SoFi acquires community bank Golden Pacific Bancorp to speed up its national bank charter process

SoFi acquires community bank Golden Pacific Bancorp to speed up its national bank charter process

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SoFi, more formally known as Social Finance, announced today that it has agreed to acquire Golden Pacific Bancorp (GPB) for about $22.3 million.

The dollar amount is not staggering. What is more notable about the acquisition is that it’s giving SoFi a quick route to getting a national bank charter. SoFi, a digital personal finance company, got preliminary approval for a bank charter last October. By acquiring Golden Pacific, the company gets a fast track into that process. Once the transaction closes later this year, GPB will become a subsidiary of the company.

A national bank charter will give SoFi the ability to accept deposits and make loans that use SoFi’s member deposits as opposed to funding its loan offerings as a nonbank, by contracting external underwriters at a premium.

As a result of the proposed acquisition, SoFi said it would switch its current de novo (i.e., net new) bank application to a change of control application. GPB currently has about $150 million in assets, but if the OCC and Federal Reserve grants SoFi a national bank charter, the company said it will then put $750 million toward its national, digital business plan. At the same time, it will maintain GPB’s community bank business and footprint, including its current three physical branches. 

SoFi expects the acquisition to close by year’s end. At that time, GPB’s community bank business will operate as a division of SoFi Bank, N.A., a renaming of GPB’s bank entity. 

GPB President and CEO Virginia Varela will continue to lead the GPB community bank business under the direction of Paul Mayer, who will serve as president of SoFi Bank, N.A.

“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 SoFi CEO Anthony Noto in a written statement. “We are thrilled to have found a partner in Golden Pacific Bank to both accelerate our pursuit to establish a national bank subsidiary, as well as begin to expand our offerings in SoFi’s financial products and Galileo’s technology platform to serve local communities.”

Noto is referring to SoFi’s 2020 acquisition of Galileo — which provides APIs that allow fintech companies to easily create bank accounts and issue physical and virtual credit cards — for $1.2 billion. 

SoFi expects to file shortly with the Federal Reserve for Bank Holding Company status and, together with GPB, to file an updated business plan with the OCC.

San Francisco-based SoFi is the latest in a string of fintechs that are either becoming banks, or launching bank arms.

Last week, TechCrunch reported that Square’s industrial bank, Square Financial Services, had begun operations. Square Financial Services completed the charter approval process with the FDIC and Utah Department of Financial Institutions, meaning it was ready for business as of last week.

In February, we reported that Brex — a fast-growing company that sells a credit card tailored for startups — had applied for a bank charter

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