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Recent Bank Insurance News In Brief

MARCH 8 - 14, 2010

AIG SELLS AIA GROUP TO PRUDENT PLC FOR $35.5 BILLION
New York City-based American International Group (AIG) has agreed to sell AIA Group (AIA), its pan-Asian life insurance company, to London-based Prudential plc for $35.5 billion, including $25.5 billion in cash, $8.5 billion in face value equity and equity-linked securities and $2 billion in Prudential preferred stock.  AIA will merge into Prudential to create the largest life insurer in Asia when the deal closes at the end of 2010, pending shareholder and regulatory approval.  AIG said it will use the proceeds from the sale to redeem $16 billion in preferred interests in AIA held by the Federal Reserve Bank of New York (FRBNY) and repay FBNY $9 billion under the FRBNY Credit Facility.  AIG plans to monetize $10.5 billion in Prudential face value securities over time and use the cash generated to repay any outstanding debt under the FRBNY Credit Facility.  AIG President and CEO Bob Benmosche said, “This transaction, the most significant milestone to date in our ongoing effort to repay taxpayers, gives us greater flexibility to move forward with AIG’s restructuring and focus on enhancing the value of our key insurance businesses, which will benefit all shareholders.”

U.S. HOUSE PASSES AGENT LICENSING BILL
The U.S. House of Representatives passed H.R. 2554, the National Association of Registered Agents and Brokers Reform Act of 2009 (NARAB II) last week.  The bill establishes a National Association of Registered Agents and Brokers (NARAB) as a nonprofit corporation that prescribes national insurance agent licensing requirements and authorizes members of NARAB who meet these requirements to sell insurance, adjust claims, and so forth in any state for any lines of insurance specified in the producer’s home state license.  Under the bill, states retain regulatory authority over licensing, supervision, discipline, setting licensing fees, consumer protection and unfair trade practices.  Independent Insurance Agents and Brokers of America (Big I) President and CEO Robert Rusbuldt said, “H.R. 2554 would reform and improve the current system of insurance regulation by providing one-stop, non-resident licensing reciprocity.”  The House passed a similar bill last year, but the Senate has yet to act.  Both houses must pass the legislation and the President must sign it into law before it takes effect.

ACAC COMPLETES GMAC PERSONAL LINES ACQUISITION
Bethesda, Maryland-based American Capital Acquisition Corporation (ACAC) has completed its acquisition of Winston-Salem, NC-based GMAC Insurance Personal Lines.  The acquired company will do business as GMAC Insurance “for some time” and continue to be headquartered in Winston-Salem under the new leadership of Larry Pentis.  GMAC operates in 47 states and the District of Columbia offering personal auto, RV, motorcycle, commercial auto and homeowners insurance.  GMAC Insurance Dealer Products and Services group and other international personal lines insurance operations were not part of the ACAC deal and continue as units of GMAC Financial Services.

NEW YORK LIFE INSURANCE SALES REACH RECORD $1 BILLION PLUS IN 2009
New York City-based New York Life Insurance Company announced its life insurance sales in 2009 jumped 14% to a record $1 billion plus.  New York Life said, “The economic downturn brought significant financial consequences to families and businesses, we believe, resulting in an increased focus on personal financial responsibility.”  He added, “What remained certain was that people still love their families and still need to make financial decisions to ensure their family’s security.”

NM GOVERNOR RICHARDSON TO SIGN STATE’S HEALTH INSURER MANDATES
New Mexico Governor Bill Richardson is expected to sign into law legislation approved by the state’s House and Senate that requires health insurers to spend 85% of health insurance premiums on direct medical services.  Richardson said House Bill 12 “will help control the rising costs of health insurance,” BestWire reports.

NATIONAL FLOOD INSURANCE PROGRAM ALIVE THROUGH MARCH
The National Flood Insurance Program, which expired on February 28, was reactivated by the Senate on March 2 and given life until March 28.  Property Casualty Insurers Association of America President and CEO David Sampson said, “The recent debate in Congress underscores the need to bring greater certainty and stability to the flood program in 2010 and advance a long-term extension that ensures the program’s fiscal soundness.”

MS AND SC INSURANCE COMMISSIONERS RESIST CLIMATE RISK DISCLOSURE SURVEYS
Insurance Commissioners in Mississippi and South Carolina have joined their counterpart in Indiana in declining to require insurance companies domiciled in their states to complete climate risk disclosure surveys.  Mississippi Insurance Commissioner Mike Chaney said he did not believe the survey collected useful data for insurance regulators, concluding, “I just don’t see the reason for it.”  The National Association of Insurance Commissioners (NAIC) agreed in March 2009 to require insurance companies with annual premiums of $500 million or more to inform their state regulators of the financial risks caused to their companies by climate change and the steps they are taking to deal with those risks.  In January 2010, the NAIC’s Climate Change and Global Warming Task Force adopted the survey framework to accomplish that requirement, BestWire reports.

HOUSEHOLDS NEARING RETIREMENT UNPREPARED FOR MEDICAL COSTS
A married couple, both of whom are aged 65 and free of chronic diseases, can expect to spend $197,000 on health care costs over the rest of their lives, according to a Prudential Financial-sponsored study conducted by Boston College’s Center for Retirement Research.  That couple has a 5% risk that their healthcare costs will exceed $570,000, including $71,000 and $79,000, annually and respectively, for semi-private and private room nursing home care.  Unfortunately, less than 15% of households nearing retirement have $570,000 in assets, the study found.  To access the Center for Retirement Research study, click here.

RBS STILL REQUIRED TO SELL INSURANCE UNIT
Edinburgh, Scotland-based Royal Bank of Scotland (RBS) reported a year 2009 net loss of £3.6 billion ($5.4 billion), an improvement over a net loss of £24.3 billion ($36.6 billion) in 2008.  The company acknowledged, however, that “if RBS hadn’t received government support, it wouldn’t be here today.”  That support mandates divestments, including the sale of RBS Insurance, as part of the company’s settlement with the European Commission.  “The required sale of our insurance business,” RBS said, is “intended to act as a deterrent to companies seeking state aid.”  In 2009, RBS reported £58 million ($87.4 million) in operating profit, down 90.1% from operating profit of £584 ($880 million) in 2008.

