Making insurance pay. (Marketing News).

Noninterest revenue is a Good Thing. It doesn't fluctuate with the money market. And insurance revenue is one of the more attractive forms of Good Things. And it can potentially represent a significant source of income in its own right.

Bank Insurance Marketing magazine noted recently that Oneida Savings Bank, N.Y., a community bank with 19 employees and $335 million in assets, reported $2.35 million in insurance fees and commissions during the first half of 2001-nearly three-fourths of its entire noninterest income for that period.

Recognizing a lack of insurance expertise, Oneida grew its insurance business through the simple expedient of buying an existing agency and mostly leaving its managers in place, while providing them with necessary growth capital. The agency's main office is just a block away from the bank's main office.

The bank and the insurance agency both-sell insurance, but of different types: the bank sells Savings Bank Life Insurance (available in New York, Massachusetts and Connecticut), and the agency concentrates on property-casualty and other commercial lines. Although there isn't a lot of cross-selling going on, the acquisition was structured so agency principals could increase their income by building agency business above a preset baseline.

The agency acquisition has done two important things for Oneida Bank, the magazine notes: first, it has boosted the bank's ratio of fee income to total revenues from 4 percent to about 21 percent The second result is a product of the first: As falling interest rates adversely affected the bank's interest-sensitive products, insurance income has provided a steady stream of revenue. The magazine quotes Oneida's chief financial officer, Rick Stickles: "If not for insurance, our net income would be flat this year."