July 2, 2012

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Article

Right on the Money

Utah’s Financial Services Industry is Strong, Stable…and Ready to Lend

Heather Stewart

July 2, 2012

Some of Utah’s industrial banks are owned by financial companies, but many are owned by non-banking companies like Pitney Bowes and Target. “Usually they have a niche customer base. For example, Interbank provides loans for people to remodel their homes, especially for energy saving activities,” he explains.

Although the majority of the customers for industrial banks are outside of Utah, the banks bring tremendous benefits to the State. They bring high-paying jobs and have imported top banking professionals to Utah.

“The spinoffs are unbelievable. These large companies come here and they like what they see in Utah, and they bring even more enterprises, sometimes related and sometimes unrelated to the bank,” says Pignanelli, who adds, “By having industrial banks in our community, we collect great resources from the Community Reinvestment Act—the federal requirement that financial institutions spend part of their money both in low-interest loans and grants.”

The strict capital requirements for industrial banks have kept them safe and strong throughout the turmoil in the financial industry, he says. “This is a safe and very sound way of banking that is pro-consumer but also gets capital into the marketplace.”

Twenty industrial banks are headquartered in Utah—by far the largest number among any of the seven states that are chartered to have industrial banks—and together they hold more than $101 billion in assets.

From Seed to Sprout
Outside of traditional bank loans, entrepreneurs in Utah also have remarkable access to venture capital, angel investors and other early-stage funding. The State has an extremely active network of angel investors that will look at deals ranging from seed funding for startups to later-stage funding for established companies that want to grow.

Angel funds like Island Park Investments, UtahAngels, Dixie Angels and others often invest cooperatively and provide an angel investor pool that covers the entire State.

The State is also home to strong venture capital firms with decades of experience and a deep well of investment capital. Sorenson Capital, for example, is the State’s largest venture capital firm. Over the years, it has backed companies like tech firm Omniture—which was acquired by Adobe—and waste management firm Metro Waste, which operates two landfills, two recycling centers and a hauling operation.

According to the MountainWest Capital Network, Utah saw 118 angel, venture capital and private equity deals in 2010, representing more than $400 million in total investments.

In recent years, the State of Utah has launched an effort to increase the investment dollars available to local entrepreneurs. The $300 million Utah Fund of Funds invests in venture capital and private equity funds, which in turn commit to invest in Utah-based startups and companies. The Utah Fund of Funds invests in firms that are based both inside and outside the state.

So far, more than 40 Utah-based companies have raised more than $1.1 billion from venture capital and private equity firms affiliated with the Utah Fund of Funds. Overall, the Utah Fund of Funds portfolio represents an aggregate of $5 billion in investable capital.

For a list of angel investment firms in Utah, visit http://www.growutahventures.com/utah-investors">www.growutahventures.com/utah-investors.

Industrial Loan Companies Headquartered in Utah

AMERICAN EXPRESS CENTURION BANK

BMW BANK OF NORTH AMERICA

CAPMARK BANK

CELTIC BANK

ENERBANK

FIRST ELECTRONIC BANK

GE CAPITAL FINANCIAL INC

LCA BANK CORPORATION

MEDALLION BANK

MERRICK BANK

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