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JANUARY
23 - 29, 2012
U.S.
COMMUNITY BANK INVESTMENT PROGRAM EARNINGS RISE 4.4%
U.S. community bank investment program fee income (combined securities
brokerage and annuity earnings) in the first nine months of 2011 rose
4.4% to $357.9 million, up from $342.8 million in the first nine months
of 2010, according to the Michael
White-Securities America Report.
Less than a quarter (22%) of community banks (i.e., banks with
less than $4 billion in assets) reported investment program earnings,
which, on average, amounted to $595 per million dollars of each bank’s
retail deposits (Program Penetration).
Additionally, investment program earnings comprised an average
9.2% of each bank’s noninterest income (Program Concentration), and
averaged $1,813 dollars in program earnings per bank employee (Program
Productivity), with each domestic banking office averaging $39,300 in
investment program revenue (Program Density).
Securities brokerage earnings dominated 73.5% of all community
bank investment program revenue in the first nine months of 2011, rising
2.7% to $263.2 million, up from $256.2 million in the first nine months
of 2010.
Not quite nine in ten (88%) community banks with investment
program revenue reported securities brokerage earnings, and nearly six
in ten (57%) reported securities brokerage revenue alone.
Annuity earnings showed stronger growth than securities brokerage
earnings in the first nine months, increasing 9.5% to $94.7 million, up
from $86.5 million in the first nine months of 2010.
And, while annuity revenue comprised only 26.5% of community bank
investment program income, that percentage was up from 25.2% during the
same period in 2010.
Additionally, 57% of community banks reported annuity earnings,
and 12.2% reported annuity income only.
Center State Bank of Florida (FL), a bankers’ bank that sells
securities for other community banks, stood out as the top community
bank investment program earner, despite reporting a 25.7% drop in that
revenue to $19.37 million, down from $25.91 million in the first nine
months of 2010.
North Shore Community Bank & Trust Company (IL) ranked a
distant second with 9.5% growth over the same period in 2010 to $12.10
million.
TIB The Independent Bankersbank (TX) ranked third with a 19%
climb in earnings to $10.12 million.
BAC Florida Bank (FL) followed despite an 11.4% decline in
investment program revenue to $4.90 million, and The Washington Trust
Company of Westerly (RI) ranked fifth after a 1.8% rise in investment
program earnings to $3.3 million, the Michael
White-Securities America Report shows.
All leaders in community bank annuity earnings reported increased
annuity revenues compared to the first nine months of 2010 except
fourth-ranked First Victoria National Bank (TX), which reported a 10.8%
decline to $1.20 million, and fifth-ranked United Bank (WV, with a 31%
drop to $1.1 million.
The other top annuity earners were, respectively, first through
third, Lake City Bank (IN), up 22% to $1.58 million, Sun National Bank
(NJ) up 20.1% to $1.26 million, and Marquette Bank (IL), up 5.8% to
$1.24 million.
Third quarter investment program earnings growth slowed overall
compared to the first two quarters of 2011.
While third quarter securities brokerage revenue of $87.88
million bested second quarter revenue of $87.77 million by 0.1%, third
quarter annuity earnings were down 9.9% to $30.4 million from $33.7
million in second quarter 2011.
Overall, third quarter investment program revenue slipped 2.6% to
$118.3 million, down from $121.5 million in second quarter 2010.
Compared to third quarter 2010, however, third quarter 2011
securities brokerage, annuity fee income and overall investment program
revenue were up, respectively, 0.8%, 3.7% and 1.5%, the Michael
White-Securities America Report found.
Commenting on community bank investment program performance
during the first nine months of 2011, Securities America Senior Vice
President Gregg Johnson said, “Given the state of the economy,
community banks’ investment program revenues have done well growing at
4.4%,” over the same period the year before.
Johnson noted that while investment program growth slowed as the
year progressed, mean program income in the first three quarters not
only was 7.8% higher than in 2010, but it also ranked as the best level
of mean investment program income since 2007.
For
more on the Michael White-Securities America Report, click here.
FINRA
FINES CITIGROUP FOR CONFLICT OF INTEREST FAILURES
The Financial Industry Regulatory Authority (FINRA) has fined Citigroup
Global Markets $750,000 for failing to disclose conflicts of interest in
certain research reports and public appearances.
FINRA found that from January 2007 through March 2010 the
Citigroup unit had neither reasonable supervisory procedures in place
nor an accurately programmed and functioning database to flag conflicts
of interest.
