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Survey: Annuity Commissions Rise at Community Banks

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Community bank investment programs produced growth in annuity commissions during the first half of 2011, according to a new report.

Michael White Associates LLC, Radnor, Pa., published this finding in a quarterly survey of 6,805 commercial banks and FDIC-regulated savings banks operating on June 30, 2011. Sponsored by Securities America, La Vista, Neb., the survey measures and benchmarks investment programs at community banks with less than $4 billion in assets.

Community banks earned annuity fee income of $64.4 million in first half 2011, up 12.5% from $57.2 million in first half 2010, the survey reports. Second quarter 2011 annuity revenues of $33.7 million were up 9.8% from $30.7 million in first quarter 2010 and up 13.4% from $29.7 million in second quarter 2010.

Annuity commissions constituted 26.9% of community bank investment program income of $239.6 million in first half 2011, up from 25.3% for the first half 2010, the report finds. In the second quarter 2011, annuity commissions accounted for 27.7% of the total, up from 25.6% in second quarter 2010.

With 13.1% of first half 2010 program income and 16.9% of first half 2011 program income from annuities, the bigger banks with assets in excess of $4 billion had a considerably lower mix of annuity commissions in their programs, the report says. 

Of the 1,422 community banks that reported earning investment program income in first half 2011, 744 banks or 52.3% reported earning annuity commissions, and 174 banks or 12.2% reported earning annuity income only.

The survey says the latter finding of 174 banks reporting only annuity income “may be indicative of banks that have only platform annuity or licensed bank employee (LBE) programs and not full-product or hybrid investment programs.”