Clay & Land Insurance adds $25 million in deposits to MetLife Bank
(May 29th, 2009 issue Memphis Business Journal)

Clay & Land's Lynn Alforrd and Jan Bounds are involved in firm's base of CD customers.

MetLife, Inc., insurance broker Clay & Land Insurance, Inc., brought in nearly $25 million in deposits to MetLife Bank in 2008 as customers flocked to the safety and security of certificates of deposit and money markets.

It was a record year for the relationship that began three years ago when MetLife approached Clay & Land, the third-largest property and casualty insurance firm in Memphis, about forming the relationship.

 

About 300 new clients were brought into Clay & Land through the MetLife relationship, the firm says.
More than 95% of Clay & Land’s deposits for MetLife are in CDs, with the average new customer having almost $82,000 in deposits last year.

The fact that rates on some short-term CDs have dropped by as much as half, and long-term CDs are almost nonexistent, isn’t expected to slow that business, says Lynn Alford, an agent with Clay & Land who markets the firm’s MetLife Bank arrangement.

MetLife Bank’s 1-year CD rate is at 1.88%, with a minimum deposit of $25,000, according to Bankrate.com.

“We’re not as competitive right now because the bank doesn’t need to be,” Alford says. “They don’t need the funds.”

Interest rate cuts in the last quarter of 2008 by the Federal Reserve trimmed the yields on CDs to below 4%, making them less attractive for some banks.

Not MetLife, which has kept rates “competitive” nationally, says MetLife spokesman Ted Mitchell, but not with the goal of trying to have the No. 1 CD rate in the country. MetLife has been plenty successful with that strategy.

MetLife Bank’s CD portfolio in the first quarter of 2009 was at $3.1 billion, compared to $1.5 billion in the first quarter of 2008, Mitchell says.

There are more than 100 MetLife agents in the Memphis area licensed to offer CDs, money market and IRA products, Mitchell says.

Having the highest CD rate is not the primary factor for a Clay & Land customer, Alford says — at least that’s not the approach in managing the relationship.

“The people we deal with are very, very conservative,” Alford says. “They want to stay out of the market.”

Their clientele tends to be in their 60s; they don’t have computers and don’t bank online. They also are very skeptical and want face-to-face interaction, he says. “A lot of them don’t know who to trust and need advice,” he says.

Alford and co-worker Jan Bounds are focused on growing that base of CD customers and trying to identify other potential investments, or converting CD or money market funds into a more practical insurance product, like a long-term care policy, Alford says.

“There’s not a lot of money to be in (CDs), but we make the relationship,” Alford says.
That’s likely a good strategy.

Lanny Mitchell, president of Memphis-based Deposit Horizons, is a former Regions Bank executive who now markets deposit consulting services to community banks. Building a business based solely on offering the highest CD rates isn’t a very good strategy, Mitchell says.

“Bankers call it hot money,” he says, because customers cash in on the rate then pull the money after maturity and move it to the next shop.

Well-managed banks recognize that and work to make the most of the relationship.
“Most banks don’t go that extra step,” Mitchell says. “They don’t know how to leverage it where they have other business.”