Bank of Smithtown in New York has reached an agreement to purchase the Seigerman-Mulvey Co. insurance agency of East Setauket, N.Y.
Seigerman-Mulvey Co. is a 30 year-old independent agency which places policies with more than 30 insurance carriers. The agency is owned and operated by Barry Seigerman, John Mulvey and Joanne Bentivegna. Seigerman has served on the board of directors of Bank of Smithtown and the board of its parent company, Smithtown Bancorp, since 1994. During 2000, in an effort to increase fee-based income for the bank, the bank entered into a joint venture with the agency to sell insurance, and the bank has done so for the past four years.
Bank of Smithtown Chairman Bradley E. Rock commented upon the acquisition, saying: “Although our insurance joint venture has not yet produced significant amounts of income for the bank, in the relatively small number of instances where we have sought to sell these products, we have had very high rates of success. We have found that once our bank customers learn of the coverages, prices and services that we can offer as an independent agent, they are quite willing to purchase their insurance from us also. Therefore, we feel not only that we can add fee-based income by purchasing the existing revenue stream of the Seigerman-Mulvey agency, but that we can also build upon that revenue stream by creating greater synergies with our retail and commercial banking network.”
The precise terms of the deal were not disclosed, but Rock did say that the price to be paid would be determined over the course of three years on an “earn-out” basis, meaning that the price will depend upon the agency’s contribution to the bank’s net income. Rock also said that the agency’s revenues have exceeded $3 million a year for the last three years, and that the deal would be accretive to Bank of Smithtown’s earnings immediately.
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