Security Federal Corp., a community bank in Aiken, S.C., is doing something few banks if any have done successfully by moving 11 insurance agents into the same number of its branches.
It picked up the agents when it bought Collier Jennings Financial Corp. in June of last year. The first two are set to start working in Security Federal branches on June 11.
Security Federal is going at such a gradual pace in part because it has no beaten path to follow.
"If there is a model out there, I'd like to see it," said Chris Verenes, the president of Security Federal's bank subsidiary.
John Wepler, the president of the insurance consultancy Marsh, Berry & Co., said "it is extremely rare" for insurance agents to work in bank branches. "A large number of banks have tried it over the years, but I do not know of a single bank that has been able to make it work," he said.
Security Federal bought Collier Jennings, a personal-lines agency that does $5 million a year in premiums, in the hopes that bank employees would be more comfortable referring customers to a bank-owned agency. Before Security Federal bought Collier Jennings, its employees made referrals to an outside agency, which paid the bank for the leads. But that tended to make the bankers uneasy, Mr. Verenes said.
The $714 million-asset bank is installing the agents in its branches to foster trust among the bankers and the agents. Since last fall a 12-person task force representatives from the bank and the agency has met for half a day each week to plan the integration.
"Most mergers fail, and culture clash is always cited," Mr. Verenes said. "We really want employes on both sides to feel we are together."
That involves creating rules about what might seem to be trivial, such as how to handle cash that a policyholder has brought in a branch to pay a premium.
The task force also address what to do if a customer comes to the bank five minutes before closing and asks for a policy that will take 40 minutes to apply for. "That kind of a thing is a real detail issue, but that's where you start developing respect," Mr. Verenes said.
The group completed its guidelines for the integration on March 12. Security Federal has been able to proceed slowly because it is closely held and under no growth pressure, he said.
Moving all 11 agents into branches could take two years or longer, said Gerald Jennings, the former president of Collier Jennings, who now leads Security Federal Insurance Inc.
He said if this works Security Federal may buy another agency and integrate it the same way.
Marsh Berry's Mr. Wepler said that selling personal lines of insurance in branches has historically not worked because clients "only want to talk about their insurance 30 days prior to renewal."
Successful bank-owned agencies offer insurance quotes in tandem with a transaction such as a home mortgage or auto loan that requires insurance. But an agent does not have to be in a branch to work up such a proposal, Mr. Wepler said.
Security Federal, though, is betting that building a culture of cooperation will allow it to succeed where others have failed.
"If we get our employees to buy in, we think we've got a sleeping giant here," Mr. Verenes said.
Neither he nor Mr. Jennings would say how much they think the business can grow. "We do $5 million in premiums now; our ultimate goal is to keep that and grow," Mr. Jennings said.
There are promising signs. An intranet referral system set up last fall and a new liaison position between the mortgage loan department and the insurance business helped Security Federal collect $12,000 of new premiums in April through bank referrals.
Before it bought Collier Jennings, the bank generated just $30,000 to $40,000 a year in property/casualty referral fees, Mr. Verenes said.
