SoFi Acquires Golden Pacific Bancorp

SoFi to Acquire Golden Pacific Bancorp for $22.3 Million

SoFi, officially known as Social Finance, has announced an agreement to acquire Golden Pacific Bancorp (GPB) for approximately $22.3 million.

While the financial figure isn't substantial, the acquisition’s significance lies in providing SoFi with an expedited pathway to securing a national bank charter. Preliminary approval for this charter was received by SoFi, a digital personal finance company, last October.

Accelerating the National Bank Charter Process

The purchase of Golden Pacific will facilitate a quicker entry into the chartering process for SoFi. Following the transaction’s completion, anticipated later this year, GPB will function as a subsidiary of the company.

Obtaining a national bank charter will empower SoFi to accept deposits and originate loans utilizing its member deposits. Currently, as a nonbank entity, SoFi funds its loan offerings through external underwriters, incurring additional costs.

Strategic Shift in Application and Investment

As a consequence of this proposed acquisition, SoFi intends to transition its existing de novo bank application to a change of control application. GPB currently holds around $150 million in assets.

Should the Office of the Comptroller of the Currency (OCC) and the Federal Reserve approve SoFi’s application for a national bank charter, the company plans to invest $750 million in its national, digital business strategy. Simultaneously, GPB’s existing community bank operations and its three physical branches will be preserved.

Operational Integration and Leadership

SoFi anticipates the acquisition will be finalized by the end of the year. At that point, GPB’s community banking division will operate under the name SoFi Bank, N.A., a rebranding of GPB’s banking entity.

Virginia Varela, the current President and CEO of GPB, will continue to oversee the GPB community bank business. She will report to Paul Mayer, who will assume the role of president of SoFi Bank, N.A.

Statements from SoFi Leadership

“We believe that pursuing a national bank charter will enable us to assist a greater number of individuals in managing their finances effectively, offering enhanced value and a broader range of products and services,” stated SoFi CEO Anthony Noto.

“We are delighted to partner with Golden Pacific Bank to both expedite our efforts to establish a national bank subsidiary and to begin extending our offerings in SoFi’s financial products and Galileo’s technology platform to local communities.”

Leveraging the Galileo Acquisition

Noto referenced SoFi’s 2020 acquisition of Galileo – a provider of APIs that simplify the creation of bank accounts and the issuance of both physical and virtual credit cards for fintech companies – which was valued at $1.2 billion.

SoFi plans to submit an application for Bank Holding Company status to the Federal Reserve shortly. In conjunction with GPB, an updated business plan will also be filed with the OCC.

Fintechs and the Pursuit of Banking Charters

San Francisco-based SoFi is joining a growing trend of fintech companies either establishing banks or launching banking divisions.

Recent reports from TechCrunch indicated that Square’s industrial bank, Square Financial Services, has commenced operations. Approval for the charter was granted by the FDIC and the Utah Department of Financial Institutions, allowing the bank to begin business last week.

Furthermore, in February, it was reported that Brex – a rapidly expanding company specializing in credit cards for startups – had applied for a bank charter.