Union Planters Corp. focuses its commercial lending on businesses with fewer than 500 employees, so it jumped on the opportunity this year to buy a national payroll processing and human resources firm that serves such businesses.
By purchasing Strategic Outsourcing Inc. of Charlotte, N.C., for $45.9 million, Union Planters said it strengthened its relationships with small-business customers and its ability to it attract new ones, said Alan Kennebeck, executive vice president in charge of retail services for the $34.2 billion-asset Memphis banking company.
The deal was completed in late April, but not made public until Tuesday.
Most small businesses cannot afford to maintain human resources or payroll departments, Mr. Kennebeck said. "This is a growing segment for small-business banking," he said of the outsourcing offerings. About one-third of Union Planters' retail revenue comes from small-business customers.
Christopher Kelly, an analyst with Morgan Keegan & Co. in Memphis, said the purchase also is helping Union Planters boost its fee income. "It's pretty consistent with what they're doing out there to generate some fee income and decrease that margin reliance."
Union Planters has begun to offer the new services in test markets in Florida and Tennessee. A complete rollout will begin next week, Mr. Kennebeck said.
Strategic Outsourcing, with 18 offices in 10 states, provides services in payroll, benefits, human resources management, and worker compensation coverage. The company processes nearly $500 million a year in gross payrolls for more than 40,000 employees.