Banks Made Almost $3 Billion On Insurance In 2001
Of 8,593 commercial and federally insured savings banks, 4,276 or 49.8% participated in insurance activities in 2001. These organizations earned $2.98 billion in insurance commissions and fee income, according to a new study completed by my firm.
The data in this study come from the financial filings of all commercial banks and federally insured savings banks in existence on Dec. 31, 2001.
The study, Michael Whites Bank Insurance and Investment Fee Income Report, shows that the largest banks–those with over $10 billion in assets–had the highest rate of participation (81%) in insurance and produced $1.77 billion or 59.5% of the banking industrys total.
Because of their size, this group of banks had the highest mean and median insurance income.
Two-thirds of banks from $1 billion to $10 billion in assets generated insurance income of $903.2 million, representing 30.3% of the industrys total.
Banks under $1 billion in assets accounted for $302.9 million in insurance income, or 10.2% of the industrys total in 2001. Of these, banks with less than $300 million in assets generated $179.8 million in insurance income, producing 46% more insurance income than banks with between $300 million and $1 billion in assets.
Bank insurance contribution to noninterest and total revenues. Insurance income for banks with under $1 billion in assets constituted a larger average percentage of noninterest income than for banks over $1 billion. Indeed, this ratio for banks with less than $1 billion in assets was 75% greater than that of banks with over $1 billion in assets.
The smallest banks, those with under $100 million in assets, ranked first in mean and median ratios of insurance income to noninterest income. In other words, insurance contributed proportionally more to small banks non-lending revenue than to that of any other size banks.
In fact, insurance contributed proportionally more to small banks total revenue than to that of other sized banks. The smallest banks average insurance income to net operating revenue was the second highest, and they had the top-ranked median ratio of insurance income to net operating revenue. (Net operating revenue, also called total revenue, is the sum of net interest and noninterest incomes.)
Bank insurance by region. Banks in the Midwestern and Eastern regions of the country dominated insurance income in 2001.
The Midwest had the highest bank-participation rate (55.7%) in insurance activities and the largest amount and share of bank insurance income–respectively, $774 million and 26%.
Collectively, the Northeast, Midatlantic and Southeast regions accounted for another $2.06 billion of insurance income, over 69% of the industrys total.