The Best Bank for Our Armed Forces

Maybe haven’t heard of it, but if you are either serving in the armed forces or were honorably discharged from the military, there’s a top-ranked bank eager to have you as a customer. It’s called USAA, and it has a deal or two for GI Joes and Janes.

USAA doesn’t actually bill itself as a bank, although banking is at the very core of what it does. Its Web site describes it as “a diversified financial services group of companies, (that) is among the leading providers of financial planning, insurance, investments and banking products to members of the U.S. military and their families.”

The bank — yes, that’s what we’re calling it — counts 7.3 million members or former members of the military, with $68.3 billion in assets under management. In 2009, when a lot of banks recorded their financial ledgers in red ink rather than black, USAA earned $423 million in net income and generated positive investment income. The bank also returns a good chunk of those profits to members in the form of dividend checks.

According to its Web site, USAA was founded in 1922 by a group of Army officers who decided to self-insure each other, forming the United States Army Automobile Association. In 1923, the company began to extend eligibility to the other branches of the armed services, and was renamed United Services Automobile Association (USAA) the following year. In 1996, eligibility was extended to U.S. military enlisted personnel — but only personnel who served in or after 1996.

But now the bank is offering membership to U.S. armed forces veterans who served prior to 1996. Joe Robles, a retired Major General in the U.S. Army and the chief executive officer at USAA, announced in a recent letter to members that the banks was lifting the restrictions on retired U.S. armed forces personnel. “Our mission states 'USAA seeks to be the provider of choice for the military community.' Not just the officer community. Not just military retirees. Not just those who served after 1995. (So) we are carefully and responsibly managing USAA's growth, and have taken incremental steps in expanding membership eligibility to bring us to this point. We wanted to be very sure that USAA has the capital, the operational capacity and the capability to precisely underwrite and price for risk at the individual level.”