ABA Banking Journal - June 2008 - (Page 60)

briefing FEE-BASED BANKS continued from page 12 just managing money, because there will always be down markets when investment performance suffers. Broadening his answer beyond just fee-based banking, Cassidy said that New Jersey’s Commerce Bank (soon to be TD Commerce Bank following its merger with TD Banknorth) was very good at organic growth. Commerce had a culture unique to a bank, he said, almost like that of a revival meeting. It created some emotion that ran right from the top of the organization to the bottom. “You need that sort of commitment to have organic growth,” said Cassidy. “For trust banks, management must also provide the tools you need to grow faster than the competition.” Another questioner asked the two analysts whether Wall Street had a general preference for organic growth ver- sus growth by acquisition. “The markets pay up for organic growth,” said Cassidy. “Organic is less risky. Acquisitions always have a risk element to them.” Integration may not go smoothly or the price may be dilutive, for example. “If we can see high-single-digit organic growth, on top of acquisitions or market growth, that’s very positive,” said Cassidy. He noted, however, that it’s hard for outsiders to separate organic growth from market growth without management breaking it out, and some managements don’t like to do that. Cassidy expected to see more acquisitions in the trust and asset management field. Lee agreed, but added that there is unlikely to be big BNY/Mellon type acquisitions again any time soon. “The nature of acquisitions will mostly be incremental,” he said referring both to geographic increments and to specific asset management capabilities. Insurance, a tough fit When asked if any fee-based banks have successfully integrated insurance services into their trust or other fiduciary product lineup, Lee responded: “None come to mind!” The analyst, who used to cover life insurance companies, said the big broker/dealers have been selling annuities for years, but many of them still struggle with it. Lee said, that’s because insurance products, including annuities, are complex and difficult to understand. He also said that relative to most asset management products, insurance products are considered to be expensive. For all those reasons, said Lee, it has been difficult for financial advisors to successfully incorporate insurance products. BJ 60 JUNE 2008/ABA BANKING JOURNAL Subscribe at www.ababj.com http://www.ambest.com/banks http://www.ambest.com/banks http://www.ambest.com/banks http://www.ababj.com

Table of Contents Feed for the Digital Edition of ABA Banking Journal - June 2008

ABA Banking Journal - June 2008 Contents Editor’s Column Do Fee-based Services Have an Edge? Snapshot: Net Interest Margins Vary Sharply with Size 100th Anniversary: Then & Now Letters ABA Resources ABA Chairman’s Position "What? No Annual Surprise Bonus?" Pass the Aspirin Cover Story: Top Community Banks: How They Did... ...And How They Did It Charter Bank First East Side Savings Bank Mackinac Financial Corp. The Peoples Bank Managing the E-mail Monster In Brief Handling PEPs in the Age of "L'affaire Spitzer" Mailbox Banker’s Mart To Advertise/Index of Advertisers The Economy

ABA Banking Journal - June 2008

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