Blurred Lines, Red Flags and a Stalking Horse

Chime plans to acquire Stride Bank, signaling a shift from fintech partner to bank owner, with expected synergies of over $100M by 2027.

Green Dot is taking the opposite approach: CommerceOne Bank will acquire Green Dot Bank, while Green Dot’s fintech business will be sold to Smith Ventures, creating a new bank-fintech partnership.

A federal judge ruled that SVB Financial Group's executives and directors were responsible for Silicon Valley Bank’s 2023 collapse, citing poor risk management and ignored warnings.

Bank7 increased its bid for Century Bank’s parent company from $68M to $91M for a 71% stake.

JRN by Bauer 43:36, September 16, 2026

Blurred Lines, Red Flags and a Stalking Horse

  • FinTechs and Banks

Before the ink was even dry on last week’s blog post (Is it a Bank? Is it a Fintech? Is it Superman? (JRN 43:35)), Chime Bank (a fintech) announced plans to acquire one of its partner banks, 5-Star Stride Bank, N.A., Enid, OK (4091) and its parent, Central Service Corporation. (That’s a sign of how quickly things are moving in the fintech portion of the bank world these days.)

This marks a complete change of direction for Chime, which set out originally as a bank alternative for everyday consumers. Instead of charging punitive fees to its customers, Chime makes most of its money from merchant interchange fees. Chime will have to find a way to reconcile that philosophy once it owns a bank that does have a history of charging fees. Chime expects to gain more than $100 million in net synergies upon completion of the transaction, which is expected in the first half of 2027.

Last week, we also briefly mentioned 4-Star Green Dot Bank, Provo, UT (22653), which in addition to operating a virtual bank, still operates the single branch office of Bonneville Bank that it purchased in 2011 (JRN 39:15.5).

What we did not mention last week is that Green Dot is in the process of doing the exact opposite as Chime. Last November, Green Dot, Smith Ventures, LLC, Birmingham, AL, and 4-Star CommerceOne Bank, Birmingham, AL (59114) entered into a 4-way agreement whereby:

  • CommerceOne Bank will acquire Green Dot Bank, then
  • CommerceOne will sell Green Dot’s non-banking (fintech) operations to Smith Ventures.

CommerceOne Bank and Smith Ventures will then commence a seven-year bank-fintech partnership.

Shareholders of both Green Dot and CommerceOne approved the agreement (overwhelmingly) in June. The transactions, assuming regulatory approvals are forthcoming, are expected to be completed by year-end.

  • The Latest on Silicon Valley Bank (SVB)

Silicon Valley Bank failed over three years ago (March 10, 2023), but the fallout continues.

After the bank was closed and the holding company declared bankruptcy, SVB Financial Trust took over the claims of SVB Financial Group, the bankrupt holding company (JRN 41:01). SVB was heavily reliant on venture capitalism but it was ultimately interest rate risk and liquidity issues that sunk the ship. SVB was ill-prepared for the Fed’s aggressive interest rate hikes (up 4.5% between March 2022 and February 2023). On March 8th, 2023, SVB announced it would take a large hit on some underwater bonds and customers panicked. In just two days, the bank failed.

After the failures of SVB and Signature Bank, and the collapse of some very high-profile crypto and fintech companies, regulators ratcheted up their scrutiny of partnerships between federally insured institutions and unregulated entities. No more playing the blame game.

Regulators made it very clear: “outsourcing any of a bank’s functions does not diminish the bank’s responsibility to ensure proper controls, identification and monitoring of transactions and customers… The (bank) board has the ultimate responsibility for proper and sound management of the bank.” (JRN 41:35)

Perhaps the SVB board didn’t get that message. On August 28, 2026, U.S. District Judge Beth Labson Freeman sided with the FDIC in a judgement against the officers of SVB Financial itself, saying they themselves, were responsible for the collapse of the bank. Here are just a few clips from the 206-page decision.

“They ignored red flag warnings put out by the Holding Company’s own internal risk thresholds and liquidity stress tests…

“disregarded the outside experts they hired…

“trusted in speculation that interest rates would stay near zero and their depositors would stick with them.”

“This thinking turned out to be fanciful, negligent, and devastating to the Bank.”

In short, the holding company took excessive risks causing damages exceeding $1.7 billion. The board and officers alone were responsible for interest-rate risk management as they did NOT behave like “ordinarily prudent bankers”.

The result: the FDIC will not be returning the $1.7 billion and will use that money to help offset the costs of the failure (which was estimated at $20 billion). The FDIC is also in the process of suing several officers and directors personally.

  • Update on “The Saga of the Century”

In July we reported on 5-Star Bank7, Oklahoma City, OK’s (4147) stalking horse bid of $68 million (cash) to acquire a controlling interest in 3½-Star Century Bank, Santa Fe, NM (28362) (JRN 43:29). A stalking horse bid is a baseline bid intended to bring out competing offers. It worked. Instead of $68 million, Bank7 announced on September 3rd, it will pay $91 million for an approximate 71% stake in Century Financial Services Corporation, the holding company for Century Bank.

The transaction is still subject to all regulatory approvals and, assuming all goes well, is expected to be completed in the fourth quarter. The combined organization will have roughly $3.4 billion in total assets as well as 21 branch offices in Kansas (2), Oklahoma (8), Texas (2) and New Mexico (9).

While Bank7 has said it will continue to operate Century Bank under its old and known name, the transaction will bring the number of banks headquartered in the Land of Enchantment down to 27.