Insurance brokerage fee income that bank holding companies earned in the first three quarters of 2012 swooned to $5.47 billion, down 7.1% from the year before, according to the Michael White – Prudential Bank Fee Income Report.

Banks can attribute the decline to an abysmal third quarter, which was one the three worst quarters for the industry in the last nine years. For the third quarter of 2012, banks generated a paltry $1.58 billion in insurance brokerage fee income, a whopping 21.3% drop from the $2.01 billion earned in the year-ago quarter.

On a more positive note, the number of banks reporting growth in insurance brokerage income increased. Of the 1,061 bank holding companies, 147 showed growth in earnings, up from 123 in 2011. In addition, the number of banks with double-digit increases rose to 83 from 66 the year before.

The nation’s largest banks produced the lion’s share of $5.47 billion earned. Bank holding companies with more than $10 billion in assets earned $4.80 billion, or 87.7% of the total, according to the data. 

Citigroup was top producer of insurance brokerage fee income for the three quarters ended Sept. 30, 2012, earning $1.49 billion, followed by Wells Fargo & Co. and BB&T Corp., which earned $1.22 billion and $915 million, respectively.

Among bank holding companies with $1 billion to $10 billion in assets, Eastern Bank Corp. led the charge. First Command Financial Services led bank holding companies with assets between $500 million and $1 billion, and Soy Capital Bank and Trust Company was No. 1 among the smallest community banks.

The report was compiled by Michael White Associates, a consulting and research firm based in Radnor, Pa., and sponsored by Prudential Insurance Co. of America’s Individual Life Insurance business. It is based on data from all 7,181 commercial banks, savings banks and saving associations, and 1,061 bank and savings and loan holding companies.