How Much Upside Would a Bank Charter Provide to SoFi Stock?
One of the key upsides to SoFi, which will go public through a reverse merger, will be getting a national bank charter. The company announced the acquisition of a community bank, Golden Pacific Bancorp, in March, which should help expedite its application for getting a charter. As a result of SoFis acquisition of GPB, SoFi would switch its current de novo (net new) bank application to a change of control application. GPB currently has nearly $150 million in assets, but if it gets a national bank charter, SoFi will put $750 million towards its national, digital business plan. In March 2021, SoFi announced the acquisition of Golden Pacific Bancorp (GPB) for $22.3 million. The acquisition marked another major step towards a national bank charter for the company. Having a bank charter would allow SoFi to accept deposits and make more profitable loans using its member deposits. It would also remove the need to rely on third-party banks. SoFi applied for a bank charter in June 2017 when it applied for an industrial loan company charter with FDIC (Federal Deposit Insurance Corporation). The company withdrew its application the same year after senior executives departed. In July 2020, SoFi applied for a national bank charter with the Office of the Comptroller of the Currency and received conditional approval in October 2020. What a bank charter would mean for SoFi  Previously, SoFis competitor, Square got approval for a national banking charter and announced the beginning of its banking operations starting in March. It's the second major fintech company to get a banking charter. In February, FDIC approved a banking charter for Varo Money. LendingClub, another fintech, got access to banking by acquiring Radius Bank. Article continues below advertisement  We can take a leaf out of Squares book to see how obtaining a national bank charter could impact a companys financials. Square doesnt expect it to add anything significant to its earnings, at least at first. It would just be the first step towards expanding the companys lending capabilities, which could become a significant part of the business over time. A national bank charter is important for SoFis future plans of increasing its lending capabilities and lowering its cost of capital. At the same time, it would be easier for SoFi to follow regulatory compliance through GPB. According to Sam Kilmer, a senior director at Cornerstone Advisors, It's basically just getting inside the club in an easier fashion than going about it the long, organic, legal, start-up way of proving yourself to a regulator.