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FEE 2023 "Fiduciary Earnings and Expenses" "Data Analytics Fiduciary" "Trust Assets" "Bank Directors" Trust Performance Report "A.M. Publishing" "U.S. Bank" "peer comparison" "profit margin" "Investment Advisor" "wealth management" assets financial institutions trust companies fiduciary earnings "net income" revenues expenses assets trust company executive priorities "call report" irregularities" "Bernard Garbo" Independent Model Remains Most Profitable; Productivity Stable, Variances Based on Institution Type

(Feb 5, 2024 --Chicago, IL) -- Fiduciary Earnings & Expenses 2023's analysis continues to suggest that the best overall model of operation is that of independent trust companies (ITCs), which generate higher revenues and profits per account officer than most of their bank counterparts. ITCs also report requiring fewer full-time- equivalent employees than their bank counterparts.

FEE 2023 compares performance among independent trust companies to that of OCC national trust companies and to bank trust divisions

What seems to drive the business model for independents is their greater tendency to focus on three or fewer product categories.

Though more institutions than in the prior year are adopting the operating template of independents, executives at an overwhelming majority of bank trust divisions (75 percent) said they have no plans to switch from a full-service model.

Bank trust divisions continue to favor the full-service model, which is generally driven by beneficial synergies between a bank's commercial division and its trust area. The full-service model, however, does not seem to reduce the stress levels of trust executives.

By a wide margin, executives at independent trust companies continue to report less stress or concern than bank trust division (BTD) or national trust company (NTC) executives do. This is especially true when it comes to meeting new-account targets as well as revenue targets.

Profits and Productivity

Profits per account officer and full-time-equivalent employee (FTE) generally declined in 2022, with the exception of NTCs. Large BTDs reported the most noticeable decline. Declines were also seen in gross revenues.

Productivity ratios, however, only marginally declined for most, suggesting that staffing levels remained stable, except among large ITCs and large BTDs.

NTCs, which historically have reported the largest year-over-year swings were the most stable of the three institution types. Across all institution types, reporting by small and midtier institutions tended to be more uniform in 2022.

Large BTDs' reporting of both in productivity ratios and profit metrics has tended to be more erratic. A potential explanation for this is that some of the expenses of BTDs, such as salary, are usually allocated (between the bank's trust division and its bank affiliate) rather than reflecting direct costs.

Large ITCs have consistently reported higher average profits per employee than BTDs and NTCs; their productivity ratios, however, are similar to those of BTDs. Though profits per employee were down in 2022 for large ITCs, they declined far less than ITCs' gross revenue per employee did.

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These and other findings are detailed in A.M. Publishing's Fiduciary Earnings & Expenses 2023 The analysis by FEE 2023 is of 2022 financial performance. However, this analysis is supplemented by feedback obtained from trust executives by direct surveying in March and April of 2023.

Order Trust Performance Report 2024 and Fiduciary Earnings & Expenses 2024 Before Feb. 29, 2024 and received Fiduciary Earnings & Expenses 2023 as a FREE bonus issue. To order go to Trust Performance Report 2024.

Both reports are based on A.M. Publishing's Annual Survey of Trust Assets. The survey gathers and analyzes the data of 1200 institutions, including bank trust divisions, national trust companies, and independent trust companies. The survey has been conducted since 2001.

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Trust Performance Report -- the annual data book, published in May, provides both industry and peer group performance data by assets, gross revenue, net income, and account category .. as well as 3-year growth data and account balance average by account category. Subscribers receive semiannual updates. TPR findings are based on its annual survey of the top 1200 fiduciary institutions. For more best practices and benchmark data see TPR. For information on ordering click here or the link below.

Fiduciary Earnings & Expenses -- the annual data book compares performance among independent trust companies to that of OCC national trust companies and to bank trust divisions. For information on ordering click here or the link below.

For Sample copies of both publications click here and then, on the web page, check "Trust Performance Report."

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No statement in this issue is offered as or should be construed as legal opinion or advice or as an indicator of future performance.
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