Dive Brief:
- Houston-based LevelField Financial has agreed to acquire Chicago-based Burling Bank with the aim of becoming the first full-service chartered bank to offer traditional banking and digital asset services on one platform across the U.S., the company announced Wednesday.
- Financial terms of the transaction were not disclosed, but the deal is expected to close later this year, LevelField said.
- After the transaction closes, the institution will retain the Burling Bank name but do business outside of Chicago using the LevelField brand, and will market itself to customers seeking to monetize their digital assets, Gene Grant, LevelField's CEO, told American Banker.
Dive Insight:
Burling launched in 1989 as a boutique bank for the trading community and has grown to count $197 million in assets.
Grant will be the combined institution’s CEO after the transaction closes, but Burling’s senior management team is expected to join LevelField's leadership and focus on serving the bank's existing clients while growing the banking business nationwide, LevelField said.
No more than half of the bank’s total assets will be connected to the digital-asset sector, though, Grant told American Banker.
Grant said LevelField took anything out of its business plan the company thought might give regulators pause.
"There is nothing novel. There is nothing particularly interesting,” Grant told American Banker. “We've read everything that's been published on digital assets to make sure we fit within the box. We have no interest, today or at any point in time, taking any principal positions. We are [strictly] customer facilitation."
LevelField’s acquisition offer was unsolicited, Burling said in a statement published on its website. LevelField looked at eight banks before proposing a deal with Burling, Grant told American Banker.
"Texas was our ideal state, but we looked at banks in a number of states," Grant told the publication, adding, in a statement, that LevelField sought “to find the ideal institution with both an existing business and a management team who are aligned with our vision.”
“We exceeded our expectations with Burling Bank," Grant said in Wednesday’s press release.
Burling CEO Michael Busch called LevelField’s offer "a tremendous opportunity for the bank to expand beyond our local footprint and serve customers with shared interests across the nation."
"Together, we will continue to provide superior service and demonstrate that we truly understand the expanding and unique needs of our customers,” Busch said.
The Burling deal comes as the digital-asset space finds itself under increasing scrutiny in the wake of several crypto-firm bankruptcies, such as FTX, Celsius, BlockFi and Voyager Digital. At the same time, several banks that have waded into crypto have since retreated from the sector. BankProv, for one, last week said it would no longer offer loans collateralized by machines that mine cryptocurrencies. Farmington State Bank this month abandoned its plan to develop banking services related to crypto. And Metropolitan Commercial Bank, once a partner to Voyager, said it would also exit the crypto sector.
For LevelField, loan size will depend on the borrower's digital holdings. Digital-asset loans, Grant told American Banker, would not be underwritten entirely on collateral.
"We need to make sure customers can support the loans based on their good credit," Grant said. "We use the collateral as a way to … reduce the risk associated with the loan. That allows us to lower the risk profile so we can charge more attractive rates. At no point will we have an uncollateralized [digital asset] loan."
