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BY Greg Edwards
(reprinted from the St. Louis Business Journal, OCT. 9, 2009)
First Bank has sold its Adrian N. Baker insurance business to AHM Corporation Holdings Inc., an insurance and asset management firm in St. Louis, in a $15 million stock purchase agreement.
The deal expands AHM’s insurance business and advances First Bank’s divestiture of non-core businesses in the face of mounting losses resulting from bad loans.
Adrian Baker had total revenue of $7.6 million in 2008 and $4.2 million for the first six months this year. With a single location, in Clayton, and 50 employees, it provides commercial, employee benefit and personal insurance to corporate and individual clients nationwide.
The key investors in the purchase are Rob Vitale, managing director of AHM; Chase Butler, who formed AHM with Vitale; and Bill Stiritz, chairman of Ralcorp Holdings Inc. Bush O’Donnell & Co. is a lender through its Eagle II private debt and equity fund. Jim O’Donnell, president and chief executive of Bush O’Donnell, said, “We’ve known Rob Vitale for several years, respect his business acumen, and are happy to be part of this new initiative.”
Other investors include John Anderson, Steve Hall and Steve Marsh, founders of Anderson, Hall, Marsh & Co., an insurance brokerage that AHM was formed to buy in 2006. Anderson, Hall and Marsh remain part of AHM’s insurance executive team. Adrian Baker insurance brokers also are among the investors.
“We have a very broad stockholder group with capacity to acquire aggressively,” Vitale said, adding that AHM is exploring other acquisitions, “but there is nothing imminent.”
In addition to Anderson, Hall, Marsh & Co., Vitale said, AHM has acquired books of insurance business from other firms. Its total premiums are estimated at more than $225 million. It also owns AHM Asset Management, formerly CJ Capital Management, an investment advisory firm in Clayton.
Joining AHM as chief financial officer will be Steven Schepman, who had been executive vice president and director of corporate development and business segments of parent company First Banks Inc. and chairman of Adrian Baker. Schepman is a former son-in-law of Jim Dierberg, who owns First Banks with his family.
In addition, Tom Dean and Rich Rafuse, top executives at Adrian Baker for the last decade, join AHM in senior positions, Vitale said.
Adrian Baker, formed in 1938, was acquired by First Bank in 2006 during a period of rapid expansion. In an interview in 2007, Schepman described First Bank’s strategy then as that of a “serial acquirer.”
More recently, First Bank has been rapidly divesting assets to raise capital and put cash on its balance sheet.
With operations in states such as California, Florida and Texas, where real estate markets have been hard hit, First Bank is selling its 19 retail branches in Texas to Sterling Bank of Houston for $30 million. In addition, it is selling its Springfield, Ill., branch to First Bankers Trust Co. of Quincy, Ill., and its Lawrenceville, Ill., branch to The Peoples State Bank of Newton.
“The sale of Adrian Baker represents the completion of one portion of our capital optimization planning process as we continue to realign our business strategies and reallocate capital in response to the current economic downturn,” Terry McCarthy, First Banks president and chief executive, said in a statement.
First Banks Inc., with $10.4 billion in assets, reported a loss of $174.5 million though June 30. In fiscal 2008, it recorded a loss of $272 million, including a $368 million provision for loan losses, compared with a profit of $49.5 million in 2007.
Reprinted with permission from the St. Louis Business Journal,
© 2009 all rights reserved.
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