Trust Updates Archive

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Trillion-Dollar Club Skews Reporting

(Chicago, IL, May 30, 2003)--As the stock market goes, so goes fiduciary income. That accounts for the
poor performance in fiduciary income in 2002, according to the Trust Performance Report 2003. The
devil, however, is in the details. Closer inspection reveals that, though the big banks control the
bulk of industry assets, medium to small institutions generate higher rates of return on their assets.
The Trillion-Dollar Club, or the Big 7, skews industry averages. The Big 7 control 77 percent
($25.6 trillion) of total trust assets. The Top 50 institutions manage 98 percent. However, the bulk
of those assets are in corporate trusts and custody accounts. Almost 80 percent of the Big 7's assets
are categorized as Other Assets. The remainder are 17 percent employee benefit, 2 percent investment
management accounts, and 1 percent personal trust. The Northern Trust is the exception in the Big 7,
with slightly over 7 percent of its assets in personal trusts and agencies. The Northern also has the
group's highest return on assets.
The Trust Performance Report 2003 provides asset and income information on 1,500 trust
institutions. Detailed information, including asset subcategories and average account size, are
provided for the Top 500 institutions.
To view sample pages of the TPR 2003 go to . To order the current issue, which includes free
quarterly updates, go to --after downloading,
information can be entered directly in to the form.


The Top 500 fiduciary institutions reported $23.7 billion in gross fiduciary income for 2002, up 0.57
percent from 2001. By contrast, gross revenue for commercial banks declined 6 percent. Total fiduciary
assets in 2002 grew to $33 trillion, an adjusted rate of 6 percent, while bank total assets grew 7
The institutions' average return on portfolios (ROP) --income as a percentage of assets--fell
from 0.09 percent to 0.07 percent. While ROP for institutions over $10 billion declined, it increased
for those under $10 billion: 6.5 percent for Peer Group 3 institutions, 5.4 for Peer Group 4, and 4.2
for Peer Group 5.
The most significant increase in fiduciary income was among Peer Group 3 institutions (trust
assets of $1 billion to $10 billion). These institutions averaged a 7 percent increase in income. This
correlates with their smaller-than-average decrease in personal assets and strong increase in employee
benefit and investment agency assets.
The Trillion-Dollar Club generally saw minimal change in fiduciary income. The exception was
Mellon Bank, which led the industry shift away from interest income to fee income.
Marginal growth in fiduciary income may also reflect a regulatory reporting shift of various
income items formerly reported as fiduciary income to new noninterest categories.
The large decline in personal assets, particularly among institutions with more than $10
billion in assets, helps explain the poor performance in fiduciary income. Personal assets generate an
average return of 0.69 percent, more than offsetting the larger base of Other Assets, which generate a
0.07 percent return.
Total accounts for the industry increased 12 percent. The largest increase, 24 percent, was in
employee benefit accounts. Trusteed IRAs are included in this count. The smallest growth was 4.5
percent, for personal accounts.

Peer Groups--Top 500 Institutions
1 (greater than $100 billion).............25
2 ($10 billion to $100 billion)...........41
3 ($1 billion to $10 billion).............104
4 ($500 million to $1 billion)............79
5 (less than $500 million)................251

-- Copyright 2003 A.M. Publishing, Inc., Trust Regulatory News

No statement in this issue is offered as or should
be construed as legal opinion or advice, nor is any
statement or data intended as or should be construed
as an indicator of future performance.

For more information see the current
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or call Bernard Garbo at 800-404-2116
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