Epic Bancorp, a small San Rafael, Calif., company that caters to wealthy customers, has started an investment management arm that its chief executive officer plans to expand aggressively in the next few years.
Kit M. Cole, the chairman and CEO of Epic and the Epic Wealth Management subsidiary it launched last week, said organic growth and strategic acquisitions would help the unit quadruple its assets under management, to $1 billion, in three to five years.
The company, which focuses on people with $1 million to $10 million of investable assets, wants to open more branches in its Marin County territory, she said, and also to buy wealth management firms in the county with $100 million to $250 million of assets under management.
Ms. Cole said Epic, which had $426 million of assets and $275 million of deposits at Dec. 31, wants to expand its business by delivering a full array of financial services, including banking products, through a wealth management approach.
Epic is the holding company for Tamalpais Bank, which Ms. Cole established in 1991. It operates five Marin County branches — in Mill Valley, Greenbrae, San Anselmo, central San Rafael, and Terra Linda. A sixth branch, in Corte Madera, is to be opened this year.
Ms. Cole said she expects to open a seventh branch in next year’s first quarter and has two other sites on her radar. Developing purely organically is difficult, however, in Marin, the affluent county just north of San Francisco’s Golden Gate, she said.
“In Marin County we are really constrained by real estate locations,” she said. “Only 10% of the land can be developed, and the rest is green space. This is a very anti-growth community. We have to work hard to find locations that are available and then have to get permits. It is a challenge, and it is difficult to build out the footprint in premier locations.”
Her company, she said, will look to strategically acquire wealth management firms in the San Francisco Bay area that employ one or two managers and have $100 million to $250 million of assets.
Ms. Cole said she developed this strategy because she felt that no bank specifically targeted the high-net-worth community in Marin County through a local branch network that included its own internal investment arm with staff in each branch. She began offering the strategy four years ago after starting Kit Cole Investment Advisory Services. Its services were offered through the bank’s branch network to provide a holistic advisory approach to wealthy customers.
The strategy was so successful that the bank decided to launch its own investment management arm, she said. “I want clients that come to the bank to know that in addition to deposits and loans there is someone in the branch to talk about the financial issues that are on their minds,” she said.
Analysts said small banking companies like Epic will have a difficult time developing a private wealth management business because most wealthy people have established a strong relationship with a larger bank.
Ms. Cole said Epic has advantages and difficulties when it comes to competing with larger banks.
“It is a disadvantage not having the huge resources that banks like Citi or Bank of America or Wells Fargo have, but it is also a huge advantage not to have their infrastructure,” she said. “Most banks have found it difficult to integrate their investment management arms into their branches because the cultures are so different. Our cultures work well together because there isn’t that legacy.”
Ms. Cole said a strong branch network is essential to developing a wealth management business in Marin County.
‘There is only one main road in Marin County, and that is Highway 101. You can’t just put a branch on Highway 101 because it is gridlocked most of the day,” she said. “We have to reach each community individually and provide convenience. We have to be in their neighborhoods.”
“Most of these larger banks in Marin County all look the same,” she added. “You could put anyone’s name on the front because they all look and feel the same. They are all soulless.”
To make her branches different, she said, each includes an investment center, an educational center, and a children’s center.
“Our goal in the short term is to build a bank with a billion dollars in assets under management, and that is very doable in this community,” she said.
