Simmons, Stephens Dominates Trio of Money Lists

by Gwen Moritz  on Monday, Sep. 21, 2009 12:00 am  

In this "Wealth Management" issue, along with our traditional lists of the state's largest broker dealers and money managers, Arkansas Business debuts a list of the state's largest trust departments.

(To see the list of the largest trust departments, click here for a PDF or here for a spreadsheet. To see the list of the largest broker dealers, click here for a PDF or here for a spreadsheet. To see the list of the largest money managers, click here for a PDF or here for a spreadsheet.)

Trust departments are a part of the banking world that it often overlooked. Or maybe a better word would be the one used by William L. Kerst Jr., CEO of Community First Trust Co. of Hot Springs: "Ignored."

To create the list of trust departments - and all except Kerst's are departments or subsidiaries of commercial banks - Arkansas Business pulled the Dec. 31, 2008, Federal Deposit Insurance Corp. call reports for the 46 banks that have been granted trust powers and are actively using those powers.

Using the uniform Schedule RC-T from those call reports, we pulled data on managed assets, non-managed assets and custody/safekeeping assets and added the three together to arrive at a number we called "total trust assets." This was the total by which the trust departments were ranked, although our list breaks out the assets and number of accounts in each of the three categories.

We also pulled a fourth category of data from the Schedule RC-T concerning trusteeship of corporate and municipal bond issues. Fewer than half of the trust departments act as trustees, but including this data allows readers to see which banks are active in this area of the market.

The result is a list topped by Simmons First National Bank of Pine Bluff, whose trust department is headed by Joe Clement. Simmons' trust assets as of Dec. 31 exceeded $2.2 billion, the bulk of it (almost $1.5 billion) in 423 non-managed asset accounts. And most of that, almost $1.3 billion, is in a subcategory that the FDIC calls "corporate trust and agency accounts" - by far the largest amount in that category among Arkansas-chartered trust departments.

Clement had an easy explanation for that: "Very few people do corporate trust in Arkansas anymore."

Clement said Regions Bank's trust department does a fair amount of corporate trust work in Arkansas, but the regional bank's call report does not segregate trust assets by state and was not included in the list. Other players, albeit much smaller than Simmons, are Little Rock's Metropolitan National Bank (No. 3) and Bank of the Ozarks (No. 4).

Corporate trust work is a specialized service that receives funds from corporate and municipal bond issues and then makes payments back to bondholders.

Rounding out the top five is First National Bank of Fort Smith, with $556 million in total trust assets as of Dec. 31.

When it comes to managed assets - which is the sole figure by which some trust departments would prefer we rank - the biggest in the state is Arvest Trust Co. of Rogers, a subsidiary of Arvest Bank Group of Bentonville and led by Diane Wells.

Of its $1.55 billion in total trust assets at the end of last year, which placed it at No. 2 on our list, almost $1.25 billion was in managed assets.

Community First Trust, which Kerst helped found in 1998, is the state's only active non-bank trust company - a status that he said had sometimes made the business hard to explain.

It is regulated by the Arkansas State Bank Department, which also lists one other non-bank trust company among its charges: FirsTrust Financial Services Inc., which is owned by publicly traded Home BancShares Inc. of Conway.

However, in 2007, FirsTrust entered an agency agreement that essentially hired Community First to manage all of its trust assets, which were just under $300 million as of Dec. 31. For the purposes of the ranking, Arkansas Business included FirsTrust's assets with those of Community First Trust, placing it at No. 6.

Broker Dealers
Stephens Inc. of Little Rock remained the top broker dealer in the state with 327 registered reps in Arkansas, the yardstick by which the annual list of broker dealers is measured.

A tumultuous year on Wall Street succeeded in shaking up the rest of the list - particularly the merger of Morgan Stanley and Smith Barney on June 1. (There was a shakeup in the local management, too. For more on that, see "Whispers" on Page 3.)

Morgan Stanley Smith Barney combined Morgan Stanley's Global Wealth Management Group of New York with Citigroup Global Markets Smith Barney of New York.

In November, Morgan Stanley had 50 registered representatives in four Arkansas cities, and Smith Barney had 60 in seven cities in the state.

As of last week, Morgan Stanley Smith Barney had 72 registered reps in six cities in Arkansas.

Wells Fargo & Co. of San Francisco also completed its merger with Wachovia Corp. of St. Louis on Dec. 31, and now operates the broker dealer division under the name Wells Fargo Advisors. (In 2007, Wachovia had acquired A.G. Edwards Inc. of St. Louis and the companies merged in 2008.) The company did not respond by deadline to repeated requests for a current count of registered representatives in Arkansas, so Wachovia's count from November 2008 was used to rank Wells Fargo at No. 2.

Other changes on the list include the addition of Raymond James Financial Services Inc. of St. Petersburg, Fla. With 10 registered representatives, Raymond James landed 16th place among the broker dealers.

Other firms also have added registered representatives since November, which is the last time Arkansas Business published its list. Crews & Associates of Little Rock grew from 120 registered stockbrokers in November to 149 as of last week.

Stern Agee & Leach of Birmingham, Ala., also increased its number of stockbrokers from 23 in November to 32 last week.

Money Managers
The annual money managers list is also dominated by Stephens Inc. affiliates, with Stephens Capital Management holding the No. 1 position by a mile and Stephens Investment Management Group LLC at No. 5.

Money managers on the list are registered investment advisers, and they are ranked by assets under management as declared in the most recent Form ADV filed with the Securities & Exchange Commission.

RIAs generally file ADVs once a year, although there is no set schedule. Arkansas Business omits RIAs whose most recent ADVs are more than 15 months old, but some of the asset totals date from late 2008, while others are only a few weeks old and could be expected to have benefitted from the recent rebound in stock prices.

With $2.75 billion in assets under management, Stephens Capital Management is more than twice as large as its nearest competitor, $1.29 billion Foundation Resource Management Inc. of Little Rock. But even that figure, filed Sept. 3, is off from the $2.9 billion that Stephens Capital reported in October 2008.

Arvest Asset Management of Lowell maintains its position at No. 3. It disclosed its $443 million figure in March, a huge drop from the $648.6 million it reported in July 2008.

Stephens Investment Management Group stayed at No. 5, but the money managers on either side of it changed places. Sowell Management Group of North Little Rock, which was No. 6 last year with $391 million under management in January 2008, moved to No. 4 with a nearly identical $388 million in March 2009.

Meanwhile, Forest Hill Capital Inc. of Little Rock, which was at No. 4 with $403 million under management in March 2008, dropped to No. 6 with $301 million a year later.



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