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LendingClub-Radius Bank Merger Receives OCC Nod, Stock Up 26.2%

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Last week, following the Office of the Comptroller of the Currency’s OCC approval for LendingClub Corporation’s LC acquisition of Radius Bancorp, shares of the FinTech firm rallied 26.2%. Boston, MA-based online bank – Radius Bank – was agreed to be acquired for $185 million in February 2020.

At the time of the agreement, the stock-cum-cash deal was expected to be completed in the next 12-15 months, subject to regulatory approval and other customary closing conditions. However, the deal still awaits the Federal Reserve’s approval.

Background

With the announcement of the acquisition, LendingClub has now become the first FinTech firm to take over a bank. Founded in 1987, Radius Bank has more than $14 billion in assets.

Scott Sanborn, CEO of LendingClub, said, “This is a transformational transaction that allows us to re-imagine banking in a way that is free from legacy practices and systems and where the success of LendingClub is aligned with the success of our customers. By combining with Radius, we will create a category-defining experience for our members that will dramatically enhance the resilience and earnings trajectory of our business.”

The combined entity will likely be significantly accretive with a cash payback of the purchase price premium and all costs within two years. Further, benefits are projected to materialize immediately upon closing.

Conclusion

LendingClub’s acquisition of Radius Bank is in sync with its aim for transition in the current era of digitization. When banks are striving hard to make profits amid the coronavirus pandemic, LendingClub looks forward to the combination of its digital asset-generation platform with Radius Bank’s online deposit gathering platform, and emerge triumphant with long-term success as a combined entity.

Currently, LendingClub carries a Zacks Rank #3 (Hold). Shares of the company have soared 108.3%, over the past six months, as against the industry’s decline of 6.2%.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Similar Moves

JPMorgan JPM is mulling to acquire Britain-based online-only bank, Starling Bank Ltd. If the deal goes through, it will be the first big merger transaction between a well-known global bank and a start-up in the country. Starling Bank is a digital bank founded in 2014. It offers checking accounts, business banking, money transfers, and other related services on both Android and iOS.

Blackstone BX has inked a deal to acquire San Francisco-based DCI, an investment management firm that uses “a proprietary, fundamental-based, technology-driven model to deliver differentiated returns to clients.” The terms of the transaction have not been revealed yet.

With an aim to enhance and expand the merchant payment business, and drive its growth plans in Europe, Banco Santander, S.A. SAN has announced a deal to acquire several highly specialized technological assets from Wirecard.

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