Magazine article American Banker

Multibank Venture to Cut A Slice of Insurance Pie

Magazine article American Banker

Multibank Venture to Cut A Slice of Insurance Pie

Article excerpt

Though the Gramm-Leach-Bliley Act of 1999 removed the barrier separating banking from insurance activities, few community banks have ventured into the insurance business since then.

Jon Evans, executive vice president at Atlantic Central Bankers Bank in Camp Hill, Pa., said he understands that community bankers are reluctant to enter an unfamiliar business. Nevertheless, he said he views insurance -- particularly commercial insurance -- as a significant source of fee income and has devised a way for Atlantic Central's shareholder banks to get their feet wet in insurance without risking their own capital.

Atlantic Central, with $210 million of assets, has created a subsidiary that plans to offer commercial title insurance to customers of its roughly 250 shareholder banks. Banks that refer business to Atlantic Central Abstract Co. LLC are to split the fees with it.

The bankers bank is learning the title insurance business from one of its shareholder banks, Pennsylvania Business Bank in Philadelphia. Alan S. Fellheimer, president and chief executive officer of the $91 million-asset institution, likened his bank's role to that of a consultant, for which it will get an undisclosed fee.

In creating a commercial title insurance agency to serve its shareholder banks, Atlantic Central is following the lead of the Virginia Bankers Association, which since 1993 has operated title insurance agencies. It now has seven, each owned by about 15 of its member banks. …

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