Dive Brief:
- London, Ontario-based VersaBank plans to buy a Holdingford, Minnesota, bank branch for $13.5 million, a bid that will give the Canadian digital firm access to the U.S. market by acquiring a U.S. bank charter.
- Stearns Bank Holdingford, a subsidiary of St. Cloud, Minnesota-based Stearns Financial Services, is chartered by the Office of the Comptroller of the Currency (OCC), and focuses on small-business lending. The bank is expected to add roughly $60 million in assets to VersaBank, the Canadian firm announced Tuesday.
- The deal, expected to close by October, is subject to regulatory approval in both the U.S. and Canada and represents a trend among financial firms to purchase the coveted OCC bank charter rather than embark on the often expensive and arduous journey of applying for one.
Dive Insight:
The proposed acquisition of Stearns Bank Holdingford will accelerate the rollout of VersaBank’s receivable purchases business, the Canadian firm’s CEO, David Taylor, said Tuesday.
“This acquisition represents a transformational next step in VersaBank’s long-term growth strategy,” Taylor said. “We have built a tremendously successful digital banking operation in Canada, providing innovative, technology-based solutions to serve unmet needs, which has driven outsized earnings growth. Now, with the acquisition of U.S.-based SBH, we will have a platform from which to replicate that success in the Western world’s largest banking market.”
Upon closing, Stearns Bank Holdingford will be renamed VersaBank USA N.A.
Stearns Financial Services and its other subsidiaries, which includes the $2.2 billion-asset Stearns Bank N.A. and the $75 million-asset Stearns Bank Upsala, will continue to operate as usual, according to a press release.
VersaBank wouldn’t be the first firm to purchase a small institution with an eye on gaining access to an OCC banking license.
In recent years, several fintechs have scooped up community bank lenders to skip the often drawn-out and expensive process of filing an application for a bank charter.
Jiko, a fintech that keeps customers directly invested in Treasury Bills, announced in September 2020 that it bought Wadena, Minnesota-based Mid-Central Federal (MCF) Savings Bank for an undisclosed amount.
San Francisco-based fintech LendingClub closed its own fintech-bank deal several months later when it purchased Boston-based Radius Bank for $185 million in February 2021.
And SoFi agreed in March 2021 to pay $22.3 million to buy Golden Pacific Bancorp — a Sacramento, California-based $150 million-asset, three-branch community bank — to accelerate its journey toward a national bank charter. The two entities completed the deal in February.
