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U.S. Bancorp Arm Signs Strategic Agreement With State Farm

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U.S. Bancorp’s (USB - Free Report) banking subsidiary, U.S. Bank, has entered into an agreement with State Farm to buy the latter’s deposit and credit card accounts. The deal is expected to close by 2020 end on in early 2021.

State Farm is a property and casualty insurance provider, based in Bloomington, IL. The company serves about 84 million policies and accounts, of which 81 million are related to auto, fire, life, health and commercial policies and remaining are bank and investment planning services accounts.

Per the terms, State Farm will be able to provide U.S. Bank deposit products and co-branded credit cards to its customers. Also, both the companies are looking for ways to provide State Farm customers with access to vehicle loans and business banking products.

Andy Cecere, CEO of U.S. Bank, said, "It is a terrific opportunity to combine U.S. Bank products, services and digital capabilities with State Farm's coast-to-coast network of agents. This relationship will provide State Farm customers with enhanced product options while expanding U.S. Bank's reach into new and existing markets."

Barclays Capital Inc., a subsidiary of Barclays PLC (BCS - Free Report) provided advice to State Farm on this transaction.

U.S. Bancorp remains focused on growing through acquisitions. Prior to the latest buyout, the company acquired Sage Pay, a division of The Sage Group plc (SGPYY - Free Report) . The deal was aimed at meeting the demands of its customers, who are switching to digital modes of banking for conducting day-to-day activities.

Also, it acquired Talech, a Palo Alto-based software company, in order to boost the bank’s digital expertise, which in turn, will ensure better customer experience.

Another financial institution that recently entered into a deal to expand product offerings is Regions Financial (RF - Free Report) . It agreed to acquire equipment finance lender, Ascentium Capital LLC, from Warburg Pincus, thereby increasing offerings for small business customers.

Our Take

U.S. Bancorp’s investments in innovative product enhancements, services and people have strengthened its balance sheet and fee-based businesses, apart from increasing market share. However, costs are witnessing a rise.

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