Sandy Spring Bank in Olney, Md., is looking to bolster noninterest income through deals for insurance agencies with $3 million of annual revenue or less, the bank's president and chief executive says.
Hunter Hollar, Sandy Spring's president and CEO, said the deal announced last week for the Wolfe & Reichelt Insurance Agency in Burtonsville, Md., suits this strategy and lets the bank enter a new market area.
Sandy Spring expects the agency to bring in $600,000 to $700,000 of annual revenue, Mr. Hollar said. "They are capable of double-digit sales growth in the local county," he said, and that made the agency a very attractive opportunity.
Wolfe & Reichelt is a general insurance agency in Montgomery County with about $700,000 of annual revenue. Its primary focus is commercial lines of business, and it sells some personal lines. Its small-business focus was what attracted Sandy Spring, Mr. Hollar said.
The agency would also give Sandy Spring Insurance Corp. and its parent bank, subsidiaries of the $2.5 billion-asset Sandy Spring Bancorp, their first Montgomery County office. "We liked their client base, customer service, and location," Mr. Hollar said.
"This opportunity allows us to serve the small-business community in the Montgomery County area and complements the products and services we already offer through Chesapeake Insurance Group," he said. Wolfe & Reichelt's reputation for superior client service made this a good fit for both companies, he added.
In the past, Sandy Spring has grown by de novo branching, said Mr. Hollar. "We've only done two acquisitions on the bank side," he said. The "typical pace of branch-building has been two a year," he added, and the company may open two or three branches next year.
As for the insurance arm, Sandy Spring looks to expand through acquisitions.
"We want to continue acquiring companies. We're looking at insurance acquisitions and potential acquisitions in the investment management arena," he said. "And we ha[ve] just been more focused on locating targets that would provide noninterest income."
When looking for potential acquisitions, Mr. Hollar said, "most importantly, we want somebody to fit with us from a strategic standpoint. We also want good customer service, somebody that is geographically located in our market. Somebody of a certain size to make the acquisition not a huge bet."
His company targets agencies with annual revenue of no more than $3 million, Mr. Hollar said. "This one was a little bit below our normal target range," but Sandy Spring liked Wolfe & Reichelt's operations and management style.
As for deals next year, Mr. Hollar said, "we wouldn't rule it out, but we have nothing to announce at this point. We're always looking at opportunities."
Sandy Spring is unlikely to branch out of Maryland, he said. "We like the five-county area we're in in Maryland. The nearest proximity we would be interested in is Virginia, but we're not focused on that. And we're not looking at Delaware or Pennsylvania," he said.
Wolfe & Reichelt's principals Charles J. Reichelt and James N. Hutchinson are to remain with the agency in sales and service.
The desire of another principal, Roger E. Wolfe, to retire but to see the agency go on without him prompted the deal to be concluded now, Mr. Hollar said.
Though he is retiring, Mr. Wolfe is to help with the integration of the agency into the bank. The deal is expected to close during the current quarter.
Sandy Spring is a community banking organization that focuses its lending and other services on businesses and consumers in eastern Maryland. It offers commercial banking, retail banking, and trust services through 30 community offices in Anne Arundel, Frederick, Howard, Montgomery, and Prince George's counties in Maryland.
