Annuity fee income hit high for bank holding companies in first quarter

Bank holding companies reaped a record $734.5 million in annuity fee income during the first quarter, according to data from Michael White Associates. Data compiled by the Radnor, Pa.-based firm and the American Bankers Insurance Association in Washington showed that the income that banks earned from annuity sales climbed 12.4% from $653.3 million a year earlier. The report included information from all 7,447 commercial and Federal Deposit Insurance Corp.-supervised banks and 940 large top-tier bank holding companies. Commissions from bank annuity sales also rose, up 12.1% in the fourth quarter from the $655.2 million earned in the fourth quarter of 2007. Fully 381 of the 940 bank holding companies sold annuities during the first quarter this year, reaping $734.5 million in annuity commissions and fees. That was 15.7% of their total mutual fund and annuity income of $4.67 billion. Among the 7,446 banks, just 886 participated in annuity sales activities during the first quarter, earning $255.7 million in annuity commissions, or 34.8% of the banking industry’s total annuity fee income. Although the banks’ data was not broken out into which annuities earned the lion’s share of income, Michael D. White, president of Michael White Associates, thinks that the data reflect the rising sales of fixed annuities, which took off during the economic crisis while variable annuity sales foundered. “We do see other surveys that show variable annuities plummeting,” he said. “That’s a mirror of the economy; people are looking for safety, that’s what accounts for last year’s and this year’s growth for annuities on the bank end.” Top earners included Wells Fargo & Co. of San Francisco, in first place with $177 million in annuity income for the first quarter, up 532.14% from $28 million a year earlier. Bank of America Corp. in Charlotte, N.C., came in second with $111 million in annuity income, up 220.93% from a year earlier. Meanwhile, JPMorgan Chase & Co. was third, with the New York bank bringing in $90 million in annuity income, up 20% from a year earlier.