Long before Gramm-Leach-Bliley, when nobody had ever heard of bricks and clicks and Internet banking was perhaps just a glimmer in some techies eye, Acacia Life Insurance Co. decided to do something new it got itself a thrift charter and opened up a savings bank.
And now, more than 17 years later, Acacia Federal Savings Bank is a $680 million-asset institution with a strong online presence and a national agency distribution network. The thrift is poised to expand sales using agent referrals in an environment much more friendly to insurer-owned banks, according to its president and chief executive officer, F. Weller Meyer. 
Acacia Federal was started in 1984 with the vision that the traditional insurance industry was becoming much more involved in the broader arena of financial planning, Mr. Meyer said. The Glass-Steagall Act at that time prohibited cross-ownership between banking and commercial companies, but Acacia took advantage of a loophole allowing unitary thrift holding companies to be owned by insurance firms.
Now, as regulations have eased and customers become more familiar with the idea of one-stop shopping for financial products, time is very much in our favor, he said. The whole universe of financial planning, investment management, and so forth is merging much more in the minds of consumers.
The thrift has one branch, on the second floor of an office building in Tysons Corner, Va., a Washington suburb. But its primary distribution is through the more than 1,200 employee agents of its parent, Acacia Life.
Acacia Life is part of Ameritas Acacia Mutual Holding Co. in Washington, which had $14.23 billion of assets under management at the end of 2000.
Mr. Meyer said he has no magic solution for the big complaint about new insurer-owned banks that its hard to motivate agents to market banking products. I think we struggle like everybody else, he said, despite Acacias long experience. Not all agents are going to automatically gravitate toward the banking product line.
One boon to Acacia Federal, he acknowledged, is that its insurer parent is a life and annuity provider, products which are simple to cross-sell with investment products like certificates of deposit.
In fact, Mr. Meyer said, CDs have historically been the thrifts strongest-selling product. But Acacia Federal has expanded its product line over the years and now offers credit cards, student loans, deposit accounts, and IRAs nationwide.
In the Washington area, the thrift operates more as a commercial bank does, Mr. Meyer said, offering residential mortgages and commercial loans.
Acacia plans to expand its residential mortgage offerings to agents in other areas this year and will eventually add products such as auto loans. But for now, Mr. Meyer said, it will keep its commercial lending close to home in order to maintain quality control.
The goal, he said, is for agents to act as financial planners for their customers, offering seamless advice on everything from life insurance and retirement planning to financing a vacation home or new car.
Technology has been a huge factor in Acacia Federals growth, Mr. Meyer said, though the thrift is still trying to find better ways to use the Internet and e-mail.
When the thrift was chartered, most business was done by mail, over the phone, or by fax, he said. In 2000, it began offering online banking, and the transition to doing more business over the Internet is actually happening a lot faster than we thought, he said.
Mr. Meyer has been with the thrift since 1987 and watched as most major insurance companies rushed to get thrift charters in recent years. He offered the newcomers some cautions, though he said he is not trying to be smart-alecky.
A lot of people have gotten a thrift charter without thinking of the implications, Mr. Meyer said. Its being a regulated financial institution [makes it] a complex business.
He said that he has observed some insurers struggling with how to use their thrift powers once they got them because they had no systematic, well-thought-out plan.
However, Mr. Meyer said, recent insurer- or insurance association-owned entrants State Farm Bank, Insurbanc, Allstate Bank, and Assurance Partners Bank to name a few arent really his direct competitors and may in fact help him by increasing consumer awareness of insurance agents as a source of banking products.
Michael White of Michael White Associates in Radnor, Pa., noted the rush to get [thrift] applications in by both insurance companies and other groups in the late 90s. Some of the resulting thrifts like State Farm Bank, with $1.2 billion of assets have grown dramatically right out of the box, he said, but others have not yet gotten off the ground.
The key issue for a thrift like Acacia, Mr. White said, is to capitalize on its strengths as more competitors elbow in to the market.
For one, he said, the fact that Acacia Federal is marketing its products through life and annuities agents unlike the property-casualty agents who work with most other insurer-owned banks can give the thrift good marketing opportunities.
I find it hard to believe that anyone would call their property-casualty agent to find out about financing and getting loans, Mr. White said. But a life and annuity agent, acting as a financial planner, could find a lot of opportunities to help customers decide about such things as student loans, CDs, and retirement products, he said.
