Magazine article American Banker

New Ideas Vital for Small Trusts, Conference Told

Magazine article American Banker

New Ideas Vital for Small Trusts, Conference Told

Article excerpt

SAN FRANCISCO -- Only radical changes in organization and strategy will help community bank trust departments attract new retail and new trust business.

That was the message at a panel on the first day of the American Bankers Association trust conference here.

Michael A. O'Brien, senior vice president and manager of the trust division at Union National Bank of Little Rock, led off the panel by explaining why his bank uses mutual funds for investing trust assets.

"Over the years we have missed the boat," he said about the trust industry in general. "The public has changed to mutual funds." He cited statistics about money market funds and performance of bank funds versus mutual funds. Then he added: "But our turn is coming. And the growth market is the employee benefit market."

Mr. O'Brien also suggested that trust bankers consider self-directed individual retirement accounts. While such ordinarily pint-size accounts have usually been unattractive to bank trust departments, "the potential is mind-boggling," he added.

James F. Searcy, senior vice president and trust officer of Midwest Commerce Banking Co. in Elkhart, Ind., spoke about combining retail banking with trust banking.

Such a combination requires over-coming an internal environment that is not conducive to that endeavor, he pointed out. For example, he said, the retail environment typically treats customers as numbers -- an approach that won't work with trust customers, who require a great deal of individual service. Cross-Selling a 'Fable'

Further, the likelihood of one department suggesting the services of another rarely works without a major effort, he said. "Cross-selling is the last of Aesop's fables," Mr. Searcy added, only half in jest.

Midwest Commerce, Mr. Searcy's bank, underwent a radical reorganization. …

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