ATLANTA–If there is a formula for banks seeking to set up an insurance division, one Western Pennsylvania institution believes that getting the culture right should top the list, executives here said.
"Culture is important," noted Todd D. Brice, president and chief operating officer of S&T Bancorp and S&T Bank based in Indiana, Pa. "We went out and looked for someone with the same philosophy."
Joe Imler, president of Evergreen Insurance Associates, LLC, and vice president of S&T Insurance Group, LLC observed, "Anyone who goes into [talking about an acquisition] needs to talk philosophically about the relationship before talking about the numbers."
He added that, "Once you have established that, all the numbers will fill in."
These observations were part of a discussion about banking and insurance agencies held Tuesday during a seminar on mergers, acquisitions and internal perpetuation sponsored by Reagan Consulting in Atlanta.
S&T Bancorp, a $3.3 billion financial holding company, entered the insurance business after deciding it was time to diversify its revenue stream, Mr. Brice said. Prior to the acquisition of Evergreen in 2002, the bank had three lines of business: commercial banking, retail banking and wealth management.
While there was a life insurance business in wealth management, S&T was not happy with the performance, Mr. Brice said, and decided an agency business was necessary for corporate growth.
S&T hired Tom Kiral executive vice president of S&T Bank and S&T Bancorp, Inc., and president of S&T Insurance Group, LLC, an individual with long experience in the insurance industry, to head the search for an agency platform.
Among the criteria established to make the relationship work, was that the insurance business needed to operate autonomously from the bank and also needed total support from management, Mr. Kiral said.
"If you don't have support from the top down you will not succeed," he noted, adding that there needs to be clear lines of communication and authority.
"We took a lot of time getting up to speed," Mr. Brice explained. "The initial time was spent educating lenders on the underwriting process."
Mr. Kiral said there was also a lot of time spent between the four units discussing how they could help one another and understanding one another's operations.
One important move, Mr. Imler said, was that the agency, based in Ebensburg, Pa., near Pittsburgh, wanted 30-day lead time to inform customers of the acquisition and to keep the agency's name, whose reputation in the coal mine and natural gas industries had been built over decades. As it turned out, he said, the acquisition was seamless for the clients.
"I would truly do the deal again without question," he added.
While the bank has increased its revenue streams, the agency has been given a platform to grow–allowing it to acquire two other agencies in 2005 and 2006.
"We now have acquisition candidates coming to us," Mr. Imler said.
It also has given employees greater career opportunities, he added.
Ultimately, the success comes down to knowing how to deliver the product to your customer, Mr. Kiral said.
"You can't run the agency like a bank and you can't run the bank like an agency," he surmised.
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