Knoxville bank puts trust in Chattanooga

Sharon Pryse will be at the new Chattanooga office of Knoxville-based The Trust Company, which will open its doors in November 2012.

Some scrappy new competitors are adding trust and investment services in Chattanooga after major regional banks reduced some of their wealth management programs.

Changes, mergers and cutbacks at Regions, First Tennessee and SunTrust have created new opportunities in a local market known as much for its old wealth as for its scenic vistas, officials say. Smaller institutions bolstered their local staff while new entrants like The Trust Company are entering the Chattanooga market for the first time.

Sharon Pryse, president of Knoxville-based The Trust Company, decided amid local uncertainty to enter the Chattanooga market. Pryse, who plans on opening The Trust Company's newest office here in November with three advisors if state regulators approve the new franchise, said Chattanooga is a hot town for wealth management.

"It's been a wealthy and philanthropic community and had significant trust presence," Pryse said. "Even though Knoxville is a larger community than Chattanooga, I believe the Chattanooga market has always been a stronger market than Knoxville."

It's difficult to conduct business in the wealth management field over the phone or the Internet, Pryse said, because clients generally want to maintain a personal relationship with the person who controls their fortune.

"That's one of the reasons we're not just starting a satellite office, we're staffing a real office with experienced trust personnel who are already known in the community," Pryse said.

New advisors Fred Speakman and Pam Dietrich are formerly of Regions' Trust division, which reported to Morgan Keegan, and James Woods retired this year from SunTrust.

FSGBank, too, has grown its wealth management business by 30 percent after adding a handful of former SunTrust wealth managers to its payroll.

"Similar to The Trust Company's decision, we believe Chattanooga is a growing and vibrant community that desires local-based decisions as it relates to trust services," said John Haddock, chief financial officer for FSGBank.

The banking brouhaha stems from both the exit of certain Atlanta-based SunTrust's wealth advisors as well as the purchase of Memphis-based Morgan Keegan by Raymond James, bankers say.

In February, Raymond James bought Morgan Keegan from Regions Bank for $930 million.

John Wilson, managing director and branch office manager for the combined entity, the two firms will finish merging in February 2013. Though there are no layoffs planned, he understands the allure of a market in flux, especially for outside firms hungry for new clients.

"If you look around Chattanooga, you see that a lot of positions that if not eliminated, are no longer in Chattanooga, and people perceive that there's a real opening for the old classic trust department type approach," Wilson said.

A few weeks after the Morgan Keegan purchase in February, SunTrust announced it was transferring a half-dozen positions to Nashville from Chattanooga.

By April, Chattanooga-based FSGBank had hired three former members of SunTrust's local team, said Bart Rolen, head of wealth management for FSGBank.

"For us, the East Tennessee and Dalton area is our market, and for us it's a high growth market," Rolen said. "Not to pick on SunTrust, but they're doing what makes sense for them and that's to focus on markets like Miami, Washington D.C. and Charlotte, and to them Chattanooga and Knoxville are not high-growth markets."

But there's more going on than simple consolidation, said Keith Sanford, Chattanooga market president of First Tennessee. Mergers and economic downturns can also lead to customer turnover, he said.

"Each time there is a disruption in account management, that gives somebody a chance to say let me look around and see what else is out there," Sanford said.

Officials for First Tennessee and SunTrust were quick to note that though the local wealth management divisions have been restructured, the banks are still aggressively pursuing new clients - just in a different way.

Both SunTrust and First Tennessee maintain about 30 wealth management advisors in town, officials said,

"SunTrust has a long history of providing wealth management services to clients, and our commitment to the business has never been stronger," said Mike Butler, president and CEO of SunTrust Bank's east Tennessee division. "We believe competition is good for the market and for clients, and are confident in our ability to attract and retain clients by providing the products and services that meet their needs along with the high-quality service that differentiates us from competitors."

This summer, SunTrust outsourced its fraud-detection and most of its real estate functions, according to news reports in the Atlanta Business Chronicle and Orlando Sentinel. The move will save the bank tens of millions of dollars over the next five years.

While the small newcomers may butt heads with the established giants as the Chattanooga market shakes out, there could be a niche for each institutions, Rolen said.

"Some people like to focus on the investment management piece, some people like to focus on the trustee piece and outsource the investment management, while we can do both," Rolen said. "If they have an advisor they've been working with for 30 years, we're happy to work with a trustee."