NU Online News Service, May 13, 3:44 p.m.EDT

A New York research group announced that a study has found bankswith some insurance activity had 2008 median net income nearly 70percent higher than banks without insurance involvement.

That conclusion follows analysis of 2008 Federal DepositInsurance Corporation (FDIC) call report data, said Bank InsuranceMarket Research Group, based in Mamaroneck, N.Y.

The group found that banks with some insurance activity had 69percent higher (median) net income in 2008. In 2007, net income was44 percent higher.

This trend toward higher (median) net income persisted in allasset-size groups with the exception of the largest banks wherethere was no difference, said the firm.

It reported that among 470 banks with $1-to-$10 billion inassets, for instance, those with some insurance activity in2008--about half the total--scored 23 percent higher in (median)net income, and the trend was more pronounced in smaller banks.

Andrew Singer, Bank Insurance Market Research Group managingdirector, said, "Overall median net income was off 36 percent in2008 compared with 2007. Nonetheless, the data suggests thatpursuing a diversification strategy--of which insurance brokerageis often a key part--may have again paid off for banks in2008."

He noted that "at a time when banks' traditional income sourcesare under pressure, an insurance agency business can help smoothout earnings and act as a hedge against interest-ratevolatility."

Overall, the median net income for 7,563 operating banks andsavings banks was $686,000 in 2008, down from $1,071,000 in 2007.The median at 3,338 banks and savings banks that reported someinsurance activity--44 percent of the total number of banks--was$1,160,000, the company said.

It found the largest discrepancy was in the smallest banks.Median net income at 5,243 banks with assets less than $250 millionwas $469,000 in 2008. (That is, the middle ranking bank in thisasset-size group reported $469,000 in profits.) Among the 2,136with some insurance activity, however, the median was $825,000--76percent higher.

The median ratio of noninterest income to total bank revenuesamong all 7,563 banks was 14 percent. At banks with some insuranceactivity, this closely watched ratio was 17 percent. Both ratioswere unchanged from 2007.

The Bank Insurance Market Research Group, online at www.singerpubs.com, providesmarket research and investment sales data to the bank and insuranceindustries. Data is based on in-depth surveys of depository andinsurance entities augmented by analysis of government data.