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OCC Conditionally Approves FinTech Company Applications To Charter National Bank

01/24/2022 | 03:11am EDT

On January 18, 2022, the OCC conditionally  approved Social Finance, Inc. ("SoFi") applications to charter a full-service national bank.

In the OCC letter, SoFi Interim Bank, National Association ("SoFi Bank, N.A.") has received conditional approval and also received approval to acquire Golden Pacific Bank, National Association as part of the transaction. SoFi Bank, N.A. will have $5.3 billion in total assets. The OCC is requiring, among other conditions, initial paid-in capital of $750 million upon consummation of the transaction. The bank will continue to offer local commercial-focused offerings and deposit products that Golden Pacific previously offered.

The letter states that the bank will also provide a fully digital lending platform for consumers nationally. This is contingent upon (i) meeting the required capital contributions, (ii) adhering to an Operating Agreement, and (iii) confirming that the bank will not engage in any "crypto-asset activities or services."

Additionally, SoFi Technologies, the parent company of SoFi Bank, N.A., has a pending application to the Federal Reserve Board to become a bank holding company and, therefore, would be subject to consolidated supervision.

Acting Comptroller of the Currency  Michael J. Hsu  emphasized the importance of having an even "playing field." He stated that bringing a large FinTech company "inside the federal bank regulatory perimeter" will subject the company to "bank regulations, including the Community Reinvestment Act," and "comprehensive supervision."

Commentary Daniel Meade

As noted by Acting Comptroller Hsu, this approval represents one of the first approvals bringing a large FinTech company within the federal regulatory perimeter, and the first full-purpose (i.e., insured deposit-taking) national bank charter for a FinTech. The OCC's conditional order also included a condition that the bank will not engage in any crypto-asset activities or services for the three years the Operating Agreement will be in effect unless it has received prior written determination of no supervisory objection from the OCC under the procedures set out in the Operating Agreement. This is in essence a requirement the OCC makes of all national banks since it issued interpretive letter 1179 in November of 2021. Thus the crypto-asset activities already engaged in by SoFi will need to remain at the parent company.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mr Daniel Meade
Cadwalader, Wickersham & Taft LLP
200 Liberty Street New York
New York
NY 10281
Tel: 2125046000
Fax: 2125046666

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Financials (USD)
Sales 2022 1 489 M - -
Net income 2022 -380 M - -
Net Debt 2022 320 M - -
P/E ratio 2022 -16,7x
Yield 2022 -
Capitalization 6 658 M 6 658 M -
EV / Sales 2022 4,69x
EV / Sales 2023 3,27x
Nbr of Employees 2 500
Free-Float 78,9%
Duration : Period :
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Technical analysis trends SOFI TECHNOLOGIES, INC.
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Mean consensus OUTPERFORM
Number of Analysts 13
Last Close Price 7,27 $
Average target price 11,12 $
Spread / Average Target 52,9%
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Managers and Directors
Anthony J. Noto Chief Executive Officer & Director
Christopher Lapointe Chief Financial Officer
Micah Heavener Head-Operations
Clay Wilkes Director
Steven Jay Freiberg Vice Chairman
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