Few banks over the years have lived on cozier terms with their clients than Wall Street’s 109-year-old United States Trust Co. It has always been the bank’s custom to invite its customers to lunch, supply cakes with candles when clients’ children have an 18th birthday, advise on everything from selecting schools and planning careers to buying horses. Offering such friendly service has proved to be highly profitable for U.S. Trust—particularly because its customers, past and present, include such names as Rockefeller, Astor, Vanderbilt, and Whitney.
Ever since it was founded in 1853 by a group of wealthy New Yorkers (among them: Inventor Peter Cooper) to provide professional management for their estates, U.S. Trust has been a rich man’s bank.Today, its personal trust funds and investment portfolios total 8,000, plus endowment funds for such schools as Princeton, Amherst, Middlebury, Williams, and New York University—all told amounting to more than $6 billion in assets. The portfolios of its customers put U.S. trust among the top half-dozen stockholders of such corporate giants as American Telephone & Telegraph, International Business Machines, Standard Oil of California, and Standard Oil of New Jersey.
Expunge Failure. U.S. Trust prides itself on the wisdom of its counsel (the name of one of its presidents, Lyman J. Gage, * who was a failure around the turn of the century, has been expunged from its corporate history). It has had to test its advice in action. As controlling stockholder, it has had to step in to straighten out management problems, at times has found itself running an insurance company, a machinery maker, a food processor, a coal-mining firm, and a molasses company. To settle the estate of one wealthy New York lawyer, the bank merged three small cement companies he controlled, formed General Portland Cement Co., which in 13 years has jumped from $15 million in sales to $59 million.
With a healthy profit increase of 87% in ten years (to $3,340,000 last year), it would seem that nothing could ruffle the serene existence of U.S. Trust. But in today’s banking world, with big banks merging to command more business, not even U.S. Trust could continue unchanged.
First to recognize this was personable Benjamin Strong (Princeton, class of ’19), since 1947 the bank’s president and then chairman. He had livened things by actively seeking new clients, e.g. advertising on the society pages. Strong cast aside the tradition that U.S. Trust chief officers linger on (one quit at 104). And he reached into the outside banking world to hire as president and his eventual successor tall, handsome Hoyt Ammidon (Yale, ’32). Ammidon was a 20-year veteran at New York’s Central Hanover Bank and Trust Co., and for five years personal-investment manager for Multimillionaire Vincent Astor. Last week, right on schedule. Strong retired at 65, and Ammidon, 52, stepped up to chairman and chief executive officer. In as president went First Vice President Charles W. Buek, 50 (Yale, ’33).
Change the Mix. As chairman, Ammi-don’s biggest job will be to change U.S. Trust’s earning mix. Last year the bank was in the unique situation of making 60% of its income from management fees, only 40% from interest on loans and its own investments. In recessions, the U.S. Trust way makes for stability, but in good times, when loans are in demand, other banks pile up profits faster. To get more loan income, Ammidon is actively seeking large commercial deposits—particularly from companies in which U.S. Trust is a big stockholder—and in three years hopes to raise deposits, to $300 million from $194 million in 1961.
U.S. Trust still wants no truck with the $5-a-week depositor, but there are signs that it will take clients who are merely silver-plated. Says President Buek: “We have tried hard to live down our reputation. We hate to have a man come in with only half a million and be afraid that we won’t want to bother with him.”
* Secretary of the Treasury under President William McKinley.
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