How are bank investments programs faring during the recession? Are branch securities sales declining relative to annuities? Have revenues plunged compared with the previous quarter? Compared with the same quarter in the previous year?

The BISA-Singer's Bank Brokerage Index, debuting this week, sheds light on these and other questions.

The Index, a collaboration of the Bank Insurance and Securities Association (BISA) and Singer's Annuity & Funds Report, tracks brokerage revenues (annuities plus securities) at 20 operating banks each quarter. It is based on a close analysis of FDIC call report data.

The Index sets 2007 1st quarter as a baseline (100). Each bank has a running index based on the baseline quarter. If Bank A has 3rd quarter 2008 brokerage revenues that are 20 percent above its 2007 1st quarter revenues, its index would be 120 for the 3rd quarter of 2008.

The overall index is the average (mean) of the 20 banks that comprise the Index. The Index stood at 119 in the 3rd quarter of 2008.

Criteria for Inclusion

The 20 banks (see table below) that comprise the Index were selected based on the following criteria:

• Longevity. BISA Managing Director Heywood Sloane and Editor Andrew Singer included in the Index banks with established retail brokerage programs. Sloane and Singer each have more than two decades' experience tracking the bank brokerage industry.
• Production level. A minimum of $1 million in quarterly brokerage revenues was required for inclusion in the Index.
• Product diversity. Inclusion required a representative mix of annuities and securities. Banks that reported only annuities or only securities were not included.
• Geographical diversity. The Index sought to include banks from all regions of the country.
• A clean reporting history. Banks had to report investment data cleanly and consistently over time to the FDIC. Data could not include non-retail sources, such as annuities and securities sold through trust departments, for instance.

About the data

Brokerage revenues are comprised of two parts: annuities ("fees and commissions from sales of annuities") and securities ("fees and commissions from securities brokerage activities") as reported to the FDIC.

The annuity field includes both variable and fixed annuities. The securities field includes both mutual funds and individual stocks and bonds.

The Index also tracks the ebb and flow between annuities and securities at institutions. In the 3rd quarter of 2008, the mix was 58 percent annuities versus 42 percent securities. That is, 58 percent of the brokerage revenues at the 20 representative banks came from annuity commissions.

Sub-indexes track annuities and securities alone. In the 3rd quarter of 2008, for instance, the BISA-Singer's Annuity Index for Operating Banks stood at 138. The BISA-Singer's Securities Index for Operating Banks stood at 98. Annuity revenues have increased 38 percent while securities revenues have declined 2 percent since 2007 1st quarter.

Other Bank Indexes

Several other BISA-Singer's Indexes will appear shortly. These include:

• BISA-Singer's BHC Annuity Index, which tracks annuity revenues at bank holding companies (BHCs) based on Federal Reserve Board Y-9 reporting, and
• BISA-Singer's Thrift Investment Income Index, which tracks investment income ("income from the sale and servicing of mutual funds and annuities") at OTS-reporting thrift institutions.