Banks report that their fee income from sales of mutual funds and annuities rose 8.6% during the first half of the year over the same period in 2005, according to the latest Bank Insurance & Investment Fee Income Report from Michael White Associates LLC, Radnor, Pa.
Data from commercial and FDIC-regulated savings banks shows total fee income of $2.7 billion in the first 6 months of this year, up from $2.5 billion in the same period last year. In all, 1,830 banks out of a total of 7,924 reported mutual fund and annuity fee income, constituting about 23% of all U.S. banks.
Banks’ income from sales of funds and annuities was up despite a drop in the number of institutions that sell the products, from 1,903 in 2005, a decrease of 73. The decrease was probably due primarily to mergers and acquisitions in the industry, says Michael D. White, founder of the firm conducting the study.
Fees from sales of mutual funds and annuities amounted to 6.2% of banks’ non-interest income in the period. That was up from a mean of 5.7% in the first half of 2005, according to White.
In the first half of 2006, 5 of the top 15 banks exceeded the mean ratio. One of them, Citizens Bank of Rhode Island, reported fund and annuity income was more than 25% of its total non-interest income.
White’s study found the highest participation (71%) in mutual fund and annuity sales was among banks with over $10 billion in assets, which produced $2.4 billion in mutual fund and annuity fee income in the first half, up 9.3% from $2.2 billion a year earlier. These largest banks accounted for 89.2% of all bank mutual fund and annuity fee income earned in the period.
The top 5 banks in mutual fund and annuity fee income were Bank of America N.A., Charlotte, N.C.; Wachovia Bank N.A., Charlotte, N.C.; J.P. Morgan Chase & Company Inc., New York; Wells Fargo Bank N.A., San Francisco; and the Bank of New York.
Banks with under $10 billion in assets accounted for $296.7 million, or 10.8% of all bank mutual fund and annuity fee income.