The acquisition is expected to enable LendingClub to reduce the use of high-cost warehouse lines, and generate additional net interest income
LendingClub agrees to acquire Radius Bank. (Credit: Pixabay/Adam Radosavljevic)
LendingClub, an online lending marketplace for borrowers and investors, has agreed to acquire Radius Bancorp, and its fully-owned subsidiary Radius Bank, in a cash and stock transaction valued at $185m.
The transaction would create a combined, digitally native marketplace bank that delivers integrated customer experience.
It will also enable LendingClub to diversify earnings by capturing the sizeable revenue opportunity that is currently being absorbed by issuing banks.
Radius president and CEO Mike Butler said: “LendingClub has always been a fintech innovator, and I look forward to leveraging the strengths of both of our talented teams as we usher in a new era in banking. We are excited for our employees to operate our virtual banking platform with more resources and for our clients to gain access to an industry-leading lending product.
“This is a perfect marriage, with LendingClub bringing the leading digital asset generation platform, and Radius contributing a leading online deposit gathering platform, to position the combined company for long-term success.”
The acquisition is expected to help LendingClub in attracting new members
Radius is a Boston, Massachusetts-based online bank established in 1987, which offers branchless digital banking platform for consumers and small businesses. It holds diversified assets worth more than $1.4bn.
The bank’s digital banking platform features include check deposit, bill pay, card management, and a personal financial management dashboard.
In addition, the bank offers commercial lending options for businesses, and treasury management services for pension funds, unions, municipalities, and non-profit organisations, along with open APIs to facilitate banking-as-a-service (BaaS) functionality to fintech companies.
The acquisition is expected to help LendingClub in attracting new members through the addition of banking services that leverage its marketing strength.
As a major provider of personal loans in the country, LendingClub facilitated more than $12.3bn in loans in 2019.
Subject to regulatory approval and other customary closing conditions, the transaction is expected to close in the next twelve to fifteen months.
LendingClub CEO Scott Sanborn said: “This is a transformational transaction that allows us to reimagine 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.”