Industrial loan company


An industrial loan company or industrial bank is a financial institution in the United States that lends money, and may be owned by non-financial institutions. They provide niche financial services nationwide. ILCs offer FDIC-insured deposits and are subject to FDIC and state regulator oversight. All "FDIC-insured entities are subject to Sections 23A and 23B of the Federal Reserve Act, which limits bank transactions with affiliates, including the non-bank parent company." ILCs are permitted to have branches in multiple states. They are regulated and supervised by state charters and insured by the Federal Deposit Insurance Corporation. They are authorized to make consumer and commercial loans and accept federally insured deposits. Industrial banks are not allowed to accept demand deposits if they have total assets greater than $100 million. ILCs are exempted from the Bank Holding Company Act.
ILCs assist numerous charities and provide millions of dollars annually in grants, low interest loans, and service through the Community Reinvestment Act. Currently, only seven states offer an ILC bank charter. Most ILCs have been chartered by the Utah Department of Financial Institutions. Other states permitting ILCs include California, Colorado, Minnesota, Indiana, Hawaii, and Nevada.
U.S. Industrial BanksTotal Assets as of December 31, 2023
Balboa Thrift and Loan Association405,063
Beal Bank USA21,981,385
BMW Bank of North America11,959,686
Celtic Bank2,961,120
Comenity Capital Bank12,950,513
Community Commerce Bank378,011
Eaglemark Savings592,462
Finance Factors, Ltd674,138
First Electronic Bank269,555
Hatch Bank163,064
Milestone Bank 315,994
Medallion Bank2,266,338
Merrick Bank6,218,750
Minnesota First Credit and Savings24,741
Nelnet Bank991,252
Optum Bank, Inc16,395,000
Pitney Bowes Bank, Inc.870,647
Sallie Mae Bank29,141,841
Square Financial Services677,682
Toyota Financial Savings Bank5,600,155
UBS Bank USA114,334,131
USAA Savings Bank2,569,748
WebBank2,517,462
WEX Bank7,074,303

Origins of the concept

In 1910, attorney Arthur J. Morris opened the Fidelity Savings and Trust Company in Norfolk, Virginia, which made small loans to working people under a concept he called the "Morris Plan". Under this lending approach, would-be borrowers had to submit references from two people of like character and earning-power to prove the borrower's creditworthiness, and agreed to repay the loan through the purchase of Installment Thrift Certificates in weekly installments equal to the face value of the loan, less origination and investigative fees. Morris Plan Banks expanded to more than 100 locations in the United States.
Morris Plan banks pioneered the use of automotive financing, and, through the subsidiary Morris Plan Insurance Society, credit life insurance.