As a result, Citigroup Global Markets failed to appropriately
disclose investment-banking conflicts, market-making conflicts and 1% or
more equity ownership conflicts, FINRA found.
FINRA Chief of Enforcement Brad Bennett said, “Firms need to
provide investors with full and accurate information so they will be
able to take it into consideration before making an investment
decision.”
Citigroup neither admitted nor denied the charges but agreed to
an entry of FINRA’s findings.
GENWORTH
TO TAP GROWING MASS AFFLUENT SENIOR MARKET
Richmond, VA-based Genworth Financial, which re-entered the U.S. indexed
annuity market in December 2011, plans to focus on the retirement needs
of the middle and upper income earners.
Genworth says it expects indexed annuity sales to grow in this
market, especially since each day, over the next 20 years, 10,000
Americans are expected to turn 65.
NEWTEK
INSURANCE AGENCY ENDORSED BY CUNA STRATEGIC SERVICES
CUNA Strategic Services (CSS) has endorsed New York City-based Newtek
Insurance Agency as its exclusive provider of health and benefit
insurance products to small business members of U.S. credit unions.
Newtek Insurance Agency parent, Newtek Business Services (aka The
Small Business Authority) has partnered with CSS since 2003, offering
credit union members small business loans, debit card processing
services, web hosting services, business tax services, web-based payroll
services, accounts receivable financing and the like.
Newtek Business Services President and CEO Barry Sloane said,
“We are pleased that our eight-year relationship with CUNA Strategic
Services … has led to the addition of health insurance and benefits
for small business members.”
He added, “Never before have credit union members and Americans
been so challenged to protect their health and families.”
CSS is owned by Madison, WI-based Credit Union National
Association (CUNA) and state credit union leagues.
BURGEONING
SENIOR POPULATION FACES RISING LTC COSTS
Americans over age 65 comprise the nation’s largest age set, according
to the 2010 U.S. Census and the U.S. Department of Health and Human
Services (HHS).
And this growing age group faces potentially enormous long-term
care costs, according to Northwestern Mutual’s most recent Cost of
Long-Term Care study.
Currently, the daily cost for a single-occupant, private nursing
home room in the U.S. averages $246.06 per day, $7,381.80 per month and
$88,581.60 per year.
The cost of a single-occupant room in an assisted living facility
averages $112.41 per day, $3,372.41 per month and $40,468.92 per year.
The cost of a shared room in an assisted living facility averages
$86.41 per day, $2,592.40 per month and $31,108.80 per year.
The cost for a home health aide from a certified home health care
agency averages $20.65 per hour, according to data collected by HHS and
Northwestern Mutual.
Northwestern Mutual Vice President Steve Sperka noted, “The
data is sobering and doesn’t even include the added expenses of
medical equipment, transportation, drugs and other hidden costs.”
He added that, while most people realize they will need care,
“they’re not sure how to plan for it.”
Sperka recommends that they begin with a trusted financial
advisor.
As a guide for financial advisors and individuals, Northwestern
Mutual has posted at its website the following helpful tools: the
Long-Term Care Cost Calculator, the Lifespan Calculator, and Long-Term
Care Costs and Options.
To
access these tools, click here.
FINRA
ISSUES NOTICE ON “COMPLEX PRODUCTS”
The
Financial Industry Regulatory Authority (FINRA) has issued Regulatory
Notice 12-03 notifying member firms of the regulator’s “heightened
supervision of complex products” and providing firms with guidance on
how to identify, vet and supervise the sale and marketing of these
products.
To
access the Notice regarding such “complex products” as structured
notes, inverse or leveraged exchange traded funds, hedge funds and such
securitized products as asset-backed securities, click here.
UK
FINANCIAL SERVICES AUTHORITY FINES RBS INSURANCE UNITS FOR DOCUMENT
TAMPERING
The U.K. Financial Services Authority (FSA) has fined Edinburgh,
Scotland-based, $2.04 trillion-asset Royal Bank of Scotland subsidiaries
Direct Line Insurance and Churchill Insurance £2.17 million ($3.33
million) for improperly altering 27 of the 50 consumer complaint files
requested for review by the FSA.
FSA Acting Director of Enforcement Tracey McDermott pointed the
finger at management and said, “The firms failed to give clear
instructions resulting in staff making inappropriate alterations, with
one individual even forging the signatures of colleagues.”
