Utah Industrial Banks Industry Profile

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1 2009 Utah Industrial Banks Industry Profile

2 Utah Industrial Banks INDUSTRY OVERVIEW Industrial Banks (IB s) 1 are financial institutions that have experienced rapid growth in the U.S. over the past decade. The state of Utah has proven to be a particularly attractive place to operate IB s and now hosts the most IB s in the country. IB s chartered in Utah currently hold the bulk of IB industry assets. The flexibility of an IB charter has made it an attractive vehicle for many large and well-known corporations. INDUSTRIAL BANKS EXPLANATION IB s are financial institutions authorized to make consumer and commercial loans and to accept federally insured deposits. IB s cannot demand deposits if the IB has total assets greater than $100 million. IB s are subject to the same regulatory and supervisory oversight as commercial banks. IB s are authorized to engage in the banking business under the statutory framework of Title 7. With the exception of demand deposits, IB s may offer the same banking services as commercial banks. FDIC rules and regulations that generally apply to commercial banks also apply to IB s, and the institutions are supervised and examined by both the FDIC and the Utah Department of Financial Institutions. UTAH INDUSTRIAL BANKS INDUSTRY STRENGTHS Strong & Balanced Regulatory Environment Utah IB s have increased the diversity of the products offered from auto lending to residential mortgage lending to small business lending. Highest Concentration of IB s in the Nation With 30 chartered IB s in the state, Utah has the highest concentration of IB s in the nation. 2 Top 8 Out of 10 IB s in the Nation Utah is home to 8 of the 10 largest IB s by asset size in the nation. 3 1 IB s are also known under federal law as industrial loan banks or industrial loan corporations. 2 Source: FDIC 3 Source: FDIC, Assets as of March 31, 2008 THE ECONOMIC DEVELOPMENT CORPORATION OF UTAH 07/31/08 1

3 UTAH INDUSTRIAL BANKS INDUSTRY MAP Source: Decision Data Resources, FDIC, Utah Department of Financial Institutions, EDCUtah WHY UTAH? Industrial loan companies and industrial banks have existed since the early 1900s. As of April 2003, states with existing insured IB s include California, Colorado, Indiana, Hawaii, Minnesota, Nevada and Utah. The charters are unique in that the owners of these banks are not required to be regulated by the Federal Reserve as bank holding companies. Instead, the Utah Department of Financial Institutions supervises owners of these banks chartered under Utah law and the FDIC under a special program developed principally for the IB industry. The parent companies of IB s include a diverse group of financial and commercial firms. 4 4 The Future of Banking: The Structure and Role of Commercial Affiliations, Open letter from Donald E. Powell to the Honorable Robert F. Bennett, April 30, /31/08 UTAH INDUSTRIAL BANKS PROFILE

