On March 17, the Office of the Comptroller of the Currency (OCC) announced that it has granted conditional approval for SmartBiz Loans to transform the business model of CenTrust Bank, N.A., located in Northbrook, Illinois. This approval follows SmartBiz Loans’ acquisition of CenTrust Bank, N.A., which has since been renamed SmartBiz Bank, N.A. The approval allows SmartBiz Bank, N.A. to expand its small business lending activities on a nationwide scale.

According to the OCC’s announcement, the decision came after a comprehensive review of SmartBiz’s operations and business model ensuring that the new business model aligns with the safety, soundness, and fairness principles of the federal banking system.

Conditions of Approval

The OCC’s conditional approval includes several stipulations, including:

  • Notification and Approval for Business Plan Changes: The bank must notify the San Francisco Supervisory Office at least 60 days in advance of any significant deviations from its business plan and obtain written approval from the OCC.
  • Loan Concentration Limits: The bank must maintain loan concentrations in line with its business plan.
  • Capital Requirements: The bank must maintain a tier 1 leverage ratio of no less than 11.0% during its first three years of operation.
  • Capital Injection: The bank must receive a $6 million capital injection from its parent company immediately after the transaction’s consummation.
  • Executive and Director Approvals: The bank must file an Interagency Biographical and Financial Report and receive OCC approval for any new executive officers or directors during its first two years of operation.
  • CRA Strategic Plan: The bank must submit a draft Community Reinvestment Act (CRA) Strategic Plan within 90 days of the transaction’s closing and a finalized plan within 12 months.
  • Compliance with Representations and Commitments: The bank must adhere to all representations and commitments made during the application process.

Our Take

The bank and fintech industries are converging, and we expect an increase in combinations between bank and fintech companies — and the formation of new fintech focused state and national banks — in 2025 and beyond.