OppFi Pulls Bank Acquisition Bid Amid Regulatory Uncertainty

Subprime lender OppFi has officially withdrawn its applications to acquire Arizona-based BNC National Bank, marking a significant setback in the company's efforts to obtain a national banking charter. Despite the withdrawal, CEO Todd Schwartz emphasized that the merger agreement with BNCCORP remains in effect, signaling that the company has not abandoned the transaction. The decision comes after a period of intense scrutiny from federal regulators, including the Office of the Comptroller of the Currency, the Federal Reserve, and the Federal Deposit Insurance Corp., regarding the proposed combination of the fintech platform and the community bank.

In a statement, Schwartz expressed frustration with the regulatory environment, pointing to a lack of clear standards for how fintechs and community banks should merge. He argued that OppFi’s applications met existing statutory criteria but were stalled by a regulatory process he described as opaque. This sentiment mirrors a similar move by fellow Chicago-based lender Enova, which withdrew its own application to acquire Grasshopper Bank in September. Enova CEO Steve Cunningham previously criticized the process for being susceptible to external political pressure rather than being governed strictly by statutory factors.

The deal faced significant headwinds from outside the regulatory boardroom. In July, twenty state and district attorneys general urged federal regulators to reject the acquisition, raising concerns that the deal was an attempt to bypass state usury laws. Critics argue that fintechs like OppFi utilize bank partnerships to offer loans with annual percentage rates that exceed state-imposed caps—sometimes reaching as high as 195%. OppFi, which markets itself as a provider of financial stability, has faced persistent criticism from lawmakers, including Sens. Elizabeth Warren and Chris Van Hollen, who have characterized the company's business model as predatory.

The political pressure intensified following the Enova withdrawal, with Senators Warren and Van Hollen explicitly calling for OppFi to abandon its bank acquisition bid. Following the announcement on Tuesday, the senators issued a statement welcoming the withdrawal, reiterating their stance that regulators must protect consumers from high-interest debt products. The acquisition, originally proposed in April, was slated to close by the end of the year. Under the terms of the merger agreement, OppFi faces a termination fee of approximately $1.95 million if the deal is ultimately abandoned, representing 1.5% of the $130 million transaction value.

Despite the regulatory roadblock, OppFi remains focused on its pivot toward a more diversified financial platform. Schwartz noted during the company's third-quarter earnings call last week that shareholder approval for the deal had been overwhelming, and he reiterated that the company remains confident in its long-term earning power. Whether the company operates under a national banking charter or continues its current structure, management emphasized that both OppFi and BNC are established, profitable entities. For now, the fintech continues to execute its strategic transformation, though the path to becoming a bank remains effectively closed under current regulatory conditions.