Compass Bancshares of Birmingham, Ala., which has been hot on the bank acquisition trail throughout the Sunbelt, is reportedly about to buy its first insurance agency.
A deal is near with Texas Insurance Agency, a 22-year-old San Antonio company that has 120 employees, according to a report in the San Antonio Business Journal. Compass, which has $18.9 billion of assets, got into Texas in the mid-1990s with several bank acquisitions.
The multiline agency generated $95 million in premiums last year, along with commissions of just under $10 million, according to an official of the agency. He refused to discuss the deal report but said he might be able to do so later in the week. Tom Dingldy, a Compass spokesman, also refused to discuss the report.
Last month Compass announced a deal to buy Firstier Corp. of Denver, the parent of $800 million-asset Firstier Bank, for $127 million in stock. Earlier in the year Compass bought $285 million-asset Western Bancshares of Albuquerque and $390 million-asset Founders Bank of Scottsdale, Ariz.
John Wepler, a principal and senior vice president of mergers and acquisitions for Marsh, Berry & Co., a Concord, Ohio, consulting company that brokers insurance agency sales, said that top agencies are being sought by banks. By the end of this year around 20 of the 100 largest [multiline] agencies will be owned by banks, he said. By next year itll be 40.
But buying an agency is not always the best way for a bank to expand its insurance business, said Ken Kehrer, president of the bank insurance consulting firm Kenneth Kehrer Associates of Princeton, N.J.
Mr. Kehrer said a bank would have to pay a premium if it wanted to buy an agency not up for sale. He added that a joint venture is less risky than an acquisition.