A new report by Spectrem Group has found that bank trust departments need an overhaul, as personal trust accounts held at U.S. banks dropped 23% and assets held in these accounts slipped 10% in 2005.

The report, 2006 Update on Trust Assets Among U.S. Banks, is based upon FDIC surveys of member trust institutions as well as data from Spectrem’s 2005 Ultra High Net Worth Market Analysis. The report found that personal trust assets held by U.S. banks fell 10% to $986.2 billion in 2005 from a peak of $1.1 trillion in 1999. The number of personal trust accounts at U.S. banks dropped 23% to 719,658 in 2005 from 929,036 in 1999.

Spectrem says several trends are to blame for banks’ failing trust prowess: the rise of non-bank trust services; a trend toward self-trusteeing or family-members acting as trustees; and old-fashioned trust services are losing their appeal to younger generations.

Catherine McBreen, Managing Director of Spectrem Group, said in announcing the study that banks can regain their footing in the personal trust business if they re-evaluate their trust offerings and ensure they’re “providing up-to-date online tools and making sure trust department staffers are skilled enough to be perceived as wealth managers.”