Umpqua Bank wanted to offer trust services, but like many banks, it was wary of the expense of a major new initiative.
So the unit of Umpqua Holdings Corp., in Portland, Ore., found a partner: New York Private Trust Co., a subsidiary of Emigrant Bancorp Inc. in New York. The deal enabled Umpqua to quickly roll out a trust offering under its brand, with minimal capital outlay and without additional infrastructure, according to Kelly Johnson, executive vice president of wealth management of Umpqua Holdings.
"I had to make a decision whether we buy, build or rent it," he said. "Ultimately, this is the best option for us."
Technically, Umpqua Trust Services is a division of New York Private, which doesn't otherwise have a presence in the bank's region. The arrangement took effect Dec. 6. New York Private was formed six years ago by the New York real estate baron Howard Milstein.
Jerry Cooper, the chief executive of Financial Marketing Associates, a consulting firm in San Francisco, describes the partnership as an unusually comprehensive private-label trust program.
"It's a substitute for staffing their own internal trust department," Cooper said. "I've heard of outsourcing software and personnel — this is completely outsourcing everything."
Even if the bank had built its own trust business, it might have taken years to become profitable, Johnson said. The partnership, he added, will allow Umpqua to generate an additional stream of revenue at a fraction of the cost creating its own trust company. It and New York Private will share fees generated by the business.
The trust offering is the latest piece of the wealth management puzzle for Umpqua. The bank has had a brokerage unit since 1999, when it acquired Strand Atkinson Williams & York, now known as Umpqua Investments. Over the past two years it has created a wealth management business under Johnson. That business includes a private bank and, now, a trust offering with the potential to deepen client relationships.
"Many of our clients throughout our footprint have substantial net worths, but we didn't have a trust offering," Johnson said. "A lot of them were naming competitors as corporate trustee upon death or incapacity."
Umpqua Trust Services provides high-net-worth clients with a comprehensive suite of fiduciary solutions, including full trust and foundation administration, estate administration and directed trustee services.
Umpqua employee and trust veteran Jennifer Flickinger is serving as the main contact for Umpqua Trust Services' clients. All trust and other fiduciary services will be performed in Delaware, where New York Private has a trust charter and a staff.
New York Private will delegate the investment function for fixed income and equity management to Umpqua Investments and to Ferguson Wellman Capital Management. Umpqua formed a strategic alliance with Ferguson Wellman Capital Management in Portland.
Umpqua Trust Services will help as the institution expands the private bank throughout its service area, Johnson said. The focus of that business is now the Portland and Vancouver, Wash., markets. Seattle and the San Francisco Bay area are among the future targets for wealth management expansion, he said.
Umpqua Trust Services is aiming to bring in 18 relationships this year, Johnson said. Clients must have net worths of at least $3 million, or $1 million of liquid assets. Johnson noted that many rivals require $5 million or more of net worth for trust clients.
The Delaware trust charter is a plus for Umpqua, Cooper said. "Having a charter in a high-pedigree state, without all the extra baggage you have in order to meet regulatory approval there, is a good thing," he said.
New York Private is able to administer traditional assets as well as nontraditional assets such as real estate, operating business interests, partnerships, oil and gas, collectibles and alternative investments.
That flexibility should prove an advantage for Umpqua Trust Services over some of its rivals, Johnson said.
Umpqua Trust Services' corporate and personal trust services include asset-protection trusts, q-tip trusts, irrevocable and revocable personal trusts, credit shelter trusts, incentive trusts, marital trusts, residuary trusts, generation-skipping transfer trusts, estate settlement trusts, dynasty trusts and irrevocable life insurance trusts.