Trust Updates Archive

Banks Trusts Revenue Fiduiciary Earnings Expenses Assets Performance 2008 third quarter Fiduciary Assets Dip, Revenue Remains Strong

(Dec. 10, 2008--Chicago, IL) -- Assets among all peer groups registered declines in the third quarter of 2008, while industry revenue was up, driven in part by a surge in new accounts, according to Trust Performance Report's quarterly update.

Not since third quarter 2001 have fiduciary institutions, across all peer groups, reported asset declines. While the Dow Jones Industrial Average has plunged 21 percent compared to third quarter of 2007, fiduciary assets declined by less than half of that, buffered by a spike in new accounts.

Until the third-quarter, the weighted average revenue gain in 2008 was 5 percent. While the weighted average for the first nine months is negative 1 percent, the nonweighted average is a positive 9 percent, reflecting double-digit revenue growth among large institutions.

While both large and, to a lesser degree, small institutions reported revenue gains, mid-tiers report revenue declines.

Revenue numbers reflect findings in Fiduciary Earnings & Expenses 2008, a TPR sister publication, that while most bank trust divisions are undercharging for their services, mid-tiers were the most sensitive or adverse to fee hikes. FEE 2008 found that only a quarter of all bank trust divisions report a gross-revenue return on asset equivalent to independent trust companies -- 0.58 percent or better.

The spike in new business in the third quarter should translate to positive 2008 revenue growth among all peer groups and a return to stronger revenue growth in 2009.

To download a copy of third quarter 2008 results click here .

For more on this topic, see the upcoming issue of Trust Regulatory News.

No statement in this issue is offered as or should
construed as legal opinion or advice

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