On March 17, 2025, the Office of the Comptroller of the Currency (OCC) announced that it conditionally approved a fintech business model for CenTrust Bank, N.A.’s (“CenTrust”), an Illinois based community bank chartered by the OCC.[1] CenTrust was acquired by SmartBiz Loans, which is a fintech company that provides an online platform to connect small business owners with lenders providing Small Business Administration (“SBA”) loans. Following the acquisition, CenTrust applied to change its business model to incorporate the SmartBiz Loans’ business model of providing SBA loans nationwide.

The OCC evaluated the transaction to ensure the new business model aligns with regulatory requirements, maintains the bank’s safety and soundness, and supports expanded nationwide lending and deposit-taking activities.[2] As a result, the OCC conditioned its approval on the company maintaining minimum capital levels with a tier 1 leverage ratio of 11.0% for three years, a post-transaction capital injection of $6 million from SmartBiz Loans, and adherence to the submitted business plan.

This is not the first case of a fintech company acquiring a national bank charter through merging with a community bank.[3] In 2022, SoFi Bank N.A. was created when Sofi Inc. acquired Golden Pacific Bank, N.A. In 2021, LendingClub Corp, entered the OCC’s regulatory scheme through a similar strategy—but with a twist. Instead of acquiring a national bank, it acquired Radius Bank, a Boston-based bank, and converted it into a national bank.[4]

SmartBiz Loan’s recent acquisition of CenTrust highlights four main advantages of a national bank charter for fintech companies, which usually operate nationwide.   

1. First, it allows the fintech company to operate its business independently without relying on a partnership with a bank.
2. Second, it allows the fintech company to be subject to the supervision of a single regulator, the OCC.[5] This includes not only compliance and supervision, but also licensing. Without an OCC charter, the fintech company would have to seek the right type of license for each state in which it operates. For example, fintech lenders will have to seek the right type of banking, brokering, or lending license for its business model, which varies in each state. This also entails complying with each state’s requirements for the activities and licensing in that state.
3. Third, as a national bank, federal preemption will shield the fintech company from most state law and supervision by state regulators.[6]
4. Fourth, the fintech company with the charter would be exempt from SEC securities laws.[7]

The merger approach presents additional advantages to obtaining a national charter. It allows the fintech company to directly access the bank’s client pool, deposit funds, and banking system. This can decrease the fintech company’s marketing cost, funding cost, or banking fees. The merger approach also allows the fintech company to sail smoothly into the regulatory scheme compared to building a new bank, because it can leverage the existing national bank’s systems and management expertise.

However, obtaining a national charter also means that a fintech company will become subject to the regular examinations and continuous review of the OCC based on the fintech company’s risk profile as a bank. The fintech company’s full scope of operation and risk will be subject to the OCC’s supervision, which examines the bank from various angles including capital adequacy, asset quality, management, earnings, liquidity, and sensitivity to market risk. Whereas, if the fintech company remained as a partner with a bank, it would be the bank responsible for the partnership complying with the OCC’s regulation and supervision under third party management. This means that fintech companies—which often compete to be first movers introducing innovative products and services—might be relegated to the “slow lane” as the OCC reviews their business models and each step of implementation. Also, as discussed above, the OCC might require the fintech company to ensure certain conditions for safety and soundness.

McGuireWoods has a team of attorneys who provide advice and representation to fintech companies navigating state and OCC regulatory issues and state licensing. For questions about the potential impacts of the OCC supervision under the national bank charter, please contact the authors of this alert, your McGuireWoods contact, or a member of the firm’s regulatory compliance team.

[1] OCC, OCC Conditionally Approves Fintech Business Model for a National Bank (March 17, 2025)

[2] Debra M. Burke, Director for Licensing, OCC, Letter to Gerard J. Buccino (February 18, 2025)

[3] The more traditional way of acquiring a national bank charter would be applying directly for the OCC charter. Fintech companies seeking a national bank charter are afforded several different methods. They can acquire a bank with an existing bank charter (e.g. SmartBiz Loans), apply directly for a traditional OCC charter, or apply for the OCC’s special purpose fintech bank charter. The key distinction between a traditional bank charter and the special purpose bank charter is access to deposit-taking activities.

[4] Stephen A. Lybarger, Deputy Controller for Licensing, OCC, Letter to Sara Lenet and Tim Bogan (December 30, 2020)

[5] 12 U.S.C § 484 (no national bank should be subject to any visitorial powers except for authorized by federal law); 12 C.F.R. § 7.4000 (state officials may not exercise visitorial powers with respect to national banks, such as conducting examinations, inspecting or requiring the production of books or records of national banks).

[6] Rose v. Chase Bank USA, N.A.,513 F.3d 1032, 1037 (9th Cir. 2008) (citing Atherton v. FDIC,519 U.S. 213, 223 (1997); Davis v. Elmira Sav. Bank,161 U.S. 275, 290 (1896)) (National banks are subject to state laws of general application in their daily business to the extent those laws do not conflict with the letter or the general purposes of the National Bank Act.)

[7] 15 U.S.C. § 77c(a)(2) (securities issued by a bank are exempt from SEC registration); 15 U.S.C. § 78l(i) (securities issued by banks are regulated by the Comptroller of the Currency, the Federal Reserve, and the FDIC); 12 C.F.R. § 16 (OCC regulations governing securities issued by banks).