McDermott added, “The significant penalty is intended to
underscore to firms that it is of critical importance that material
provided to the FSA reflect the picture as it is, not as they might like
it,” BestNews reports.
INSURANCE
REVENUE FALLS AT WELLS FARGO
San Francisco-based, $1.3 trillion-asset Wells Fargo & Co.
reported insurance revenues in fourth quarter 2011 fell 17% to $466
million, down from $564 million in fourth quarter 2010, and trust and
investment fees (TIF) declined 10% to $2.66 billion, down from $2.96
trillion. Insurance
earnings and TIF comprised, respectively, 4.8% and 27.4% of noninterest
income, which decreased 7% to $9.71 billion, down from $10.43 billion in
fourth quarter 2010, when card fees and mortgage banking fees were,
respectively, $261 million and $393 million higher.
Fourth quarter net interest income on a 3.89% net interest margin
grew 10% to $8.85 billion, up from $8.07 billion in fourth quarter 2010,
reflecting a $420 million (22%) drop in interest expense and a $949
million (32%) drop in credit loss provisions to $2.04 billion, which
more than compensated for a 5% decrease in interest income to $12.38
billion in fourth quarter 2010.
Net income after preferred dividends grew to a record $3.8
billion, up from $3.23 billion in fourth quarter 2010.
For the year 2011, insurance revenue slid 8% to $1.96 billion,
down from $2.13 billion in 2010, despite what Wells Fargo & Co.
Chairman and CEO John Stumpf described as the company’s overall
“record cross-sell.”
At the same time, trust and investment fees (TIF) rose 3% to
$11.30 billion, up from $10.93 billion.
Insurance revenue and TIF comprised, respectively, 5.1% and 29.6%
of noninterest income, which declined 6% to $38.19 billion, down from
$40.45 billion in 2010, when mortgage banking fees and service charges
on deposit accounts were, respectively, $1.91 billion (20%) and $636
million (13%) greater.
Net interest income on a 3.94% net interest margin climbed 20% in
2011 to $34.86 billion, up from $29.00 billion in 2010, driven by a 50%
drop in loan loss provisions to $7.90 billion and a 17% ($7.39 billion)
decline in interest expense, which made up for a 6% ($3.38 billion)
slide in interest income.
Net income, helped additionally by $1.06 billion in reduced
expenses, climbed 29% to a record $15.03 billion, up from $11.63 billion
in 2010.
Stumpf said, “I am extremely pleased with Wells Fargo’s
performance in 2011,” especially during a time when the company
completed its conversion of Wachovia’s retail banking stores.
“Now all of our 6,239 retail banking stores are on a single
platform serving customers coast to coast,” Stumpf said.
In 2010, Wells Fargo & Co. reported $1.78 billion in
insurance brokerage fee income, which comprised 4.4% of its noninterest
income and 2.1% of its net operating revenue. The company ranked 2nd in
insurance brokerage earnings among U.S. bank holding companies (BHCs)
engaged in significant banking business, according to the Michael
White-Prudential Bank Insurance Fee Income Report.
TRUST
& INVESTMENT MANAGEMENT FEES DOWN AT U.S. BANCORP WHILE INVESTMENT
PRODUCT FEES RISE
Minneapolis, MN-based, $340 billion-asset U.S. Bancorp
reported fourth quarter 2011 trust and investment management (TIM) fees
fell 13.1% to $245 million, down from $282 million in third quarter
2010, and investment product fees rose 6.9% to $31 million, up from $29
million.
TIM fees and investment products fees comprised, respectively,
10.1% and 1.3% of noninterest income, which increased 9.4% to $2.43
billion, up from $2.22 billion in fourth quarter 2010, despite a $62
million (21.2%) drop in credit and debit card revenue.
Net interest income on a 3.60% net interest margin in fourth
quarter 2011 climbed 38.6% to $2.12 billion, up from $1.53 billion in
fourth quarter 2010, reflecting a $415 million drop in loan loss
provisions to $497 million and a $127 million increase in interest
income to $3.22 million.
Net income after dividends climbed 37.7% to $1.31 billion, up
from $951 million.
U.S. Bancorp President and CEO Richard Davis credited the
company’s “diversified business model” and its expanded fee-based
businesses with helping “mitigate the unfavorable impact of recent
debit card interchange reductions” in the quarter.
For the year 2011, trust and investment management (TIM) fees
slid 7.4% to $1.00 billion, down from $1.08 billion in 2010, while
investment product fees grew 16.2% to $129 million, up from $111
million.
