State Farm To Exit $16.4 Billion Banking Business
Bloomington-based State Farm is getting out of banking. The company on Thursday announced plans for U.S. Bank to take over existing deposits and credit card accounts.
U.S. Bank is the nation's fifth largest bank. Credit cards will be co-branded. State Farm agents will be able to offer U.S. Bank products. The two companies are also talking about making U.S. Bank car loans available to State Farm.
According to financial reports, State Farm Bank's return on assets last year was .35%. And the bank division total assets declined by $500 million.
A State Farm representative declined to say when State Farm decided to get out of banking, citing proprietary considerations.
As to why: "State Farm is focused on serving more customers in more ways and sometimes that means doing things differently than we have in the past. State Farm has made the decision to offer customers banking products and services through alliances rather than State Farm Bank," said Roszell Gadson.
Gadson said State Farm Bank hopes to reassign as many of the 1,300 banking employees as possible. That includes 975 employees in Bloomington.
"While we do anticipate hiring, we can't speculate on the total number of openings," Gadson said. "Given the anticipated hiring needs at State Farm in 2020, our hope is that many will consider available opportunities in other departments of the company."
State Farm Bank net income in 2019 was $59 million and total assets for State Farm Bank, F.S.B. were $16.4 billion for the year. In 2018 the bank saw net income of $35 million and had total assets of $16.9 billion, according to State Farm financial information released earlier this month.
“State Farm has been committed to helping people for nearly 98 years. U.S. Bank is an outstanding institution that shares our commitment to strong customer relationships,” said State Farm President and CEO Michael Tipsord. “When we combine State Farm’s deep customer relationships with the scale and capabilities of companies like U.S. Bank, we can help significantly more people.”
“It is a terrific opportunity to combine U.S. Bank products, services and digital capabilities with State Farm’s coast-to-coast network of agents. This relationship will provide State Farm customers with enhanced product options while expanding U.S. Bank’s reach into new and existing markets,” said U.S. Bank chair, president and CEO Andy Cecere.
State Farm said the deal does not include State Farm’s Investment Planning Services.
Total assets under management for the Investment Planning Services operation at the end of 2019 were $12.7 billion. State Farm VP Management Corp. and State Farm Investment Management Corp. reported a combined net loss of $22 million in 2019. Comparable figures for 2018 were: total assets under management, $11.2 billion; net income, $7 million.
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