First Southwest Bank of Bismarck, N.D., has acquired an insurance agency and now has insurance products for sale at three of its four branches.

The $265 million-asset bank has had insurance operations in its rural Ellendale and Oakes branches for 30 years. This month it plans to move agents of Mandan-based Metzger & Associates, which it bought in July, into the Mandan bank branch. And Craig Larson, the bank's president and chief executive officer, said it is looking for another agency to buy to bring insurance products to its home office, in Bismarck.

"We see ourselves as providers of financial services" beyond the traditional banking menu, Mr. Larson said. "Today's ever-busier consumers are looking for convenience in where and how they buy their financial products."

First Southwest sells insurance products directly from the branches to provide more convenience and service, Mr. Larson said.

For North Dakota banks, buying insurance agencies is practically a matter of keeping up with the Joneses. In recent months, said Joel Gilbertson, executive vice president and general counsel of the Independent Community Banks of North Dakota in Bismarck, BNC National Bank there bought the Lips & Lahr Inc. insurance agency and CountryBank USA of Cando bought the Ford Agency in Devil's Lake.

North Dakota-chartered banks have been buying insurance agencies since 1997, when the state Banking Board authorized them to sell insurance as incidental to the business of banking. "Prior to that the vast majority of banks sold insurance through affiliates," said Gary D. Preszler, the commissioner of the state Department of Banking and Financial Institutions.

By 1997 a number of national banks had been using grandfather provisions and regulatory loopholes to sell insurance in North Dakota, and expanding the opportunity "became almost a parity issue for state-chartered banks," Mr. Preszler said.

Mr. Larsen said 40% to 50% of the banking customers at his two branches with insurance operations also buy insurance from First Southwest.

The bank offers business and personal banking, including loans, accounts, and retirement services, with a special niche in farm banking. It also sells investment products provided by Primevest Financial Services Inc., an independent broker-dealer.

Mr. Preszler noted that BNC National (a subsidiary of BNCCorp) and other banks that have recently bought agencies are nationally chartered and therefore not subject to the 1997 change in regulation.

As banking commissioner, he said, he has supported banks' interest in buying insurance agencies because it creates a more level playing field for the state-chartered institutions.


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