Community-based banks and credit unions have been getting higher revenue from their brokerage operations than all but the largest financial institutions, researchers report.

Banks and credit unions with less than $4 billion in assets produced $1,958 in brokerage revenue per $1 million in consumer deposits in 2007, according Kehrer-LIMRA, a division of LIMRA International, Windsor, Conn.

The community financial institutions’ productivity was 10% higher than the average brokerage revenue penetration of deposits for banks or credit unions of any size, Kehrer-LIMRA researchers report.

Moreover, when expressed in terms of gross revenue per financial consultant, the community financial institutions’ average annual broker sales productivity was on par with that of much larger institutions, the researchers report.

If trail commissions and money management fees are added to the mix, however, the largest banks have a slight edge in income due to their increased focus on fee-based business, the researchers note.

Although revenue penetration at the smallest institutions is relatively high, profit margins at those institutions is relatively low, the researchers write.

Since 2006, commission rates on annuities have been shrinking, and the product mix at community financial institutions has shifted toward fee-based acounts, exchange-traded funds, mutual fund C shares and other products with relatively low ratios of revenue per dollar invested, according to Kenneth Kehrer, the co-author of the Kehrer-LIMRA study.