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About ILCs
Industrial Loan Companies (ILCs) or Industrial Banks have been an integral part of the US financial system for over a century, providing credit and financial innovation during good times and bad. Perhaps one of the most compelling facts about ILCs is that during the worst years of the financial crisis, when most banks and credit unions were contracting their balance sheets and dramatically reducing lending, ILCs continued to lend and actually grew their assets (loans) year over year, providing needed capital for the US economy.
Important Issues, Reports and Studies
Industrial Banks are regulated by federal and state agencies, with the same requirements as any other state chartered bank in the country. Reports document that industrial banks are the safest and soundest financial institutions in the country.
The National Association of Industrial Bankers continues to champion innovative financial services for Americans by expanding access to credit, guaranteeing consumer choice, and providing unique banking services.
A quick overview of the history and purposes of ILCs.
An Overview of ILCs
For over a century, ILCs have provided reliable and safe financial services to consumers and businesses. They follow the rules of traditional banks and have shown a unique ability to be innovative and perform well.
101 of Industrial Banks
Industrial Banks are regulated like every other FDIC-insured bank: subject to CRA, fair lending, privacy laws, the full array of examinations, taxes, etc. The only difference is that an industrial bank parent or affiliate can engage in non-financial activities.
Stability and Strength of ILCs
ILCs provide credit and financial innovation during good times and bad. ILCs have the same regulation as all other state-chartered depositories. Industrial Banks have consistently outperformed all other FDIC-insured institutions for over 20 years.
Reports & Studies
The banking industry, in general, enjoyed strong profitability and solid financial condition in 2023 and 2022. The industrial bank sector continues to achieve strong capital and asset quality and superior profitability ratios.
The Utah Center for Financial Services at the University of Utah prepared this report to highlight the safety and soundness of industrial banks. Key measures of safety and soundness in banking are capital, asset quality, and profitability.
The Utah Center for Financial Services at the University of Utah prepared this report to highlight the safety and soundness of Industrial Banks. Key measures of safety and soundness in banking are Capital, Asset Quality and Profitability. We have compared levels of Capital, Asset Quality and Profitability ratios for the US banking industry and the industrial banking sectors.
Thirteen of the 24 industrial banks met the threshold (assets in excess of one billion dollars) and accordingly reported estimated amounts of uninsured deposits.
The Utah Center for Financial Services at the University of Utah prepared this report to highlight the safety and soundness of Industrial Banks. The banking industry enjoyed strong profitability and solid financial condition in 2022. While the banking industry is sound and safe as of December 31, 2021, the industrial bank sector continues to achieve superior earning strength and strong capital and asset quality ratios. As expected, economic conditions are causing a small increase in troubled loan ratios of industrial banks, leading to increased reserves for potential losses.
The Utah Center for Financial Services at the University of Utah prepared this report to highlight the safety and soundness of Industrial Banks. While the banking industry is sound and safe as of September 30, 2022, the industrial bank sector continues to demonstrate superior financial strength.
The Utah Center for Financial Services at the University of Utah prepared this report to highlight the safety and soundness of Industrial Banks. Key measures of safety and soundness in banking are Capital, Asset Quality, and Profitability. We have compared levels of Capital, Asset Quality and Profitability for the US banking industry and the industrial banking sectors. The underlying financial information is drawn from the March 31, 2022 call report data for individual banks and for aggregated banking industry segments. While the banking industry is sound and safe as of March 31, 2022, the industrial bank sector continues to demonstrate superior financial strength.
Key measures of an insured institution’s safety and soundness are capital adequacy, asset quality and profitability. We have compiled and analyzed data related to these measures to provide an objective view of the US banking industry or a banking industry segment’s safety and soundness profile. All data is derived from FDIC quarterly call reports as of September 30, 2021.
Key measures of an insured institution’s safety and soundness are capital adequacy, asset quality and profitability. We have compiled and analyzed data related to these measures to provide an objective view of the US banking industry or a banking industry segment’s safety and soundness profile.
Comment letters
The National Association of Industrial Bankers (NAIB) appreciates the opportunity to submit comments on proposed amendments to § 1026.52(b) and its accompanying commentary as they relate to credit card late fees.
We appreciate the Committee’s desire to protect consumers from risks in the financial sector. However, the legislation introduced in the Close the Shadow Banking Loophole Act unfairly targets Industrial Loan Companies (ILCs), which are among the safest and soundest banks in the U.S. financial system. The proposed legislation is anti-innovation, anti-competition, and runs counter to its stated objectives.