INSURANCE EARNINGS JUMP 32% IN 2009 AT CITY HOLDING
Charleston, WV-based, $2.6 billion-asset City Holding Company reported insurance commissions in fourth quarter 2009 climbed 13.1% to $1.11 million, up from $981,000 in fourth quarter 2008.  Bank-owned life insurance (BOLI) income rose 1.9% to $753,000, up from $739,000, and trust and investment management fee income increased 6.0% to $549,000, up from $518,000.  Insurance, BOLI and trust/investment fee income comprised, respectively, 8.6%, 5.8% and 4.2% of noninterest income, which surged fourfold to $12.92 million, up from $3.18 million a year ago, when the company recorded $10.8 million in investment securities losses.  Net interest income increased 6.1% to $22.01 million, up from $20.74 million, as loan loss provisions dropped $3.77 million to $1.58 million, and net income soared 261% to $11.08 million, up from $4.25 million.
     For the year 2009, City Holding said, “Increased insurance revenues of $1.4 million, or 32% [to $5.58 million, up from $4.21 million in 2008], associated with our wholly-owned insurance agency, City Insurance, helped offset lower service fee income.”  BOLI income grew 11.6% to $3.27 million, up from $2.93 million, and trust/investment management fee income rose 4.5% to $2.34 million, up from $2.24 million.  Insurance, BOLI and trust/investment management fee income comprised, respectively, 10.7%, 6.3% and 4.5% of noninterest income, which surged 137% to $51.98 million, up from $21.94 million in 2008, when City recorded $38.27 million in investment securities losses.  Net interest income, however, slipped 3.2% to $88.38 million, down from $91.33 million, helped by a $3.37 million decrease in loan loss provisions to $7.05 million.  Net income, bolstered by soaring noninterest income, jumped 51.6% to $42.6 million, up from $28.1 million.  City Holding Company President and CEO Charles Hageboeck said, “While the U.S. economy continued to struggle in 2009, I am quite pleased with City’s results.”  He added, “City remains one of the most profitable, most liquid and best capitalized publicly traded banks in the U.S.”
     In 2008, City Holding’s insurance brokerage income comprised 7.1% of its noninterest income and 2.6% of its net operating revenue.  The company ranked 41st in insurance brokerage earnings among U.S. bank holding companies (BHCs) with assets between $1 billion and $10 billion, according to the Michael White-Prudential Bank Insurance Fee Income Report.

DECLINING INSURANCE REVENUE REMAINS LARGEST CONTRIBUTOR TO NONINTEREST INCOME AT COBIZ
Denver, CO-based, $2.5 billion-asset CoBiz Financial reported fourth quarter 2009 insurance brokerage fee income dropped 28.1% to $2.58 million, down from $3.59 million in fourth quarter 2008, but remained the largest contributor to noninterest income, comprising 39.8% of that revenue, which decreased 8.1% to $6.49 million, down from $7.06 million.  Trust/investment management fee income slid 3.5% to $1.36 million, down from $1.41 million, to comprise 21.0% of noninterest income.  Net interest income on a 4.36% net interest margin jumped almost fourfold to $8.44 million, up from $2.19 million, as loan loss provisions decreased over $7 million to $16.56 million and expenses decreased by $4.2 million.  But, the company, hit by $22.9 million in charge offs, reported a net loss of $4.5 million compared to a net loss of $8.6 million in fourth quarter 2008.
     For the year 2009, the company set aside $105.7 million in loan loss provisions and recorded $73.5 million in net charge offs, impacting an $83 million net loss compared to $1.3 million in net income in 2008.  CoBiz Chairman and CEO Steve Bangert said, “2009 was a tough year and one I wasn’t sorry to see come to an end….  We exit 2009 with a stronger capital base, record liquidity and a deeper management team.”
     In 2008, CoBiz Financial’s insurance brokerage income comprised 47.3% of its noninterest income and 11.8% of its net operating revenue.  The company ranked 10th in insurance brokerage earnings among U.S. bank holding companies (BHCs) with assets between $1 billion and $10 billion, according to the , according to the Michael White Bank Investment Program Income Report.

BOLI JUMPS, INSURANCE SLIDES AT FIRST DEFIANCE
Defiance, OH-based, $2.06 billion-asset First Defiance Financial Corp. reported fourth quarter 2009 combined insurance and investment sales commissions generated by First Insurance and Investments slipped 3.6% to $1.08 million, down from $1.12 million in fourth quarter 2008, while trust income rose 4.8% to $109,000, up from $104,000, and income from bank-owned life insurance (BOLI) of $219,000 contrasted with a $428,000 loss the year before.  Insurance/investment, trust and BOLI earnings comprised, respectively, 19.4%, 2.0% and 3.9% of noninterest income, which more than doubled to $5.58 million, up from $2.76 million, helped by $2.07 million in mortgage banking income compared to a $636,000 loss in that revenue in fourth quarter 2008.  Net interest income on a 3.82% net interest margin, however, dropped 25.6% to $9.06 million, down from $12.17 million, as loan loss provisions climbed by $4.65 million to $8.47 million.  Net income, bolstered by noninterest earnings including insurance and investment fee income, jumped 81.8% to $1.6 million, up from $880,000 in fourth quarter 2008.
     For the year 2009, combined insurance and investment sales commissions declined 8.7% to $5.02 million, down from $5.5 million in 2008; trust income fell 7.4% to $415,000, down from $448,000; but BOLI income jumped 72.4% to $557,000, up from $323,000.  Insurance brokerage, trust and BOLI income comprised, respectively, 19.1%, 1.6% and 2.1% of noninterest income, which grew 37.9% to $26.3 million, up from $19.07 million, helped by an almost $7 million climb in mortgage banking income.  Net interest income on a 3.76% net interest margin fell 11.1% to $44.09 million, down from $49.6 million, as loan loss provisions climbed by over $10.6 million to $23.23 million.  Net income grew 12.2% to $8.3 million, up from $7.4 million, driven by noninterest earnings, including insurance, trust and BOLI revenue.  First Defiance Financial Chairman, President and CEO William small said, “We believe that the fundamentals of the company remain sound, but it will take time to work through the problem credits precipitated by the recession and current real estate downturn.”

INSURANCE COMPRISES 29.3% OF 2009 NONINTERST INCOME AT OHIO’S PEOPLES BANCORP
Marietta, OH-based, $2 billion-asset Peoples Bancorp reported lower property and casualty insurance commissions drove fourth quarter 2009 insurance brokerage fee income down 8.6% to $2.01 million, from $2.20 million in fourth quarter 2008, but insurance earnings remained the second largest contributor to noninterest income behind $2.67 million in service charges, comprising 25.8% of noninterest earnings, which slipped 0.5% to $7.78 million, down from $7.82 million in fourth quarter 2008.  Income from bank-owned life insurance (BOLI) decreased 3.9% to $244,000, down from $254,000, to comprise 3.1% of noninterest income.  But trust/investment management income rose 1.6% to $1.24 million, up from $1.22 million, to comprise 15.9% of noninterest earnings.  Net interest income on a 3.50% net interest margin soared nearly sixfold to $8.66 million, up from $1.28 million, as loan loss provisions were almost cut in half to $6.76 million.  The company reported net income of $0.7 million, compared to a net loss of $3.1 million in fourth quarter 2008.
     For the year 2009, insurance brokerage fee income declined 5.2% to $9.39 million, down from $9.9 million, and, as the second largest contributor to noninterest income behind service charges, comprised 29.3% of that revenue, which slipped 0.2% to $32.05 million, down from $32.1 million.  Trust/investment management income fell 8.2% to $4.72 million, down from $5.14 million to comprise 14.7% of noninterest income.  BOLI decreased 33.5% to $1.05 million, down from $1.58 million, to comprise 3.3% of noninterest earnings.  Net interest income climbed 17.1% to $36.12 million, up from $30.84 million, reflecting a $2 million decrease in loan loss provisions to $25.7 million and a $7.5 million decrease in expenses.  Still, net income tumbled 69.0% to $2.31 million, down from $7.46 million in 2008.  Peoples Bancorp President and CEO Mark Bradley said, “The year 2009 was a challenging year for our bottom-line earnings … caused by the economic downturn that started in 2008.”
    In 2008, Peoples Bancorp’s insurance brokerage income comprised 30.1% of its noninterest income and 10.8% of its net operating revenue.  The company ranked 18th in insurance brokerage earnings among all U.S. bank holding companies (BHCs) with assets between $1 billion and $10 billion, according to the Michael White-Prudential Bank Insurance Fee Income Report.

