Florida-based Flagship Community Bank has agreed to acquire the assets and liabilities of digital banking startup BankMobile in a cash deal worth $175m.
The transaction includes all of BankMobile's deposits, technology, intellectual property and customer accounts.
BankMobile, a unit of Customers Bank that itself is a subsidiary of Customers Bancorp, offers a full suite of deposit products to retail customers using smart phone technology. The company had about 1.7 million student checking accounts and about $500m of noninterest bearing deposit as at 31 December 2016.
Customers Bancorp chairman and CEO Jay Sidhu said: "Due to Durbin Amendment restrictions on debit card interchange fees, Customers believes it will be unable to profitably operate BankMobile once Customers' consolidated assets exceed $10 billion."
Customers Bank said that the sale will generate around $100m in pre-tax gain for the firm.
Flagship chairman, president and CEO Frank Burke said: “While Flagship continues to believe in the demand for a locally owned and managed community bank, and will continue its model of local community banking through its two branches in Clearwater, we also recognize that digital banking is expanding and the acquisition of BankMobile provides us with an opportunity to meaningfully expand our digital banking footprint beyond our Florida markets.
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“We look forward to welcoming BankMobile's team of over 220 staff members to Flagship, so we can continue to provide BankMobile's customers with the products and services they have come to expect."
The deal is expected to be completed in the third quarter of 2017, subject to regulatory and shareholder approvals.