Banks in the U.S. reported $539.6 million in income from annuity commissions and fees in the first half of this year, up 13.2% over the first half of 2007, when they earned $476.9 million.

Only 13% of banks reported earnings from annuity sales, according to Michael White Associates LLC, Radnor, Pa., which issues the quarterly study. Moreover, the bulk of those sales came from the largest banks. About 80% of bank annuity sales came from institutions with over $10 billion in assets, MWA found.

Banks’ combined income from both mutual funds and annuities in the first half totaled $2.84 billion, down about 1% from $2.86 billion in the same period last year, MWA reports.

All told, about 19% of this total fee-commission income came from annuities.

The report does not break out mutual funds’ contribution to banks earnings in terms of fees and commissions because many banks lump together all income from funds, including from such items as services they sell to providers, notes Michael White, head of the research firm.

Based on data from 7,622 commercial and savings banks, MWA found 1,710 or 22.4% had income from selling and servicing funds and annuities, down from 23.2% last year.

Among banks with over $10 billion in assets, 74% reported fee income from mutual funds and annuities in the first half, totaling $2.53 billion. That was down 0.6% from $2.54 billion for the same 2007 period.

Annuity commissions alone for these largest banks amounted to $430 million, up 12.5% from $382.2 million in the same period of 2007.

Banks with assets between $1 billion and $10 billion saw fund and annuity income fall 5.5%, from $199.8 million in first half of 2007 to $188.7 million in the same stretch of 2008. From annuities alone, these banks earned $70.5 million in fees and commissions, up 23.2% from $57.3 million in first half of 2007. Annuities represented 37% of total income from both sources for banks of this size.

Among all banks, the leader in mutual fund and annuity income at midyear was Bank of America, Charlotte, N.C., earning $962.5 million, down 4.1% from $1 billion in 2007.

Wachovia Bank, Charlotte, N.C., was second, earning $300 million, down 1.3% from $304 million the year before. Wells Fargo Bank, San Francisco, was third, with $189 million in fund and annuity sales, up 6% from $178 million in the first half of the year before.

Some large banks, such as Wells Fargo, do not report income from annuities because they ascribe such sales to their holding company. MWA releases income data for bank holding companies separately.

The research was sponsored by Symetra Financial Corp., Bellevue, Wash.