Canada’s Office of the Superintendent of Financial Institutions has approved VersaBank’s acquisition of Minnesota-based Stearns Bank Holdingford — giving the cross-border tie-up the last regulatory nod it needs, the London, Ontario-based lender said this week.
VersaBank aims to close the transaction by Aug. 30, the Canadian lender said in a press release Tuesday.
The deal has seen three regulatory green lights in as many weeks — from the Federal Reserve on June 6; the Office of the Comptroller of the Currency on June 14; and OSFI on June 25. That’s a stark contrast to the two years VersaBank and Holdingford have waited to consummate a combination that was proposed in June 2022.
“Being granted authority to operate as an OCC bank throughout the United States is a tremendous honor,” VersaBank CEO David Taylor told American Banker this week.
In Tuesday’s press release, Taylor called the deal for single-branch, $79 million-asset Holdingford the “transformational next step in our growth strategy.”
Not only does it give VersaBank a U.S. banking charter, but it allows the lender to purchase loan and lease receivables from point-of-sale lenders on a wider scale south of its home country.
The bank’s Receivable Purchase Program launched in Canada in 2010 and has amassed partnerships with roughly 275 lenders and provided more than $6.5 billion in funding to North American finance firms, the company said.
VersaBank launched RPP in the U.S. “on a limited basis” in April 2022 but aims for a wider rollout this fall “to the largest point-of-sale financing market in the world,” Taylor said.
“The very favourable market response to the limited initial rollout of our RPP solution in the U.S. to date, as well as the long list of potential partners waiting on our ability to broadly roll out our program, has confirmed our belief that our offering is both one-of-a-kind and an attractive alternative to the existing sources of funding for our partners,” Taylor said in a June 14 press release. “In our expansion into the U.S., we will maintain our steadfast commitment to risk mitigation throughout our organization, which has enabled us to lead the Canadian banking industry in terms of credit risk and achieve a 30-year track record of no material loan losses.”
VersaBank does not operate any branches in Canada but pledged to maintain Holdingford’s brick-and-mortar footprint.
“It speaks volumes that our Canadian neighbor, VersaBank, has chosen Holdingford as its home base for entry into the U.S. market,” Heather Plumski, Stearns Bank Holdingford’s president, said in a statement June 14, a virtual repeat of comments she made when the acquisition was announced in 2022. “The VersaBank team shares our values and culture and is committed to continuing Stearns Bank’s legacy as a vital contributor to and supporter of the local economy.”
Stearns Financial CEO Kelly Skalicky called the regulatory approvals “a testament to the diligence and integrity of the VersaBank management team and the strength and soundness of their banking model,” adding that the deal would “provid[e] VersaBank the opportunity to bring successful solutions and positively contribute to our local communities and the larger U.S. financing sector.”