MARCH 1 - 7, 2010

CLIMBING NONINTEREST INCOME BOLSTERS INCREASED EARNINGS AT U.S. BANKS AND THRIFTS
U.S. banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported aggregate net income of $914 million in fourth quarter 2009, a $38.7 billion improvement over the $37.8 billion net loss registered in fourth quarter 2008, according to the FDIC.  More than half (50.3%) of all institutions reported year-over-year improvements in their quarterly net income, while those reporting fourth quarter losses decreased to 32.9%, down from 34.6% in 2008.
     Noninterest income drove improved earnings in the quarter, jumping 53.2% to $62.4 billion, up from $40.7 billion in fourth quarter 2008, while net interest income, excluding loan loss provisions, rose 1.8% to $98.7 billion, up from $96.97 billion.  Including loan loss provisions, which dropped 14.1% to $61.1 billion, down from $71.1 billion, net interest income on a 3.49% net interest margin grew 45.7% to $37.6 billion, up from $25.8 billion.  In the quarter, banks and thrifts charged off $53 billion in uncollectible loans, up 37.3% from $38.6 billion in fourth quarter 2008; noncurrent loans and leases increased by $24.3 billion, and total loans and leases decreased $128.8 billion.  Assets declined $137.2 billion (1%), and forty-five institutions failed.
     For the year 2009, net income for all U.S. banks and thrifts combined surged 175.3% to $12.53 billion, up from $4.55 billion in 2008.  Once again, noninterest income bolstered these earnings, climbing 25.4% to $260.5 billion, up from $207.7 billion in 2008.  Net interest income, excluding loan loss provisions, increased 10.7% to $395.8 billion, up from $357.7 billion.  Loan loss provisions, however, jumped 40.6% to $247.7 billion, up from $176.2 billion, driving net interest income down 18.4% to $148.1 billion, from $181.5 billion in 2008.  Fewer than half (41%) of all banks and thrifts reported increased net income in 2009, and 29.5% reported net losses.  Over the year, 140 banks failed, the highest total since 1992, and the Deposit Insurance Fund ended the year with a balance of negative $20.9 billion, reflecting a $44 billion contingent loss reserve.  FDIC Chairman Sheila Bair said, “We saw signs of improvement in industry performance, but as we have said before, recovery in the banking industry tends to lag behind the economy, as the industry works through its problem assets.”

U.S. LIFE INSURERS RECORD MORE SALES, LOWER PREMIUMS; UNIVERSAL LIFE DOMINATES
New annualized premium for individual life insurance products in the U.S. slid 5% in fourth quarter 2009 compared to fourth quarter 2008 and fell 15% for the year compared to 2008, according to survey data compiled by Windsor, CT-based LIMRA.  However, the number of individual life insurance policies sold rose 3% quarter-over-quarter and slipped only 2% year-over-year, LIMRA found.
     Universal Life (UL) products accounted for the largest share of annualized premiums (38%), followed by whole life (28%) and term (27%).  While the number of UL policies sold in 2009 increased 5% compared to 2008, UL premiums dropped 20%.  The number of variable life insurance products sold fell 36%, and variable premiums tumbled 50%.  In contrast, term life premiums slipped only 1%, and whole life premiums rose 4% for the year, driven by 12% growth in the fourth quarter.  The number of whole life policies sold increased 6%, LIMRA found.

U.S. ANNUITY SALES DOWN OVERALL IN 2009
U.S. annuity sales in the fourth quarter fell 22% to $53.3 billion, down from $68.6 billion in fourth quarter 2008, as fixed annuity sales dropped 40% to $20.7 billion, down from $34.8 billion and variable sales slipped 3% to $32.6 billion, down from $33.8 billion, according to surveys conducted by Windsor, CT-based LIMRA.  Among fixed annuities, deferred annuities accounted for the most sales ($17.7 billion), but those sales were down 43% from $31 billion in fourth quarter 2008.  Book value annuities placed a distant second in popularity ($9.3 billion), but those sales were also down 43%.  Equity indexed annuities slid only 5% to $6.9 billion; fixed immediate annuities fell 199% to $1.7 billion.  But, market value adjusted tumbled 80% to $1.5 billion, and structured settlements dropped 24% to $1.3 billion, down from $1.7 billion in fourth quarter 2008.
     For the year 2009, total U.S. annuity sales fell 11% to $234.9 billion, down from $265 billion in 2008.  Among all annuities sold, only equity indexed and book value annuities showed growth, with equity indexed up 9% to $29.4 billion and book value up 2% to $51.9 billion.  Fixed deferred annuities remained steady at $95 billion, but fixed immediate decreased 10% to $7.1 billion.  Variable fixed accounts declined 12% to $36.8 billion; structured settlements fell 13% to $5.6 billion; market value adjusted dropped 20% to $14 billion; and variable separate accounts skidded 21% to $90.2 billion.  Among all annuities sold, fixed deferred annuities were most popular ($95.2 billion), followed by variable separate accounts ($90.2 billion), book value fixed ($51.9 billion), equity indexed ($29.4 billion), variable fixed accounts ($14 billion), fixed market value adjusted ($14 billion), fixed immediate ($7.1 billion) and fixed structured settlements ($5.6 billion), according to LIMRA’s survey of 62 annuity providers.

20% JUMP IN 4TH QUARTER VARIABLE ANNUITY PREMIUMS CONTRASTS WITH 19.2% DROP FOR THE YEAR
U.S. variable annuity sales in the fourth quarter jumped 20.2% to $31.9 billion, up from $26.5 billion in fourth quarter 2008, with qualified sales comprising $21.9 billion of those premiums and non-qualified comprising $10 billion, according to Washington, DC-based Insured Retirement Institute (IRI).  For the year, however, variable annuity sales fell 19.2% to $125.1 billion, down from $154.8 billion in 2008.  IRI President and CEO Cathy Weatherford said, “The [fourth quarter] surge in variable annuity assets is a clear indicator that we are indeed on solid road to recovery.”

METLIFE OUTSTRIPS COMPETITION IN TOTAL ANNUITY SALES
New York City-based MetLife was the number one provider of individual annuities in the U.S. in 2009, ranking second in variable annuity sales ($15.4 billion) and third in fixed annuity sales ($6.97 billion) for an overall total of $22.37 billion.  Prudential, which ranked first in variable annuity sales ($16.1 billion) ranked second with $17.35 billion in total sales.  TIAA-CREF ranked third based solely on fixed annuity sales of $13.92 billion.  Jackson National ranked fourth ($13.86 billion) based on its fourth place rank in variable sales ($10 billion) and its 8th place rank in fixed sales ($3.86 billion).  AIG ranked fifth ($12.5 billion) as the number two provider of fixed annuities ($7.76 billion) and the 10th ranked provider of variable annuities ($4.75 billion).  New York Life, the number one provider of fixed annuity products ($10.33 billion), ranked 7th overall ($11.59 billion), according to Windsor, CT-based LIMRA.

