Listening to Bryce Carr discuss his doubts about Emprise Bank's new advertising campaign for its wealth management services, one gets an old-school feeling about how business gets done in his market.
"In Wichita, advertising and the media have never been a big part of our growth," said Carr, executive vice president of Emprise Bank's trust and investments unit. "It just has not been terribly effective to date. We aren't trying to be some big national bank. Wealth management grows in Kansas from person to person."
But Emprise, and its local rival Intrust Bank, are setting themselves apart from other small players.
With branches surrounding Wichita — beyond the shadows of the country's largest banks — Emprise and Intrust are adding trust and wealth management assets at a time when community banks nationally are divesting similar businesses because they cannot compete with larger outfits.
Analysts said that as large banks continue to focus on pockets of wealth in large metropolitan areas there is an opportunity for small and midsize companies, like Emprise and Intrust, to use trust and wealth management to retain and obtain wealthy customers locally.
Carr said that over the past 15 years his unit has worked with the $1.2 billion-asset banking company's customers and the local legal community to amass $300 million of assets under advisement.
"At one time, no one saw us as a viable competitor for wealth management business, but now we are pulling business away from the big banks," he said. "We are on the radar with local, wealthy customers and the larger national banks aren't because of our presence and our local attention."
Rod Pitts, the executive vice president of Intrust Wealth Management, said the $3.5 billion-asset Intrust has offered trust and wealth management services since 1921 and has kept building its business during the economic downturn.
"Trust and investment services are part of our core business and it is certainly not something we are looking to abandon," he said. "It is definitely part of our history and continues to be a very successful part of what we offer to our customers in Kansas, Oklahoma and Arkansas."
Intrust offers wealth management services, including trust and investment services, 401(k) record keeping and brokerage, through its 46 branches in Kansas and Oklahoma, and has a Tulsa branch that offers wealth management services exclusively. Its assets under management have increased 9.5%, to $2.85 billion, since the end of last year.
Carr said Emprise competes with Intrust and UMB Financial Corp. of Kansas City, Mo., while larger banking companies continue to "focus on the coasts."
"I think it is all in how you define 'wealth,' " he said. "When you are a wealth manager dealing on a national basis, you certainly can set that benchmark pretty high. Large national banks can service clients very, very effectively, but $1 million is middle market or mass affluent to them and they feel they can't deliver the same level of service to those customers that they deliver to their ultrawealthy customers. We believe that people with $1 million to $10 million have a lot of potential for us. We think we can deliver something unique to these individuals that large institutions could deliver, but have chosen not to."
He added that "the largest banks could do everything we do and more, but the real issue is whether they want to do that for the segment we focus on. We have created our own niche here in Kansas."
Many small banks are getting out of wealth management because it can be expensive and they would rather use the capital on core banking businesses.
Pitts said Intrust Wealth Management helps to diversify Intrust Bank's revenue. "We are a commercial bank. We have always been a commercial bank and we'll always be a commercial bank and we make the majority of our earnings in those segments, but Intrust Wealth Management can complement their offerings and really diversify revenue," he said. "We are a nice addition."
Intrust's principal customers are also those with assets of $1 million to $10 million, but Pitts said it services clients with $100,000 as well. He said by offering an array of nonproprietary products, Intrust is able to differentiate itself from national banks. "We made a critical decision very early not to manufacture products," he said. "We are 100% open architecture. We wanted our job to be able to objectively work with clients to find the right solutions for them."
Using nonproprietary products helps Emprise's trust and investments unit remain profitable, Carr said. He said trust and investment services do not require a lot of capital and can deliver attractive returns on equity.
Carr has three trust administrators and four relationship managers for 40 branches around Wichita that generate referrals from its commercial and retail banking business and from estate planning attorneys in the Wichita area. Intrust has 85 wealth management employees, including 18 in its 401(k) record-keeping business.
Carr said Emprise is expanding its team of relationship managers. He is adding three from a "large national competitor" and said he may hire more next year. "We have a lot of options for growth," he said. "One option is organic growth, but another option is to acquire assets or hire good people and let them lead you to good business. We'd rather hire people who are known quantities than buy assets with unknown risks."
Carr said small banks cannot expect to retain customers without offering trust and investment services.
"It is just not a good strategy to abandon trust services," he said. "We tried it and Emprise reached the conclusion that if you are going to build your business on a relationship model then trust and investments remains a crucial part of that model. I think we are kidding ourselves if we can think we can be an individual's primary financial relationship without it, especially the affluent."