4 Most IB s operating in Utah market specialized products or services nationwide, using the authority afforded national banks and federally insured state-chartered financial institutions to offer services nationwide under a uniform regulatory standard. Historically, an IB mainstay has been the issuance of credit cards to consumers and businesses nationally. However, as the number of IB s has increased so has the diversity in offered products. IB s now offer auto lending, commercial mortgage lending, escrow management, receivable factoring, residential mortgage lending and small business lending. Utah has established a reputation for a strong, yet balanced, regulatory environment. The process of obtaining an IB charter starts with an application to the Department of Financial Institutions and an application for insurance of deposits with the FDIC. Because the information requested in the FDIC application is similar to that requested in the State application, the FDIC application could be filed in lieu of the State application. 5 INDUSTRIAL BANKS BUSINESS MODELS 6 Existing IB s can generally be grouped according to one of four broadly defined business models: 1) Institutions that are operated as community-focused institutions, including stand-alone institutions and those serving a community niche within a larger organization. These institutions often provide credit to consumers and small- to medium-sized businesses. Funding sources may include commercial and wholesale deposits, as well as borrowings. Institutions that operate within a larger corporate organization may also obtain funding through the parent organization. 2) Independent institutions that focus on specialty lending programs, including leasing, factoring and real estate activities. Funding sources for this relatively small number of institutions may include retail and commercial deposits, wholesale deposits and borrowings. 3) Institutions that are embedded in organizations whose activities are predominantly financial in nature, or within the financial services units of larger corporate organizations. These institutions may serve a particular lending, funding or processing function within the organization. Lending strategies are often focused on a limited range of products such as credit cards, real estate mortgages or commercial loans. Corporate strategies play a larger role in determining funding strategies in these cases, with some institutions periodically selling some or all outstanding loans to the parent organization. Parent assessments of funding options across all business units frequently determine the specific tactics at the IB level. A few institutions restrict themselves to facilitating corporate access to the payment system or supporting cash management functions, such as administering escrowed funds. 4) Institutions that directly support the parent organizations distinctly commercial activities. These institutions largely finance retail purchases of parent company products, ranging from general merchandise to automobiles, truck stop activities, fuel for rental car operations and heating and air conditioning installations. Loan products might include credit cards, lines of credit and term loans. Funding is generally limited to wholesale or money center operations, borrowings or other options from within the parent organization. 5 Source: Utah Department of Financial Institutions, What is a Utah Industrial Loan Corporation? 6 Source: FDIC Division of Supervision and Consumer Protection. THE ECONOMIC DEVELOPMENT CORPORATION OF UTAH 07/31/08 3

5 UTAH S LARGEST DEPOSIT MARKETS Rank Largest Deposit Markets Institutions in Market Deposits Asset Distribution 1 Salt Lake City 63 $157,188,000 Less than $250 million 2 Ogden/Clearfield 19 $15,916,000 $250 million to $1 billion 3 Provo/Orem 18 $3,370,000 $1 billion to $10 billion 4 St. George 10 $1,567,000 Greater than $10 billion 5 Logan 11 $1,006,000 Greater than $10 billion Source: FDIC, Q1 2008, 2007 Summary of Deposits UTAH INDUSTRIAL BANKS Rank Industrial Bank Name and Address Contact Information Total Assets as of Merrill Lynch Bank USA 15 West South Temple, Suite 300 Morgan Stanley Bank 201 South Main Street, 5 th Floor GMAC Bank 6985 Union Park Center, Suite 435 Midvale, Utah UBS Bank USA 299 South Main Street, Suite 2275 Goldman Sachs Bank USA 295 Chipeta Way, 4 th Floor American Express Centurion Bank 4315 South 2700 West Salt Lake City, Utah Capmark Bank 6955 Union Park Center, Suite 330 Midvale, Utah Lehman Brother Commercial Bank 4001 South 700 East, Suite 410 CIT Bank 2180 South 1300 East, Suite 250 Salt Lake City, Utah GE Capital Financial 4246 South Riverboat Road Salt Lake City, Utah BMW Bank of North America, Inc East Parley s Way, Suite 301 Salt Lake City, Utah Advanta Bank Corporation South Election Road Draper, Utah Sallie Mae Bank 5217 South State Street, Suite 201 Murray, Utah Preston Jackson (801) Danny Wall (801) Mark Hales (801) Raymond Dardano (801) Michael Civitella (801) Andrea Moss CEO (801) Steven Nielsen (801) Julie Boyle (801) Richard Lake (801) Tim Carfi (801) William Donnelly (801) John Moore (801) Mark Howard (801) $63,002,659,000 $38,472,000,000 $30,329,334,000 $27,989,074,000 $25,573,236,000 $24,310,302,000 $7,744,994,000 $6,481,586,000 $3,096,706,000 $2,733,979,000 $2,678,628,000 $2,587,476,000 $1,331,697, /31/08 UTAH INDUSTRIAL BANKS PROFILE

