Green Dot’s Bank Holding Company Plans

Green Dot CorporationIn February, Green Dot Corporation announced plans to acquire a bank holding company. A notice of their intent to acquire Bonneville Bancorp, a Utah bank holding company, were published in the Federal Register on February 22, 2010. Copies of Green Dot’s application to acquire Bonneville Bancorp are available from the Federal Reserve Bank of San Francisco. The application includes some details about the acquisition, Bonneville Bancorp, and Green Dot’s plans for the bank.

As required by the Bank Holding Company Act, Green Dot filed an application for prior approval to acquire Bonneville Bancorp. The application includes a number of confidential appendices which are not available for public review. However, the public portion of the application includes some details of the planned acquisition, details of Bonneville Bancorp’s capitalization, and Green Dot’s plans for the bank.

The Planned Acquisition of Bonneville Bancorp

The application filed by Green Dot notes that Green Dot and Bonneville Bancorp entered into a definitive Agreement and Plan of Merger on February 4, 2010. The acquisition price is approximately $15,650,000 (less possible amounts payable to minority shareholders of the Bank and other set asides). The proposed transaction would result in the Green Dot Corporation owning 100% of the common shares of Bonneville Bancorp.

Bonneville Bancorp

Green Dot’s application provides the following details about Bonneville Bancorp:

Bonneville Bancorp is the parent company of [Bonneville Bank], which has assets of approximately $34 million funded primarily by core deposits of approximately $28 million. The Bank has a single branch in Provo, Utah with ten employees. The Bank opened in May 1978. The Bank offers a range of business and consumer banking products in the Provo, Utah area. The Bank also originates commercial, industrial, residential, real estate and personal loans. The Bank targets consumers and small and medium-sized businesses in the Provo, Utah area. ….

Bonneville’s only subsidiary is the Bank. At December 31, 2009, the Bank had total assets of approximately $34 million, with net interest income for the year ended December 31, 2009 of approximately $1.45 million. At December 31, 2009, the Bank’s Tier 1 capital/risk-adjusted assets ration was 30.94%, it’s Tier 1 leverage ration was 17.60% and its total capital/risk-adjusted assets ratio was 31.63%.

Green Dot’s Plans for the Bank

While much of Green Dot’s plans for use of the Bank are confidential, the public portion of the application provides some details of how Green Dot plans to use the Bank.

For example, after completion of the acquisition, Green Dot plans to change Bonneville Bancorp’s name to “Green Dot Bancorp”, and the Bank’s name will be changed to “Green Dot Bank”. Green Dot Bank will continue to do business as Bonneville Bank. A quick check of domain registrations shows that Green Dot Corporation is the owner of the domain name “greendotbank.com”.

The application further notes that:

Green Dot expects to focus the Bank on issuing the Green Dot-branded debit cards linked to an FDIC-insured transactional account and, initially, on a pilot basis, savings accounts to Green Dot’s core customer base.

Upon closing the transaction, Green Dot will contribute $10 million in cash to the Bank to provide an initial capital base for the Bank’s operations. Further, Mr. Lewis B. Goodwin (former CEO and President of DaimlerChrysler Financial Bank) is targeted to be the CEO of the newly formed bank.

Copies of Green Dot’s application to become a bank holding company can be obtained by contacting Kenneth Binning, Vice President, Applications and Enforcement, Federal Reserve Bank of San Francisco.

Public portions of the application can also be obtained by contacting GetDebit.com.

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