On March 18, 2020, the FDIC approved the applications submitted by Square Financial Services and Nelnet Bank for deposit insurance as new Industrial Loan Corporation (ILC) charters. Simultaneously, the Utah Department of Financial Institutions approved the industrial bank charter applications. (ILCs are also referred to as industrial banks.)
“Square and Nelnet are great additions to the U.S. banking sector. We congratulate them for succeeding through the rigorous federal and state application process,” said Frank Pignanelli, Executive Director of the National Association of Industrial Bankers.
This announcement is another welcome signal from the FDIC and Utah regulators of confidence in the ability of state-chartered banks, and new banking models to innovate and provide safe credit opportunities for Americans. Over the past three decades industrial banks have made a significant contribution to the strength of the U.S. banking system and these two new banks will benefit many Americans.
The focus of Square Financial Services (SFS) is the same as their parent company, which is to offer economic empowerment for small businesses nationwide and provide banking services through a new Utah ILC. SFS will be led by Lewis Goodwin as CEO. Mr. Goodwin previously served as CEO and senior officer of several other ILCs and commercial banks and is a licensed CPA in the state of Utah.
Nelnet is a diversified and innovative company focused on offering educational and financial services. Nelnet Bank fills a critical need to help students and families gain access to financial service products so they can make informed decisions about loans and education expenses. Leading Nelnet Bank as CEO and President is Andrea Moss. She is a seasoned leader with over 27 years of experience in financial services and banking. She has served as a bank president for two other ILCs prior to joining Nelnet Bank.
The approval of two new banks is welcome news for many reasons. FDIC Chairman Jelena McWilliams affirmed “De novo [new] banks are a key source of new capital, talent, ideas, and ways to serve customers.” (December 6, 2018 issue of the American Banker)
“A new ILC charter is long overdue. To bring fresh ideas and innovation into banking, the FDIC and state regulators should encourage de novo applications of all kinds of banks. This provides Americans with a future of safe financial service options. Attacks on ILCs are unfounded disingenuous attempts to limit consumer choices,” says Pignanelli. He adds, “It’s great to see state and FDIC approval of ILC applicants Square Financial Services and Nelnet Bank. These new charters will bring much needed innovation within the banking system, rather than outside it.”