6 Wright Express Financial Services 3955 South 700 East, Suite 450 Merrick Bank Corporation South Jordan Gateway, Suite 200 South Jordan, Utah OptumHealth Bank, Inc Lake Park Boulevard West Valley City, Utah Pitney Bowes Bank, Inc Brickyard Road, Suite 450 Salt Lake City, Utah Transportation Alliance Bank, Inc Harrison Boulevard, Suite 200 Ogden, Utah Republic Bank, Inc. 801 North 500 West, Suite 103 West Bountiful, Utah Magnet Bank 2825 East Cottonwood Parkway, Suite 180 Salt Lake City, Utah Medallion Bank 1100 East 6600 South, Suite 510 Salt Lake City, Utah World Financial Capital Bank 2855 East Cottonwood Parkway, Suite 100 Salt Lake City, Utah EnerBank USA 1245 Brickyard Road, Suite 100 Salt Lake City, Utah Celtic Bank 340 East 400 South Salt Lake City, Utah 8111 Allegiance Direct Bank 136 West Center Street, Suite 200 Cedar City, Utah ADB Bank 136 West Center Street, Suite 200 Cedar City, Utah Escrow Bank USA 6955 Union Park Center, Suite 300 Midvale, Utah WebBank 6440 Wasatch Boulevard, Suite 300 Salt Lake City, Utah LCA Bank Corporation 1375 Deer Valley Drive, Suite 218 Park City, Utah First Electronic Bank South Lone Peak Parkway, Suite 135 Draper, Utah Target Bank 299 South Main Street, Suite 2050 Kirk Weiler (801) Richard Urritia (801) Kelvin Anderson (801) Sheldon Woods (801) J.J. Singh (801) Boyd Lindquist (801) Christopher Worel (801) John Taggart (801) Marvin Corne (801) Louise Kelly (801) Phillip Ware (801) Adriaan Van Zyl (435) Adriaan Van Zyl (435) Steven Nielsen (801) Gerry Smith (801) Timothy Talbert (435) James McLaughin (801) Shawn Gensch (801) $1,195,118,000 $1,181,376,000 $736,192,000 $687,050,000 $552,646,000 $508,519,000 $442,953,000 $364,955,000 $178,777,000 $175,336,000 $145,770,000 $51,344,000 $51,000,000 $42,274,000 $34,490,000 $33,060,000 $17,439,000 $14,405,000 THE ECONOMIC DEVELOPMENT CORPORATION OF UTAH 07/31/08 5

7 Marlin Business Bank 2795 East Cottonwood Parkway, Suite 120 Franklin Templeton Credit Corporation 2301 ial Drive, Suite F Salt Lake City, Utah Union Financial Services Corporation 181 East 5600 South, Suite 240 Valley Loan Corporation 2105 West 4700 South Murray, Utah Robert Majka Shelly Dueri Executive Assistant (801) Wallace Jensen (801) Roxanne Emery (801) $12,012,000 Presently Inactive Presently Inactive Presently Inactive Total Chartered Institutions 35 Total Assets - $242,766,387,000 Source: FDIC, Utah Department of Financial Institutions, data as of March 31, 2008 ECONOMIC DEVELOPMENT CORPORATION OF UTAH (EDCUtah) The Economic Development Corporation of Utah (EDCUtah) is a private, statewide, non-profit organization formed in 1987 to provide a unified and professionally managed economic development program promoting the state of Utah. EDCUtah is an investor-based organization with more than 230 private sector businesses, organizations, chambers of commerce, municipalities and counties. Through these partnerships, EDCUtah facilitates an ongoing effort to develop and nurture a thriving business climate throughout Utah. EDCUtah specializes in assisting companies considering Utah for a business relocation or expansion. The corporate recruitment team of EDCUtah coordinates all of the information key decision makers and economic development/site consultants need as they evaluate Utah as a site location. FOR ADDITIONAL INFORMATION Economic Development Corporation of Utah 201 South Main Street, Suite 2010 Phone (801) Fax (801) /31/08 UTAH INDUSTRIAL BANKS PROFILE

8 201 South Main Street, Suite 2150 Phone Fax