Encore Bank in Houston has bought two insurance agencies in the last 11 months in an effort to boost cross-selling opportunities within its high-net-worth client base.
Encore Bank’s affiliate, Town and Country Insurance Agency Inc., said last week that it had bought the business of John A. Bumstead & Associates Inc., a Houston agency specializing in personal insurance lines.
“We like the insurance business,” said James S. D’Agostino Jr., Encore’s chairman and chief executive officer. “Our goal going forward is to find small blocks of insurance business that fit our target market — high-net-worth individuals.”
Privately held Encore Bank decided to buy the Bumstead agency because insurance has proven an effective source of fee income and gives the bank a way to offer more products and services, said Mr. D’Agostino. He worked for the big Houston insurer American General Corp. from 1986 until 1999, most recently as a vice chairman and group executive-consumer finance.
Mr. D’Agostino said the Bumstead agency, which offers insurance products including homeowners, auto, renters, and flood coverage, was especially attractive because of its reputation and Mr. Bumstead’s experience in the business, as well as its commitment to customer service.
Encore has more than $1 billion of assets and has eight branches in Houston as well as five on Florida’s west coast. It offers private banking products and services including checking accounts, home mortgages, and individual retirement accounts.
Mr. D’Agostino declined to specify overall insurance revenue or sales goals but did say that he expects the Bumstead deal to bring in more than $500,000 of annual revenue.
When Encore Bank examines potential deals, it “looks for agencies with a strong reputation, clients that fit with our banking strategy, and opportunities where we can integrate them into our existing operations,” he said.
The bank views prospective deals case-by-case, Mr. D’Agostino said. Asked whether he has a plan to buy an agency to go with the bank’s Florida branches, he said he has no immediate plan to buy another agency.
After buying Town and Country, a full-service agency with offices in Houston and Galveston, Tex., in March and adding the Bumstead agency this month, the bank has agency offices only in Texas. It did not sell property and casualty insurance before the Town and Country deal. But it did have an arrangement with Invest Financial Corp. in Tampa to sell annuities.
Encore Bank is unlikely to branch out into other states any time soon, said Mr. D’Agostino. “We feel that Texas and Florida represent great sales opportunities, and we are focused in those areas,” he said. Town and Country offers retail personal and small-commercial lines property and casualty insurance.
The Town and Country deal brought Encore 10,000 insurance clients to whom bank products could be cross-sold. The bank has about 10,000 customers, and it focuses on people like entrepreneurs, executives, lawyers, and doctors.
Insurance is an attractive business for the bank because “the returns are good and it fits our overall strategy with wealth management needs,” Mr. D’Agostino said.
Separately, in September, the bank announced that it had bought National Fiduciary Services, a Houston trust company. The purchase brought in $700 million of personal trust assets under management.
