FinTech: SoFi Advances Bank Charter Ambitions; Acquires Golden Pacific Bancorp

March 10, 2021 | FinTech, News

SoFi will pay about $22 million for the bank and its wholly-owned subsidiary.

Digital personal finance company and fintech Social Finance Inc (SoFi) announced on Tuesday its acquisition of Golden Pacific Bancorp, Inc, a community bank based in Sacramento, California. SoFi will pay $2.55 in cash for each share of Golden Pacific, or about $22.3 million in total. Also included in the transaction is the bank’s wholly-owned subsidiary, Golden Pacific Bank, N.A. (BusinessWire)

Golden Pacific is regulated by the Office of the Comptroller of the Currency (OCC) and has approximately $150 million in assets.

A stepping stone to the banking charter

According to SoFi, the acquisition will accelerate its progress towards obtaining a banking charter. A national bank charter will allow SoFi to accept deposits, and thereafter make loans using these member deposits. This is much cheaper compared to the higher cost of external funding for its loan offerings as a non-bank.

In October, SoFi received preliminary and conditional approval from the OCC for its application to set up a new (“de novo”) bank.

The acquisition of Golden Pacific will allow SoFi to convert from its de novo application to a “change of control” application.

SoFi will also file shortly with the Federal Reserve for Bank Holding Company status, and submit an updated business plan, incorporating Golden Pacific, to the OCC.

“We believe that by pursuing a national bank charter, we will be able to help even more people get their money right with enhanced value and more products and services,” said Anthony Noto, CEO of SoFi.

In February, LendingClub Corporation (NYSE: LC) announced the completion of its acquisition of Radius Bancorp, Inc. and its digital bank subsidiary, Radius Bank. The transaction created the first public U.S. neobank and the only full-spectrum fintech marketplace bank.

Fintechs make a beeline for bank charters

Last week, payments giant Square Inc (NYSE: SQ) announced that its subsidiary and industrial bank Square Financial Services had opened for business after it completed the charter approval process with the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions.

“Bringing banking capability in-house enables us to operate more nimbly, which will serve Square and our customers as we continue the work to create financial tools that serve the underserved,” said Square at the time.

In February, financial management software company Brex filed to open an industrial bank in Utah to be named Brex Bank. It intends to offer credit solutions and FDIC-insured deposit products to small- to medium-sized businesses (SMBs).

Last year, Varo Bank became the first U.S. neobank to be granted a national charter.

Furthermore, in September, the State of Wyoming greenlighted digital exchange Kraken’s application to form the world’s first Special Purpose Depository Institution (SPDI) dubbed Kraken Financial.

In January this year, Anchorage received conditional approval for a national trust charter for its Anchorage Digital Bank National Association. It became the first federally chartered digital asset bank in history.

Related Story:    Square’s Bank Ready To Serve The Underbanked

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