Iowa bank teams with advisor to provide trust services

Northwestern Financial Review, Aug 15, 2001 by Dullum, Justin

Gary Ernst, vice president and senior trust officer, West Des Moines State Bank, West Des Moines, Iowa, thinks the average size of a community bank's investment department is cause for a few sleepless nights. "There are many banks around this country where you have one or two investment people. You worry about them leaving at night and getting hit by a bus," quipped Ernst.

In a move to broaden the depth of its own one-man investment department, West Bank, which holds approximately $2.5 billion in trust assets, is teaming with VMF Capital, L.L.C., to deliver management and advisory services to trust clients. The alliance broadens West Bank's investment services and provides for more staffing and resources.

"With one person it's hard to follow the large cap growth stocks, or value stocks, or mid-cap, or small cap," said Ernst. "The reason we went with VMF is that our trust department jumps from one person to 26 investment people. They are investment professionals and they are local. That makes all the difference."

The arrangement marks VMY's first alliance with an independent bank. Ernst said that by specializing in managed accounts, VMF represents an area of expertise that West Bank customers have been demanding. The $800 million West Bank has established strong relationships with its customers, said Ernst, and the agreement with VMF allows the bank to offer a higher level of customized portfolios.

Don Means, a managing partner of VMF in Des Moines, said the company also will provide online account access to West Bank's trust customers. Means, who formerly served for 20 years as vice president and chief investment officer for Wells Fargo Investment Management and Trust, added that he sees a growing demand for 24-hour trust account access. "This isn't a merger," said Means. "They basically hired us to be their investment department. We're still two separate companies."

Means said the formal agreement sprang from relationships he and his managing partners had cemented through years in the financial industry. VMF knew the head of West Bank's trust department through past relationships. "They had a one-man trust department," Means said. "It's very difficult to run an investment operation with one person. You end up talking to yourself We offered to help broaden their department, then their investment person moved back East. The decision was made to make VMF the investment department."

VMF Capital, a Cedar Rapids, Iowabased investment advisor with clients across the United States, counts more than $700 million in assets making it the largest independently-owned advisor in Iowa. The firm's 26 investment and administrative staff work from Des Moines and Cedar Rapids, Iowa.

By Justin Dullum