Can 2015 possibly be a record year for bank wealth management businesses?
While the final revenue figure will not be available until late April, data through the third quarter of 2015 suggests there's a chance bank wealth management may match the record $143.2 billion it generated the previous year.
For the first nine months of 2015, bank and thrift holding companies posted $102.7 billion in wealth management income, up 2% year-over-year, according to the latest Sorrento-Pacific – Michael White Bank Wealth Management Report released this week.
Mike White, author of the report, is guardedly optimistic about the year-end result. "I suspect 2015 wealth management noninterest fee income will close out the year on a good note as the second best year on record, but flat or down slightly from 2014," he said in an email.
The report includes securities brokerage, annuity sales, fiduciary activities and investment advisory/banking services in its calculation of wealth management income.
Investment advisory/banking services were the biggest revenue generators, bringing in $42.7 billion, or 41.6% of the total $102.7 billion. Fiduciary services came in second, producing $29.6 billion, followed by securities brokerage, which generated $28.05 billion, and annuity sales, which whipped up another $2.3 billion.
"While the interest income environment is easing up somewhat, wealth management programs like the ones we support in banks across the country are still important in sustaining top and bottom lines for banking organizations," Valorie Seyfert, president and CEO of Sorrento Pacific Financial, said in a statement.
Of the 358 wealth management programs of bank holding companies with more than $1 billion in assets, 319 were on track to earn a minimum of $250,000. Of those, 223 grew their wealth management revenue from the previous year, with 83 achieving double-digit gains and 38 surging 20% or more.
"Wealth management income has continued its growth overall, and the number of investment programs with positive revenue growth outnumbers by 7 to 3 those that are experiencing revenue declines," Seyfert said. "This quarter's report shows that banks that generate meaningful wealth management fee income are offsetting declines or flat traditional bank revenues."
New York-based Bank Leumi posted the biggest jump in wealth management revenue, generating $12.4 million in the first nine months of 2015, up more than eight-fold from the same year-ago period. The next two fastest-growing wealth management programs were those run by Fidelity Southern Corp. and Hilltop Holdings, which generated $318,000 and $211 million, respectively.
J.P. Morgan Chase produced the most wealth management income among bank holding companies with more than $10 billion in assets. Among those with assets between $1 billion and $10 billion, Stifel Financial led the charge. Haverford Trust led banks with less than $1 billion. The report did not specify how much the leaders generated.
The report is based on data from all 6,270 banks and savings associations and 581 large top-tier bank holding companies operating on Sept. 30, 2015. It was compiled by Michael White Associates, a research and consulting firm in Radnor, Pa., and sponsored by Sorrento Pacific Financial with Imeriti Financial Network.
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