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Banks vie for trust accounts.

Arkansas Arkansas, river, United States
Arkansas (ärkăn`zəs, är`kənsô'), river, c.1,450 mi (2,330 km) long, rising in the Rocky Mts., central Colo.
 Market Reaches $12 Billion and Counting
Gross Income From Arkansas Trust Operations

                         1995              1994             1993

First Commercial   $11.52 million    $10.34 million    $8.83
Boatmen's           11.08 million     11.37 million     9.95
Arvest               3.10 million      2.98 million     2.77
Simmons              1.79 million      1.75 million     1.79
Mercantile           0.80 million      0.82 million     0.69

Source: First Commercial Trust Co.'s marketing survey.

Historically, trust departments often have been money-losing propositions that banks endured as a service for wealthy clients. But last year, administrative fees generated more than $28 million for the five largest bank trust operations in Arkansas, according to according to
1. As stated or indicated by; on the authority of: according to historians.

2. In keeping with: according to instructions.

 a bank marketing survey.

That change came thanks to the loosening loosening /loo·sen·ing/ (loo´sen-ing) freeing from restraint or strictness.

loosening of associations
 of regulatory restrictions and increased popularity of trusts. The trust departments that once functioned as stand-alone (jargon) stand-alone - Capable of operating without other programs, libraries, computers, hardware, networks, etc. Exactly what is absent is presumed to be obvious from context.

"We only run Windows on stand-alone PCs because it's too dangerous to run it on networked ones."
 operations now are integrated profit centers in a bank's overall operations.

Profitability also has prompted increased competition for smaller, less profitable accounts and caused some banks to start up trust operations.

"Trusts have traditionally been a pretty sleepy sleepy

characterized by sleep.

sleepy foal disease
see shigellosis.

sleepy staggers
see hepatic encephalopathy.
 business," says Mike Dowling Dowling is a surname, and may refer to
  • Austin Dowling, archbishop
  • Bairbre Dowling, actress
  • Brian Dowling, reality TV show contestant
  • Brian Dowling (football)
  • Bridget Dowling, Adolf Hitler's sister-in-law
  • Constance Dowling, actress
, president of Boatmen's Trust Co. in Arkansas. "But in the last five years there's been a real growth in trusts as part of estate planning Estate Planning

The overall planning of a person's wealth, including the preparation of a will and the planning of taxes after the individual's death.

Contrary to popular belief, estate planning involves much more than preparing a will, and it is not only for the

The Boatmen's trust operation is the second largest in the state but ranks as the most efficient in terms of profitability, as measured by an income-per-employee figure of $120,000.

Boatmen's administers 6,000 Arkansas trusts totaling $2.1 billion in assets. During 1995, the mix of personal, pension and other trusts generated income of $11 million.

That income stream nearly equaled the $11.5 million total in 1995 for First Commercial Trust, which managed twice the assets of Boatmen's. The figures for all central Arkansas banks were calculated for a marketing survey by First Commercial Trust.

However, the mix of accounts First Commercial manages was much heavier in corporate trusts, $4.5 billion compared with $960 million for Boatmen's.

"We are starting to gear up in the corporate trust business because there's not a lot of other people who will do this," says Mike O'Brien O'Bri·en   , Edna Born 1932.

Irish writer whose works, including The Lonely Girl (1962) and Johnny I Hardly Knew You (1977), explore the lives of women in modern-day Ireland.

Noun 1.
, president and chief executive officer of First Commercial Trust Co.

NationsBank Corp. of Charlotte, N.C., which is on track to merge with Boatmen's early next month, sold its corporate trust portfolio to Bank of New York The Bank of New York, abbrieviated to BNY, was a global financial services company that existed until its merger with the Mellon Financial Corporation on July 2, 2007.[1] The bank now continues under the new name of The Bank of New York Mellon Corporation.  about five years ago. However, Nations could re-enter re·en·ter also re-en·ter  
v. re·en·tered, re·en·ter·ing, re·en·ters
1. To enter or come in to again.

2. To record again on a list or ledger.

 the market, given Boatmen's significant involvement in corporate trusts. Arvest also abandoned the corporate trust business after selling its portfolio to First Commercial.

Corporate trusts are a low-margin portion of the overall trust market. Administering bond issues and the like requires a large dollar volume to make the effort worthwhile.

Overall, First Commercial Trust is home to 5,000 accounts with an asset market value of $7.1 billion. About 60 percent of those funds are personal trusts, set up for people who can't or don't want to manage assets for themselves.

