Idaho Trust Bank builds on strength
Ten percent growth in total assets managed is projectedDecember 7th, 2017
Now in its 23rd year of operations, Idaho Trust Bank, which bills itself as one of few banks in the Gem State to offer both commercial banking and wealth management services, says it looks to continue to grow, while maintaining its focus on client success.
Chief wealth management officer for Idaho Trust’s Coeur d’Alene office, Desiree Prohaska, says Idaho Trust is the largest among Idaho-based banks in terms of wealth management.
“Currently, we manage around $400 million in assets, and next year, we’re expecting that will grow by at least 10 percent, to about $440 million in assets under management,” Prohaska says. “In the next two to three years, we’d like to see that number grow to $500 million.”
She says most of that expected growth will occur organically, through the addition of new clients and increase in current client assets.
“We’d also like to create more partnerships and sponsor more causes,” she says. “Finding more opportunities to give back to the community is something that’s very important to us.”
Idaho Trust’s wealth management services include investment management for individuals and retirement accounts, trust and estate administration, business succession planning, insurance, and annuities.
Prohaska says there are two sides to Idaho Trust’s wealth management services, those being wealth management and fiduciary services.
“For wealth management accounts, we’ve set a minimum of $300,000, although we will accept clients with less than that to invest,” she says. “On the brokerage side, we don’t have any required account size.”
Prohaska estimates Idaho Trust has about 487 wealth management accounts currently, with the average account value estimated at $821,000.
Prohaska, who has been the chief wealth management officer for Idaho Trust’s Coeur d’Alene office since 2006, is a sister-in-law to the bank’s co-founders, Thomas and Daniel Prohaska.
“There aren’t a whole lot of banks that offer a full spectrum of wealth management solutions,” says the bank’s co-founder and president, Thomas Prohaska. “But we do, and have done so since the beginning.”
Prohaska says he and his brother, Daniel, both former estate attorneys, founded Idaho Trust in Coeur d’Alene in 1994, at a time when many of Idaho’s “100-year banks” were being acquired by larger institutions.
“We found that a lot of our clients were getting frustrated with the resulting lack of personal service, and the elimination of local decision-making, so we wanted to create a local bank that was focused on those things,” says Prohaska.
“Most banks start out as community banks, but we started as a trust company,” he says. “We added banking as a complementary service, and we’ve seen some modest growth on that side of things in the last year or so.”
While Idaho Trust has maintained a Coeur d’Alene presence since its founding, the bank moved its headquarters to Boise in 2003, in an effort to expand the bank into a statewide institution.
Idaho Trust has operated out of an 1,800-square-foot office in downtown Coeur d’Alene, at the southwest corner of Sherman Avenue and Seventh Street for five years now. In addition to its two Idaho branch offices, which have 47 employees altogether, the company also has a trust office located in Henderson, Nev.
From Coeur d’Alene, the bank predominately serves clients in North Idaho and Eastern Washington, but also serves clients in the greater Seattle region and California.
“We have kind of a limited view of the future,” he says. “With the current level of technology, it’s not necessary to have more than a few central branch locations, so what I think we’d like to continue to build on is the ability for our clients to access their information from any device, anytime, anywhere.”
Although the bank isn’t currently interested in expanding its physical presence, Prohaska says that hasn’t slowed its plans for continued growth.
On the banking side, Idaho Trust offers personal, business, and private banking services.
Prohaska says the bank currently has $100 million in total assets and is expected to end the year with $75 million in total loans and $80 million in deposits.
“We hope to grow the bank’s assets to $250 million in the next three to five years,” he says. “Our ultimate goal overall is to have $1 billion in assets under management.”
Prohaska says that a majority of Idaho Trust’s wealth management clients also have banking, lending, and insurance services through the bank.
“It’s not required that clients have both wealth management and banking services through us, but it does tend to work out well that way,” he says. “People find they utilize more of our services as they become more familiar with us.”
For her part, Desiree Prohaska says she chose to specialize in wealth management because it enables her to work one on one with clients to achieve their financial goals.
“It’s very rewarding to help our clients create and preserve wealth for generations, which is our core mission here at Idaho Trust,” Prohaska says. “In some cases, we are working with the third generation of a family to invest assets and act as a trustee of family trusts.”
While a client’s financial needs and goals evolve depending on where they are in life, Prohaska says most simply are looking for peace of mind.
“Overall, clients want to be able to know they’re investing in a way that will allow them to achieve those life goals,” she says.
When it comes to managing investments, Prohaska says most clients have good ideas that they simply need help organizing in a strategic way.
“Often people don’t really understand their investments, until you’re able to map things out and show them the appropriate risk for the returns they’re expecting,” she says.
“Idaho Trust takes a holistic approach to creating client solutions,” she adds. “We work to integrate investment goals with tax, estate, and retirement planning. This approach also allows us to work with talented professionals like CPAs and attorneys to ensure each client’s total financial well-being.”
Prohaska says Idaho Trust’s trademarked investment process, LifeNeeds, is designed around modern portfolio theory, an investment theory designed to maximize a portfolio’s expected return by altering and selecting the proportions of the various assets in the portfolio.
“LifeNeeds is built around four fundamental elements: assess, plan, implement, and evaluate,” she says. “We start with assessing the client’s personal situation, income needs, life goals, risk tolerance, and expectations, then based on that assessment we create a portfolio that best suits the client’s needs, and set about implementing it.”
Prohaska says the bank’s clients seem to enjoy the risk-adjusted results of its investment strategy.
“When it comes to investment performance, to use a baseball analogy, we try to hit a double every year on average,” she says. “In a bad year we try to get a single, and in a great year we try to hit a triple. We try not to strike out because we don’t swing for home runs, which takes too much risk with client money.”
Prohaska says Idaho Trust also offers clients ongoing monitoring and evaluation of their portfolio’s performance, meeting with some as often as once every few weeks.
In looking at the future of wealth management, Thomas Prohaska says the industry seems to be moving away from financial investments like individual securities and mutual funds, in favor of exchange traded funds.
“Exchange traded funds are basically a basket of securities,” he says. “They trade daily like stock, but have higher liquidity and are more affordable for clients. ETFs enhance diversification, allow clients to invest money at a low cost, and decrease the amount of risk taken.”
“In general, there’s been a movement away from performance focused planning, toward more of a goal focus,” he adds. “People want a portfolio that balances risk with the desired result.”
Prohaska says the U.S. Department of Labor’s recent changes to the fiduciary rule have also impacted how many investment professionals treat their clients.
Introduced in April of 2015, and implemented in June of 2017, the new fiduciary rule brought more investment advisers under the already existing fiduciary standard, which requires financial advisers to put their clients’ best interests ahead of their own profits.
“There hasn’t really been any change for us, because we’ve been working toward the client’s best interest since Day One,” he says. “But the change does seem to indicate the industry is now moving more in our direction.”