ABA Banking Journal - April 2008 - (Page 32)

Community Banking teners to build in exit strategies from the start, such that a decision to bail out would be smooth. In his own bank’s case, many contracts and commitments have been made, reducing the bank’s flexibility if a strategic shift should ever be desired. than an ideal choice, for instance. Nevertheless, said Cornell, “it was basically a vehicle to get started with.” One of the biggest hurdles to overcome was the initial hope that “if you build it, they will come,” according to Cornell. Getting the bank’s lenders to cooperate took time, for instance. And the expectation that the bank’s large mortgage volume would instantly translate into lots of homeowners and title insurance policies turned out to be unrealistic. Customers and others involved in the mortgage chain had many established relationships that would not be overcome overnight. Cornell advised listeners to avoid overpromising early results to the bank’s board. “Be patient, and build that expectation with the board,” he suggested. Since then, the company’s insurance efforts have evolved, and have come together, bit by it. Cornell said that the operation—an independent agency— today enjoys a $1.8 million commission stream and a 30% net profit margin. In financials shared by Cornell, revenues for P&C, employee benefits, and advanced financial planning have continued to rise over the 2005-2008 period. The agency was acquired through a holding company subsidiary which, up until that point, had existed for the sake of sharing credit life insurance commissions. Today, the bank’s operation offers both personal lines as well as commercial lines. The company took on staff with insurance experience, in hopes of avoiding other banks’ trouble that management has seen, where a bank employee designated to take on insurance would flounder about. However, over time, Cornell said, “we realized that we were a small fish. What worked for us was finding a partner.” The partner that the bank found was Spirit was willing, but agency was small Spirit Bankcorp, Inc., Bristow, Okla., moved into insurance early, after passage of the Gramm-Leach-Bliley Act in 1999, in hopes of attaining diversification, complementing its community bank product lineup, and adding more profits. So the now $1.1 billion-assets holding company, which serves both rural and metro markets in its state, acquired a small insurance agency that had annual revenues of $250,000. “It was not the agency to buy,” said speaker Paul Cornell, president of the holding company as well. There were ownership complications that made it less 32 APRIL 2008/ABA BANKING JOURNAL http://www.spiritbank.com

Table of Contents Feed for the Digital Edition of ABA Banking Journal - April 2008

ABA Banking Journal - April 2008 Contents Editor's Column You Can't Beat Wal-Mart: Or Can You? Snapshot: Non-Interest Income Shoulders More Weight ABA National Conference for Community Bankers Report 100th Anniversary: Then & Now ABA Resources ABA Chairman's Position Banks Plus Insurance: How to Make It Work Pass the Aspirin 2008: Year of Rich Internet Apps? Tough Time For That IPO Your Audience Needs to Know Who You Are Telepresence: Costly But Very Cool Webnotes Better Websites Mean Tougher Compliance Mailbox Banker's Mart To Advertise/Index of Advertisers The Economy

ABA Banking Journal - April 2008

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