FEDERAL JUDGE SIGNS OFF ON B OF A FINE
U.S. Federal Judge Jed Rakoff agreed to the Securities and Exchange Commission’s plan to fine Charlotte, NC-based, $2.22 trillion-asset Bank of America (B of A) $150 million in order to settle charges that B of A inappropriately failed to notify shareholders that Merrill Lynch held $16 billion in impending losses before those shareholders voted on B of A’s $50 billion acquisition of Merrill at the end of 2008.  Judge Rakoff wrote in his ruling that “the amount of the fine appears paltry” and represents “half-baked justice at best,” InvestmentNews.com reports.

LOUISIANA AUTO AND TIRE DEALERS GIVEN REPRIEVE FROM LICENSING REQUIREMENT
A state judge in Louisiana’s 19th District has issued an order temporarily enjoining the state from requiring auto dealers and tire suppliers to become licensed property and casualty agents in order to sell tire-and-wheel road hazard coverage.  Louisiana Automobile Dealers Association Executive Director Bob Israel said the association filed suit as “a stopgap measure” in order to give the state legislature time to pass legislation exempting tire and wheel road hazard insurance sales from insurer licensing requirements.  Louisiana Insurance Commissioner Jim Donelon had issued the order and said nothing short of legislation would undermine it, Insurance Journal reports.

YOUNG ADULTS ACCOUNT FOR 25% OF U.S. RESIDENTS WITHOUT HEALTH INSURANCE
Almost one-third (30%) of U.S. adults aged 20-29 who had no health insurance in 2008 accounted for 25% (13 million) of the country’s uninsured (citizen and non-citizen), according to the National Center for Health Statistics (NCHS).  The uninsured young adults were typically between being covered by their parents’ insurance policy or a government program and having a permanent job with health insurance benefits, according to NCHS.  NCHS researcher Robin Cohen said, “They may be taking jobs of lower wages or temporary jobs, and many of these jobs come with limited or no health benefits.”

AMERICAN SAVINGS RATE RISES TO 4.6%
The week of February 21-28 was “America Saves Week,” and Americans appear to have harkened to the annual call.  The savings rate grew to 4.6% in 2009, up from 2.7% in 2008, according to the Department of Commerce.  FDIC Chairman Sheila Bair urged more savings saying, “Establishing a savings account in a federally insured institution is a great first step to build wealth and begin a savings habit that will last a lifetime.”  Bair added, “It is harmful to an economy when consumers spend beyond their means, financed by debt that they cannot afford to repay.  A country with robust savings,” she said, “generally has more capital to fund investments and support economic growth over the long-term.”

BANCASSURERS FOCUS ON ASIAN SAVERS
In contrast to American’s 4.6% savings rate, residents of Mainland China are saving 45%.  Hong Kong residents are saving 33%, and residents of Malaysia are saving 25% of their monthly incomes in cash, investments, insurance and pensions, according to a recent HSBC Insurance (Asia) survey.  “Lack of confidence” in markets is given as the main barrier to long-term savings, according to 65% of the residents surveyed in Taiwan and South Korea, 61% of those living in Singapore and China, 59% of India’s residents and 55% of Malaysians.  But financial security and saving for a more comfortable life motivate their savings patterns.  HSBC plans to utilize its bancassurance model to meet the concerns and desires of these potential customers and intends to focus on offering medical insurance “for critical illness and for the time of their retirements,” HSBC Insurance (Asia) Managing Director Jason Sadler said.  Zurich Insurance group appears to be heading in the same direction, noting that the 2009 swine flu outbreak raised health consciousness, creating more awareness of the need for medical and other insurance products, BestWire reports.

INSURANCE AND WEALTH MANAGEMENT EARNINGS SLIDE AT S & T
Indiana, PA-based, $4.2 billion-asset S&T Bancorp reported insurance brokerage fee income in the fourth quarter decreased 5.1% to $1.88 million, down from $1.98 million in fourth quarter 2008, and wealth management earnings declined 7.7% to $1.92 million, down from $2.08 million.  Insurance and wealth management fee income, respectively, comprised 16.5% and 16.9% of noninterest income, which climbed 16.0% to $11.37 million, up from $9.8 million, bolstered by $2.2 million in fair market valuations for a deferred compensation plan trust and an added $3 million in mortgage banking revenues.  Net interest income on a 3.94% net interest margin dropped 25.0% to $27.3 million, down from $36.4 million, as loan loss provisions grew by almost $5 million to $10.4 million, and net income tumbled 51.9% to $7.6 million, down from $15.8 million in fourth quarter 2008, reflecting a $5 million net charge off for two commercial real estate projects in New York and Connecticut; a $2.5 million net charge off for a commercial and industrial loan, and a $0.6 million net charge off for condominium construction loans in western Pennsylvania.
     For the year 2009, insurance brokerage fee income slipped 4.3% to $7.75 million, down from $8.1 million in 2008.  Wealth management income slid 5.9% to $7.5 million, down from $7.97 million.  Insurance earnings comprised 17.7% of noninterest income, and wealth management comprised 17.2% of that revenue, which grew 11.7% to $43.67 million, up from $39.1 million, reflecting fourth quarter gains already described.  Net interest income on a 3.89% net interest margin dropped 42.1% to $78.83 million, down from $136.22 million, as loan loss provisions increased by $59.5 million to $72.35 million, and net income plummeted to $2 million, down from $60.2 million in 2008.  S & T Bancorp President and CEO Todd Brice said, “The economic events of 2009 presented previously unknown performance challenges and credit quality stresses that significantly affected our earnings this year.”  In 2009, the company paid the U.S. government $5.9 million in dividends and amortization associated with S & T’s issuance of $108.7 million in stocks and warrants to the U.S. Treasury under the Troubled Assets Relief Program (TARP).
     In 2008, S & T Bancorp’s insurance brokerage income comprised 14.7% of its noninterest income and 3.2% of its net operating revenue.  The company ranked 27th in insurance brokerage earnings among U.S. bank holding companies (BHCs) with assets between $1 billion and $10 billion, according to the Michael White-Prudential Bank Insurance Fee Income Report.

