First quarter insurance brokerage fees for bank-owned brokeragefirms was down close to 11 percent over the same period last yearaccording to a report from a bank consulting firm.

The Michael White-Prudential Bank Fee Income Report, releasedtoday, says despite reaching an aggregate first quarter result of$1.81 billion in insurance brokerage fees this year, the secondhighest on record, fees dropped 10.7 percent from last year'srecord $2.03 billion.

Of the top twelve bank holding companies, two primarily propertyand casualty insurance brokerage firms, Wells Fargo & Co. andBB&T Corp., reported mixed results.

Ranked second on the list, Wells Fargo, saw its fee income dropby $2 million, or less than 1 percent, to $453 million.

Third ranked BB&T, however, saw its fee income climb almost10 percent, or $22 million, to $244 million. BB&T owns moreagencies than any other holding company, the report notes.

First ranked CITIGROUP Inc., which is not a P&C broker, sawits fee income drop close to 8 percent in the quarter, or $43million, to $509 million.

Despite the drop, Michael White, president of Michael WhiteAssociates, the bank consulting firm, says the first quarter of2012 saw a number of holding companies expand their insurancerevenue.

“We examined 224 [holding companies] in the first quarter thatare on track to earn $250,000 in annualized insurance brokerageincome,” says White in a statement. “At quarter's end, 145 of these[holding companies] showed positive growth in their insurancebrokerage income, up 34.3 percent from 108 [holding companies] withpositive growth at the end of first quarter 2011.”

He went on to note that close to 65 percent of these companieshad first quarter increases in 2012 compared to 47 percent in2011. The number of holding companies with double digitincreases in insurance brokerage fees rose more than 25 percentfrom 75 last year to 94 so far this year.

Holding companies with over $10 billion in assets had thehighest participation in insurance brokerage activities, more than80 percent. The large holding companies produced $2.32 billion ininsurance fee income, which was close to 9 percent less than lastyear's $2.54 billion.

In an interview, White says that he believes there were a fewmajor reasons for the drop in insurance broker fee income. Thecombination of soft market pricing and poor economic conditions puta drag on their earnings. P&C brokers also experienced a dropin their contingent commissions due to the poor performance oftheir books of business from the 2011 catastrophe season.

He also feels the numbers suffered from a failure of some banksto fully invest in their insurance brokerage segments because theyfeel the earnings are not significant enough to their bottomline.

As far as CITIGROUP, White notes the bank has sold off some itsinsurance brokerage holdings, reducing earnings.

In a statement, Joan H. Cleveland, senior vice president,business development with Prudential's Individual Life InsuranceBusiness, notes that insurance is a useful addition to the bank'sbook of business and “it can help banks expand the relationshipthey have with customers and strengthen their retentionefforts.”

The results are based on data from 7,307 commercial banks,FDIC-supervised savings banks and savings associations, and 1,074large top-tier bank holding companies and thrift holding companiesas of March 30 of this year.