Dive Brief:

• Embedded finance company Green Dot said Monday it has entered into acquisition agreements with Smith Ventures and CommerceOne Financial Corp., with the private equity firm acquiring Green Dot’s non-bank fintech business, and the parent company of CommerceOne Bank acquiring its Green Dot Bank assets.
• Smith Ventures will buy Provo, Utah-based Green Dot’s fintech business from CommerceOne for $690 million in cash, the companies said in a news release. Of that amount, $470 million will be distributed to Green Dot shareholders, $155 million will be invested into the bank as a capital infusion, and about $65 million will be used to pay off debt.
• CommerceOne and Green Dot Bank will become a publicly traded bank holding company that acts as the fintech’s exclusive issuing bank, the companies said. The concurrent transactions, which await regulatory approval, are expected to close in the second quarter of 2026.

Dive Insight:

Green Dot, founded in 1999, has faced shrinking profit margins and had been exploring “strategic alternatives” since March. At that time – not long after the company reported a $26.7 million loss for 2024 – former CEO George Gresham exited and interim CEO Bill Jacobs took over.

During a conference call Monday to discuss the proposed transactions, Jacobs said the company was “overwhelmed with interest” during the eight-month strategic review process.   

“The close-ability of the transaction as well as the committed financing was a significant part of our board’s interest in looking at various bidders to the company,” Jacobs said. 

Smith Ventures CEO Bill Smith noted during the call that he sold one of the first companies he built, Insight Card Services, to Green Dot in 2014. The private equity firm, founded in 2017, and CommerceOne are both based in Birmingham, Alabama. Smith is a founding investor and member of the board of CommerceOne Bank.

After spending time understanding the financing the Smith group had put together, and reviewing with regulators and attorneys any issues that may arise with the proposed deals, “we came to the conclusion that this was an eminently closeable and approvable transaction,” Jacobs said. 

Green Dot shareholders will receive a minimum of $14.23 per share, according to the release. Green Dot shareholders will own about 72% of the combined company, while CommerceOne shareholders will own roughly 28%.

Additionally, Smith Ventures and CommerceOne struck a seven-year agreement that has the lender serving as the exclusive bank sponsor of the embedded finance business. 

“Separating the bank charter has always been an option for Green Dot,” William Blair analyst Cristopher Kennedy wrote in a Monday note. Kennedy noted in March that Green Dot’s bank charter likely limited the list of potential buyers.

In acquiring the fintech business, Smith Ventures gets Green Dot’s consumer business, which has both retail and direct-to-consumer channels; its business-to-business segments; its money movement unit; and the technology infrastructure that supports those segments, Green Dot CFO Jess Unruh said during the call.

“The embedded finance sector is a vast and growing sector and I see tremendous opportunity for Green Dot Bank and Green Dot’s embedded finance business, and look forward to working with this team and continuing to invest in the platform to capitalize on this opportunity,” Smith said during Monday’s call.

CommerceOne, founded in 2018, has about $840 million in assets and $745 million in deposits, according to an investor presentation. It’s a business-focused, single-branch bank in the Southeast, serving small and medium-sized companies.  

Merging with Green Dot Bank, plus the seven-year commercial agreement, “should position the new CommerceOne to become a diversified bank with multiple growth drivers, top-tier profitability and substantial capital generation,” CommerceOne CEO Kenneth Till said during the call. 

The deal enables CommerceOne to improve its asset mix, and both the bank deal and the commercial agreement bolster CommerceOne’s deposits, providing liquidity for loan generation, Till said. Green Dot has about $5 billion in assets and $4.7 billion in deposits.

The banking industry is “going through tremendous structural change,” Till said during the call. Newer, nonbank competitors are serving younger businesses and consumers outside the bank system, placing pressure on traditional banks and their ability to grow low-cost deposits, he said.

“With Green Dot Bank, we are now well-positioned to generate deposits and ensure that we do not fall behind in the evolution of banking,” he said.

He also pointed to the opportunity to reposition the asset side of Green Dot’s balance sheet and elevate the yields it earns.

“Green Dot had begun to do that work and we will continue to execute on that strategy,” Till said. 

Till noted areas where he sees room for future growth in embedded finance. That includes positioning CommerceOne to serve customers beyond the Green Dot fintech business, given Green Dot Bank’s infrastructure and experience supporting that sector.

CommerceOne intends to “immediately” invest to further build out compliance and risk management infrastructure to support the growth it’s angling for, Till said.

Compliance issues have come up for Green Dot in the past: The company was fined $44 million by the Federal Reserve in 2024, with the central bank faulting Green Dot’s “deficient consumer compliance risk management program.” 

Executives have had preliminary conversations with the Fed related to the deals, Till said. From a compliance standpoint, “we have to … demonstrate to the Fed that we’re in a position to execute and do it the right way,” he said during the call.