Based on our last two GonzoBankers of the Month, one might think that all the consultants at Cornerstone Advisors do is hang out with CIOs. Nothing could be further from the truth! In our strategy, process improvement and benchmarking work, we also come into contact with quite a few bankers who hail from the lines of business. This month’s GonzoBanker does care about that pesky little yield curve, but not as much as some of his peers… Please read on.
Name: Daniel Cantara
Official Title:
Executive Vice President, Commercial Business Services, First Niagara Financial Group ($8 billion) (Lockport, NY)
Work Prior to First Niagara: Dan was the Managing Partner of a regional CPA firm in upstate New York.
Gonzo’s Title:
Bodhisattva of Integrating an Insurance Line of Business at a Commercial Bank
Alma Mater:
State University of New York, Buffalo – B.S. in Accounting and M.B.A.
Things Keeping Dan Busy:
Integrating commercial lending, merchant services, cash management, leasing, insurance and employee benefits into a team-based sales model – some of the largest growth engines for First Niagara.
Gonzo Claim to Fame:
Like practically all financial institutions facing a difficult yield curve, First Niagara is keenly interested in growing its noninterest income. Enter Dan Cantara, First Niagara’s EVP of Commercial Services, who is responsible for many of the bank’s fee income lines including insurance, cash management, merchant services, leasing and employee benefits. Today First Niagara enjoys nearly 30% of its income from noninterest activities including a sizeable contribution from its insurance business. When Dan started at First Niagara in 2001, insurance agency revenue stood at $8.5 million. Through a combination of acquisitions (insurance agencies and an employee benefits consulting firm) and organic growth, revenue in First Niagara Risk Management will hit about $50 million in 2006.
In building the insurance business in the bank’s four primary markets – Buffalo, Rochester, Syracuse and Albany – Dan and his team have developed some best practices demonstrating that you don’t have to have the financial muscle of a Suntrust or BB&T to be competitive in this space while dropping some very nice fee income to the bottom line.
It’s All About Relationship Banking. As First Niagara has transitioned to a commercial bank from its thrift roots, a key source of its competitive advantage derives from the relationships its bankers have with commercial clients. Dan explains that in a similar vein, “insurance agents are sophisticated relationship sellers. It is a business where we need boots on the ground.” This shared approach to relationship sales and management has made integration of acquired agencies into the bank model go that much more smoothly at First Niagara.
Leverage the Commercial Banking Franchise. Dan learned early on that the world of selling personal insurance lines is particularly “cutthroat” and more of a “commodity business with lower margins.” 
That’s why Dan changed the model to focus on Commercial P&C, employee benefits and industry niches (e.g. construction, non-profits, moving and storage, and general manufacturing) to grow the insurance business. These types of products leverage the bank’s strong commercial franchise and customer relationships. Today, First Niagara Risk Management derives 85% of its revenue from commercial lines while personal lines make up only 15% and are typically offered as an accommodation to commercial clients. Moreover, in 2006, 15% of insurance sales were from bank referrals, and that number continues to climb each year – a key Gonzo metric for measuring insurance integration success.
Can You Say “Co-location”? “Co-location of commercial bankers, insurance, cash management and leasing has been one of the keys to our success,” reported Dan. In each of the bank’s four major markets there is a co-location center where these folks all sit together and interact on a daily basis. This 
strategy “has been tremendously helpful in our team-based selling approach,” stated Dan. “Educating the commercial bankers on the benefits of insurance was difficult at first,” Dan commented, but knowledge transfer and training were made much easier through co-location. Joint sales calls and consultative sales are the order of the day in Commercial Services.
Acquisitions. The overwhelming majority of banks that are in the insurance biz have entered through some type of acquisition, and First Niagara is no exception, pulling off a dozen in the past nine years. Acquiring is the easy part; retaining talent and integrating the acquisition with the bank is the tough part and First Niagara has done both well. “Rule #1,” said Dan, “is after an acquisition don’t mess with the agents’ pay. A high-producing agent will often make more money than his boss or his boss’s boss and bankers have to live with that.” At First Niagara agents are 100% commission with a variable structure for new business versus renewals. Rule #2, according to Dan, is “be patient, be choosy and don’t overpay.” While that may seem obvious, Dan has seen too many banks overpay for agencies and then sell them off a few years down the road when things didn’t go as planned. First Niagara completes a sophisticated IRR and cash flow analysis before closing a transaction, but Dan said that a good rule of thumb for valuations is 6- 8 times EBITDA. Rule #3 is “don’t be constrained by the traditional bank model.” Fifteen months ago First Niagara acquired the Burke Group, Inc. a large employee benefits and compensation consulting firm located within the bank’s footprint. “The consulting business has opened a lot of doors allowing us to cross-sell insurance and other bank products,” commented Dan.
Dan’s Key to Success in Integrated Insurance/Commercial Delivery: “Banks should not get into the insurance business as a financial investment that will run on a standalone basis just to diversify fee income. We run insurance as an extension of the bank, and, more specifically, an extension of our commercial franchise, which has allowed us to integrate our acquisitions and capitalize on the relationships of both our bankers and agents.” <>
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Dan also warned that “cross-sell won’t magically happen just because you buy an agency. It takes training and education, incentives and a strong commitment from the very top of the organization.”<>
If You Had to Do it All Over Again, What Would You Do Differently? “I would have focused initially on integrating insurance and commercial services. Instead, like many banks, we spent our initial years in the business focusing on personal line integration, which is not where First Niagara achieved success.”
Shout Out to Other Team Members Who Have Made this Initiative Successful:
John Hoffman, CEO of Warren Hoffman – the first platform agency purchased by First Niagara that gave the bank its start in the business. John, who is still with the bank, has provided invaluable guidance and expertise in the insurance arena to an acquirer new to the business.
John Koelmel, President and CEO of First Niagara. John saw the potential for an integrated commercial bankingnsurance services offering early on and has been a steadfast champion of Dan’s efforts at growing this fee income business. 
Outside of the Office:
Dan is an accomplished chef and gourmet. As Dan commented, “My wife had been cooking in the same pots and pans we got at our wedding shower 25 years ago, but I got into cooking a few years back and of course had to have all new equipment.” Sounds like most guys I know.
If I Weren’t a Banker:
“I’d be an architect.”
Favorite Movie: 
Once Upon a Time in America<>, Robert DeNiro and James Woods
Most Underrated Rock and Roll Album of All Time:
Meatloaf Bat out of Hell<>. A good pick, Dan.
Thumbs up to Dan and his team. GonzoBanker salutes you. We are pleased to donate $250 in Dan’s name to the charity of his choice: Martin House Restoration Corp. dedicated to restoring a priceless Frank Lloyd Wright home in Buffalo, NY, to its original splendor.