State Farm is getting out of the banking business.

The property/casualty insurer said it has formed a strategic alliance with U.S. Bank, allowing it to assume State Farm Bank’s existing deposit and credit card accounts. As part of the deal, State Farm agents will in turn market U.S. Bank deposit products and co-branded credit cards to State Farm customers.

Plans call for the transition of State Farm deposit and credit card accounts to begin after closing, subject to regulatory approval, later this year and into 2021. Current State Farm Bank customers do not need to take any action, the insurer said.

State Farm explained that the alliance is part of a broader strategy to exit its banking operations. Beyond assuming State Farm Bank’s existing deposit and credit card accounts, U.S. Bank and the insurer are looking at ways to give State Farm customers access to vehicle loans and business banking products.

State Farm President and CEO Michael Tipsord said that the new dynamic will ultimately help customers.

“State Farm has been committed to helping people for nearly 98 years. U.S. Bank is an outstanding institution that shares our commitment to strong customer relationships,” Tipsord said. “When we combine State Farm’s deep customer relationships with the scale and capabilities of companies like U.S. Bank, we can help significantly more people.”

Andy Cecere, chairman, president and CEO of U.S. Bank, said the alliance with State Farm will help it reach more customers and enhance State Farm customers’ existing options.

Barclays Capital Inc. advised State Farm in connection with this transaction.

Source: State Farm