A second insurance agency acquisition in two years has given Northeast Bancorp six new offices, increased revenue and premiums, and will help Northeast’s insurance operation achieve scale, according to its president and chief executive officer, Jim Delamater.
The purchase of Sargent Insurance Agency of Rangeley, Maine, “dramatically adds to our revenues in the insurance business [and] gives us access to better carriers,” Mr. Delamater said. Sargent’s offices “fit very well within our present market area.”
The acquisition raised Northeast’s annual insurance premiums to about $17 million, he said.
The $537.5 million-asset Northeast is based in Auburn, Maine, and does business in western, central, and mid-coastal Maine, he said. Last week it announced that its insurance subsidiary, Northeast Financial Services Co., had bought all the outstanding shares of Sargent, though it did not say how much it paid.
Buying Sargent added 21,000 customers and offices in Auburn, Augusta, Anson, Mexico, Rangeley, and South Paris to Northeast’s insurance operation, which in based in Bethel. Sargent’s co-founder, Craig Sargent, will take charge of Northeast’s insurance division.
Mr. Delamater said bringing on experienced management was another benefit of the purchase.
Northeast bought its first agency, Kendall Insurance Agency in Bethel, in 2002. Mr. Delamater said that purchase was opportunistic, since his bankers were familiar with the agency owners, but it was also “a bit of a test.”
Adding Sargent has given Northeast a bigger platform from which to grow, he said. “We’ve been on a plan to become an active player.”
Northeast will probably make more agency deals, because “our customers like buying property/casualty insurance from us,” Mr. Delamater said. However, the next acquisition does not have to happen right away, because there’s “ample growth opportunity” within Northeast’s current customer base, he said.
John Wepler, an executive vice president at Marsh, Berry & Co. in Concord, Ohio, said it is not unusual for a small bank to try out insurance on a small scale, though many find that the operation does not work well.
“A lot of banks have acquired small agencies as a way to kind of sample their interest in insurance,” Mr. Wepler said. “Unfortunately, most of those banks that bought small agencies didn’t have the management that comes along with larger acquisitions. Many of those banks that bought little agencies never really gained momentum in offering insurance.”
For a banking company like Northeast that buys a small insurance agency and then decides to stick with and expand the business, the agency was probably was a successful venture that “validated their interest” from the start, he said.
Mr. Wepler compared Northeast to F.N.B. Corp. of Hermitage, Pa., which entered the insurance business through a series of small deals in Pennsylvania before making the large-scale acquisition of Roger Bouchard Insurance in Clearwater, Fla., in 1999. (Roger Bouchard was spun off with F.N.B.’s Florida branches this year.)
Northeast Bank, the flagship subsidiary of Northeast Bancorp, has 12 Maine branches — in Auburn, Augusta, Bethel, Brunswick, Buckfield, Falmouth, Harrison, Lewiston, Lisbon Falls, Mechanic Falls, Portland, and South Paris.
