American Community Banks | Some efforts to connect data to insights with some programming

One person, on doing well by others, immediately accounts the expected favor in return. Another is not so quick, but still considers the person a debtor and knows the favor. A third kind of person acts as if not conscious of the deed, rather like a vine producing a cluster of grapes without making further demands, like a horse after its race, or a dog after its walk, or a bee after making its honey. Such a person, having done a good deed, won’t go shouting from rooftops but simply moves on to the next deed just like the vine produces another bunch of grapes in the right season.

Marcus Aurelius, Meditations, 5.6

A quick update on some work I am doing since venturing into consulting.

My two ventures are Factor IX Capital, LLC and ThorCo Solutions, LLC. Factor IX develops real estate solutions for blood plasma collection center operators throughout the United States. Our team is uniquely positioned to provide solutions to the major operators, and our expertise, market research and growing network of “boots on the ground” position us to add tons of value to our clients.

My consulting business is formed under ThorCo Solutions, LLC, and I am working with leaders in insurance agencies, family offices, and other consulting firms. I have been pleasantly surprised at the types of inquiries I have had, including in areas of agency leadership, case-specific support for employee benefit consulting, product placements for estate planning, as well as (ongoing) discussions about corporate development strategies. I am as busy as I want to be, which was my goal…

One area I continue to invest into is the community bank marketplace; This market is interesting because banks have multiple needs my teams, across both entities, may help with:

• Community banks with insurance agencies that are underperforming may desire help to optimize their insurance distribution operation; Our team can provide consulting support (including personnel with experience in bank owned agency leadership).
• Community banks making deals that touch insurance distribution may desire transaction support services (incl. financial diligence); Our team can provide transactional support (including personnel with experience in large agency financial officer roles).
• Community banks without insurance agencies may need help optimizing employee benefits and BOLI programs; Our team has this expertise.
• Community banks with owned real estate may consider divestiture of branches; Our team includes a Ph.D. operations research professional with expertise in facility location models. (Perhaps excess branch locations could be repurposed into plasma centers…)

We developed a model to establish a SQL database of bank data (sourced from the FDIC), populate the database, and then make quarterly updates.

I’m really enjoying this proactive market research (in addition to day-to-day activity). My career in insurance agency leadership has “touched” the bank-owned agency market in numerous ways.

• Under Hartman, I built relationships with numerous agencies, some of whom were led by personal friends, which were sold to regional banks. It was interesting observing as a vendor, and friend, as deals were made and post-merger integrations progressed.
• In our wholesale division at Hartman, we also served numerous large, national bank-owned agencies, including Fleet Insurance Services (FIS) and Bank of America Corporate Insurance Agency (BACIA). It was interesting building relationships and conducting business with these organizations and seeing the advantages (e.g. cross-sale opportunities) and disadvantages (e.g. training and compliance expectations of insurance professionals specific to AML) conferred from the perspective of my friends and colleagues at these firms.
• At USI, I had the good fortune to work with team members that came from financial institutions like MVB Financial, Wells Fargo, and Key Insurance Services, among others. Again, the opportunity to work with these professionals as a practice leader at a large, national insurance agency offered me additional perspective about the pros/cons of bank-owned agencies.

I am particularly curious about whether banks with insurance agencies perform differently from other banks without such operations. One of the benefits of keeping an updated SQL database is I can investigate this in some detail based on actual data.

I created a report to analyze ROE measures by state, date, and size (i.e. total assets) and visualize results. For example, here is the output for all NY banks (scrubbed for null values, which arise at a relatively high rate in NY…)

I created a switch in the function to filter included banks based upon insurance commissions relative to net interest income; The difference in the size of the circles is based upon total assets of each bank.

So, we have also created some standard reports from our database and report program. Here is a quick look… (I am interested in the income statement effects from the past year of provisions for credit losses…)

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Thank you for reading my blog! This is an incredibly interesting time to be alive and engaged in society, whether from a perspective of a business-person, a policy-maker, a researcher, or just as an engaged citizen. While there are certainly (many) areas that justify frustration and concern (e.g. our world’s, and nation’s, handling of the global pandemic), in my view there are as many reasons to view the world with optimism and awe (e.g. our world’s demonstrable ability to develop effective vaccines to a novel virus in, by historical standards, miraculous timeframes.) This is a wonderful time to be alive (and be in business!)

If you have thoughts or questions about any of these items, or you are just interested in connecting, please call me! My cell continues to be (814) 360-4699. I hope you have a wonderful evening! And, to my observant friends of Jewish faith, l’shana tova to you and your loved ones this new year! G’mar chatima tova. I hope you have a year where, at its conclusion, you feel confident you contributed to society, “just like the vine produces another bunch of grapes in the right season.“