Mode Eleven Bancorp in Hulett, Wyo., will voluntarily dismantle its Banking-as-a-Service platform after being hit with an enforcement action from the Federal Reserve.
The parent of the $110 million-asset Summit National Bank entered into a cease-and-desist order with the Fed on March 28. The order barred the bank from engaging in “expansionary activities related to the fintech business strategy” without written Fed approval.
Those activities include creating new subsidiaries, business lines, products, programs, services, customers or program managers tied to the fintech business strategy.
Once known as Hullett Bancorp, the company rebranded as Mode Eleven. In September 2022, it sold an undisclosed stake in itself to Nexo, which deals in digital assets.
Most enforcement actions against BaaS-focused banks have come from the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp.