NEWS RELEASE
Oct. 6, 2010
ABIA Media Contact: Jonathan Snowling
(202) 663-5468
E-mail: jsnowlin@aba.com

BANK ANNUITY FEE INCOME IMPROVES IN SECOND QUARTER, BUT STILL DOWN FOR THE YEAR

WASHINGTON–Income earned from the sale of annuities at bank holding companies (BHCs) rose to $640.9 million, up 10.0% from $582.6 million in first quarter 2010 and up 8.0% from $593.1 million earned in second quarter 2009, according to the Michael White-ABIA Bank Annuity Fee Income Report™.  First-half annuity commissions of $1.22 million, however, were off 7.8%, down from $1.22 billion in first half 2009.

Compiled by Michael White Associates and sponsored by American Bankers Insurance Association, the report measures and benchmarks the banking industry's performance in generating annuity fee income.  It is based on data from all 7,077 commercial and FDIC-supervised banks and 930 large top-tier bank holding companies operating on June 30, 2010.

Of the 930 BHCs, 387 or 41.6% participated in annuity sales activities during first half 2010.  Their $1.22 billion in annuity commissions and fees constituted 10.8% of their total mutual fund and annuity income of $11.33 billion and 15.1% of total BHC insurance sales volume (i.e., the sum of annuity and insurance brokerage income) of $8.10 billion.  Of the 7,077 banks, 894 or 12.6% participated in first-half annuity sales activities.  Those participating banks earned $375.0 million in annuity commissions or 30.6% of the banking industry's total annuity fee income.  However, bank annuity production was down 22.6% from $484.3 million in first half 2009.

Nearly seventy-three percent (72.7%) of BHCs with over $10 billion in assets earned first-half annuity commissions of $1.15 billion, constituting 94.0% of total annuity commissions reported.  This revenue represented a decrease of 8.4% from $1.26 billion in annuity fee income in first half 2009.  Among this asset class of largest BHCs in the first half, annuity commissions made up 10.3% of their total mutual fund and annuity income of $11.16 billion and 15.0% of their total insurance sales volume of $7.65 billion.

BHCs with assets between $1 billion and $10 billion recorded an increase of 4.9% in annuity fee income, rising from $59.6 million in first half 2009 to $62.5 million in first half 2010 and accounting for 37.4% of their mutual fund and annuity income of $167.1 million.  BHCs with $500 million to $1 billion in assets generated $11.0 million in annuity commissions in first half 2010, down 8.2% from $12.0 million in first half 2009.  Only 32.3% 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 (12.9%) of total insurance sales volume of $84.9 million.

Wells Fargo & Company (CA), Morgan Stanley (NY) and JPMorgan Chase & Co. (NY) led all bank holding companies in annuity commission income in first half 2010.  Among BHCs with assets between $1 billion and $10 billion, leaders included Stifel Financial Corp. (MO), Hancock Holding Company (MS), and National Penn Bancshares, Inc. (PA).  Among BHCs with assets between $500 million and $1 billion, leaders were First American International Corp. (NY), Ironhorse Financial Group, Inc. (OK), and First Citizens Bancshares, Inc. (TN).  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), Bank of Oak Ridge (NC), 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 Annuity Concentration Ratio was 6.1% in first quarter 2010.  Among the top 50 small banks in annuity concentration that are serving as proxies for small BHCs, the median Annuity Concentration Ratio was 17.1% of noninterest income.

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The American Bankers Insurance Association (ABIA) is the separately chartered insurance affiliate of the American Bankers Association (ABA) and is the only Washington, D.C.-based full service association for bank insurance interests.  The ABIA's mission is to develop policy and provide advocacy for banks in insurance and to support bank insurance operations through research, education, compliance-assistance and peer group networking opportunities.  ABIA Membership consists of banks, and their affiliated agencies, insurance companies, marketing, and administrative services suppliers, non-bank lending organizations and other firms involved in the bank affiliated insurance industry.  Additional information on the ABIA can be found at www.theabia.com.

Michael White Associates (MWA) is a bank insurance consulting firm headquartered in Radnor, PA, and at www.BankInsurance.com.  The annual Michael White-ABIA Bank Annuity Fee Income Report and Michael White-Prudential Bank Insurance Fee Income Report™ provide, respectively, comprehensive analyses of bank insurance brokerage and bank annuity commission income.  Additionally, the MWA Fee Income Ratings Reports™ compare, rank and rate a particular financial institution's insurance or other noninterest fee income program nationally, regionally, statewide and in its asset-peer group.  Copies of MWA reports can be ordered by calling (610) 254-0440, or by visiting www.BankInsurance.com.

For additional information contact:

Michael White                                        Michael White Associates, LLC            823 King of Prussia Road                            Radnor, PA 19087                                       Phone: (610) 254-0440                     Email:  MWA@BankInsurance.com

Valerie Barton ABIA 1120 Connecticut Avenue, NW Washington, DC 20036 Phone: (202) 663-5072 Email:  vbarton@aba.com