Bank Holding Companies’ Agency Fee Income Rises to $8.4 Billion in 2003

Bank holding companies (BHCs) earned a record $8.36 billion in insurance agency commissions and fee income in 2003, according to Michael White’s Bank Holding Company Insurance & Investment Fee Income Report (BHC-FIR), published by Michael White Associates LLC (MWA).

Compiled from data reported by 2,088 top-tier (or regulatory top-holder) BHCs with $100 million or more in consolidated assets on Dec. 31, 2003, the report measures insurance, investment, and mutual fund and annuity fee income generated in 2003 and compares individual BHC and banking industry performance data and benchmark ratios to those of 2003.

Among the new and significant findings in the 2003 Year-End BHC-FIR are:

• BHCs increased their 2003 insurance agency fee income 42.5 percent from $5.86 billion in 2002 to a record $8.36 billion in 2003. Nearly two-thirds of BHCs with $100 million or more in consolidated assets (1,319 of 2,088 or 63.2 percent of them) produced insurance revenue.

• BHCs over $10 billion in assets had the highest participation (81.1 percent) in insurance activities and produced $7.61 billion in insurance fee income, 45.4 percent more than the $5.23 billion they produced in 2002.

These large BHCs accounted for 91.0 percent of all BHC insurance fee income earned in 2003, which constituted a 177 basis-point increase from their 2002 BHC-market share.

• In 2003, the top 10 leaders nationally in insurance agency income were MetLife Inc. (N.Y.), Citigroup Inc. (N.Y.), Wells Fargo & Company (Calif.), BB&T Corporation (N.C.), Bank One Corporation (Ill.), Wachovia Corporation (N.C.), MBNA Corporation (Del.), J.P. Morgan Chase & Co. (N.Y.), Greater Bay Bancorp (Calif.), and FleetBoston Financial Corporation (Mass.).

• BHCs under $10 billion in assets earned $752.4 million or 9 percent of all BHC insurance income.

BHCs with assets between $500 million and $1 billion achieved a 35.5 percent rate of growth in insurance fee income, rising to $118.6 million in 2003. In comparison, BHCs with assets between $100 and $500 million generated $142.2 million, 17.9 percent more insurance income than their $120.6 million in 2002.

• BHCs under $1 billion in assets accounted for 3.1 percent or $260.8 million of insurance income.

The top five leaders in insurance agency fee income among BHCs under $1 billion in assets were BNCCorp Inc. (N.D.), Sunflower Banks Inc. (Kan.), Leesport Financial Corp. (Pa.), Shore Bancshares Inc. (Md.), and Texas Independent Bancshares Inc. (Texas).

• The Northeast region was first in BHC insurance fee income with $4.74 billion, or 56.8 percent of total BHC insurance income in 2003. Its market share rose by one-sixth from 48.9 percent in 2002. The West region ranked second with $1.12 billion in insurance fee income, up 35.7 percent from $826.4 million in 2002. The Southeast region was a narrow third in 2003 with $1.11 billion, up 22.7 percent from $901.7 million in 2002.

The reports may be purchased online at: www.BankInsurance.com.