State Farm Begins Exit From Banking Business Via U.S. Bank Strategic Alliance

State Farm is getting out of the banking business.

The property/casualty insurer said it has formed a strategic alliance with U.S. Bank, allowing it to assume State Farm Bank’s existing deposit and credit card accounts. As part of the deal, State Farm agents will in turn market U.S. Bank deposit products and co-branded credit cards to State Farm customers.

Plans call for the transition of State Farm deposit and credit card accounts to begin after closing, subject to regulatory approval, later this year and into 2021. Current State Farm Bank customers do not need to take any action, the insurer said.

State Farm said that the U.S. Bank alliance is part of a broader strategy to exit its banking operations. Beyond assuming State Farm Bank’s existing deposit and credit card accounts, U.S. Bank and the insurer are looking at ways to give State Farm customers access to vehicle loans and business banking products.

State Farm President and CEO Michael Tipsord said that the new dynamic will ultimately help customers.

“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,” Tipsord said.

The move is similar to what giant insurer Nationwide did in 2018, selling off its approximately $2.4 billion in deposits in Nationwide Bank to Axos Bank, which now provides. banking services to Nationwide customers.

Mutual of Omaha shedded its banking operations in 2019. CIT Group acquired Mutual of Omaha Bank for $1 billion. The deal ended Nebraska-based Mutual of Omaha’s foray into the banking sector, initiated in 2007.

Life insurer MetLife sold its retail banking arm back in 2011.