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Evolve Bank & Trust, formerly First State Bank, is an American bank headquartered in West Memphis, Arkansas. It is best known since 2010 for partnering with fintech companies to offer banking services to their customers. Evolve has been recognized multiple times as an Inc. 5000 company and has also received several honors from Top Workplace USA.

In 2024, Evolve Bank faced scrutiny due to freezing funds of certain fintech customers, including Yotta and Juno, which restricted access to over $100 million held in customer accounts. This incident attracted public attention as many impacted customers eventually received only minimal fund access, leading to widespread frustration and media coverage.

Evolve's Chief Marketing & Communications Officer resigned in October 2024, citing his "integrity and well-being" as a cause.

History

Early years

Founded in Parkin in 1925 as First State Bank, the bank provided loans to local farmers in Cross County, Arkansas. In 1934, it became a member of the Federal Deposit Insurance Corporation.

2005-present

In 2005, First State Bank was renamed to Evolve Bank & Trust after a group led by Chairman Scot Lenoir acquired it. The bank then relocated its banking charter to West Memphis.

In 2017, Evolve established its Open Banking division to provide Banking-as-a-Service. Evolve serves as the partner bank for fintech companies like Branch, Marqeta, Mercury, and Stripe. Evolve Open Banking also provides card services offerings, allowing companies to white-label Mastercard, Visa, and American Express cards.

In 2022, Evolve was ranked #1 in trust departments in Arkansas, surpassing Simmons Bank, according to Arkansas Business.

In June 2024, the Federal Reserve Board issued an enforcement action against the bank for deficiencies in their anti–money laundering, risk management, and consumer compliance programs.

Also, in June 2024, Evolve announced it was the victim of a data breach by the cybercrime group LockBit. Some of its corporate fintech clients, including Affirm, Mercury and Wise also announced their customers were affected by the breach.

Freezing of Customer Withdrawals & Accusations of Fraud

In September 2024, Evolve’s partner Synapse Financial Technologies, accused the bank of misappropriating customer funds. Synapse had declared bankruptcy the previous spring, after previously serving as the banking as a service platform connecting Evolve to multiple fintech startups, including Yotta and Juno.

After Synapse’s bankruptcy in April 2024, Evolve froze withdrawals from partner apps, claiming inaccurate accounting prevented the bank from knowing which funds belonged to which account holders. This move left tens of thousands of users without access to their bank accounts for 5 months while Evolve performed reconciliation. After the reconciliaton was complete, it was announced that tens of millions of dollars deposited with Evolve Bank remained unaccounted for. Consumers affected formed several groups including Fight For Our Funds and Reddit r/yotta to attempt to recover an estimated $41,991,194 million lost by 4992 users, compiled from site form submissions to fightforourfunds.org .

Accolades & honors

Evolve Open Banking ranked as a Nacha Top 50 Originator in both 2022 and 2023. Additionally, Evolve was recognized as the Most Innovative Bank of 2023 by the Tearsheet Awards.

