Trust Updates Archive
(Jan. 5, 2017 --Chicago, IL) -- Asset growth rates in the third quarter returned to pre-2015 levels driven primarily by the securities markets, according to Trust Performance Report 2016's quarterly update. Trust institutions also reported solid account growth, especially in managed accounts.
For a complete copy of the Third Quarter report click here.
The rate of revenue growth has been slowing following mid-2015 asset declines. However, the third quarter’s asset spike is expected to pay strong dividends to trust institutions
Revenue growth tends to lag asset growth, often by several months. As a result, the current slowing is expected to be temporary, as trustee’s fees are generally billed as percent of assets. The continued strong growth in managed accounts should also translate to improved revenues. Managed accounts generate significantly higher returns on assets than do non managed.
Based on TPR’s revised analysis, gross revenues for year-end 2016 are expected to come in at $38.4 billion. While this would be only marginally more than in the prior year, it would set a new record and be unusual in that it is driven more by midtiers than large institutions.
Profit margins continue to remain fairly stable, regardless of slowing revenue, according to Fiduciary Earnings & Expenses 2016. The annual report continues to find that those institutions that focus on three or fewer account categories generate higher profit margins (for a sample copy, see Data Books below).
FEE also found that investment in training remains low. Results varied considerably among small institutions: some doubled their spending, others cut their budgets by over 50 percent.
Lower spending on training can impact operating efficiency. However, this does not appear to be the case currently. According to FEE, efficiency improved for all peer groups except small institutions.
Trust Performance Report -- annual data book, published in May, provides both industry and peer group performance data by assets, gross revenue, net income, and account category. Subscribers receive quarterly updates. TPR findings are based on its annual survey of the top 1500 fiduciary institutions. For more best practices and benchmark data see TPR. For information on ordering click here or the link below.
Fiduciary Earnings & Expenses -- annual data book comparing 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."
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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