SoFi is looking to provide more competitive interest rates to its customers if the fintech company obtains the national banking charter, according to the company’s CEO Anthony Noto.
To accelerate the process, Social Finance Inc. is moving towards acquiring Golden Pacific Bank, a small community bank. SoFi announced that it would purchase the bank for a price of $22.3 million, or $2.55 per share. The idea behind the purchase of Golden Pacific is to go through a faster “change of control” application rather than applying for a slower “de novo” process.
“When we have a bank charter, we’ll be able to determine what interest rate that we want to provide and not be dependent on anyone else,” Anthony Noto said. “We have the capital and the financial model because we’re a digital company to provide a much more attractive interest rate on SoFi Money than we are providing today.”
At this point, Golden Pacific holds around $150 million in assets and has three branches across California. If the purchase and bank charter are approved, SoFi plans to invest another $750 million to pursue its national and digital expansion. The company’s net revenue in the third quarter of last year totaled more than $200 million. For now, the application for the bank charter received preliminary, conditional approval from the Office of the Comptroller of the Currency (OCC).
“We will continue our commitment to bringing more services and convenience for our individual customers, small businesses, and the communities that we serve in Sacramento and surrounding counties,” stated Virginia Varela, CEO and President of Golden Pacific, who is to remain at her current post after the acquisition.
If OCC approves the bank charter, it should significantly reduce the company’s cost of funds, allowing for better interest rates. Further benefits would be operating under the federal government’s regulations rather than the state-based standards and legislations.
Golden Pacific will be renamed to SoFi Bank, N.A., with Paul Mayer, who will take the role of president of the bank. The transition is scheduled for 2021, pending approval by the Federal Reserve and OCC.
SoFi also announced in January a merger with Social Capital Hedosophia Holdings Corp. V, a blank-check acquisition company, which would bring SoFi a post-money valuation of $8.65 billion.