A West Virginia community bank known for its outsize ambitions has purchased its own insurance agency.
In early December, City Holding Co. in Charleston announced the acquisition of RMI Ltd., a Winfield, W.Va., agency with $1.4 million in annual premiums, as part of a strategy to expand beyond conventional banking. The terms of the deal weren't disclosed.
Buying a full-range insurance company is an unusual step for a $1.3 billion bank company. But Stephen J. Day, City Holding Co.'s chief executive officer, said moving into a wide range of products will give it a solid footing in the changing market for financial services.
Banks that are not pushing to boost fee income "are going to have a tough time," Mr. Day said.
City Holding, whose bank affiliate goes by the name of City National, is the first banking company in West Virginia to purchase an insurance company, Mr. Day said. It plans to buy two or three more agencies in January to build insurance sales, he said.
"I'm just surprised more banks haven't done this," Mr. Day said.
City Holding has also pushed far beyond normal geographical boundaries in search of revenue. Earlier this year it made its first move in California, acquiring First Allegiance Financial Corp., Irvine, which originates junior lien mortgage loans. And in November it announced plans to acquire Del Amo Savings Bank, Torrance, Calif.
In RMI, City National got an agency with three sales offices and a full range of products and services. It offers employee benefit programs, property-and-casualty insurance, retirement plans, deferred compensation plans, key person programs, and benefits consulting.
Michael White, a bank insurance consultant based in Radnor, Pa., applauded City Holding for the California deals. "It's interesting they have the foresight," he said. "And why shouldn't a smaller institution be able to do that?"
City Holding plans to make no changes to RMI management, Mr. Day said, but it does plan expand the widen its reach. Initially, RMI salespeople will serve the bank's 43 branches while looking for more business among its own customers.
Mr. Day expects insurance best sellers to include, along with accident and health insurance, property-and-casualty sold to mortgage customers. But he holds no illusion that insurance will be a meat-and-potatoes product.
"The industry feels that if you are generating 5% revenues from insurance operations, that is pretty good," he said. "We'll be south of that number initially."
Mr. Day said he will take a measured approach to bringing insurance to California. The Del Amo Savings deal won't close until February, he said, but Del Amo's platform employees have told him that they are hungry for investment products and insurance. In fact, they often send customers to competitors next door, he said.
