Third ranked BB&T, however, saw its fee income climb almost 10 percent, or $22 million, to $244 million. BB&T owns more agencies than any other holding company, the report notes.

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

Despite the drop, Michael White, president of Michael White Associates, the bank consulting firm, says the first quarter of 2012 saw a number of holding companies expand their insurance revenue.

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

He went on to note that close to 65 percent of these companies had first quarter increases in 2012 compared to 47 percent in 2011. The number of holding companies with double digit increases in insurance brokerage fees rose more than 25 percent from 75 last year to 94 so far this year.

Holding companies with over $10 billion in assets had the highest participation in insurance brokerage activities, more than 80 percent. The large holding companies produced $2.32 billion in insurance fee income, which was close to 9 percent less than last year's $2.54 billion.

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

He also feels the numbers suffered from a failure of some banks to fully invest in their insurance brokerage segments because they feel the earnings are not significant enough to their bottom line.

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

In a statement, Joan H. Cleveland, senior vice president, business development with Prudential's Individual Life Insurance Business, notes that insurance is a useful addition to the bank's book of business and “it can help banks expand the relationship they have with customers and strengthen their retention efforts.”

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