Magazine article American Banker

AAA Auto Club Group to Buy Illinois Bank

Magazine article American Banker

AAA Auto Club Group to Buy Illinois Bank

Article excerpt

Byline: Robert Barba

The sale of an Illinois bank is bucking the trend of banking and insurance moving away from each other.

Insurer Auto Club Group said Thursday that its $66 million-asset Auto Club Trust FSB would buy the $465 million-asset National Bancorp in Sycamore, Ill., for an undisclosed amount.

Auto Club Group is one of 40 AAA clubs across the country and provides property and casualty insurance, life insurance and other financial services products to 9 million members of the AAA in 11 states, Puerto Rico and the U.S. Virgin Islands. The insurer said in a press release that the acquisition, set to close in the third quarter, would help it expand financial services offerings throughout its network.

National has "an excellent reputation, is financially sound, and has a strong management team with a vision and core values in line with our own," Chuck Podowski, Auto Club's chief executive, said in the release. "We are excited to partner with them to expand the scope of our financial services offerings into Illinois and, longer term, across our enterprise footprint."

It has become increasingly uncommon for nonbanks, particularly insurers, to enter or expand in the banking industry.

Several insurers bought banks during the financial crisis to gain access to the Treasury Department's Troubled Asset Relief Program. In subsequent years, several of those companies, including Metlife and Allstate, shed their banking units. At the same time, banks have opted to exit the insurance business, choosing to partner with agencies to pursue cross-selling opportunities.

"Banks and insurers have a very different return profile, different business models and have been growing apart," says Craig Tessimond, a director in Houlihan Lokey's financial institutions group, "There would need to be some strategic reason behind a tie-up, such as customer acquisition or cross-selling. …

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