Modern Bank, a New York private banking company, plans to increase its banking assets organically but wants to use acquisitions to turn its asset management platform into a multiboutique one, according to its incoming chief executive officer.
Jeffrey B. Lane, who will join the Modern Financial Inc. unit July 1, hopes for "dramatic geometric growth" through purchases.
It has only $200 million of assets under management, but "I really like the multiboutique structure that we used successfully at Neuberger Berman," said Mr. Lane, who was its chairman before Bear Stearns Cos. hired him seven months ago as the chairman and chief executive of its asset management group. "By having competing proprietary money mangers that are all independent and all competing for shelf space, it is really a wonderful way to grow."
The two-year-old Modern Bank has doubled its bank assets in the past year, to $500 million, and it expects to have $1 billion "in substantially less than a year," he said. "I don't think any deals are necessary for us to reach that level."
It wants to add assets organically by adding high-net-worth customers in New York, Mr. Lane said. He also plans to consider long-term ways to find banking clients in states like California, Florida, and Texas.
"All of the high-net-worth institutions that I am familiar with like oceans," he said. "States bounded by oceans tend to have a preponderance of wealth. We are finding that there is a lot of opportunities in New York, New Jersey, Connecticut, Florida, Texas, and California. I mean, there is a lot going on in the Midwest right now, too, but there are just more opportunities around the edges of the country."
Mr. Lane said it is not in a rush to open branches in new markets.
That is because "we are finding that there are many more wealthy individuals than we can serve in the New York market alone," he said. "This is a very fragmented market. Any bank that can remain focused on individuals and customer services can seize a big piece of the market."
In asset management, Modern Bank would be an attractive acquirer, because "we have a platform that is clean, and money management organizations that have performed well are interested in partnering with someone that can help them gain traction with high-net-worth customers."
Mr. Lane said he is "agnostic" about where he makes asset management deals. "I think with technology the way it is, we really just want to find quality manufacturers on the asset management side. Location is really secondary. Quality is very important."
He hopes his experience at Neuberger Berman Inc. will help him make such deals. He said that he was not at Bear Stearns long enough to draw many lessons from that experience. JPMorgan Chase & Co. bought the company after liquidity problems led to a rescue in March by the Federal Reserve Board.
"Bear Stearns was a difficult environment to start with, and it got worse and worse until there was no environment at all," Mr. Lane said. "I only spent seven months there. We really never had an opportunity to accomplish anything at Bear, which is probably why I really appreciate the opportunity to start with a clean slate here."
Analysts said Modern Bank, which was the first independent, private client bank licensed by the Office of the Comptroller of the Currency in 25 years when it opened, is quickly developing a reputation as a company that can draw top talent from diverse backgrounds.
Leslie E. Bains, a vice chairman and the head of private banking, retired from HSBC North America in 2003 as a senior executive vice president. Anthony Burke, the bank's president, retired from New York Community Bank in December 2003 as its president and chief operating officer.
Bippy Siegal, Private Bank's chairman, is the former chief executive officer of the New York venture capital firm Raycliff Capital. The former quarterback Joe Montana, who also has a background in private-equity investments, is another vice chairman.
In December 2006, Modern Bank bought the $202.5 million-asset Excel Bank to be the foundation for the private bank.
Modern Bank opened with a staff of 50, including 18 former employees of HSBC and five former executives at U.S. Trust Co., which Bank of America Corp. bought in July.
Lana Chan, an analyst at Bank of Montreal's BMO Capital Markets Corp. who covers small New York banking companies, said that there is a big opportunity in the region for small private banks like Modern. "Consolidation among larger banks has left a real void in terms of the type of service that small-business owners and high-net-worth individuals have come to expect."
Banks like Signature Bank of New York and Sterling National Bank in New York have had "remarkable growth" in the past seven years, Ms. Chan said. "I don't think that any of these banks need to go outside of the New York City market right away in order to grow. There are so many opportunities here for these smaller banks. This is a market with incredible share when it comes to small-business lending."
Mr. Lane said that he is confident that there is a need in the banking industry needs "a private bank that understands the importance of customer service" in the New York area. "I don't think we are going to wake up tomorrow and horrify [JPMorgan Chase chairman and chief executive] Jamie Dimon with our presence in the market, but I think that there is certainly plenty of room for a company like ours in this environment to compete."