The reasons for setting up personal trust accounts range from estate planning to guardianships. Trusts are viewed as a traditional move to help minimize the bite from estate taxes while taking advantage of a bank's investment expertise to build wealth.

Hot Competition

Research by First Commercial Trust indicates the average size of a personal trust account in Arkansas is about $200,000. This market is drawing special competitive fire as trust departments vie for the entry-level trust customers.

Little Rock's Pulaski Bank & Trust instituted a satisfaction-guaranteed program on any of its trust-related accounts in early 1996. The bank offers a money-back pledge of sorts anytime during the first six months an account is open.

If a customer is dissatisfied dis·sat·is·fied  
Feeling or exhibiting a lack of contentment or satisfaction.

 with any aspect of service, Pulaski Bank will refund TO REFUND. To pay back by the party who has received it, to the party who has paid it, money which ought not to have been paid.
     2. On a deficiency of assets, executors and administrators cum testamento annexo, are entitled to have refunded to them legacies
 any fees and return the assets. The guarantee doesn't cover any losses associated with a trust investment, which would be an even bolder marketing statement.

"We think there's a good opportunity for Pulaski Bank in the market," says Bob Plummer, the bank's senior vice president overseeing trust operations. "We have picked up some new accounts, primarily from Boatmen's but some from First Commercial."

Pulaski Bank & Trust administers about 300 trust accounts containing assets of $100 million. It is making an aggressive push to land trust accounts of all sizes with a promise to beat any competitor's prices.
Income Per Trust Company Employee
(Figures in thousands)

                      '95      '94      '93

Boatmen's            $120      $91      $76
First Commercial       97       93       87
Mercantile             80       69       53
Arvest                 76       81       75
Simmons                54       53       60

"We believe we're at the lowest point on the fee totem pole totem pole

Carved and painted vertical log, constructed by many Northwest Coast Indian peoples. The poles display mythological images, usually animal spirits, whose significance is their association with the lineage. Each figure represents a type of family crest.
, but if we're not, we're willing to go lower," says Plummer, a former SVP SVP S'il Vous Plaît (French: Please)
SVP Senior Vice President
SVP Schweizerische Volkspartei (Swiss People~s Party)
SVP Society of Vertebrate Paleontology
SVP Social Venture Partners
SVP St Vincent de Paul
 with Arrest Trust Co. in Fayetteville. "We will be the low-cost provider in the Little Rock market. The reason we can do that is we're smaller and our overhead is less."

The bank's minimum annual fee of $960 for small trusts is aggressive. The focus of its trust business is threefold: personal, money management and employee-benefit services.

Head-to-Head Battle

Metropolitan National Bank, which started its trust department in March 1995, is competing head-to-head with Pulaski in openly courting small accounts with an aggressive pricing structure.

"Typically, the larger trust companies want to deal with the larger accounts," says Mike McBryde, the bank's senior vice president overseeing trust operations. "Our fees are very competitive and take into account the type of trust we're dealing with."

The fee structure on personal trusts at Metropolitan is based on a sliding scale slid·ing scale
A scale in which indicated prices, taxes, or wages vary in accordance with another factor, as wages with the cost-of-living index or medical charges with a patient's income.
 of 0.8 percent on the first $500,000, 0.7 percent on next $250,000, 0.6 percent on next $250,000 and 0.3 percent on anything above $1 million.

"I'm of the school that asset size isn't the prime factor for handling a customer's trust business," says McBryde, a 25-year veteran of the trust business. "It's relationship driven."

McBryde left Worthen Banking Corp.'s trust operations during the Boatmen's acquisition and joined Metropolitan to build its trust operations from scratch. In 21 months, Metropolitan has attracted about 100 accounts and $22 million in trust assets.

Taking All Trusts

Boatmen's has no prohibition prohibition, legal prevention of the manufacture, transportation, and sale of alcoholic beverages, the extreme of the regulatory liquor laws. The modern movement for prohibition had its main growth in the United States and developed largely as a result of the  against trusts of any size, but its fee schedule is slightly higher for smaller trusts.
Annual Management Fees for Personal Trusts

Metropolitan           0.8 percent on $500,000 or less
Pulaski Bank           0.9 percent on $300,000 or less
First Commercial       0.95 on $500,000 or less
Boatmen's              1 percent on $200,000 or less
Mercantile             1 percent on $500,000 or less

"We have minimum fees, and that does restrict the size of a trust," Dowling says, adding that the fee schedule under Boatmen's is the same as it was under Worthen.

Boatmen's sliding scale starts with a $2,000 minimum annual fee for fully managed trusts with assets of $200,000 or less. This self-limiting structure discourages the formation of trusts below $200,000.