BOLI INCOME UP AT HEARTLAND
Dubuque, IA-based, $4 billion-asset Heartland Financial USA reported trust fees in fourth quarter 2009 jumped 23.4% to $2.16 million, up from $1.75 million, and bank-owned life insurance (BOLI) income of $362,000 contrasted with a $1.78 loss a year ago.  In contrast, combined insurance and investment brokerage commissions dropped 30.3% to $697,000, down from $1 million.  Trust fees, combined insurance and investment brokerage income and BOLI earnings comprised, respectively, 16.1%, 2.7% and 5.2% of noninterest income, which soared 157.7% to $13.4 million, up from $5.2 million, helped by $1.1 million in FDIC loss share payments associated with the company’s FDIC-assisted third quarter Elizabeth State Bank acquisition, $2.19 million in net securities gains and an $837,000 increase in mortgage loan fees.  Net interest income on a 4.04% net interest margin jumped 69.6% to $23.95 million, up from $14.12 million, as interest expenses dropped $4.5 million and provisions for loan losses fell $4.3 million, but non-cash goodwill impairment charges of $7.5 million and $5.2 million tied, respectively, to Billings, Montana-based Rocky Mountain Bank and Phoenix, Arizona-based Arizona Bank drove a fourth quarter net loss of $7.9 million compared to a $2.7 million net loss in fourth quarter 2008.
     For the year 2009, trust fees slipped 1.3% to $7.8 million, down from $7.9 million; and combined insurance and investment brokerage fee income decreased 16.1% to $3.12 million, down from $3.72 million.  But BOLI generated $1 million in revenue compared to a $1.18 million loss in 2008.  Trust fees, combined insurance and investment fee income and BOLI earnings comprised, respectively, 14.8%, 5.9% and 1.9% of noninterest income, which, helped by a $7.1 million increase in net securities gains and a $4.5 million increase in mortgage loan fees, jumped 74.5% to $52.7 million, up from $30.2 million.  Net interest income on a 3.99% net interest margin grew 8.1% to $93.4 million, up from $86.4 million, as interest expenses decreased over $16 million, but net income, reflecting $19 million in goodwill impairment charges, dropped 41.8% to $6.4 million, down from $11 million in 2008.  Heartland Chairman, President and CEO Lynn Fuller said, “The recognition of goodwill impairment at two of our banks was difficult, but it reduced a non-earning asset without any impact to our capital ratios.”  He added, “Heartland continues to experience solid operating income fueled by our exceptional net interest margin and strong noninterest income.”
     In 2008, Heartland Financial USA’s insurance brokerage income comprised 2.5% of its noninterest income and 0.5% of its net operating revenue.  The company ranked 88th in insurance brokerage earnings among U.S. bank holding companies (BHCs) with assets between $1 billion and $10 billion, according to the Michael White-Prudential Bank Insurance Fee Income Report.
     In 2008, Heartland’s securities brokerage income comprised 8.1% of its noninterest income and 1.6% of its net operating revenue.  The company ranked 33rd in securities brokerage earnings among U.S. bank holding companies (BHCs) with assets between $1 billion and $10 billion, according to the , according to the Michael White Bank Investment Program Income Report.

TRUST EARNINGS TRENDING UP AT RENASANT
Tupelo, MS-based, $3.64 billion-asset Renasant Corp. reported fourth quarter insurance brokerage fee income fell 18.8% to $705,000, down from $868,000 in fourth quarter 2008, while trust revenues rose 1.5% to $559,000, up from $551,000.  Insurance brokerage and trust earnings comprised, respectively, 6.5% and 4.2% of noninterest income, which increased 5.24% to $13.42 million, up from $12.75 million.  Net interest income on a 3.22% net interest margin climbed 43.3% to $17 million, up from $11.86 million, as loan loss provisions dropped by $7.18 million to $7.8 million, and net income soared 1,638% to $4.03 million, up from $232,000 in fourth quarter 2008.
     For the year 2009, insurance brokerage fee income slid 4.7% to $3.32 million, down from $3.48 million in 2008, and trust revenue fell 16.6% to $2.04 million, down from $2.44 million.  Insurance brokerage and trust earnings comprised, respectively, 5.8% and 3.5% of noninterest income, which rose 6.5% to $57.6 million, up from $54.04 million.  Net interest income on a 3.22% net interest margin fell 16.2% to $72.6 million, down from $86.6 million, impacted by a $4.08 million increase in loan loss provisions to $26.9 million, and net income dropped 23% to $18.52 million, down from $24.05 million.  Renasant Chairman and CEO E. Robinson McGraw said, “The company experienced strong deposit growth due to management’s strategic efforts to acquire low costing and noninterest bearing deposits.”  At the same time, “total loans declined year over year” and “our construction and development loan portfolio decreased an additional $150 million.”
     In 2008, Renasant Corp.’s insurance brokerage income comprised 7.4% of its noninterest income and 2.4% of its net operating revenue.  The company ranked 43rd in insurance brokerage earnings among all U.S. banks with assets between $1 billion and $10 billion, according to the Michael White-Prudential Bank Insurance Fee Income Report.

INSURANCE AND INVESTMENT BROKERAGE INCOME GROWS AT BANK MUTUAL
Milwaukee, WI-based, $3.5 billion-asset Bank Mutual Corporation reported combined insurance and investment brokerage commissions in fourth quarter 2009 jumped 38.8% to $715,000, up from $515,000 in fourth quarter 2008.  But income from bank-owned life insurance (BOLI) was more than cut in half to $927,000, down from $2 million, as the yield on that product was “adversely impacted by a relatively low interest rate environment during 2009,” the company said.  Insurance and investment brokerage income and BOLI income comprised, respectively, 12.9% and 16.7% of noninterest income, which fell 15.0% to $5.54 million, down from $6.52 million.  Net interest income dropped 38.3% to $12.1 million, down from $19.6 million, as loan loss provisions skyrocketed 40-fold to $3.59 million, up from $89,000, and net interest income including loan losses dropped almost $5 million to $19.3 million.  Net income tumbled 76.1% to $1.48 million, down from $6.19 million.
     For the year 2009, insurance and investment brokerage fee income increased 6.1% to $2.79 million, up from $2.63 million in 2008, but BOLI income dropped 22.4% to $5.79 million, down from $7.46 million.  BOLI income and combined insurance and investment brokerage income comprised, respectively, 18.7% and 9.0% of noninterest income, which surged 75.0% to $30.99 million, up from $17.71 million, bolstered by a $7 million jump in gains on loan sales and a $6.66 million net gain on securities sales compared to a $1.67 million loss in 2008.  Net interest income tumbled 22.7% to $55.62 million, down from $71.92 million, as loan loss provisions soared by $11 million to $12.4 million.  Net income dropped 20.2% to $13.73 million, down from $17.2 million in 2008.  Bank Mutual Corp. Chairman, President and CEO Michael Crowley, Jr. said, “Our recent earnings performance has been impacted by difficult interest rate and economic environments that combine to erode the yields on our loans and investments and challenge some of our customers’ ability to repay their loans.”

