After a buying push in the past five years to expand nationally, Wilmington Trust Corp. says it plans to focus on organic growth to expand its assets before looking to acquire in other wealthy markets.
“We don’t have a burning desire right now to acquire in order to develop our footprint or our product capabilities,” said Rodney Wood, the president of Wilmington Trust’s wealth advisory services. “We could expand geographically into new markets if the opportunity presents itself for lift-outs or acquisitions, but it is not our focus.”
Mr. Wood said the Wilmington, Del., banking company plans to concentrate on expanding distribution and hiring in order to grow.
“We want to focus on markets with a high concentration of clients with $10 million to $25 million in assets,” he said, “and half of the people with those assets reside in and around seven cities in the U.S. We are in four of the seven already because we are in Philadelphia, New York, Los Angeles, and southern Florida. We are not in San Francisco, Boston, and Chicago. We have concluded that these markets are attractive for us, but we don’t have any plans or a timetable as to when we will enter them. But they are areas that we are watching.”
Wilmington Trust has $40 billion of assets under management. Mr. Wood said the company wants to add to this total but that this can be done through expansion of its existing offices, not necessarily by geographical expansion.
“Over the last couple of years, we have gotten into new markets and added new product capabilities,” he said. “Now we want to maximize what we have bought in order to bring in more clients.”
Last week, the company announced it had expanded its Baltimore office by adding several senior professionals to serve high-net-worth investors and commercial banking clients in the area. It has added six people in Baltimore this year and plans to add 15 more in coming months.
Richard X. Bove, a banking analyst at Punk, Ziegel & Co., said it might not be the right time for expansion.
“What you see across the board is a clear slowdown in economic activity, which means it is not a good time to get into capital expansion of any kind because the economy might not absorb the increased capacity,” he said.
Mr. Wood said Wilmington Trust plans to continue hiring in Philadelphia and California.
Tony Guernsey, the president of Wilmington Trust’s wealth advisory services group in New York, said it will look to add to its staff in New York but that he wants to be opportunistic. Since the company started its New York operation eight years ago, it has grown from three employees to 35.
“We only have one work station left in our current space here,” he said. “We want to take in more people, and we’ll probably take over the entire floor in 2008. Our challenge is, we don’t know where to put people.”
Wilmington Trust ventured into Florida about 25 years ago and since 1997 has opened offices in Pennsylvania, California, New York, Georgia, and Maryland. In 2002, it bought Balentine & Co., an Atlanta investment counseling firm.
The company established itself in California in October 2004 when it bought Grant Tani Barash & Altman LLC, a Beverly Hills business management and family-office firm that serves high-net-worth clients. After the deal closed the bank moved to larger offices in the Century City section of Los Angeles.
Mr. Wood said that, with Wilmington Trust gaining strong footholds in its “more mature markets” in New York, Los Angeles, and Atlanta, he expects to be able to generate growth organically. “We can expect to continue to have growth like we have had over the last couple of years without having to make another large acquisition,” he said.
Robert Balentine, the president and chief executive officer of Wilmington Trust’s investment management group, who joined the company when it bought his Balentine & Co. four years ago, said the company plans to expand distribution of its proprietary products through consulting firms, mutual fund supermarkets, and broker-dealers.
Last Monday, Wilmington Trust said it had signed an agreement to offer its investment management capabilities through several no-transaction-fee broker-dealer investment platforms, and it hired Darryl S. Grayson to expand national distribution.
“We want to take our products to a broader audience,” Mr. Balentine said. “We have strong sales goals internally, but we want to find complementary distribution channels from here.”
Mr. Bove said he believes it is really not the best time for any sort of expansion.
“In periods like this what you should be trying to do is control costs,” he said. “Firms should be whittling down their balance sheets and putting themselves in a defensive position. … Now is the time to get the balance sheets in shape, reduce the permanent employment force, and put yourself in a position so six months from now you can make a lot of acquisitions because that is when there is going to be a lot of stuff that is really cheap.”
Mr. Wood said Wilmington Trust would continue to expand assets under management by focusing on both organic growth and strategic acquisitions.
“We want to grow across the board,” he said. “The hardest part of growing is finding good people. We feel that by being reasonably patient we will find good people that fit with the way that we do business.”
