Utah: A Banking Giant

Perhaps you know that Utah has been called a magnet for tech startups and ranks best in the nation for business. But did you know that Utah also ranks among the leading states for banking?

Eighth in the nation in banking assets, according to the FDIC. And that’s without including data from the state’s credit unions or financial technology companies.

How is it that Utah, far away from the country’s leading financial centers, stands out as a banking giant?

“We are in a pretty interesting position, largely because of Utah’s strong industrial bank industry and its success in the state over the years,” says Kelvin Anderson. He’s the new financial services cluster director in the Governor’s Office of Economic Development (GOED). Utah has identified six economic clusters targeting industries where economic developers work to create sustainable advantages around mature and emerging business sectors. As the cluster director for financial services, Anderson is working to help facilitate business growth for existing and new financial services businesses.

“That’s no small task,” says Ben Hart, GOED’s managing director of business services. “In fiscal 2015, Utah’s financial cluster, as defined by GOED, represented 4,888 businesses with more than 50,800 jobs. Those jobs pay an average annual wage of $62,934, or 162 percent of Utah’s average wages, so growing this cluster is a high priority for our office.”

Hart goes on to explain that GOED is redefining its cluster initiative and hiring the brightest minds in the state to grow the respective industries. Growing the financial services cluster is a proactive global effort to let the world know Utah’s value as a financial center and in doing so help create more high-paying jobs. Anderson will focus on recruiting companies that may have a financial services need or operation within their footprints that could benefit by having a banking presence in Utah.

Anderson accepted his new position after retiring in April from his post as president and CEO of Optum Bank, a position he held for eight years. Anderson’s experience encompasses more than 28 years in bank operations, finance, commercial lending, credit card payments and regulatory compliance.

Optum Bank is an industrial bank with more than $5 billion in assets that began operations in 2003 when UnitedHealth Group recognized the value of owning a wholly owned banking operation to support its nationwide health insurance business. Utah was the only state that offered an FDIC insured industrial bank charter coupled with a strong banking department and experienced employees to staff the operation.

Before joining Optum, Anderson served as COO and CFO of two banks wholly owned by GMAC, and before that he was instrumental in the start-up of several other industrial banks from the capacities of president, CFO or controller. He also served as the chairman of the Utah Bankers Association, the Utah representative on the government relations committee of the American Bankers Association, the president of the Utah Association of Financial Services, a director of the National Association of Industrial Bankers and currently serves on the advisory board of the Center for Innovation in Banking and Financial Services at the University of Utah Lassonde Center.

Utah enjoyed significant success growing the financial services industry in the early 90s, largely through new industrial bank entrants as companies saw the advantage of owning a banking operation within their enterprises. Anderson says that growth was stymied by federal legislation after the Great Recession. The FDIC has only approved five charters nationally in the past three years.

The largest Utah bank is Morgan Stanley Bank, NA at $135.6 billion in assets. Other large banks in Utah include Ally Bank, Synchrony Bank, Zions Bank, NA, UBS Bank USA, American Express Bank, FSB, American Express Centurion Bank and Sallie Mae Bank. All Utah banks combined total $580 billion in assets.

Anderson explains that industrial banks are FDIC insured state chartered financial institutions authorized to make consumer and commercial loans and to accept federally insured deposits. Industrial banks are subject to the same regulatory and supervisory oversight as commercial banks.

There are many other stalwarts within Utah’s financial services industry. For example, Goldman Sachs’ second largest North American office is located in Salt Lake City. Anderson hopes to help elevate the state’s entire financial services sector, but says much of his focus will be on growing the footprint of industrial banks.

“Only two states in the country are in a position to charter new industrial banks – Utah and Nevada,” he says, “and Utah has competitive advantages over its neighbor.” He adds that there is an outreach effort going on right now by the FDIC to charter new banks. And from an industry perspective, it needs to see that the FDIC is moving timely on those applications.

“I’ve been talking to several companies that have an interest in exploring the possibilities of starting a bank,” he continues, “and the message we want to get out to the financial services industry is that Utah has the resources available to assist in that process.”

You can learn more about Utah’s financial services industry by reading EDCUtah’s Financial Services Proile.