The Federal Deposit Insurance Corporation (FDIC) Board has voted to conditionally approve Square’s application for deposit insurance related to its Industrial Loan Company (ILC) bank charter. Square has also received charter approval from the Utah Department of Financial Institutions.
The bank, Square Financial Services, is expected to launch in 2021. It will operate independently, as a direct subsidiary of Square, Inc. Its primary purpose will be to offer small business loans for Square Capital’s commercial lending business, and to offer deposit products.
“We appreciate the FDIC’s thoughtful approach to our application, and their recognition that Square Capital is uniquely positioned to build a bridge between the financial system and the underserved,” said Jacqueline Reses, Square Capital Lead and Executive Chairwoman of the board of directors for Square Financial Services. “We’re now focused on the work ahead to build out Square Financial Services and open our bank to small business customers.”
Square Financial Services CEO Lewis Goodwin and CFO Brandon Soto will lead the bank’s executive team; both bring decades of banking leadership experience to Square and have managed multiple ILCs over their banking careers. As the ILC prepares to open, Square Financial Services will make additional hires for its bank headquarters in Salt Lake City, Utah.
Square Financial Services expects to continue to sell loans to third-party investors and limit balance sheet exposure. As a result, we do not expect the bank to have a material impact on Square’s consolidated balance sheet in 2020. We also do not expect the bank to have a material impact on our consolidated total net revenues, gross profit, or Adjusted EBITDA in 2020.
SAFE HARBOR STATEMENT
This press release contains forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact could be deemed forward-looking, including, but not limited to, statements regarding Square Financial Services’ expected launch timeline, purpose, personnel plans, treatment of loans and financial impact.
Risks that contribute to the uncertain nature of the forward-looking statements include, among others, the ability to satisfy certain approval conditions required by the Federal Deposit Insurance Corporation Board in a timely manner, or at all; the possibility that final approval may be delayed or not achieved; as well as other risks and uncertainties relating to the Company listed or described from time to time in the Company’s filings with the Securities and Exchange Commission (the SEC), including the Company’s most recent Annual Report on Form 10-K, which is on file with the SEC. All forward-looking statements are based on information and estimates available to the Company at the time of this press release. Except as required by law, the Company assumes no obligation to update any of the statements in this press release.
Lewis Goodwin is President and Chief Executive Officer of Square Financial Services. Previously, Lewis served as President and CEO of Green Dot Bank and has held other senior banking roles at Toyota Savings Bank, Chrysler Financial Bank, and West One Bank (merged with US Bank). He is a licensed CPA in Utah.
Brandon Soto is Chief Financial Officer of Square Financial Services. Previously, Brandon served as Chief Administrative Officer and Chief Financial Officer at Green Dot Bank and held other senior finance and accounting roles at Sallie Mae Bank, Chrysler Financial Bank, Toyota Savings Bank, Allegiance Direct Bank and JPMorgan Chase. He is a licensed CPA in Utah.