By: Ken Chase.
Ontario-based Canadian bank VersaBank has announced its bid to purchase a single U.S. bank branch in Holdingford, Minnesota for $13.5 million. If the offer is approved by U.S. and Canadian regulatory authorities, the purchase would provide the digital bank with lucrative U.S. bank charter and access to the American banking market. According to a press release this week, the acquisition will also provide the Canadian company with roughly $60 million in assets.
The Holdingford bank that VersaBank wants to acquire is a subsidiary of Stearns Financial Services and maintains a charter from the Office of the Comptroller of the Currency. If the deal is approved by regulators, Stearns Bank Holdingford will operate under a new name, VersaBank USA, N.A.
While the purchase would provide the Canadian firm with new financial assets, the acquisition of an OCC charter will likely prove to be the bigger prize. For most financial firms, acquiring an OCC bank charter can be a costly and time-consuming application and approval process. As a result, recent years have seen a rise in fintech firms’ interest in purchasing community banks in an effort to gain access to charters without undergoing that complex process.
One notable example is San Francisco’s LendingClub fintech firm, which purchased Massachusetts-based Radius Bank early in 2021. In February 2022, another San Francisco firm, ScoFi, completed a similar deal, with its acquisition of Golden Pacific Bancorp.
VersaBank President and CEO David Taylor said that the acquisition of the Holdingford branch would enable his company to bring its successful digital operation to customers throughout the United States:
“This acquisition represents a transformational next step in VersaBank’s long-term growth strategy. 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, in particular, through acceleration of the roll out of our innovative and highly differentiated Receivable Purchase Program solution, which has been very successful in Canada, in the US$1.8 trillion and growing U.S. consumer and small business point-of-sale financing market.”
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