RISING INSURANCE EARNINGS COMPRISE 26.6% OF TOMPKINS’ 2009 NONINTEREST INCOME
Ithaca, NY-based, $3.15 billion-asset Tompkins Financial Corp. reported insurance commissions and fees generated by Tompkins Insurance Agencies in fourth quarter 2009 rose 1.4% to $2.87 million, up from $2.83 million in fourth quarter 2008.  Investment services income generated by Tompkins Investment Services also rose 1.4% but to 1.4% to $3.5 million, up from $3.45 million, while bank-owned life insurance income (BOLI) declined 12.5% to $316,000, down from $361,000.  Insurance, investment services and BOLI income comprised, respectively, 23.6%, 28.8% and 2.6% of noninterest income, which climbed 17.5% to $12.14 million, up from $10.33 million in fourth quarter 2008, when the company recorded $1.8 million in a mark-to-market loss on liabilities held at fair value.  Net interest income on a 3.89% net interest margin grew 10.7% to $25.14 million, up from $22.7 million, as loan loss provisions rose by only $653,000 to $2.76 million and net interest income not including provisions grew by over $3 million to $27.9 million.  Net income grew 12.9% to $8.21 million, up from $7.27 million in fourth quarter 2008.
     For the year 2009, insurance commissions and fees increased 6.0% to $12.31 million, up from $11.61 million in 2008, but investment services income slid 5.9% to $13.35 million, down from $14.18 million, and BOLI income fell 24.8% to $1.09 million, down from $1.45 million.  Insurance, investment services and BOLI fee income comprised, respectively, 26.6%, 28.9% and 2.4% of noninterest income, which rose 0.4% to $46.2 million, up from $46 million.  Net interest income climbed 13.7% to $97.75 million, up from $85.96 million, despite an over $4 million increase in loan loss provisions to $9.29 million.  Net income grew 6.7% to a record $31.8 million, up from $29.8 million.  Tompkins Financial President and CEO Stephen Romaine said, “We are obviously pleased to report record earnings in a year when the financial services industry has seen significant turmoil and when many in our industry have reported losses.”  He added, “We remain diligent in the monitoring of the credit portfolio, as we recognize that a continuation or worsening of the current economic situation may result in further stress on the portfolio.”
    In 2008, Tompkins Financial’s insurance brokerage income comprised 25.5% of its noninterest income and 8.5% of its net operating revenue.  The company ranked 15th in insurance brokerage earnings among all U.S. bank holding companies (BHCs) with assets between $1 billion and $10 billion, according to the Michael White-Prudential Bank Insurance Fee Income Report.

FEBRUARY 22 - 28, 2010

USI HOLDINGS ACQUIRES NATIONAL CITY INSURANCE AGENCIES
Briarcliff Manor, NY-based USI Holdings Corporation has agreed to acquire National City Insurance Group’s retail employee benefit agencies offices in Ohio, Kentucky and Missouri from Pittsburgh, PA-based, $269.9 billion-asset PNC Financial Services Group.  USI Chairman, President and CEO Michael Sicard said, “Through this acquisition we expect to expand and strengthen our Midwest Regional Operation by adding a significant footprint in Louisville, St. Louis and Cleveland.”  USI expects the acquisition to generate $13 million in annual revenues, after the deal closes at the end of February.

MUTUAL OF OMAHA BANK EXPANDS FLORIDA FOOTPRINT WITH FAILED-BANK ACQUISITION
Omaha, NE-based, $3.8 billion-asset Mutual of Omaha Bank entered into a purchase and assumption agreement with the Federal Deposit Insurance Corporation (FDIC) to assume the $117.1 million in deposits and purchase $104.8 million in assets of Marco Island, FL-based, $119.6 million-asset Marco Community Bank.  The Florida Office of Financial Regulation closed the bank and appointed the FDIC receiver on Friday, Feb. 19.  The FDIC estimates the event will cost the Deposit Insurance Fund $38.1 million.  Marco Community Bank is the 17th FDIC-insured institution to fail in 2010 and the third to fail in Florida this year.

BBVA COMPASS ADVANCES IN SUNBELT WITH GUARANTY CONVERSION
Birmingham, AL-based, $64.6 billion-asset BBVA Compass Bank has completed its conversion and rebranding of former Guaranty Bank branches in California and Texas into BBVA Compass.  BBVA Compass Chairman Jose Maria Garcia Meyer said, “The seamless conversion of Guaranty further advances BBVA’s well-defined strategy of growth and development of its U.S. franchise in the attractive Sunbelt Region.”  BBVA Compass entered into a loss-sharing agreement with the Federal Deposit Insurance Corporation (FDIC) in August 2009 to acquire Austin, TX-based, $13.5 billion-asset Guaranty Bank’s $11.5 billion in deposits, $12 billion of its assets and assume 20% to 5% of its losses.  BBVA Compass is a subsidiary of Birmingham, AL-based Compass Bancshares, a unit of Bilbao, Spain-based, $785 billion-asset BBVA Group.

U.S. FIXED ANNUITY SALES TREND DOWN
U.S. fixed annuity sales in the fourth quarter continued their quarter-to-quarter downward trend.  While first quarter sales of $34.8 million rose 2.1% over fourth quarter 2008 sales of $34.1 million, second quarter 2009 dropped 20% from first quarter sales of $27.8 million; third quarter sales dropped another 20% from second quarter sales to $22.1 million, and fourth quarter sales declined 9% to $20.4 million from third quarter sales.  Overall, year 2009 fixed annuity sales totaled $105.1 billion, down 1.5% from record earnings of $106.7 billion in 2008, according to data compiled by Evanston, IL-based Beacon Research for Washington, DC-based Insured Retirement Institute (IRI).  Book value annuities made up 44.2% of the fixed annuity market in the fourth quarter followed by indexed annuities (37.3%), and trailed by immediate annuities (9.4%) and market value adjusted (MVA) annuities (9.1%).  For the year 2009, book annuities accounted for almost half (49.5%) of all fixed annuity sales, followed by indexed annuities (30.2%), MVAs (14.9%) and fixed income annuities (7.6%), Beacon Research shows.

U.S. INDEXED ANNUITY SALES HIT RECORD $30.2 BILLION IN 2007; INDEXED LIFE SALES CHOPPY
U.S. indexed annuity sales in 2009 reached a record $30.2 billion, exceeding the past record of $27.2 billion set in 2007 by 10%, according to AnnuitySpecs.com Indexed Sales and Market Report.  Record sales in the second and third quarters drove the results, which were slowed by fourth quarter sales of $7 billion, down 6.7% from $7,5 billion in third quarter 2009 and off 2.7% from $7.2 billion in fourth quarter 2008.  Jackson National Life was the number one provider of indexed annuities in the bank and wirehouse market, but Allianz Life was the top provider overall, followed by American Equity, Jackson National and ING, respectively.
     Indexed life insurance sales of $151.3 million in the fourth quarter slipped 4% compared to fourth quarter 2008 sales of $157.6 million, but were up 16% compared to third quarter 2009 sales of $127.1 million.  Aviva, with a 22% market share, was the top indexed life insurance provider.  Pacific Life, with the number 1 indexed life product, ranked second, followed by National Life Group, Minnesota Life, and American General Companies.  Among all indexed life insurance products sold, the average premium paid totaled $7,596, Pleasant Hill, IA-based AnnuitySpecs.com research shows.

U.S. BANK EXECUTIVES REJECT GOVERNMENT AS WAGE CZAR
Close to all (96%) of U.S. bank executives do not believe the government should play a role in setting bank compensation parameters and guidelines, and 61% do not believe such compensation parameters and guidelines will reduce excessive risk-taking, according to Grant Thornton’s 17th Bank Executive Survey sponsored by Bank Director magazine.  Executive pay should be based upon bank performance, 84% of bankers believe, and 58% believe increased government involvement will negatively affect their ability to successfully retain and recruit good executive management.  The vast majority (71%) of bankers in the Southeast agree with that last statement, followed by bankers in the Central Region (63%), the West (62%), the Midwest (55%) and last of all the Northeast (46%), Chicago-based Grant Thornton.

