Howards Grove bank sold for $26 (Milwaukee Journal Sentinel)
A small Sheboygan County bank considered a national leader in providing health savings accounts is being sold to a Connecticut bank for $26 million in cash.
Webster Financial Corp., of
Webster Financial will keep the health savings account business, with its 31 employees, in Howards Grove, said Nathaniel Brinn, Webster’s executive vice president for corporate development. Brinn said he expects the health savings account business to expand in Howards Grove and create more jobs locally.
The fate of 35 employees who perform basic banking functions in two branches — one in Howards Grove and the other in Beaver Dam — is less certain. Webster Financial will seek to sell that business to another bank and focus on developing the health savings account business, Brinn said.
Health savings accounts are used by people with high-deductible health insurance policies. Money put into a health savings account can be deducted from federal income taxes, accumulate earnings on a tax-deferred basis and be withdrawn tax-free to pay medical bills. The bank acts as a trustee for the accounts.
The health savings account niche was developed at State Bank of Howards Grove by President and Chief Executive Bradley O. Yocum. Yocum, 56, said he will retire. The HSA unit will be headed by Kirk Hoewisch, who will become president of HSA Bank, a division of Webster Bank.
The transaction is to close by April 2005.
State Bank of Howards Grove has $144 million in deposits. About $100 million of that is in health or medical savings accounts. The health savings accounts are attractive to Webster Financial because of the deposits they generate and the administrative fees they produce.
“They were very well positioned to be an early, leading HSA player and that’s what attracted us to the bank,” Brinn said.
Webster Financial, which has about $17 billion in assets and 147 branches, operates the largest independent bank in southern
Dan Perrin, executive director of the HSA Coalition and publisher of HSA Insider in
“It’s the equivalent of buying the Boardwalk in Monopoly,” Perrin said of the deal.
Yocum said it’s time to sell the health savings account business because it is growing too big for a small bank. Banks are required by regulators to raise money through stock offerings or other measures so that capital stays in safe proportion to total assets.
“We’d taken it as far as our capital would allow us to take it,” Yocum said.
Copyright 2004 Journal Sentinel Inc.
September 8, 2004 Wednesday