BancorpSouth's second agency deal in three months was made in Arkansas, a big market for the banking company but a new one for its insurance operation.
"BancorpSouth has a strong banking presence in Arkansas," with about 20% of its business coming from its 47 branches in that state, said James Threadgill, an executive vice president at the Tupelo, Miss., banking company.
BancorpSouth's deal, an-nounced Monday, was an agreement to buy Ramsey, Krug, Farrell & Lensing Inc. in Little Rock.
The agency is on track to bring in about $13 million of revenue this year, Mr. Threadgill said.
When the deal closes, Ramsey Krug's contribution will bring BancorpSouth's annual property/casualty insurance revenue to between $45 million and $50 million. Including the platform annuities program, the bank expects more than $50 million of insurance revenue, Mr. Thread-gill said.
BancorpSouth chairman and chief executive officer Aubrey Patterson said in a statement that the agency's "reputation both inside and outside their industry positions them well to continue the strong business trend they have enjoyed and to generate noninterest income for our institution."
Mr. Patterson added, "This is our fourth major insurance agency acquisition in four years, and we will consider other similar acquisitions."
In 1999, BancorpSouth bought Stewart Sneed Hewes Inc. of Gulfport, Miss. In 2000, it acquired two smaller Jackson, Miss., agencies, Pittman Insurance and Kilgore, Seay and Turner in one deal.
Most recently, in May 2003, BancorpSouth bought Wright & Percy of Baton Rouge, La.
The company's Louisiana agency deal was unusual because it has no bank branches in Baton Rouge, though it does have several elsewhere in the state.
Though Mr. Threadgill declined to predict the company's expansion plans for Baton Rouge at the time of the Wright & Percy deal, he did say BancorpSouth had a "keen interest" in expanding its various businesses in Louisiana and was looking to Wright & Percy as a foundation for insurance growth in the state.
This week's deal, however, is right in the center of a key market for the bank, which has several branches in Little Rock and nearby communities.
Mr. Threadgill said the group of agencies fit together well both geographically and culturally. "They are very similar, highly successful sales-orientated agencies that we think we can blend nicely," he said.
The agencies also have specialties that complement each other, Mr. Threadgill pointed out. "They all have kind of a little bit different areas of expertise," he said.
For example, Ramsey Krug does a lot of business in the health-care arena, including medical malpractice insurance, Mr. Threadgill said. "They currently insure 47 hospitals in the state of Arkansas," he said.
In addition, the agency also has strong expertise in construction and surety, self-insurance, and risk management.
Meanwhile, he said, the Wright & Percy agency has a specialty in insuring franchise restaurants.
The plan is for each operation to be able to call upon experts from sister agencies to attract and serve new clients, Mr. Threadgill said.
"The people in our Baton Rouge and Mississippi offices can utilize some of the expertise in the hospital area that Ramsey Krug has," and the Arkansas agency "can benefit from some of the other areas" where the first four agencies have strengths, he said.
Mr. Threadgill said that already, in the short time the bank has owned Wright & Percy, the agency has worked with Stewart Sneed Hewes to acquire and serve clients.
BancorpSouth wanted an agency in Arkansas because it has several large commercial clients in that market, Mr. Threadgill said, but "it's very difficult to service a large commercial insurance account from a distance ... . You need someone who can be there when you need them."
He said the bank felt it would be easier to cross-sell commercial insurance products to Arkansas banking clients with an agency in the state. BancorpSouth also hopes to get banking clients from Ramsey Krug's pool of customers, he said.
The bank is continuing to look for agency deals, Mr. Threadgill said. "Obviously, we want to have an insurance network that will effectively service our entire geographic footprint," he said. BancorpSouth has about 250 branches in six states: Alabama, Arkansas, Louisiana, Mississippi, Tennessee, and Texas.
