A Pennsylvania community thrift has jumped on the financial services convergence bandwagon with its planned purchase of an insurance agency.

Northeast Pennsylvania Financial Corp., the holding company for $658 million-asset First Federal Bank in Hazleton, has signed a letter of intent to buy Higgins Insurance Agency, a Pottsville, Pa., multiline provider, for about $3.1 million of stock and cash.

"We do mortgage lending, home equity lending; we have a title insurance company and a trust company," said Patrick J. Owens, First Federal's vice president, treasurer, and chief financial officer. "The addition of an insurance agency just helps complete the circle."

First Federal plans to make insurance products available in all its branches, Mr. Owens said, but details of how the products will be marketed are not fully worked out. The bank has 14 branches in the Pennsylvania counties of Luzerne, Schuylkill, Carbon, Monroe, and Montour.

Under the deal's proposed terms, Higgins would be operated as a wholly owned subsidiary of Northeast Pennsylvania Financial. Stockholders in the agency are to get shares of Northeast Pennsylvania Financial stock valued at $2.5 million, plus $600,000 of cash to be paid out over four years. One-third of the cash payment ($200,000) is to depend on the agency's meeting agreed-upon financial goals.

President Joseph Schlitzer, as well as Higgins' other officers, agents, and employees, are to remain with the agency. The deal is expected to close in the fourth quarter.

The bank decided to buy an agency instead of forming an alliance because the former provides "a more personal touch," Mr. Owens said. Higgins, which sells life, health, property-casualty, personal, and commercial lines of insurance, has customers throughout Schuylkill and Luzerne counties. It has been a strong player in Pennsylvania for many years and earned $24 million in premiums in 1999.

Mr. Owens said he believes Higgins will help bring in more customers to the bank. First Federal has also been expanding its commercial lending business, and Higgins has commercial insurance products to offer thee clients.

However, before the transaction closes, the "logistics need to be worked out," Mr. Owens said, including the deal's final terms. Higgins belongs to the Insurance Alliance of Central Pennsylvania Inc., which has the right of first refusal on acquisitions of its members. Alliance members are expected to make their decision by Thursday.

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