Regional Entities Make Banking Impact

The success of the institution is attributable to a combination of low overhead and listening to their independent agents, explained Phil Urban, president and chief executive officer of Grange Insurance as well as chairman of Grange Bank, along with Bob Mays, president of Grange Bank.

Indeed, it was the companys independent agent force that came to Grange with the thought of entering the banking business four years ago, according to Mr. Urban. From those conversations, and with $7 million in capitalization, the company applied for a thrift charter, which it received in May 1999.

The first year-and-a-half was a learning experience for the bank, Mr. Urban conceded, gradually discovering what worked and what did not. Once the institution was confident it had everything in place, it ramped up operations and now provides savings and loan services in six states–Georgia, Illinois, Indiana, Kentucky, Ohio and Tennessee, where it is also licensed to provide insurance.

Founded in 1935, the company has a long tradition of working with its independent agents and giving them the services and products they need to make them and the company successful, according to Mr. Urban. About 70 percent of the 1,200 agencies contracted with Grange are trained to deal in banking products, the company noted.

In the last six months, the bank has begun concentrating on providing commercial financial products, noted Mr. May.

The bank continues to be on track to expand, with an anticipated rollout of banking services in Michigan sometime in February. The hope is that in the not-too-distant future, Grange Bank will be up to $100 million in assets, said Mr. Urban.

Even closer in regional proximity, the Independent Insurance Agents of Tennessee received a charter for the establishment of Insurers Bank of Tennessee, headquartered in Nashville. Established in November 2000, the bank holds more than $18 million in assets, according to the FDIC.

Its main focus is the commercial client, said Chuck Bidek, executive director of IIA of Tennessee. The bank provides commercial loans for clients and agents for equipment, agency purchases and a host of other entrepreneurial deals. The bank also has checking and deposit accounts for the commercial customer. It has a heavy reliance on technology for customers to do their banking, with a big emphasis on Web-based services.

With 180 agents as shareholders, Mr. Bidek said the banks success will be based not on competing with bigger financial institutions established by larger insurance and banking entities, but by carving out a niche and becoming a boutique bank within the state.

Moving in another direction, insurance broker Synaxis Group of Nashville was acquired by First Tennessee National Corp. of Memphis last December. The acquisition, said David Haynes, chairman and CEO of Synaxis, means that the agency becomes a subsidiary of the bank, but remains an autonomous insurance broker.

"We believe this is a good relationship," said Mr. Haynes, adding that any business combination needs compatibility, and the firm believes it has found it with this particular financial institution.

"They have the same client focus and culture we do," observed Mr. Haynes. "We will both be beneficiaries of this acquisition. First Tennessee provides quality and service to our clients, and we think [the bank is] a long way ahead of others."

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, February 4, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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