Community banks—those with under $4 billion in assets—narrowly outperformed last year’s investment program production in the third quarter, according to the latest Michael White Community Bank Investment Programs Report.

The 1,490 community banks that offer brokerage services earned $116.5 million in the third quarter, about the same as the second quarter, up from $110.9 million in the third quarter of 2009.

“They’re doing better than they were a year ago, narrowly up as we shake out some of the torpor relative to the economy,” said Michael White, president of Michael White Associates in Radnor, Pa.

Only 21.7% of community banks provide investment services, but those that do earn 6.8% of their non-interest income from their brokerage programs on average, compared to 5.9% at larger banks. “ For a community bank, 6.8% is significant,” White said. “Insurance tends to be higher, but a lot of times a bank engaged in one is engaged in both,” so non-traditional bank services make up an even more substantial portion.

“It should be an encouragement,” to the 88.3% of community banks that don’t provide investment services, White said, but he expresses frustration that it never seems to. “They won’t get fatter by sitting on their hands,” he said. “This is a new world and banks have to provide broader services to meet customers’ needs or they won’t long remain your customers!”