Revenue from insurance brokerage is slipping at bank holding companies.
According to the recently released Michael White Succeed Advisors Bank Insurance Fee Income Report, bank holding companies generated $1.57 billion in insurance brokerage fee income in the first quarter of 2014, down 8.4% year-over-year.
The report attributes the decline to the poor performance of Bank of America Corp. whose insurance brokerage operations lost $31,000, a stunning reversal from the $138 million the business generated in the same quarter a year ago. Small decreases and slow growth in insurance fee income among many of the bank's peers also contributed to the decline, according to the report.
Yet even with their weak performance, the largest bank holding companiesthose with more than $10 billion in assetsstill produced the bulk of the revenue, generating $1.3 billion, or 82.7% of the total. Those with assets between $500 million and $10 billion reeled in $272.5 million. The smallest community banks with less than $500 million in assets generated $40.8 million.
According to the report, a total of 248 bank holding companies were on track to earn $250,000 in annualized insurance brokerage income. Of those, 139 showed positive growth from the previous year, with 92 posting double-digit gains. In contrast, 256 were on track to cross the $250,000 threshold in the first quarter of 2013, with 168 showing positive growth and 116 registering double-digit gains.
"These findings signal a downturn from last year in the number and percentage of bank holding company-owned insurance agencies with minimum annual insurance income of a quarter million dollars that are currently growing fast at 10% or greater," said Michael White, president of Michael White Associates, a research and consulting firm based in Radnor, Pa.
BB&T Corp. was the biggest producer of insurance brokerage income in the first quarter, bringing in $396 million, followed by Wells Fargo & Co. with $394 million and Citigroup with $204 million.
The report was based on data from all 6,730 commercial banks, savings banks and savings associations and 1,080 large top-tier bank holding companies and thrift holding companies with consolidated assets greater than $500 million operating on Dec. 31, 2013.