Despite recent signs of recovery in the markets, many banks are still ailing and some may face more pain ahead. But one category of banks has seen some significant growth in size and staff in recent years -- banks owned by insurers.
State Farm Bank, for instance, has seen deposits jump from $6 billion in 2004 to $10.3 billion this year, according to the Federal Deposit Insurance Corp. The bank has added about 450 employees over the past five years to reach roughly 1,300 now. It's owned by the Bloomington, Ill.-based firm, the nation's largest insurer of cars and homes.
Similarly, MetLife Bank's deposits have nearly quadrupled, to $7.8 billion, and it's expecting to add hundreds of employees in coming months after recently buying a mortgage business, says Donnalee DeMaio, the bank's CEO. The bank is part of MetLife Inc., mainly a life insurer.
There may be more growth coming, too. Ramy Tadros, head of the insurance practice at consultant Oliver Wyman, says there's been "a huge up-tick of interest" among insurers in operating banks.
That may be another consequence of the financial crisis. Some large insurers used to be wary of owning a bank because they didn't want to be regulated by the federal government. Now, amid concern about the potential risk posed by financial firms getting too big to fail, "they see that coming anyway," says Tadros.