Wealth management services reeled in record first-quarter revenue for bank and thrift holding companies, according to the Sorrento Pacific Michael White Bank Wealth Management Report released this month.
In the first quarter, bank and thrift holding companies generated $35.04 billion in wealth management income, up 7.3% year-over-year.
Investment advisory and banking services were the biggest revenue drivers, generating $13.5 billion, or 38.5% of the total. Securities brokerage came in second, producing $11.06 billion, followed by trust and fiduciary services, which yielded $9.6 billion, and annuity sales, which whipped up another $885.6 million.
Of the 567 wealth management programs, 473 were on track to earn a minimum of $250,000 in 2014. Of those, 77% showed some level of positive growth from a year ago, with 51% exhibiting double-digit growth and 29% growing 20% or more.
"As an industry, wealth management programs got off to a record start in the first three months of 2014 compared to 2013. Every component of wealth management showed positive growth: securities brokerage; investment banking, advisory and underwriting activities; annuity sales; and fiduciary activities," said Valorie Seyfert, president and chief executive of Sorrento Pacific Financial, a full-service broker-dealer based in San Diego. "Optimizing all components of wealth management programs in our current economy has become a key factor in banks' overall ROA, especially in order to help banks offset declines in traditional banking revenues such as service charges and net interest margins."
Capital Bank Financial Corp. posted the biggest jump in wealth management fee income, generating $1.3 million, more than five times the $251,000 it produced in the first quarter of 2013. The next two fastest-growing wealth management programs were those run by Forcht Bancorp in Kentucky and CertusHoldings in Georgia.
Morgan Stanley 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 Corp. led the charge. First Command Financial Services led banks with assets between $500 million and $1 billion, and The Harverford Trust Company led those with less than $500 million.
The report is based on data from all 6,730 commercial banks, savings banks and savings associations (thrifts) and 1,080 large top-tier bank holding companies operating on March 31, 2014. It was compiled by Michael White Associates, a research and consulting firm based in Radnor, Pa., and sponsored by Sorrento Pacific Financial.