|
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.
___
Michael White Associates (MWA) is pleased to provide
this
online Bank Insurance News in Brief. MWA also publishes the BankInsurance.com
Newsletter, a compilation of
important industry news stories posted at www.BankInsurance.com.
Click
Here to request your FREE
BankInsurance.com Monthly Newsletter
by Email
|
