After months of talking about it, the State Farm insurance empire applied Monday for a federal savings bank charter.

If approved, the application by State Farm Mutual Automobile Insurance Co. would enable the parent to market banking services to holders of its 66 million auto, health, life, and other policies.

"Our primary target audience is our current policyholders," said Stanley R. Ommen, proposed president of State Farm Financial Services. "The more products and services we can continue to offer to households, the more likely they are to stay with us."

Under the plan, State Farm would become a unitary thrift holding company. Its savings bank would offer home mortgage, home equity, and automobile loans and leases as well as credit cards and other consumer loans.

In addition, it would provide checking, savings, money market, and certificate of deposit accounts, according to the application at the Office of Thrift Supervision.

State Farm, the nation's largest property and casualty insurer, would sell these banking products through its existing network of agents, not by opening any branches.

Checking accounts, however, would be offered at first only to employees and agents. State Farm has not decided whether to offer checking to the general public, Mr. Ommen said.

To be based at its parent company's headquarters in Bloomington, Ill., the State Farm thrift would confine its activities in the first three years of operation to three states, which company officials declined to identify. Then it would expand nationwide.

State Farm would operate the thrift as a wholly owned subsidiary and plans to infuse it with at least $25 million.

The company is the fourth insurer to request a thrift charter in recent months, an OTS spokesman said. The Travelers Group applied last December, while the Principal Financial Group and TransAmerica Corp. filed applications in June.

Thrift charters are popular because of the lack of restrictions on ownership. The agency has received 18 charter applications this year, twice as many as in all of 1996.

Although legislation pending in Congress may eliminate the thrift charter, State Farm is confident its institution could be grandfathered or converted to a bank, Mr. Ommen said. State Farm began planning for a thrift charter a year ago and hopes for a decision from OTS within six months, he said.

Founded in 1922, the $60 billion-asset State Farm operates through a network of 28 regional offices and nearly 17,000 agents in the United States and Canada. State Farm also owns two registered broker-dealer subsidiaries that sell variable life insurance and annuities to customers and mutual funds to employees and agents.

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