Chime has agreed to buy Stride Bank, which has served as its sponsor bank for the past seven years.
The San Francisco fintech said in a press release that it will pay $590 million for the Enid, Okla., bank, which will be rebranded as Chime Bank. Chime noted that buying Stride will eliminate partner-bank fees, reduce funding costs, and improve unit economics.
The deal, which is expected to close in the first half of next year, priced Stride at 150% of its tangible book value.
“We founded Chime because mainstream America deserved better banking,” Chris Britt, the fintech’s co-founder and CEO, said in the release. “By combining Chime’s leading brand and deep member relationships with Stride’s national charter and team, we will accelerate toward our vision to be the largest provider of primary bank accounts in America.”
“Stride has spent more than a century serving customers and strengthening communities,” said Brud Baker, Chairman and CEO of Stride Bank. “For seven years, we have seen firsthand how Chime puts members first and how seriously it takes its mission. That gives us real confidence in this combination and the future we can build together. Stride’s national bank charter and experienced team will be central to what comes next. I look forward to continuing to lead Chime Bank, creating new opportunities for our customers, communities, and employees.”
The deal is expected to be immediately accretive to Chime’s earnings per share. Chime expects to realize more than $100 million in net synergies, driven by sponsor bank fee savings, expansion of lending products, and a significantly lower cost of funds.
Chime, which is profitable, said it expects to fund the purchase from cash on its balance sheet.
Morgan Stanley and Wachtell, Lipton, Rosen & Katz advised Chime. Piper Sandler and McAfee & Taft advised Stride.