Annuities sold through banks hit a rough patch last year, but 2011 looks brighter, as interest rates begin to rise and the Dow Jones Industrial Average continues to improve.

The first half of 2010 saw sales at a five-year low of $2.2 billion, increasing to $2.6 billion in February and $3.3 billion in March—the highest level of the year, according to the Kehrer-Jackson Monthly Bank Annuity Sales Survey. But the second quarter was rocky, with sales tumbling 13%, to $2.8 billion in April and then jumping 18%, to a quarterly high of $3.1 billion in May. June's sales fell 8%, to $2.9 billion, but were still higher than April. For the second half of the year, bank sales of annuities ranged from $2.5 billion to $2.9 billion.

Interestingly, in September 2010, banks sold 13% more variable annuities than fixed annuities, a marked difference from January when sales of fixed and variable annuities were about equal, at $1.11 billion in fixed annuities and $1.06 billion in variables.

Fixed annuities peaked in March at $1.8 billion and slowly declined through 2010, remaining steady in the fourth quarter. Variable annuity sales rose each month, and by December production was 33% more than September.

Variable annuities seem poised for growth in 2011, the survey reports. With the recession winding down, variable annuities should benefit from the recent bull market, given the historic correlation between variable annuity sales and the Dow Jones.

Meanwhile, as interest rates start to recover, fixed annuity sales should also benefit. "The ultimate result could mean a very positive 2011 for total annuity sales," says Jennifer Parmelee Witt, associate research director at Kehrer-Limra.