Banks Saw Record Wealth Management Growth in 2011

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Bank holding companies overcame a lackluster fourth quarter to earn a record $118.4 billion in wealth management income in 2011, according to a new report.

Overall, wealth management income was up more than 1% from 2010, according to the Michael White-IPI Bank Wealth Management Report released Saturday.

The increase comes at a time when many banks are beefing up their wealth offerings to make up for declines in fee income from service charges on checking accounts.

"The fact that so many banks and [holding companies] registered growth in their wealth management revenue and have begun to expand further into the business underscores the tremendous opportunity wealth management presents to financial institutions," Jay McAnelly, the president of IPI, said in a news release.

The $810 million-asset Access National (ANCX) in Reston, Va., had the largest percentage increase in wealth management fee income; in 2011, it earned $568,000, up 1,036% from 2010.

Of all 532 bank holding companies, 418, or almost 79%, earned a minimum of $250,000 in 2011. Of those, 78% showed some level of positive growth year over year with 180 companies seeing double-digit growth.

Still, the fourth quarter was the weakest for wealth management revenue since the first quarter of 2009, the report found. Fourth-quarter wealth management income totaled $26.1 billion, down almost 18% from a year earlier and roughly 9% less than the third quarter.

Investment advisory and banking made up the largest percent of wealth management activities for all bank holding companies at 37.5%. Securities brokerage was 31% of wealth management income while fiduciary activities were 29% and annuities was 2.4%.

The report was compiled by Michael White Associates and sponsored by Investment Professionals. It was based on data from 6,679 commercial and Federal Deposit Insurance Corp.-supervised savings banks and 929 large top-tier bank holding companies.

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