U.S. community banks increased revenue from brokerage operations 15% between the first quarter of 2004 and the first quarter of 2005.[@@]
Kenneth Kehrer Associates, Princeton, N.J., says its index of brokerage revenue at community banks rose to 130 at the end of the quarter, from 110 in March 2004.
Kenneth Kehrer Associates pegs the bank brokerage index to a benchmark of 100 set in 2002.
When firm researchers develop the index, they treat banks with less than $4 billion in assets as community banks.
To eliminate distortions that might be caused by mergers and acquisitions, the researchers look at the “deposit penetration” rate, or the average amount of brokerage revenue per $1 million in bank retail deposits, rather than at total brokerage sales.
During the first quarter of 2005, typical community banks and credit unions generated $354 in brokerage revenue per $1 million in bank retail deposits. That is half the deposit penetration rate of $701 per $1 million in deposits that Kenneth Kehrer Associates found at larger banks.