FEDERAL AGENCIES ISSUE FINAL MODEL PRIVACY NOTICE FORM

The Federal Deposit Insurance Corporation (FDIC) Board, the Board of Governors of the Federal Reserve System, the Commodity Futures Trading Commission, the Federal Trade Commission, the National Credit Union Administration, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the U.S. Securities and Exchange Commission have issued their jointly developed Final Model Privacy Notice Form (model form). The model form is designed to enable financial institutions to succinctly, comprehensibly and in an easy-to-read font notify consumers of their information-sharing practices. Institutions that use the model form will obtain a “safe harbor” and satisfy disclosure requirements. To access the Final Model Privacy Notice Form, click here.

LABOR DEPT. DROPS RULE ALLOWING DIRECT INVESTMENT ADVICE TO DEFINED CONTRIBUTION PENSION PLAN PARTICIPANTS

The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) has withdrawn the January 21, 2009 Final Rule under the Employee Retirement Income Security’s Act that implemented the Pension Protection Act exemption that would have allowed mutual fund company representatives to offer direct investment advice to defined contribution plan participants. The Final Rule was to have taken effect May 17, 2010. To read the notice withdrawing the Rule, click here.

OVERALL FIXED ANNUITY SALES DROP 21%

Third-quarter U.S. fixed annuity sales fell 21% to an estimated $21.9 billion, down from $27.7 billion in third quarter 2008 and second quarter 2009, according to Evanston, IL-based Beacon Research’s survey of fixed annuity providers. Book value products were the most popular fixed annuities sold, but their $9.9 billion in sales reflected a 30% drop from a year ago. In contrast, indexed annuity sales rose 6% to $7.3 billion to rank second. Market value adjusted (MVA) annuities ranked third but fell 37% to $2.7 billion, and fixed income annuities ranked fourth, declining 16% to $1.9 billion. Pacific Life was the number one issuer of book value annuities and the number one provider of fixed annuities to banks. Allianz led in indexed annuities; ING USA led in MVA sales, and New York Life continued to dominate in fixed income annuity sales, Beacon Research’s Fixed Annuity Premium Study shows. For more on the report, click.

NOVEMBER 23 - 29, 2009

U.S. indexed annuity sales in the third quarter grew 11.3% to $7.5 billion, up from $6.7 billion in third quarter 2008, with bank sales tripling to comprise 12.3% of all indexed annuity sales, according to AnnuitySpecs.com’s Advantage Index Sales and Market Report. Among carriers “some companies’ sales are up more than 75%, and others’ sales are down almost 60%,” AnnuitySpecs.com President and CEO Sheryl Moore said. Minnesota, MN-based Allianz Life ranked as the number one indexed annuity provider, followed by West Des Moines, IA-based American Equity, Radnor, PA-based Lincoln National, Lansing, MI-based Jackson National, and Des Moines, IA-based Aviva.

INSURANCE LARGEST CONTRIBUTOR TO NONINTEREST INCOME AT SHORE BANCSHARES

Easton, MD-based, $1.16 billion-asset Shore Bancshares reported third-quarter insurance brokerage fee income slipped 3.6% to $2.74 million, down from $2.85 million in third quarter 2008, and, as the largest contributor to noninterest income, comprised 58.1% of that revenue, which decreased 10% to $4.72 million, down from $5.25 million, as all other sources of noninterest income also declined. Net interest income on a 3.79% net interest margin dipped 3.4% to $8.73 million, down from $9.03 million a year ago, as loan loss provisions jumped 95% to $1.7 million, and net income dropped 37.1% to $1.95 million, down from $3.1 million a year ago, as the company repurchased stock sold to the U.S. Treasury under the Troubled Asset Relief Program (TARP). Shore Bancshares President and CEO W. Moorhead Vermilye said, “We have been diligently moving problem loans through the resolution pipeline and expect to continue focusing resources on this area to maintain our traditional high-quality conservative balance sheet.” In 2008, Shore Bancshares reported $12.1 million in insurance brokerage income, which comprised 58.3% of its noninterest income. The company ranked 14th 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.

INSURANCE BROKERAGE EARNINGS COMPRISE 96% OF NONINTEREST INCOME AT VIST

Wyomissing, Pa-based, $1.28 billion-asset VIST Financial reported insurance brokerage fee income in the third quarter rose 6.8% to $3.26 million, up from $3.05 million in third quarter 2008, bolstered by the September 2008 acquisition of Fisher Benefits Consulting. In contrast, brokerage and investment advisory fee income fell 40% to $112,000, down from $186,000, and bank-owned life insurance (BOLI) dropped over 44% to $95,000, down from $171,000. Insurance, investment advisory and BOLI income comprised respectively, 95.9%, 3.3% and 2.8% of noninterest income of $3.4 million compared to a noninterest loss of $2.04 million a year ago, when the company took $7.09 million in impairment losses, compared to $2 million in impairment losses in third quarter 2009. Net interest income on a 3.24% net interest margin fell 10.7% to $7.64 million, down from $8.56 million, as loan loss provisions increased by $875,000 to $1.04 million. The company reported net income of $528,000, compared to a net loss of $4.61 million in third quarter 2008. VIST Financial President and CEO Robert Davis said, “Positive results continue to be significantly offset by additional credit provisioning and non-cash other-than-temporarily-impaired charges.” Increased non-performing loans are tied to two commercial construction and development projects, the company said. VIST announced it will be amending its 2008 through third quarter 2009 filings “to revise the fair value on certain Junior Subordinated Debentures and cash flow hedges related to those debentures.” Davis said all third-quarter balance sheet items reported remain unchanged. In 2008, VIST Financial reported $11.3 million in insurance brokerage income, which comprised 61.4% of its noninterest income. The company ranked 16th 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.

INSURANCE “CORE REVENUE STREAM” AT FIRST M & F

Kosciusko, MS-based, $1.68 billion-asset First M & F Corporation reported insurance brokerage commissions in the third quarter slid 4.9% to $1.097 million, down from $1.153 million in third quarter 2008, but “remain strong” and a part of the company’s “core revenue stream,” First M & F Chairman and CEO Hugh Potts said. Insurance income was the second largest contributor to noninterest earnings, behind service charges on deposits, comprising 20.4% of that revenue, which slid 2.5% to $5.38 million, up from $5.52 million, helped by $441,000 in securities gains. Fiduciary and brokerage fee income rose 2.6% to $120,000, up from $117,000, to comprise 2.2% of noninterest income. Net interest income on a 3.40% net interest margin dropped 30.8% to $7.49 million, down from $10.83 million, as loan loss provisions more than doubled to $4.81 million, and the company reported a net loss of $580,000 compared to net income of $2.21 million in third quarter 2008. Chairman Potts said, “As we look ahead, we believe the recession is coming to an end, [but] the lagging clean up will extend to 2010. in looking at First M & F there are some trends which are improving, some trends are relatively stable, and some trends are still bothersome and troubling.” In 2008, First M & F Corp reported $4.04 million in insurance brokerage income, which comprised 20.7% of its noninterest income. The company ranked 42nd in insurance brokerage earnings among U.S. bank holding companies with assets between $1 billion and $10 billion, according to the Michael White-Prudential Bank Insurance Fee Income Report.