TIM fees and investment product fees comprised, respectively,
11.4% and 1.5% of noninterest income, which rose 4.8% to $8.76 billion,
up from $8.36 billion in 2010, despite declines in credit and debit card
revenue, deposit service charges and mortgage banking revenues.
Net interest income on a 3.65% net interest margin jumped 49.6%
to $7.78 billion, up from $5.2 billion in 2010, reflecting a $481
million increase in interest income to $12.64 billion, a $63,000
decrease in interest expense to $2.52 billion, and a $2.01 billion drop
in loan loss provisions to $2.34 billion.
Net income after dividends climbed to a record $4.72 billion, up
from $3.33 billion in 2010.
Chairman, President and CEO Richard Davis said, “Our full year
2011 results reflect the advantages derived from our diversified
business model and our ability to successfully complement our strategy
and accomplish our goals.”
In 2010, U.S. Bancorp reported $38.0 million in insurance
brokerage fee income, which comprised 0.5% of its noninterest income.
The company ranked 20th in insurance brokerage earnings among
U.S. bank holding companies (BHCs) with over $10 billion in assets,
according to the Michael
White-Prudential Bank Insurance Fee Income Report.
INSURANCE
REVENUE TRENDS UP AT BB&T
Winston-Salem, NC-based, $174.6 billion-asset BB&T Corp. reported
insurance revenue in fourth quarter 2011 rose 2% to $254 million, up
from $249 million in fourth quarter 2010, driven by the McGriff, Seibels
& Williams’ corporate brokerage platform, the company said, and
benefiting from the fourth quarter 2011 acquisitions of two employee
benefits insurance agencies in California and one commercial
property-casualty and employee benefits broker in Maryland.
In contrast, trust and investment advisory (TIA) earnings
remained flat at $42 million; income from bank-owned life insurance
(BOLI) slipped 3.2% to $30 million, down from $31 million; and
investment banking and brokerage fees dropped 23% to $75 million, down
from $97 million in fourth quarter 2010.
Insurance, TIA, BOLI, and investment banking and brokerage fees
comprised, respectively, 27.5%, 4.6%, 3.3% and 8.1% of noninterest
income, which slid 4.4% to $922 million, down from $964 million in
fourth quarter 2010, hit by a $31 million drop in check card fees
resulting from the implementation of the Durbin Amendment, and a $46
million net loss in FDIC loss share income.
Net interest income on a 4.02% net interest margin jumped 71.3%
in fourth quarter 2011 to $1.18 billion, up from $689 million in fourth
quarter 2010, driven by a $371 million (58%) drop in loan loss
provisions to $272 million and a $106 million (25%) decline in interest
expense.
Net income, after a $184 million increase in foreclosed property
expense, soared 88% to $391 million, up from $208 million in fourth
quarter 2010.
For the year 2011, insurance earnings remained steady at $1.04
billion; trust and investment advisory (TIA) revenues increased 8.8% to
$173 million, up from $159 million; income from bank-owned life
insurance (BOLI) slipped less than 1% to $122 million, down from 123
million; and investment banking and brokerage fees slid 5.4% to $333
million, down from $352 million.
Insurance brokerage income, TIA fees earnings, BOLI and
investment banking and brokerage fees comprised, respectively, 33.4%,
5.6%, 3.9% and 10.7% of noninterest income, which fell 21.3% to $3.11
billion, down from $3.96 million in 2010 when securities gains were $492
million greater.
Net interest income in 2011 jumped 61% to $4.32 billion, up from
$2.68 billion in 2010, reflecting a $1.45 billion (55%) drop in loan
loss provisions to $1.19 billion and a $417 million decrease (23%) in
interest expense to $1.38 billion, which overcame a $230 million decline
(3.2%) in interest income to $6.89 billion.
Net income climbed 58% to $1.29 billion, up from $816 million in
2010.
Commenting on the results for the fourth quarter and the year
2011, BB&T Chairman and CEO King said, “We met essentially all of
our strategic objectives and are successfully emerging from the credit
cycle.”
In 2010, BB&T Corp. reported $933.3 million in insurance
brokerage fee income, which comprised 33.0% of its noninterest income
and 11.5% of its net operating revenue.
The company ranked 3rd in insurance brokerage earnings
among U.S. bank holding companies (BHCs) engaged in significant banking
business,
according to the Michael
White-Prudential Bank Insurance Fee Income Report.
___
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