The undersigned also work with a variety of depository institutions in their CRA obligations. This includes a strong working relationship with the National Association of Industrial Bankers, which represents industrial banks chartered in Utah and Nevada. Industrial banks have been an enthusiastic and helpful partner in many of our CRA projects and endeavors.
The National Association of Industrial Bankers (NAIB) appreciates the opportunity to submit comments on the Notice of Proposed Rulemaking promulgated by the Board of Governors of the Federal Reserve System the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency (“Agencies”) relating to amendments to the regulations implementing the Community Reinvestment Act (CRA), issued May 5, 2022.
The undersigned organizations, trade associations and companies that represent a significant portion of the American vehicle industry, write today to urge the House Committee on Financial Services to oppose H.R. 5912 – the Close the ILC Loophole Act. This bill as drafted will adversely impact the vehicle industry by eliminating decades-long Industrial Loan Company (ILCs) charters and unnecessarily creating a prohibition on future auto-related businesses seeking an ILC charter.
The National Association of Industrial Bankers hereby responds to a recent joint trade association letter (“Joint Letter”) sent by the Bank Policy Institute (BPI), the Center for Responsible Lending (CRL), the Independent Community Bankers of America (ICBA) and other organizations. This Joint Letter calls on Congress to pass H.R. 5912, The Close the ILC Loophole Act. This letter will correct the misrepresentations made in the Joint Letter and provide you with an accurate story about Industrial Loan Corporations (ILCs).
Congress is considering eliminating the exemption for industrial loan companies (“ILCs”) from the definition of a bank under the Bank Holding Company Act (“BHCA”). State regulators believe there are several misconceptions regarding ILCs and the permissible activities of ILCs and their commercial parents.
NAIB member banks understand the importance of managing third party relationships in a safe and sound manner. We hope the comments provided will be helpful in developing well balanced and effective guidelines without regulatory burdens that may be overkill and without adequately considering the impact on the banks.
The National Association of Industrial Bankers appreciates the opportunity to submit this statement for the record to the Subcommittee on Consumer Protection and Financial Institutions hearing on: The Future of Banking: How Consolidation, Nonbank Competition, and Technology are Reshaping the Banking System.
We, the undersigned companies, are writing to ask you to oppose any action that would eliminate or unduly weaken a historically strong, safe avenue for innovation and growth in the financial services industry: industrial loan corporations (ILC), also described as industrial banks.
Important Issues
Thirteen of the 24 industrial banks met the threshold (assets in excess of one billion dollars) and accordingly reported estimated amounts of uninsured deposits.
The Utah Center for Financial Services at the David Eccles School of Business at the University of Utah commissioned the Source of Strength and Consolidated Supervision: A Comparative Assessment of Industrial Banks and Commercial Banks.
Bank Holding Company regulated by Federal Reserve (BHC) compared to parent of an industrial bank regulated by the bank’s state and federal regulators (IBHC).
The Utah Center for Financial Services has released the report “Bank Funding Sources: A New Look at Brokered Deposits” (“The Barth Report”) by Dr. James Barth and his colleague, Yanfei Sun. In it they examine brokered deposits in the context of their origin, regulatory history, use, and performance.
The Volcker Rule was intended to regulate certain trading and investment activities of banks, bank holding companies and their affiliates, such as broker-dealers. It restricts so-called proprietary trading – the purchase and sale of financial instruments for purposes of short-term profits – and sponsoring and investing in hedge funds and private equity funds.
James R. Barth and Yanfei Sun of Auburn University conducted a study for the Utah Center for Financial Services (UCFS) on how Industrial Loan Companies (ILCs a.k.a Industrial Banks) have performed compared to other FDIC insured institutions. The findings demonstrate ILCs perform better than all other FDIC institutions.
James R. Barth and Yanfei Sun of Auburn University conducted a study for the Center of Innovation in Banking & Financial Services (CIBFS) on how Industrial Loan Companies (ILCs a.k.a Industrial Banks) have performed compared to other FDIC insured institutions. The findings demonstrate ILCs perform better than all other FDIC institutions.
The NAIB is urging the FDIC review the exclusion of all fully-insured brokered deposits from the definition of the term “core deposit” used in the Uniform Bank Performance Report (“UBPR”).
The Utah Center for Financial Services at the University of Utah prepared this report to highlight the safety and soundness of Industrial Banks. Key safety and soundness measures in banking are Capital, Asset Quality, and Profitability. We have compared levels of Capital, Asset Quality and Profitability for the US banking industry and the industrial banking sectors. The underlying financial information is drawn from the June 30, 2022 call report data for individual banks and for aggregated banking industry segments.