Yet, even this low end of the fee schedule isn't written in stone. The figures are subject to discounting depending on the extent of a customer's relationship with the bank.

Fees are subject to negotiation and only become an issue at the lower end of the market, which is defined as anything under $100,000.

"It's not that we don't want the business, but if the client wants to open an account below $200,000, we ask ourselves is this really the right product or is this a fee we need to negotiate?" Dowling says.

In 1995, Boatmen's consolidated four trust offices. The Russellville, Conway and Batesville trust operations were relocated re·lo·cate  
v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates
To move to or establish in a new place: relocated the business.

 to Little Rock, and the Camden trust operations were moved to Pine Bluff Pine Bluff, city (1990 pop. 57,140), seat of Jefferson co., S central Ark., on the Arkansas River; inc. 1839. It is a port and trade center for an agricultural area and has industries producing metal, wood, and paper products; machinery; electrical equipment; and .

"We obviously lost some business because some customers want to deal with a local office," Dowling says. "But most customers don't care
This page is about the music single. For the meaning relating to digital logic, see Don't-care (logic)

"Don't Care" is a 1994 (see 1994 in music) single by American death metal band Obituary.
 where the office is as long as they're getting the level of service they want."

While most contact with a trust customer is by phone, Boatmen's maintains personal contact with clients as well. Each trust account has an administrative officer who oversees the day-to-day bookkeeping bookkeeping, maintenance of systematic and convenient records of money transactions in order to show the condition of a business enterprise. The essential purpose of bookkeeping is to reveal the amounts and sources of the losses and profits for any given period.  chores while an investment portfolio manager supervises asset management.

Nationally, Boatmen's ranks as the 14th-largest trust organization. Combined with Nations, which has an even larger trust operation, the resulting trust merger will have about $220 billion in assets - easily within the top five in the nation.

What changes will be wrought by the pending merger?

"I wish I knew, too," Dowling says. "I'd be happy to talk with you after Jan. 6 [when the Boatmen's-Nations merger is scheduled to be completed]. I do know it will be good for our customers. Nations is known for their customer service. They have technology that nobody else here in Arkansas has."

Nations employs a service center concept for trust customers, who can call a 1-800 number and get answers to practically any question concerning their accounts.

Through the wonders of technology, trust documents are scanned into a computer and can be called up at the service center to answer even the most technical questions.

The system is powered by very expensive software that even competitors concede con·cede  
v. con·ced·ed, con·ced·ing, con·cedes
1. To acknowledge, often reluctantly, as being true, just, or proper; admit. See Synonyms at acknowledge.

 gives customers an immediate response to mundane (jargon) mundane - Someone outside some group that is implicit from the context, such as the computer industry or science fiction fandom. The implication is that those in the group are special and those outside are just ordinary.  and complex inquiries alike.

Fighting the Label

Like Boatmen's, North Little Rock's Mercantile Relating to trade or commerce; commercial; having to do with the business of buying and selling; relating to merchants.

A mercantile agency is an individual or company in the business of collecting data about the financial status, ability, and credit of individuals
 Bank of Arkansas is battling the big, bad, out-of-state label that in-state competitors are trying to pin on it.

"Even though we're based in St. Louis, the decisions are made in Arkansas," says Jim Crawford Jim Crawford may refer to:
  • Jim Crawford (footballer), an Irish footballer
  • Jim Crawford (boxer), Australian boxer
  • Jim Crawford (driver), Scottish Formula One driver
  • Jim Crawford (retail analyst)
  • James W. Crawford, Jr.
, senior vice president of trust operations at North Little Rock's Mercantile Bank of Arkansas. "We don't have to go out of state."

Mercantile is employing a mix of personal service and a 1-800 service to save money for customers. Crawford is quick to add that the toll-free call comes to North Little Rock and is merely a service for long-distance inquiries.

"Face-to-face contact is important to a lot of trust customers," Crawford says. "A lot of older people aren't enamored en·am·or  
tr.v. en·am·ored, en·am·or·ing, en·am·ors
To inspire with love; captivate: was enamored of the beautiful dancer; were enamored with the charming island.
 by technology that younger people often embrace. We work with customers of all sizes."

The trust operation of Mercantile Bancorporation is among the 100 largest in the nation. Its Arkansas trust portfolio is made up of about 500 accounts and $200 million in assets. The management fees for personal trusts at Mercantile start at 1 percent for the first $500,000.
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Author:Waldon, George
Publication:Arkansas Business
Date:Dec 16, 1996
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