Online lender Social Finance gets OCC’s preliminary, conditional approval for national bank charter

Social Finance, Inc., this week obtained preliminary approval of its application to establish a full-service national bank – to be named SoFi Bank, National Association, and based in Utah – from the Office of the Comptroller of the Currency (OCC).

“The decision to grant preliminary conditional approval was made with the understanding that the proposed bank will apply for Federal Reserve membership and will obtain deposit insurance from the Federal Deposit Insurance Corporation,” the OCC said in its announcement Wednesday.

The OCC stated its decision in a letter dated Tuesday to Social Finance, which also Wednesday launched a new credit card issued by Mastercard; the card will offer cash back that users can use to deposit into their accounts or to pay down personal or student loan balances with the company.

The OCC letter addressed concerns raised by a commenter who objected that Social Finance had offered an insufficient plan for compliance with the Community Reinvestment Act (CRA) with its proposed charter. However, the OCC said it does not expect a bank to have a fully developed CRA plan “at this stage.”

“The CRA plan should be finalized after a bank has received preliminary conditional approval from the OCC, but prior to final approval of the charter application,” the OCC wrote. “The Bank has demonstrated in its charter application and through discussions with OCC staff that it understands the requirements of the CRA and has begun to develop a CRA plan.”

It said the institution is considering a strategic plan under the current (and recently revised) CRA regulation of the OCC. The OCC rule permits a bank to choose to have its CRA performance evaluated against an OCC-approved strategic plan, which would be subject to a 30-day public comment period.

If the SoFi charter gets final approval, SoFi will be working under an operating agreement with the OCC for its first three years of operation, the letter notes.

Office of the Comptroller of the Currency Conditionally Approves SoFi’s Application to Establish a National Bank

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