RETIREMENT AGE WORKERS GOOD BETS FOR ANNUITIES
A record 55% of Americans plan to work past age 67, and the number who plan to work fulltime at that age has climbed to a new high of over 28%, according to the Unretirement Index based on a survey conducted by Wellesley, MA-based Sun Life Financial, U.S.   Sun Life Financial Distributors President Terry Mullen said,
”Americans need help building their savings for a more secure environment, and annuities with their guaranteed life income can help.”

BANCASSURANCE INLCUDES MICROINSURANCE IN PHILIPPPINES
The Philippines central bank, Bangko Sentral neg Piliinasai (BSP), has given Philippine banks the authority to distribute microinsurance products through licensed insurance providers.  The move is designed to reach the over 28 million Philippines living in poverty or low-income situations but who still need protection against death, injury, loss of property and other contingent events, BSP said.  Banks, according to BSP, are trusted in the countryside and understand the low-income market and are, therefore, ideal distribution channels for those low premium products whose benefits match the limited needs of the population they serve.  Microinsurance products will primarily be offered through the country’s 3,500 rural banks, BestWire reports.

INSURANCE SECOND LARGEST CONTRIBUTOR TO NONINTEREST INCOME AT BREMER DESPITE DECLINE
St. Paul, MN-based, $7.8 billion-asset Bremer Financial Corp. reported fourth quarter 2009 insurance brokerage fee income fell 17.1% to $5.86 million, down from $7.06 million in fourth quarter 2008, but remained the second largest contributor to noninterest income, behind service charges.  Investment management and trust fees, however, grew 13% to $3.54 million, up from $3.13 million, and investment brokerage fee income jumped 30.5% to $2.3 million, up from $1.76 million.  Insurance, investment management and trust fees and investment brokerage fees comprised, respectively, 20.9%, 12.7% and 8.2% of noninterest income, which increased 11.6% to $27.98 million, up from $25.06 million in fourth quarter 2008, helped by a $3.16 million gain on loan sales.  Net interest income on a 4.03% net interest margin grew 14.7% to $58.47 million, up from $51 million, as loan loss provisions fell by 20% to $13.09 million, and net income, reflecting gains in interest and noninterest income, rose 2.1% to $15.52 million, up from $15.19 million in fourth quarter 2008.
     For the year 2009, insurance brokerage fee income slid 5.7% to $14.75 million, down from $15.64 million; investment management and trust fees decreased 5.5% to $12.43 million, down from $13.15 million, and investment brokerage fee income fell 9.3% to $6.64 million, down from $7.33 million.  Insurance, investment management and trust fees, and investment brokerage fee income comprised, respectively, 12.8%, 10.8% and 5.8% of noninterest income, which, bolstered by a 125% surge in gains on loan sales and an over $12 million gain on securities sales, jumped 21.2% to $114.9 million, up from $94.82 million.  Net interest income on a 3.93% net interest margin slipped 3.6% to $214 million, down from $222 million, as loan loss provisions jumped 42.1% to $59.4 million, up from $41.8 million, and net income, reflecting loan loss provisions and an $11 million increase in FDIC insurance and fees, decreased 9.5% to $65.16 million, down from $72.02 million in 2008.  Bremer Financial CEO Stan Dardis said, “Despite one of the most economically challenging years in history, the employees of Bremer remained focused on meeting the needs of our clients and our communities.”
     In 2008, Bremer Financial’s insurance brokerage income comprised 17.9% of its noninterest income and 4.4% of its net operating revenue.  The company ranked 94th in insurance brokerage earnings among all U.S. bank holding companies (BHCs), according to the Michael White-Prudential Bank Insurance Fee Income Report.

COMBINED INSURANCE AND RETAIL BROKERAGE FEE INCOME JUMP 47.2% AT FIRST COMMONWEALTH
Indiana, PA-based, $6.4 billion-asset First Commonwealth Financial reported additional producers and an enhanced calling program at First Commonwealth Insurance Agency and First Commonwealth Advisors propelled fourth quarter insurance and retail brokerage fee income ahead 47.2% to $1.82 million, up from $1.24 million in fourth quarter 2008, to comprise 18.7% of noninterest income, which decreased 2.8% to $9.73 million, down from $10.01 million.  Trust income and income from bank-owned life insurance (BOLI) rose, with trust income up 6.2% to $1.2 million, from $1.13 million; and BOLI income up 2.6% to $1.19 million from $1.16 million.  Trust earnings comprised 12.3% of noninterest income, while BOLI comprised 12.2%.  Net interest income on a 3.78% net interest margin dropped 22.9% to $32.38 million, down from $42.01 million, as loan loss provisions, impacted by a commercial and industrial loan in Western Pennsylvania that moved to nonaccrual status, almost doubled to $21,16 million, and net income tumbled 63.4% to $3.29 million, down from $8.99 million.
     For the year 2009, insurance and retail brokerage fee income jumped 42.6% to $7.56 million, up from $5.3 million, to comprise 21.4% of noninterest income, which, hit by $35.3 million in net impairment losses, was more than sliced in half to $20.19 million, down from $42.8 million.  Trust income decreased 14.9% to $4.8 million, down from $5.64 million, to comprise 13.6% of noninterest income, and BOLI fell 21.3% to $4.44 million, down from $5.52 million, to comprise 12.6% of noninterest income.  Net interest income on a 3.71% net interest margin dropped 36.0% to $105.94 million, down from $165.5 million, as loan loss provisions more than quadrupled to $100.6 million, up from $23.1 million, and the company reported a net loss of $19.5 million compared to net income of $43.09 million in 2008, impacted by loan loss provisions and net impairment losses.  First Commonwealth President and CEO John Dolan said, “We will continue to reduce the size of our individual credit exposure to be more in line with current policies.”  Regarding noninterest income, Dolan said the addition of more producers and an enhanced calling program generated higher insurance and retail brokerage commissions at year-end.  He added, “In 2010 we will better integrate First Commonwealth’s wealth management capabilities within the commercial and retail side of the bank.”
     In 2008, First Commonwealth’s insurance brokerage income comprised 5.3% of its noninterest income and 1.2% of its net operating revenue.  The company ranked 108th in insurance brokerage earnings among all U.S. bank holding companies (BHCs), according to the Michael White-Prudential Bank Insurance Fee Income Report.
     In 2008, First Commonwealth’s investment program income (securities brokerage plus annuity commissions) comprised 7.3% of its noninterest income and 1.4% of its net operating revenue.  The company ranked 85th in investment program earnings among all U.S. bank holding companies (BHCs), according to the , according to the Michael White Bank Investment Program Income Report.

