Bank holding companies (BHCs) earned $669 million in the third quarter of 2009, up 12.9% from the $593.1 million in second quarter and four percent higher than the $644.2 million earned in third quarter 2008, according to the Michael White-ABIA Bank Annuity Fee Income Report.
For the first three quarters of the year, bank holding companies earned $2.00 billion from the sale of annuities, a 2.5% increase over the $1.95 billion posted in the same period a year earlier, according to the “Michael White-ABIA Bank Annuity Fee Income Report”.
Wells Fargo & Company (CA), JPMorgan Chase & Co. (NY), and Bank of America Corporation (NC) led all bank holding companies in annuity commission income in the first three quarters of 2009. Banks with the highest year-over-year growth in annuity income were Bank of America, PNC Financial and Regions Financial Corp.
The report, compiled by Michael White Associates and sponsored byAmerican Bankers Insurance Association, is based on data from all 7,319 commercial and FDIC-supervised banks and 922 large top-tier BHCs operating on September 30, 2009.
Of the 922 BHCs, 388 (42.1%) sold annuities during the first three quarters of 2009. Their $2.00 billion in annuity commissions and fees constituted 13.5% of their total mutual fund and annuity income of $14.77 billion and 18.0% their insurance sales volume (annuity and insurance brokerage income) of $11.1 billion.
Of the 7,319 banks, 975 (13.3%) sold annuities, earning $705.5 million in commissions or 35.3% of the banking industry’s total annuity fee income. Overall bank annuity production was down 13.3% from $814.0 million in the first three quarters of 2008.
Seventy-one percent (71.4%) of BHCs with over $10 billion in assets earned third quarter year-to-date annuity commissions of $1.89 billion, constituting 94.6% of total annuity commissions reported. This was an increase of 3.5% from $1.82 billion in annuity fee income in the first three quarters of 2008.
Among this asset class of largest BHCs in the first three quarters, annuity commissions made up 16.1% of their total mutual fund and annuity income of $11.73 billion and 18.1% of their total insurance sales volume of $10.42 billion.
| Bank Holding Company | Annuity Fee Income ($ Millions) |
Change | |
|---|---|---|---|
| 3Q YTD 2009 | 3Q YTD 2008 | ||
| Wells Fargo | $504.0 | 612.0 | -17.6% |
| JPMorgan Chase | 258.0 | 268.0 | -3.7 |
| Bank of America | 203.2 | 110.3 | 84.2 |
| Morgan Stanley | 168.0 | N/A | N/A |
| PNC Financial | 98.9 | 49.7 | 99.3 |
| Regions Financial Corp. | 71.2 | 21.2 | 235.7 |
| SunTrust Banks | 62.9 | 94.8 | -33.6 |
| U.S. Bancorp | 52.0 | 72.0 | ;”>-27.8 |
| Keycorp | 46.2 | 42.8 | 7.8 |
| HSBC North America | 36.4 | 50.1 | -27.3 |
| *3Q 2008 figure includes $86,000 for Wells Fargo & Company and $526,000 for Wachovia Corporation, which it acquired. SOURCE: Michael White-ABIA Bank Annuity Fee Income Report |
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BHCs with assets between $1 billion and $10 billion recorded a decrease of 12.2% in annuity fee income, declining from $104.2 million in the first three quarters of 2008 to $91.4 million in the first three quarters of 2009 and accounting for 3.0% of their mutual fund and annuity income of $3.03 billion. BHCs with $500 million to $1 billion in assets generated $16.7 million in annuity commissions in the first three quarters of 2009, down 18.0% from $20.4 million in the first three quarters of 2008. Only 34.7% of BHCs this size engaged in annuity sales activities, which was the lowest participation rate among all BHC asset classes. Among these BHCs, annuity commissions constituted the smallest proportion (13.0%) of total insurance sales volume of $129.0 million.
Among BHCs with assets between $1 billion and $10 billion, leaders included Stifel Financial Corp. (MO), Hancock Holding Company (MS), and NewAlliance Bancshares, Inc. (CT). Among BHCs with assets between $500 million and $1 billion, leaders were First Citizens Bancshares, Inc. (TN), CCB Financial Corporation (MO), and Codorus Valley Bancorp, Inc. (PA).
The smallest community banks, those with assets less than $500 million, were used as “proxies” for the smallest BHCs, which are not required to report annuity fee income. Leaders among bank proxies for small BHCs were Sturgis Bank & Trust Company (MI), The Juniata Valley Bank (PA) and FNB Bank, N.A. (PA).
Among the top 50 BHCs nationally in annuity concentration (i.e., annuity fee income as a percent of noninterest income), the median year-to-date Annuity Concentration Ratio was 6.1% in third quarter 2009. Among the top 50 small banks in annuity concentration that are serving as proxies for small BHCs, the median Annuity Concentration Ratio was 12.9% of noninterest income.
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