Shares of Square Inc. rose 3.7% in after-hours trading Monday after the company said its industrial bank had started operations. The first step for the bank, called Square Financial Services, will be to underwrite and originate loans taken by Square SQ, + 4.77% sellers through the company’s Square Capital program.
The primary goal of Square’s in-house bank will be “to offer commercial loans and deposit products,” the company said in a statement, and the bank will be the main source of financing for Square Capital’s loans. Square received conditional approval from the Federal Deposit Insurance Corp. and the Utah Department of Financial Institutions to operate a bank late last year. “Bringing banking capacity internally allows us to operate more agilely, which will serve Square and our customers as we continue to work to create financial tools that serve the underserved,” Square CFO Amrita Ahuja said in a statement. . See Also: Square Buys More Bitcoins As Cash App Users Increase Revenues Square Plans To Operate Square Financial Services Under A Light Asset Business Model By Selling Loans To Outside Investors To Minimize Impact On Industrial Bank Balance Sheet . Square does not anticipate that the bank will have a material impact on its balance sheet, net income, gross profit or adjusted earnings before interest, taxes, depreciation and amortization this year, it said in its statement. Don’t Miss: Visa is considering the opportunity beyond payment, estimating it is worth $ 185 trillion of Square shares that have rallied 189% in the last 12 months while the S&P 500 SPX, + 2.38% has added 32%.