Truist Financial in Charlotte, N.C., has agreed to buy Service Finance, a Boca Raton, Fla., company that makes point-of-sale loans for home-improvement projects.
The $522 billion-asset Truist said in a press release Tuesday that it will pay $2 billion to Canadian-based ECN Capital for Service Finance. The deal is expected to close later this year.
Service Finance uses proprietary technology to deliver payment solutions to more than 14,000 home-improvement dealers and contractors. More than 80% of Service Finance’s loan applications are completed on its mobile application.
The acquisition “expands the scale and capabilities of our wholesale payments businesses, enabling Truist to deliver innovative financing solutions to Service Finance’s nationwide network of dealers and serve homeowners across the country,” Mike Maguire, the company’s head of national consumer finance and payments, said in the release.
“This acquisition significantly strengthens Truist’s leadership position in the rapidly growing POS industry,” Maguire added.
Truist said it plans to hold “the vast majority” of Service Finance’s loans on its balance sheet. The company said it expects to earn a roughly 3% return on Service Finance’s loans, adding that it should be able to reduce how much capital it holds against potential losses.
Mark Berch, Service Finance’s founder and president, will join the POS lending unit of Truist’s national consumer finance and payments group.
The deal is the second in recent months where a regional bank agreed to buy a home-improvement lender. Regions Financial in Birmingham, Ala., agreed in June to buy EnerBank USA for $960 million.