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A Trust Bank to Consider for Your Portfolio

Shubh Datta
April 4, 2012

Last quarter, low interest rates and restrained capital market activity resulted in uninspiring results at U.S. trust banks. The largest custody bank of them all, Bank of New York Mellon (NYSE: BK  ) , saw its profits fall by 26% in the fourth quarter of 2011.

As banks are recovering, the stock markets have rallied as well, and custody banks seem well positioned to gain from it. This year the Dow Jones Industrials Average (INDEX: ^DJI  ) is up 7%, and the S&P 500 is up 11%. It's about time we took a look at the trust banks.

Here's the good, the bad, and why you should keep an eye on BNY Mellon.

The good
BNY Mellon's asset management business is on the up. The bank's assets under management rose to $1.26 trillion last quarter, rising by almost 8% from the year-ago period. At the same time, its assets under custody and administration increased to $25.8 trillion, up 3% from the previous year. The rise reflects an influx of new businesses.

Peer State Street (NYSE: STT  ) , on the other hand, saw its AUM decline by 7.2%, although AUC increased by 1% to $21.8 trillion from the year-ago period. The rise was credited to an increase in new businesses as well. Northern Trust (Nasdaq: NTRS  ) , too, saw its AUC rise by 4% to $4.26 trillion with its AUM going up 3% to $662.9 billion in the same period. 

In addition, diversified bank JPMorgan Chase saw its AUM rise to $1.3 trillion, up 3% from the earlier year, whereas its AUC rose by 5% to $16.9 trillion. Fellow big bank Citigroup (NYSE: