Magazine article American Banker

Banks' Insurance Income Up but Investment Business Ebbs

Magazine article American Banker

Banks' Insurance Income Up but Investment Business Ebbs

Article excerpt

Bank insurance fee income rose substantially in the first three quarters of 2002 while bank investment fee income fell.

Of 8,432 commercial and federally insured savings banks, 4,198 were in insurance as of Sept. 30. Bank insurance fee income was up 22.9% in those nine months, to $2.66 billion, from the corresponding months of 2001.

Participation in insurance was highest, 77% of the category, among the largest banks (those with assets topping $10 billion), and their income from insurance fees was $1.95 billion -- up 49.8%.

These large banks accounted for 73.2% of banks' insurance income, a 1,300-basis-point increase.

Banks with assets of $1 billion to $10 billion generated insurance fee income of $453.6 million, down 29.1%.

Meanwhile, those with assets of less than $1 billion had $261.6 million of insurance income, up 15.6% from the year-earlier period. Of these, banks with assets of $500 million to $1 billion had the largest increase in insurance fee income, 49.1%. At the smallest community banks, those with assets of less than $100 million, income from insurance fees fell 9.7% (it was one of the two asset classes to experience a decline).

Banks in the eastern and central regions of the country dominated insurance income in the first nine months of 2002. The Middle Atlantic, Southeast, and Midwest accounted for $1.87 billion, 70% of the industry total -- up 10.1%, 43.3%, and 12.2% respectively from the like period of 2001.

For the first time, the Northeast produced the most insurance income, $653 million -- up 26.7% for a 24.5% bank-market share.

The Southwest and West had the smallest amounts, but both were higher: the Southwest 34.1% and West 44.9%.

Through the first three quarters of 2002, 27.2% of banks generated investment fee income, and together they earned $6.84 billion. That was down 6.7%. …

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