PHILADELPHIA - When Stolper & Co. Inc. was acquired by PNC Bank Corp. last month, it became the sixth investment management entity owned by PNC.
The Philadelphia-based bank has, in recent years, expanded its investment management offerings to keep up with the rush by U.S. banks to be full-service providers that can offer a menu jammed with financial service options.
Westchester, Pa.-based Stolper, with $1 billion in high-net-worth assets under management, has been merged into the $9 billion PNC family wealth group, now named Hawthorn. It will be responsible for the assets of individuals and families with $25 million or more in net worth.
Stolper executives Michael Stolper and Edward Bowman are managing directors of Hawthorn, along with Jonathan D. Scott, who was head of the family wealth management unit.
"They seemed, about as much as a bank could, to understand my entrepreneurial instincts," Mr. Stolper said of PNC executives.
"When PNC came to us three years, we established a multiyear consulting arrangement," he said. "They wanted to acquire us then. I wasn't ready. I wasn't sure the business was as important to them as to me. But I feel comfortable now. They understand now that we are different. They are not just a financial buyer."
Mr. Scott said the Stolper acquisition helped PNC, because the bank now gets to market a package of funds with an audited track record of five years or more, giving it an advantage over some of its competitors, which are hawking new funds of funds.
Hawthorn's three primary lines of business are investment counseling and fiduciary services; custody and customized reporting services with extensive after-tax reporting; and limited partnership investments via multimanager specialty funds.
The unit will be a medium- to large-sized player among high-net-worth managers, according to research from the Family Office Exchange in Oak Park, Ill. Stolper's 22 employees are joining Hawthorn, boosting total staff to 50.
Both Mr. Stolper and Mr. Scott agree that the continued success of Hawthorn will depend on the extent to which the bank leaves it alone. Neither would reveal terms of the deal, aside from saying Stolper employees have incentives that allow them to reap some of the rewards of growth.
"We're not really viewed as a bank; we're viewed as a boutique," said Mr. Scott, adding he wants to keep it that way.
Hawthorn is part of PNC Asset Management Group, the holding company for the bank's investment management service providers. The other five investment management entities held by PNC are:
*BlackRock Financial Management Inc., New York, with $51.7 billion in assets under management, of which about $14 billion are U.S. institutional tax-exempt assets. BlackRock is a core bond active fixed-income manager.
*Provident Capital Management Inc., Philadelphia, with $5.4 billion under management, of which nearly half is U.S. institutional tax exempt. Provident is an active domestic value equity manager, handling small-cap, large-cap, midcap, sector-neutral and core products.
*CastleInternational Asset Management Ltd., Chicago, with $2.1 billion in assets under management, most of which is from U.S. institutional tax-exempt clients. CastleInternational is an active value-oriented international equity manager.
*PNC Equity Advisors Co., Philadelphia, with nearly $3.5 billion in assets under management, of which about a third is U.S. institutional tax exempt. PNC Equity is an active domestic growth equity manager.
*PNC Institutional Management Corp. of Philadelphia, nearly $40 billion in assets under management, of which about $5 billion is U.S. institutional tax exempt. PNC Institutional is a money market fund manager, investing in short-term obligations issued by state and local governments.
Separately, PNC announced late last month it's taking a 4.9% equity stake in Friedman Billings Ramsey Group Inc., an institutional brokerage and investment bank specializing in initial public offerings. Arlington, Va.-based Friedman also has three retail mutual funds with $55 million in assets.
The mutual fund operations of the two companies will remain separate.
Despite the acquisition of investment management entities, U.S. banks haven't tapped into the investment services world in the way they had hoped, said Andrew Guillette, a consultant at Cerulli Associates, Boston.
"It will contribute to the bottom line, but that doesn't mean other (bank) divisions will receive incremental value. Historically, the difficulty is in integrating these services," he said.
Steve Daniels contributed to this story.