BENEFITS ADMINISTRATION INCOME GROWS WITH CLIENTS AT COMMUNITY BANK SYSTEM
DeWitt, NY-based, $5.4 billion-asset Community Bank System reported “new client generation and favorable year-over-year comparisons from asset-based revenues” drove an 8.8% increase in revenue generated by its employee benefits administration and consulting businesses in the fourth quarter to $7.2 million, up from $6.6 million in fourth quarter 2008.  At the same time, wealth management revenues jumped 23.5% to $2.38 million, up from $1.93 million, bolstered by improved demand and favorable market comparisons.  Combined benefits administration and consulting income was the second largest contributor to noninterest income behind deposit service fees of $11 million and comprised 33.2% of noninterest earnings, which climbed 15.4% to $21.7 million, up from $18.8 million.  Wealth management income, the third largest contributor to noninterest earnings, comprised 11.0% of that revenue.  Net interest income on a 3.86% net interest margin rose 6.2% to $40.36 million, up from $38 million, as loan loss provisions increased by less than $200,000 to $2.59 million, but net income fell 21.7% to $9.4 million, down from $12 million, as the company took a $3.1 million noncash charge for impairment of goodwill tied to its wealth management business, and took a $1.4 million special charge related to the early termination of a system services contract.  Community Bank System President and CEO Mark Tryniski said, “We realized a solid fourth quarter revenue increase of more than 9% in a highly unfavorable business environment.”
     For the year 2009, benefit plan administration and consulting fees grew 7.8% to $27.8 million, up from $25.8 million in 2008, but asset management fee income slipped 0.2% to $8.63 million, down from $8.65 million.  Benefit and consulting fees comprised 33.2% of noninterest income, and asset management earnings comprised 10.3% of that revenue, which climbed 13.7% to $83.54 million, up from $73.47 million, helped by a $3 million jump in mortgage banking revenues, a $6 million climb in deposit fees and the $2 million increase in benefit and consulting fees.  Net interest income grew 9.8% to $155.7 million, up from $141.8 million, as a $7 million increase in interest income more than compensated for a $3.06 million increase in loan loss provisions to $9.79 million.  But net income decreased 9.8% to $41.4 million, down from $45.9 million in 2008, impacted by fourth quarter charges.  Tyniski said Community Bank System has not and never plans to participate in the Trouble Asset Relief Program (TARP).  “We are confident,” he said, “that we will continue to generate sufficient capital to respond to our business investment needs and the organic growth opportunities in our markets.”
     In 2008, Community Bank System’s insurance brokerage income comprised 3.1% of its noninterest income and 1.0% of its net operating revenue.  The company ranked 120th in insurance brokerage earnings among all U.S. bank holding companies (BHCs), according to the Michael White-Prudential Bank Insurance Fee Income Report.

YEAR 2009 INSURANCE BROKERAGE AND TRUST FEES UP AT PINNACLE FINANCIAL
Nashville, TN-based, $5.1 billion-asset Pinnacle Financial Partners reported fourth quarter 2009 trust fees were a bright spot among noninterest earners, as these revenues climbed 26.8% to $705,906, up from $556,727 in fourth quarter 2008.  In contrast, insurance brokerage fee income declined 1.4% to $894,990, down from $907,950.  Investment services fee income decreased 1.7% to $1.14 million, down from $1.16 million in fourth quarter in fourth quarter 2008.  Investment services income, insurance brokerage earnings and trust fees comprised, respectively, 8.6%, 10.9% and 13.9% of noninterest income, which rose 1.7% to $8.18 million, up from $8.04 million.  Net interest income on a 3.19% net interest margin fell 18.5% to $21.34 million, down from $26.18 million, as loan loss provisions increased more than fourfold to $15.69 million, up from $3.71 million, and the company, impacted further by $6.7 million in net charge offs, reported a fourth quarter net loss of $3.98 million, compared to net income of $7.74 million the year before.
     For the year 2009, insurance brokerage fee income climbed 14.5% to $4.03 million, up from $3.52 million, and trust fees grew 18.8% to $2.59 million, up from $2.18 million.  Investment services fees, however, fell 15.0% to $4.18 million, down from $4.92 million.  Insurance, trust and investment services earnings comprised, respectively, 10.2%, 6.5% and 10.5% of noninterest income, which grew 14.2% to $39.65 million, up from $34.72 million, bolstered by a $6.46 million gain on the sale of investment securities.  Net interest income, however, plunged 86.4% to $14.03 million, down from $103 million, slammed by an over $105 million increase in loan loss provisions to $116.76 million.  The company did not report its year 2009 overall results, but Pinnacle President and CEO M. Terry Turner said, “Given the uncertainty as to when the economic landscape will improve, we cannot forecast that our nonperforming assets have peaked.”
     In 2008, Pinnacle Financial’s insurance brokerage income comprised 10.2% of its noninterest income and 2.4% of its net operating revenue.  The company ranked 97th in insurance brokerage earnings among all U.S. bank holding companies (BHCs), according to the Michael White-Prudential Bank Insurance Fee Income Report.
     In 2008, Pinnacle Financial’s fiduciary income comprised 6.3% of its noninterest income and 1.5% of its net operating revenue.  The company ranked 206th in insurance brokerage earnings among all U.S. bank holding companies (BHCs), according to the Michael White Bank Trust Fee Income Report.

INSURANCE COMPRISES 30% OF NONINTEREST INCOME AT BENEFICIAL MUTUAL DESPITE DECLINES
Philadelphia, PA-based, $4.7 billion-asset Beneficial Mutual Bancorp reported insurance brokerage fee income in fourth quarter 2009 fell 16.3% to $1.85 million, down from $2.21 million in fourth quarter 2008.   Insurance brokerage earnings comprised 29.7% of noninterest income, which surged 60.6% to $6.23 million, up from $3.88 million in fourth quarter 2008, when the company took a $2.58 million impairment charge on securities available for sale.  Net interest income on a 3.29% net interest margin jumped 87.4% to $31.17 million, up from $16.63 million, bolstered by a $9.6 million reduction in loan loss provisions to $3.6 million.  And the company reported net income of $6.19 million compared to a net loss of $2.94 million in fourth quarter 2008.
     For the year 2009, insurance brokerage fee income fell 19.4% to $8.13 million, down from $10.09 million in 2008, and comprised 30.3% of noninterest income, which grew 13.8% to $26.85 million, up from $23.60 million, helped by a $6.53 million gain on the sale of investment securities, which helped overcome a $2.8 million slump in service charges.  Net interest income on a 3.28% net interest margin climbed 17.4% to $111.65 million, up from $95.11 million, as interest earnings soared by over $13 million and loan and loss provisions declined by over $3 million.  Net income rose 3.3% to $17.09 million, up from $16.55 million in 2008.  Beneficial Mutual Bancorp President and CEO Gerald Cuddy said, “We believe that the economic crisis that has gripped our nation and adversely impacted our customers and communities will result in a refocus on financial responsibility.”
     In 2008, Beneficial Mutual Savings Bank’s insurance brokerage income comprised 35.7% of its noninterest income and 6.7% of its net operating revenue.  The company ranked 33rd in insurance brokerage earnings among all U.S. banks, according to the Michael White-Prudential Bank Insurance Fee Income Report.

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