Banks reportedly earned $1.73 billion in insurance commissions and fee income in the first half of 2003, according to Michael White’s 2003 Mid-Year Bank Insurance & Investment Fee Income Report™ (Bank-FIR™) published by Michael White Associates, LLC (MWA).
Compiled from data reported by all 8,321 commercial banks and federally insured savings banks, the report measures insurance and investment fee income generated in the first six months of 2003 and compares the industry and individual banks’ performance data and benchmark ratios to those of the first half of 2002. Among the report’s significant findings are these:
Of 8,321 commercial and federally insured savings banks, 3,833 or 46.1 percent participated in insurance activities in the first six months of 2003 and reported $1.73 billion in insurance income in the first half of 2002, down 3.2 percent from $1.79 billion at mid-year 2002.
The largest banks, those over $10 billion in assets, had the highest participation rate (76.4 percent) in insurance and produced $1.25 billion in insurance fee income, 7.2 percent more than the $1.16 billion recorded in the first half of 2002. These large banks accounted for 71.9 percent of all bank insurance income earned YTD at June 30, a 700 basis-point increase over their YTD 2002 bank-market share.
Banks under $10 billion in assets earned $487.3 million or 28.1 percent of all bank insurance income. Banks with assets between $1-$10 billion generated insurance fee income of $295.5 million, down 35.9 percent from $460.8 million in the first half of 2002.
Banks under $1 billion in assets accounted for $191.8 million in insurance income, an increase of 13.8 percent over the $168.6 million earned YTD in 2002. Of these, banks with assets between $500 million and $1 billion saw their insurance fee income increase the most, 49.7 percent compared to the same period in 2002. Each of the two smallest classes of community banks, those between $100 and $300 million in assets and those under $100 million in assets, experienced declines (7.7 percent and 2.3 percent, respectively) in insurance income in the first six months of 2003.
Banks in the eastern and central regions of the country dominated insurance income in the first half of 2003. The Northeast, Midatlantic and Southeast regions collectively accounted for $1.33 billion of insurance income, 76.9 percent of the industry’s YTD total. Insurance income in these regions changed, respectively, 22.4 percent, -8.8 percent and 2.9 percent YTD compared to the same six-month period last year. Insurance income dropped 35.2 percent in the Midwest region from $438.6 million to $284.3 million. The Midwest region once led all other regions, but its bank-market share of insurance revenue has declined from 24.5 percent to 16.4 percent.
Bank investment fee income experienced a slight decrease of 0.6 percent from $4.75 billion earned in 2002 to $4.72 billion in 2003. More than one-fourth of banks (2,203 or 26.5 percent) earned investment fee income in 2002.
Banks over $10 billion in assets had the highest participation (82.0 percent) in investment fee income activities and recorded $4.24 billion or 89.9 percent of total industry investment fee income.
BHCs in the Northeast reportedly produced the most investment fee income, $2.1 billion or a 43.5 percent share.
Michael White Associates, LLC (MWA) is a bank insurance consulting firm headquartered in Radnor, Pa., and online at http://www.bankinsurance.com/.
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