JASPER, Ga. - Michael W. Caton, president of Crescent Bank and Trust Co., has an uncanny way of getting what he wants.

Twenty years have passed since he first glimpsed this community, nestled in the foothills of the southern Appalachians an hour north of Atlanta. "What a great place to have a bank in," he recalls telling his wife.

Now, six years after founding the bank he once dreamed of, he is taking it to the next level. Crescent, with $50 million of assets, is about to open the trust department that its name has long hinted at.

It is an audacious strategy for so small a bank. Most experts maintain that a bank needs to be at least twice the size of Crescent before it can even think of entering the trust business.

"It's very gutsy of them," said John Philip Sousa 4th, a Nevada-based consultant who specializes in community banks. "For a bank this size to succeed, they have to be able to overturn every rock to look for money."

However, Mr. Sousa added, "It sounds like they have their heart in it, and that's a big chunk of the battle."

The new unit, dubbed Crescent Trust, will focus on managing assets for employee benefit plan sponsors and individuals, and less on the traditional will-making end of the business - all "at a fraction" of the cost of the fees charged by other banks and brokerage firms.

"We felt there was a void in the smaller-investor market because the traditional trust departments were really pricey," Mr. Caton said.

Mr. Caton said that his bank will be able to manage assets for investors with less than $5 million of assets and companies with less than $15 million by charging around 1% on those assets.

His goal is ambitious: to amass $200 million in trust assets, generating as much as $800,000 in annual revenues.

Though he is building the trust department from scratch, Mr. Caton is not worried. He built the bank itself from scratch, even overseeing its construction personally.

Built in stacked stone in the shape of a crescent and adorned with a clock tower rising above relatively flat terrain, the facade is a delight to behold. Inside, its two stories mix wood paneling, green marble cut from local quarries, and Southern charm galore.

Such a distinctive structure is an apt metaphor for a bank that thrives on standing out from the pack. Crescent's promotional brochures boast that "we do everything a bank does and some things other banks don't."

That's not to say Crescent is determined to go it alone. In fact, a key element of the bank's plan to expand into trust is a partnership with SEI Corp., Wayne, Pa.

SEI, which provides trust and investment management support to hundreds of banks, will handle some key custody, management, and recordkeeping functions. That way, the trust unit can keep the overhead down, and operate with a three-member staff.

The unit will he headed by Carl W. Deane, a former SEI vice president and manager of institutional accounts, who was hired last summer. Mr. Deane will also oversee marketing and sales, along with S. Suzanne Whilden, assistant vice president. A third trust officer, Barbara J. Trivedi, will oversee the administrative and regulatory portion of the department.

Mr. Deane pointed to the mutual fund asset-allocation software provided by SEI - Assist - as the single most important reason that his small trust unit will be able to handle a projected 150 accounts affordably.

The software, which Crescent officers can access on their laptops, stores client profiles, accounts, and diversifies investments across several asset classes to minimize risk.

Similar services, in form of wrap accounts, are offered at larger brokerage houses, but at a cost as high as 3% of annual assets, they can be expensive.

By outsourcing most of the work to SEI and with the help of the asset- allocation software, Mr. Deane said his bank will be able to charge that fee to all investors with as little as $40,000, as opposed to the $250,000 minimum it had initially envisioned.

That doesn't mean that folks with less that will not be talked to, Mr. Deane said. Their cost, however, may be a bit higher.

That brings, however, a significant point to the table: Mr. Caton and his trust officers said they did not want the kind of retail brokerage program that would place salespeople in the bank's lobby.

"No matter what you'd do, it seemed to us that the invitation to a bank customer to come in to buy a security or a mutual fund is fraught with risk," Mr. Caton said.

He said that that risk diminishes by offering investments through the trust department because of the physical separation - once in Crescent Bank's lobby, a visitor is presented with two glass doors, one leading to the Banking Room, the other to the Trust Room.

Can Crescent do it?

Although the bank has no trust record, it has a good track record in the fee-income business. Two years ago it launched a mortgage unit, whose servicing operations last year handled over $350 million, in a down market.

With outsourcing and help from a top executive Mr. Caton hired away from First Liberty Financial Corp., the bank has been able to generate profits without exposing capital by reselling its loans on the secondary market.

Mr. Caton sees the trust unit as a natural extension of this strategy. "Fee income gives us some protection against interest rate swings and cycles," he said.

"When you look at our size, you'd never suspect we'd be doing things like this," said Mr. Caton.

Indeed, he has his eyes on further expansion. Plans have already been drawn up for a registered investment advisory unit, Crescent Capital Solutions, to capture some of the $15 billion of institutional assets that, according to a bank study, resides in the northern parts of Georgia alone.

For all his entrepreneurial ways, Mr. Caton is emphatic on one point: He and the bank's board of directors are in this business to stay. After all, these people, who donate vacation days to colleagues in a slump, have too much heart invested in the bank.

"We didn't build the bank to sell it," Mr. Caton said.

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