Erebor Gets FDIC Nod; PayPal Applies for ILC; Thread Raises $30.5Mn

Payrolls were up 64,000 in November. Erebor gets conditional approval from FDIC. PayPal applies for ILC charter. Octane raises $100Mn Series F. Thread Bank bags $30.5Mn in new funding. Imprint raises $150Mn Series D. Enova to acquire Grasshopper Bank.

This past week, we launched Visa's stablecoin settlement pilot with Highnote, bringing production-grade USDC settlement into real payment flows. This enables seven-day availability with near-instant access to funds, faster clearing and reconciliation, and continuous liquidity for lending and card programs. Read more here.

This will be the last Cross River IQ newsletter of the year. Thank you for continuing to follow our work. Coverage will resume in January with the next newsletter in your inbox on the 11^th.

New here? Subscribe here to get our newsletter each Sunday. For even more updates, follow us on LinkedIn.

Nonfarm Employment Up By 64,000 in November

Payroll data is in for November, showing nonfarm employment growing by a seasonally adjusted 64,000. That’s better than the Dow Jones estimate of 45,000 and a welcome reversal from a decrease of 105,000 in October. The majority of new roles in November, some 46,000, came from the healthcare industry. Still, as we covered last week, there is some concern that certain official indicators may be overestimating employment gains, due to methodological challenges of surveying businesses. The unemployment rate unexpectedly ticked up to 4.6%, the highest since late 2021. A broader measure of unemployment, which includes those working less than they’d like to and discouraged workers, hit 8.7%, the highest since August 2021.

Erebor Gets Nod From FDIC

Peter Thiel-backed Erebor Bank, which recently won conditional approval of its charter application from the OCC, has cleared another hurdle: the FDIC has granted conditional approval of the de novo bank’s deposit insurance application. Per the public portions of Erebor’s application, the bank plans to focus on serving the tech and crypto industries and high net worth individuals. Erebor’s agreement with the FDIC requires it to have initial paid in capital of at least $276Mn and to maintain a tier 1 leverage ratio of at least 12% during its first three years of operation. As is common for newly formed banks, Erebor must also obtain written non-objection before substantially deviating from the business plan it submitted as part of the chartering application process. Conditional approval of Erebor’s deposit insurance application gives the bank one year to open its doors. Otherwise, the deposit insurance approval will expire.

PayPal Applies for ILC Charter

Payments giant PayPal is the latest firm to apply for a bank charter. The company has applied for a Utah industrial loan company, commonly referred to as an ILC. If approved, the company would leverage the newly formed PayPal Bank as part of its small business lending efforts. A company statement said it also expects to offer interest-bearing savings accounts to consumers, which could help supply the deposit funding for the bank’s lending activities. PayPal CEO Alex Chriss commented on the application, saying, “Securing capital remains a significant hurdle for small businesses striving to grow and scale. Establishing PayPal Bank will strengthen our business and improve our efficiency, enabling us to better support small business growth and economic opportunities across the U.S.”

Octane Raises Series F

Octane, which offers financing for large purchases like motorcycles, recreational vehicles, and powerboats, announced it has raised a $100Mn Series F. Existing investor Valar Ventures led the round, with participation from Upper90, Huntington National Bank, Holler-Classic Family, Camping World, and others. The new funding values Octane at $1.3Bn on a post-money basis, the company said. Of the $100Mn round, half went towards secondary share sales to provide existing investors with liquidity. To date, the company has raised $242Mn in equity and has completed $4.7Bn in asset-backed securitizations. Per Octane cofounder and CEO Jason Guss, the company expects to have $80Mn in adjusted EBITDA in 2025, though it’s unclear what “adjustments” this entail, and interest expense is typically a material input cost in lending businesses.

Thread Raises $30.5Mn In New Funding

Tennessee-based Thread Bank announced it has raised an incremental $30.5Mn in funding. The round was led by Portage Ventures with participation from Rockmont Partners and other strategic investors. The additional capital will support the bank’s embedded distribution strategy. Thread describes its approach as offering “digital branches” through small business and consumer brands and vertical SaaS companies.

Thread CEO Chris Black commented on the raise, saying, “From the outset, our mission at Thread has been to use technology to meet customers where they live their financial lives and conduct their financial business, challenging traditional methods and paradigms for delivering banking products and services. This funding round, backed by seasoned financial technology and banking investors, serves as a resounding vote of confidence in our team, embedded approach, and customer-first vision for the future of banking.”

Imprint Bags $150Mn Series D

Cobrand card startup Imprint announced it has raised a $150Mn Series D. The round was led by Khosla Ventures, with participation from Ribbit Capital, Kleiner Perkins, Hedosophia, Thrive Capital, Spice Capital, and Timeless. The round values Imprint at $1.2Bn. Imprint supports cobrand cards for names like Crate & Barrel, Fetch, and Rakuten. According to the company, it has seen 200% growth in cardholders year over year. Imprint’s inaugural $300Mn securitization was rated AAA by Fitch Ratings. Imprint plans to use the incremental funding to continue growing its stable of cobrand offerings and further developing its loyalty platform. Company cofounder and CEO Daragh Murphy commented on the raise, saying, “Brands today face pressure to earn customer loyalty through authentic and genuinely rewarding experiences. This milestone underscores how our team is delivering on our mission to build the best way to pay at the brands customers love. With this new capital, we are accelerating the evolution of co-brand from a bank product into a complete brand loyalty platform.”

Enova to Acquire Grasshopper Bank

Consumer and small business lender Enova International has entered into an agreement to acquire Grasshopper Bank, the companies announced last week. Enova will pay $369Mn in cash and stock to acquire the bank, which was formed in 2019. The transaction is subject to Grasshopper shareholder approval and signoff from the OCC and the Federal Reserve and is expected to close in the second half of next year. Acquiring Grasshopper should be accretive to Enova’s business by lowering its cost of funds and simplifying its regulatory and licensing model.