COLUMBIA— Shelter Financial Bank has set a target closing date of March 22 after receiving federal approval.
The bank opened more than 13 years ago at Shelter Insurance's headquarters on West Broadway and served as a community bank accepting loans and making deposits. The bank's parent company, Shelter Insurance, made the decision to close the bank.
Shelter Mutual Insurance Company decided to close its banking unit on Sept. 7, citing costly regulations under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. It had been waiting for government approval to close until recently.
“Most of the bank's 26 employees have been relocated to different departments within Shelter, four or five found similar jobs in Columbia and a few took the severance package,” said Joe Moseley, vice president of public affairs for Shelter.
The customers are mainly comprised of Shelter Insurance agents and their customers across the 14 states the company services.
A large number of current loans, such as mortgage loans, will be handled through Shelter's financial services. No new loans will be made.
Moseley confirmed that Boone County National Bank bought many of the bank's certificates of deposit and loan books.
Shelter Bank has to wait for Boone County Bank to process the loans to finalize its closing, Moseley said.
The Columbia bank began encountering issues with the Dodd-Frank Act last summer. The act requires two sets of financial statements that would add $1 million to annual expenses, Moseley said.
“We talked to federal regulators to see if these regulations could be changed, but we didn’t meet with success,” Moseley said.
According to the act, regulations are intended to protect consumers from unstable banking and eliminate loopholes that led to the 2008 economic recession.
Shelter Bank was not an unstable bank, though, Moseley said.
“The solution would be to maintain the same regulatory framework from before Dodd-Frank and keep the savings and loans with insurance companies,” Moseley said about solving the problem of federal regulations on insurance banking.
On a national level, other insurance companies such as Prudential Financial and MetLife have encountered similar issues as Shelter Insurance, leading to the withdrawal from banking, according to The Wall Street Journal.
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