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Fiduciary Assets Trust Performance Report trust companies bank trust divisions A.M. Publishing peer comparison financial institutions trust companies banks Bernard Garbo Revenue on Track for Record-Setting Year, No Thanks to Large Institutions

(July 25, 2017 --Chicago, IL) -- Industry revenues are estimated to be on track to reach $40 billion in 2017, setting a new record, , according to Trust Performance Report 2017's quarterly update. Growth continues to be held back by poorer performance among the industry's largest institutions (those with more than $100 million in total assts), but not the way one might be initially inclined to think.

Assets grew on average 9 percent when compared to the same quarter in the prior year. When compared to the start of 2017, they grew by only 3 percent, representing a significant slowdown.

Revenue growth rallied in the first quarter as anticipated. Revenue had been slowing following mid-2015 asset declines--showing only minor improvement in 2016 even as assets spiked. As revenue growth tends to lag asset growth, the benefit of 2016's spike in assets had been expected to be seen in 2017.

Poorer Performers

Peer Group 1 institutions skew industry statistics, which is why TPR weights industry averages. Trillion- dollar institutions, with one exception, are heavily composed of assets in custody accounts. These assets have a very low return on assets. The other 21 institutions that comprise Peer Group 1 tend to be more diversified. This has lead to the assumption that if Peer Group 1 is not performing as well as other peer groups, the trillion- dollar institutions are to blame. This logic, however, is not supported by the data.

Revenue growth in the first quarter for the eight institutions that make up the trillion-dollar institutions was 7 percent. The remaining 21 institutions in Peer Group 1 report average revenue growth of only 1 percent; adjusting for Deutsche Bank, which reported a large decline, the average bounces up to 5 percent. Thus, it is not the largest of the large that are holding back the industry's revenue growth. Though non-trillion-dollar institutions in Peer Group 1 are generally more diversified, their percentage of managed assets is often the same or less than that of trillion-dollar institutions.

While Peer Group 1 institutions continue to hold back the industry's revenue growth rates, the rest of the industry is surging forward even as trust executives are more concerned with raising fees. Raising fees, however justified, still makes many trust bankers nervous. This may be why over the last five years ever more TPR survey respondents say their focus is on policing their existing fee schedule

Proft Margin and Efficiency

Profit margins continue to remain fairly stable, according to preliminary findings by FIDUCIARY EARNINGS & EXPENSES, TPR's sister publication. FEE's preliminary findings also show that while investment in training remains low, it has significantly increased over prior years. Individual and peer results varied considerably. Investment in training has been correlated with improved operating efficiency. Efficiency has been improving across most peer groups, according to FEE.

For a complete copy of the Trust Performance Report's first quarter report, go to

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 1400 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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