Federal Reserve Approves VersaBank Acquisition of Stearns Bank; OCC Up Next

VersaBank received one of two U.S. regulatory approvals it needs to proceed with its previously announced proposed acquisition of Stearns Bank Holdingford.

The Federal Reserve announced its approval of the bank’s application Thursday (June 6).

The other U.S. regulatory approval VersaBank needs is from the Office of the Comptroller of the Currency (OCC), and the bank said it expects the OCC to announce its decision shortly, according to a Friday (June 7) press release.

If it receives a favorable decision from the OCC, VersaBank will immediately seek approval of the proposed acquisition from its Canadian regulator, the Office of the Superintendent of Financial Institutions, the release said.

VersaBank is a chartered bank focused on B2B digital banking and cybersecurity solutions, the release said. Its wholly-owned subsidiary, DRT Cyber, develops solutions to address cyber threats.

Stearns Bank Holdingford is based in Minnesota and is a national OCC-licensed bank, per the release.

“Completion of this acquisition would enable VersaBank to broadly launch our unique and attractive Receivable Purchase Program (RPP) in the United States,” VersaBank President and CEO David Taylor said in the release. “For well over a decade, we have proven out our RPP model in Canada and now look forward to the opportunity to enter the world’s largest financing market and further capitalize on the significant operating leverage in our branchless, business-to-business digital banking model.”

Via its RPP, the bank’s Point of Sale Financing division buys loan and lease receivables from Canadian and U.S. finance companies, indirectly providing capital for small businesses, according to VersaBank’s website.

VersaBank announced its proposed acquisition of Stearns Bank Holdingford in June 2022, saying the deal would provide it with access to U.S. deposits to fuel the growth of its RPP.

The bank said at the time that while the deal was subject to regulatory approval in both the U.S. and Canada, it expected the closing of the acquisition to be completed by Oct. 31, 2022.

VersaBank was reportedly Canada’s first financial institution to be digital-only and operate without a branch.