Magazine article American Banker

First Washington of NJ Teams Up with Title Insurer

Magazine article American Banker

First Washington of NJ Teams Up with Title Insurer

Article excerpt

A title insurance agency and a community bank in central New Jersey have taken advantage of a provision in the Gramm-Leach-Bliley Act that permits joint ventures among financial services companies.

Madison Title Agency LLC of Lakewood and $360 million-asset First Washington State Bank of Windsor created Windsor Title Agency LP on Aug. 9 to serve the bank's commercial and residential real estate borrowers.

In addition to letting banks, insurers, and brokers buy each other outright, the 1999 law allows them to establish jointly owned entities.

Herb Schneider, First Washington's president and chief executive officer, said Monday that he expects Windsor Title to be "not only an effective service for borrowers but a meaningful source of noninterest income."

Bruce Stern, Madison's vice president of business development, said it wants to form at least four more joint ventures with banks by the end of next year. It is looking to partner with banks in New York, Pennsylvania, Florida, and Texas, he said.

Madison Title is a depositor at 11-branch First Washington, which was founded in 1989 and set up a mortgage unit in May 2001. They own Windsor 50-50 and will split the profits the same way. Neither side would disclose the dollar amounts involved, but Mr. Stern characterized the investment as "not large."

Banks have found many ways to offer insurance products, but the number that have used such joint ventures is thought to be small. "Are we unique? No, probably not, but we are definitely on the leading edge," Mr. Stern said in an interview. "Within three to five years most banks will have some type of title insurance joint venture, some interest in a title agency. …

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