Smaller banks seeking a piece of the insurance sales pie may have a business model in the Virginia Bankers Insurance Center.

The 67-member consortium of community banks, established in July 1999 to help community banks market insurance through agency acquisitions, has announced its first such deal and says more are on the way.

The group's first purchase would bring it the Blue Ridge Insurance Group and an affiliated outfit, the Ewald-Lester Life Agency of Wytheville. The deal was announced Wednesday and is expected to close in September, with cross-sales for the consortium's members to begin right away. Financial terms were not disclosed.

"What you have here is a bunch of small banks that could never buy an agency on their own finding a way to compete by forming alliances," Carmen Effron, president of C.F. Effron Co., a consulting firm in Westport, Conn., said of the consortium.

In a similar small-bank alliance, members of the Pennsylvania Bankers Association, of Harrisburg, Pa., can market insurance through an alliance the group's for-profit PBA Services Corp. subsidiary has with Bisys Insurance Services. Bisys supports these marketing efforts with information from its Web site and advice from experts the bankers can contact by phone.

Bruce Whitehurst, chief administrative officer of VBA Management Services, a for-profit subsidiary of the Virginia Bankers Insurance Center, said: "We want a platform of agencies in place. Right now, all of our members can expect to tap into the back-room support in Wytheville. But we still need to buy more agencies in order to offer face-to-face assistance to banks across the state."

He would not say when any further deals might be announced.

Blue Ridge and Ewald-Lester offer personal and commercial property and casualty insurance, as well as life and health lines through a staff of about 10 agents. Mr. Whitehurst said members of the Virginia Bankers Insurance Center probably will begin cross-selling through the agencies as soon as the deal is done.

Some consortium members, including $330 million-asset First Bank and Trust Co. in Abingdon, already offer insurance lines.

"But this gives us an opportunity to offer a broader array and products and to have access to greater expertise," said Leton Harding, executive vice president of First Bank and Trust. "We've been trying to figure out a way to get into the insurance business in a meaningful way for quite a while. This is a culmination of a long initiative."

Other members of the Virginia Bankers Insurance Center, such as $235 million-asset Bank of Tidewater in Virginia Beach, have yet to offer any insurance to their customers. Bank of Tidewater expects to use the agencies to be acquired by the consortium for commercial insurance sales; 80% of its loan portfolio is commercial.

"For us to have done this by ourselves, we would either have to buy an agency, which we can't afford to do, or get involved in a joint venture, which either goes so well that you want to buy them or so poorly that you want them to go away," said Bank of Tidewater president Betsy Duke.

Middleburg Bank, which has $260 million of consolidated assets, is also a newcomer to insurance. Bill Doyle, senior vice president, said Middleburg plans to hire its own insurance salespeople.

"We're looking to add agents that can handle clients directly, instead of just making referrals," Mr. Doyle said. "We will rely on the VBIC for back-office support."

Mr. Doyle added that his bank expects its clients to purchase a broad base of insurance policies, from life and health to property and casualty.

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