LendingClub Purchases Radius Bank for $185 Million

In the very first fintech takeover of a regulated US bank, LendingClub has purchased Radius Bank for a cool $185 million.

According to CNBC, Lending Club is buying Radius Bank to get access to a stable and cheaper source of funding. The former will buy the latter in a cash and stock.

Boston-based Radius Bancorp has roughly $1.4 billion in assets.

“What a bank charter does for LendingClub is it allows us to take what is the leading digital loan provider online and combine it with a leading digital deposit gatherer,” said Scott Sanborn, CEO of LendingClub, on CNBC this Tuesday. “It totally changes the earnings profile of this business.”

According to Sanborn, the deal will help save $40 million a year in bank fees and funding costs and will allow the company to earn a spread on loans kept on its balance sheet, which is a core way banks earn money.

The transaction is expected to take 12 to 15 months to close. It will reach breakeven for the acquirer two years after that, according to LendingClub. JPMorgan Chase advised LendingClub on the takeover.

LendingClub has additionally asked its largest shareholder, Asian investment firm Shanda, to trade its 22% stake in LendingClub for nonvoting shares.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.