Despite a slight downturn in the fourth quarter, profits and revenues at larger bank brokerages remained at historically high levels, according to a survey for the Bank Securities Association.

A study of 25 bank and thrift securities programs by Kenneth Kehrer Associates found they earned an average of $934 per $1 million of retail deposits during the quarter, down 9% from the record $1,032 in the previous quarter but up 18% from the year earlier.

Full-time representatives earned average monthly gross commissions for banks of $25,619 per month in the fourth quarter, down 1% from the third quarter but up 22% from the year before.

Two conflicting trends have contributed to banks' success, said Kenneth Kehrer, head of the Princeton, N.J., consulting firm that did the survey. On one hand, market volatility has driven investors towards fixed annuities, he said.

Fixed annuity sales made up 27% of fourth-quarter revenues, compared with 25% in the third quarter and 16% a year earlier. That's good news for banks, which earn higher commissions from annuities than from other products, Mr. Kehrer noted.

But after a slow October and November, a market upturn has stimulated sales of variable annuities, mutual funds, and equities ever since, the survey said.

"We're seeing a lot more equity trades," said Paul Mann, president of First Tennessee Brokerage Inc., a unit of Memphis-based First Tennessee National Corp. "People who have money want to put it in individual equities, which can be a little more sexy, a little more exciting - especially with tech stocks."

But the surge in sales of individual stocks and bonds has not affected packaged product sales, Mr. Mann said. "For the most part it seems to be a different market," he said.

Increased interest in individual stocks and bonds has also been evident at Summit Financial Services Group Inc., the investment arm of Princeton, N.J.-based Summit Bancorp.

"A lot of times now, people come in talking about Internet stocks, and it's their first time doing anything in the market," said brokerage chief Richard Mansfield. And that means bank brokers have to spend more time educating clients, he said.

Summit is looking for ways to process such trades more quickly so that brokers spend less time on low-commission items, Mr. Mansfield said. For instance, Summit is looking at ways to place trades requested in branches through the Internet.

A separate survey by Kehrer Associates found that base compensation of the heads of bank investment sales units rose 10% in 1999, to $119,450, the first increase since 1996. Also last year, base compensation for directors of hybrid programs for the first time exceeded that for those managing broker-only programs.

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