Umpqua Holdings Corp. plans to aggressively expand its private banking unit as other, smaller banks divest such businesses.
Donna Huntsman, who was hired Monday to be a senior vice president of private banking, said she expects the Roseburg, Ore., company to have at least $900 million of private banking assets under management in three years. That would be triple the current amount.
Umpqua has four private banking relationship officers, she said, and plans to add at least two within a week.
The $8.6 billion-asset company plans to aim its private banking services at people with at least $1 million of investable assets. Umpqua has offered private banking services for seven years and started a wealth management division this year, but Huntsman said in an interview Tuesday that its private banking services currently are "like retail banking with lipstick on it."
She said Umpqua plans to add financial planning, trust, investment services and asset management to its current offering for affluent customers. "We want to lead with financial planning," she said. "We want to be more consultative for our customers."
Some analysts questioned whether Umpqua's aggressive approach is wise. As the economy worsened, many smaller banks shuttered or sold their wealth management units to focus on core businesses. "It is a difficult time to be expanding and growing anything beyond your core capabilities," said Burton Greenwald of BJ Greenwald & Associates in Philadelphia. "It is the right time to be conservative."
The move is part of an effort by Umpqua executives to broaden the company beyond its traditional retail banking roots. Besides the private banking initiative, Umpqua in May started an international banking division in San Francisco to serve small and midsize companies that do business overseas.
Huntsman, who was a senior vice president and financial adviser in the Key Private Bank unit of Cleveland's KeyCorp, said it is hard to use a "broad brush" to characterize the types of services that small banking companies should be offering.
Every banking company must consider its own plan, she said, and she is convinced that private banking is integral to Umpqua's strategy. "A lot of banks had serious credit issues that ha[ve] forced them to be reactionary and fold down their private banking groups," she said. "I think this gives us a real opportunity. In the platform we are building, the upside is better than it has ever been because there is disarray in the investment brokerage world and a lot of bigger banks don't know up from down right now."
Umpqua plans to begin by generating private banking customers and assets in the Portland metropolitan area, Huntsman said. Over time, she said, the private bank will try to add customers all across Umpqua's footprint, which goes from San Francisco to Seattle.
The company will compete against boutique wealth managers and large banking companies for customers in the region, she said. Huntsman said most large banking companies "try to be community banks" when it comes to serving private banking customers, "but that can only go so far."
"I just don't see these large banks as a huge threat out here," she said. "With all of its issues with Merrill, Bank of America has really imploded in town."
Mark Halverson, the global head of wealth and asset management services at Accenture Ltd., a Chicago global management consulting, technology services and outsourcing company, said smaller banking companies are trying to move "from a product sales to a consultative mentality."
This can be difficult for companies with well-established platforms, he said, but companies that are starting fresh can gain assets. "There are opportunities to gather a better share of wallet and to be profitable if they approach their customers with additional services," he said. "A lot of these affluent individuals aren't satisfied with the larger banks."
Umpqua plans to offer its private banking customers nonproprietary products in addition to its proprietary wealth management services and retail brokerage services from Umpqua Investments.
Huntsman said coming from Key, where she worked for 32 years, "I know what works and what doesn't." Being with a smaller bank will give her the flexibility, she said, to form partnerships with a broader array of providers. The company will add relationship officers as it adds assets, she said.
