Question

Which of the following factors is not taken into consideration when evaluating earnings at a small trust department?

a. Profitability, in relation to the size and scope of those activities.
b. For a small trust department if the bank's intent is for fiduciary activities to be a service to existing commercial banking customers.
c. The board's decision to lease space in its suburban branch to a discount broker in hopes of boosting revenue for the branch, which currently has only deposit activities.
d. The bank's board of director approval of the budget for additional trust accounting system conversion costs (after evaluating the projected impact on earnings).

Answer 1

The board's decision to lease space in its suburban branch to a discount broker is not taken into consideration when evaluating earnings at a small trust department. Option C

Step-by-step explanation:

The factor that is not taken into consideration when evaluating earnings at a small trust department is c. The board's decision to lease space in its suburban branch to a discount broker in hopes of boosting revenue for the branch, which currently has only deposit activities.

Factors a, b, and d are all taken into consideration:

a. Profitability, in relation to the size and scope of those activities, is considered to assess the profitability of the trust department relative to its operations.

b. If the bank's intent is for fiduciary activities to be a service to existing commercial banking customers, it is considered to evaluate the alignment of the trust department with the bank's overall strategy.

d. The bank's board of director approval of the budget for additional trust accounting system conversion costs (after evaluating the projected impact on earnings) is considered to analyze the investment in infrastructure and technology. Option C