June 16, 2021

American Banker Quotes Allen Denson on a High-Cost Consumer Lender’s Purchase of a Utah Bank

2 min

On June 16, 2021, Allen Denson was quoted in American Banker on KDM Partners’ purchase of Salt Lake City-based Liberty Bank, which has only $11.7 million in assets.

According to the article, KDM Partners is the parent company of Chicago-based CreditNinja, which offers personal loans with annual percentage rates between 25% and 249%. The lender focuses on borrowers with lower credit scores or little credit history who do not typically qualify for traditional bank loans.

KMD Partners plans to use Liberty Bank to offer checking and savings accounts, credit cards, and other banking services to underserved populations, according to executives involved in the deal. They said that the bank will also offer credit at more affordable rates to CreditNinja borrowers who have improved their credit standing.

The deal is the latest example of a fintech trying to enter the banking system by acquiring an insured depository institution, noted Denson. For some fintechs, buying an existing bank might be less expensive than starting a new bank from scratch. An acquisition can also provide more certainty than less-tested options like applying for the Office of the Comptroller of the Currency's fintech charter, which remains the subject of litigation.

"I think that there are opportunities like this out there, so I think that this could be a really interesting trend that happens over the next few years," Denson said.