First Charter Bank says it is continuing to buy insurance agencies in its Charlotte footprint as a way to cross-sell banking products.
Clarkson McLean, the president of the bank’s insurance arm, First Charter Insurance Services, said its most recent purchase, announced last week, of the Charlotte agency Smith & Associates, is consistent with the strategy adopted in 1998 when it entered the insurance business. “The agency is in the heart of our footprint, with great people, and it’s similar to our own profile in commercial and personal insurance,” he said.
First Charter Bank, a wholly owned subsidiary of the $4.4 billion-asset First Charter Corp., said it closed the deal for Smith & Associates Insurance Services Inc. on Dec. 1. Terms were not disclosed.
First Charter offers commercial and personal property and casualty coverages, bonds, and group life and health products. Smith & Associates, which specializes in middle-market commercial insurance accounts, has a similar product line, Mr. McLean said.
The deal also gives it another regional insurance carrier relationship, he said, but he declined to name the company. “The agency enjoys strong relationships with many of the same top insurance carriers that work with First Charter,” he said.
Bob James, the president and chief executive officer of First Charter Bank, took a broader view of the insurance business within the bank’s strategy. “From a banking standpoint our strategy is centered around customer acquisition,” he said. “We want to acquire bank customers.”
Smith & Associates offers good cross-selling opportunities, he said, and First Charter would like to sell potential customers insurance as well as the checking accounts that are “the cornerstone of any banking relationship.” It would also like to sell equity products, commercial loans, and cash management, as well as other banking products.
Mr. McLean declined to say how much in revenue he expects the deal to bring in but said that First Charter generates more than $100 million of annual premium. He also would not discuss long-term sales goals for the venture.
Regarding further acquisitions, Mr. McLean declined to comment but noted that his company typically targets agencies that have “experienced, professional people, agencies that are profitable, have similar business profiles as we do, and similar products.”
Mr. James said this is part of the larger strategy to be competitive in the insurance market. “Since Clarkson joined in 1998, we did three acquisitions in the first year and seven since then in the greater Charlotte market,” he said.
Asked whether First Charter would consider expanding its insurance operation beyond Charlotte, he said he would not rule it out. “We have done that once, since we purchased a Greensboro agency.” The purchase of Business Insurer Services of Guilford County in Greensboro was closed in September 2000.
“We would be interested in markets that we want banking offices in as well,” said Mr. James. The bank has 53 branches in 18 North Carolina counties, mostly in the western part of the state.
Acquisitions are necessary to be competitive, Mr. McLean said. “We have maintained a healthy organic growth, but it’s easier to reach critical mass through acquisitions.”
Smith & Associates employs a dozen people, including principal owners John Smith and John Land who are to remain with First Charter.
First Charter has seven insurance offices and 99 ATMs in North Carolina, in addition to the banking offices. It sells banking, financial planning, funds management, investment, insurance, mortgage, and employee benefit products to businesses and individuals.
American Banker reported last month that analysts have identified First Charter as possibly a seller, not a buyer. It could be a prime acquisition target for regional banking companies that want some bulk in the Charlotte market, they said. First Charter is the largest bank there, after Wachovia, Bank of America, and BB&T.
But in an interview published Monday, Lawrence Kimbrough, the bank holding company’s president and chief executive officer, said it is interested in buying banks, not selling itself. He said its hometown of Charlotte, along with Raleigh, N.C., and Greenville-Spartanburg, S.C., are the “most attractive areas” to First Charter but that it would consider bank purchases in other markets.
Two companies mentioned as the most likely buyers for First Charter are SunTrust Banks Inc. and Royal Bank of Canada’s RBC Centura Banks. Each has a sizable North Carolina operation, but neither has much of a presence in the Charlotte area, observers said.
