August 3, 2020 (Salt Lake City, Utah) – The Kem C. Gardner Policy Institute today released a groundbreaking analysis detailing the substantial economic benefits of industrial banks in Utah, the nationwide center for this banking segment with a 110-year history. The report, commissioned by the Utah Center for Financial Services at the David Eccles School of Business, shows that Utah headquartered industrial banks held $140.6 billion in assets in 2019, 93.5% of the U.S. total for industrial banks and 0.8% of the U.S. total for any type of bank insured by the Federal Deposit Insurance Corporation (FDIC).
“Our research shows that Utah’s thriving financial services sector features innovative large-scale banks established under industrial bank charters,” said Levi Pace, senior research economist at the Gardner Institute and lead author of the report. “We’ve seen how being the nationwide center for industrial banking brings career-quality jobs and ongoing community contributions to our state.”
Also known as industrial loan companies, these state-chartered institutions provide financial services to individuals and organizations, such as making loans and accepting insured deposits. While most bank charters in the U.S. limit bank ownership to financial institutions, nonfinancial companies can also own industrial banks, subject to federal and state laws and regulations.
“The Utah Center for Financial Services is pleased to sponsor this study of Industrial Banks in Utah,” said Allan Landon, assistant dean at the David Eccles School of Business and executive director of the Utah Center for Financial Services. “The report highlights the scope and contribution of industrial banks to innovation and the Utah economy over many years.”
Highlights from the report include:
- Industrial banks generate significant economic benefits: In 2019, industrial banks in Utah directly and indirectly generated 6,468 in-state jobs paying $443.8 million in earnings to workers who produced $722.0 million in state GDP, 0.4% of the total for all industries. The associated state and local fiscal impacts included $32.0 million in sales, property, and state income tax revenue.
- Industrial banks offer well-paying jobs: In 2019, industrial banks provided 1,824 Utah jobs. Average employee compensation was $105,400, 67.3% above the state’s $63,000 average for all industries.
- Industrial banks support community development: During their most recent 12-month reporting periods, Utah industrial banks funded $1.0 billion in investments and donations to lower-income communities, largely for affordable housing in Utah and other states. Bank employees gave 6,500 hours of volunteer service.
- Several prominent banks began as industrial banks: Utah is also home to 10 former industrial banks now operating under commercial bank charters. Their successor banks provided 1,332 in-state jobs in 2019. Total economic impacts of former industrial banks included 4,655 jobs and $315.0 million in employee and self employment earnings.