OppFi Acquires BNC National Bank: A Move Towards a National Banking Charter
OppFi, a high-cost lender with a focus on providing small loans to cash-strapped Americans, has recently announced its decision to acquire BNC National Bank. The $130 million cash-and-stock deal is anticipated to conclude in the fourth quarter of 2026, pending regulatory approval from the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corp.
This acquisition represents a significant strategic move for the Chicago-based company, as it will award them a national bank charter. Todd Schwartz, OppFi’s CEO, stated to American Banker, “Instead of being a vertically integrated servicer for bank partners, what about becoming the bank?” (source)
Implications of a National Bank Charter
The national bank charter will allow OppFi to operate uniformly across all 50 states, bypassing the current restrictions imposed by some state laws that limit high interest rates. For instance, OppFi’s high annual percentage rates, which can reach up to 160% for a nine-month, $2,000 loan serviced in California, have resulted in its service being prohibited in 10 states, including Iowa, Connecticut, Massachusetts, and Colorado.
However, with the national bank charter, OppFi would be regulated by the Office of the Comptroller of the Currency instead of a mix of state regulators, which Schwartz views as an opportunity to streamline compliance and regulatory processes. He also believes the change will foster innovation and potentially lower costs for customers.
Concerns and Criticisms
Despite Schwartz’s positive outlook, the deal has raised concerns among consumer advocates and critics. They argue that the national charter will enable OppFi to bypass state laws limiting interest rates and fear this could pave the way for more predatory lending practices. Lauren Saunders, a senior attorney at the National Consumer Law Center, expressed her concerns, stating, “With a national bank charter, OppFi could charge whatever rates it wants and ignore the laws passed in red and blue states around the country.”
Similar apprehensions were raised in connection with the pending merger between another nonbank lender, Enova International, and New York’s Grasshopper Bank. In both cases, critics are calling on the administration to reject these deals, fearing a rise in predatory lending practices if they are approved.
OppFi’s Defense and Future Plans
In response to these criticisms, Schwartz emphasized that OppFi’s primary mission is to provide credit access to consumers who often struggle to secure loans from traditional banks. He believes that simplifying the company’s regulatory burdens could reduce its costs, which could be passed on to the customers.
Once the merger is finalized, BNC, a commercial bank with 13 locations and $1 billion in deposits, will continue its operations as usual under its existing management team. It will operate as a community banking division of OppFi’s newly established banking subsidiary, OppFi Bank. The merger has received unanimous approval from the boards of both companies, signifying a new chapter in their histories.
As the financial landscape continues to evolve, it remains to be seen how these mergers will reshape the lending market and what impact they will have on consumers. For more details on the merger, click here.