References

1. ^ "Evolve Bank & Trust". Federal Deposit Insurance Corporation. Archived from the original on 2024-02-08. Retrieved 2024-08-02.
2. ^ "Investor Kit 2024" (PDF). Evolve Bank & Trust.
3. ^ Xie, Teresa; Gorrivan, Charles (2024-06-26). "Evolve Bank & Trust Confirms Data Was Stolen in Cyber Attack". Bloomberg. Archived from the original on 2024-06-26. Retrieved 2024-06-27.
4. ^ Rooney, Kate (2019-02-15). "Small banks you've never heard of are quietly enabling the tech takeover of the financial industry". CNBC. Retrieved 2024-10-20.
5. "Evolve Bank & Trust". Inc. 5000. Retrieved 2024-10-19.
6. "Working at Evolve Bank & Trust". Top Workplaces. Retrieved 2024-10-20.
7. "Evolve offers Yotta, Juno customers 'pennies' after freeze". Banking Dive. Retrieved 2024-11-12.
8. "Yotta Payment Processing Updates". Yotta Payment Processing Updates. Retrieved 2024-11-12.
9. ^ Massey, Kyle (2022-09-25). "Tech Work Fuels Huge Growth at Evolve Bank & Trust of West Memphis". Arkansas Business — Business News, Real Estate, Law, Construction. Archived from the original on 2024-09-25. Retrieved 2024-10-20.
10. "Marqeta Partners With Evolve Bank & Trust on Expanded Program Management Capabilities". PYMNTS.com. 2022-05-19. Retrieved 2024-10-20.
11. Kauflin, Jeff. "Silicon Valley Bank Collapse Produces An Early Winner: Digital Banks". Forbes. Retrieved 2024-10-20.
12. Rudegeair, Peter (2020-12-03). "Stripe to Offer Banking Services in Deal With Goldman Sachs, Citigroup". THE WALL STREET JOURNAL. Archived from the original on 2020-12-03. Retrieved 2024-10-19.
13. "Evolve Bank & Trust Compares Banking-as-a-Service to Open Banking". DownBeach. 2024-03-25. Retrieved 2024-10-20.
14. Moritz, Gwen (2022-10-23). "Evolve Overtakes Simmons in Trust Assets". Arkansas Business — Business News, Real Estate, Law, Construction. Archived from the original on 2024-09-25. Retrieved 2024-10-20.
15. "Federal Reserve Board issues an enforcement action against Evolve Bancorp, Inc. and Evolve Bank & Trust for deficiencies in the bank's anti-money laundering, risk management, and consumer compliance programs" (Press release). Federal Reserve. 2024-07-14. Archived from the original on 2024-07-26. Retrieved 2024-08-02.
16. Lang, Hannah; Schroeder, Pete (2024-07-17). "Fed penalizes Evolve Bank for failing to manage fintech partnership risk". Reuters. Archived from the original on 2024-06-14. Retrieved 2024-08-02.
17. "Arkansas-based Evolve Bank confirms cyber attack and data breach". Reuters. June 27, 2024. Retrieved 2024-08-02.
18. "Cybersecurity Incident". Evolve Bank & Trust. Archived from the original on 2024-08-02. Retrieved 2024-08-03.
19. @Affirm (2024-06-27). "As an Affirm Card user, we wanted to alert you of a recent cybersecurity incident at Evolve Bank and Trust, an issuing partner on the Affirm Card (not an originating bank partner for Affirm loans)" (Tweet). Retrieved 2024-08-03 – via Twitter.
20. "Data breach at Evolve Bank & Trust". Mercury. Retrieved 2024-08-06.
21. Franceschi-Bicchierai, Lorenzo (2024-07-01). "Fintech company Wise says some customers affected by Evolve Bank data breach". TechCrunch. Archived from the original on 2024-08-03. Retrieved 2024-08-04.
22. "Data breach at Evolve Bank & Trust in the US". Wise. 2024-06-28. Archived from the original on 2024-08-03. Retrieved 2024-08-04.
23. Franceschi-Bicchierai, Lorenzo; Azevedo, Mary Ann (2024-06-27). "Startups scramble to assess fallout from Evolve Bank data breach". TechCrunch. Archived from the original on 2024-07-17. Retrieved 2024-08-03.
24. https://www.bankingdive.com/news/evolve-bank-failed-most-basic-duty-stole-customers-lawsuit/727422/
25. https://prospect.org/economy/2024-05-23-fintech-fight-frozen-bank-accounts-synapse/
26. https://www.businesswire.com/news/home/20241019710799/en/Evolve-Bank-and-Trust-Reaches-Reconciliation-Milestone
27. https://www.cnbc.com/2024/11/22/synapse-bankruptcy-thousands-of-americans-see-their-savings-vanish.html
28. https://www.fightforourfunds.org
29. https://www.reddit.com/r/yotta/
30. https://www.fightforourfunds.org
31. "Nacha Releases Top 50 Financial Institution ACH Originators and Receivers for 2022 | Nacha". www.nacha.org. Retrieved 2024-10-20.
32. "Nacha Unveils Top 50 ACH Originating and Receiving Financial Institutions for 2023 | Nacha". www.nacha.org. Retrieved 2024-10-20.
33. "Announcing the winners of The Big Bank Theory Awards 2023". Tearsheet. 2023-05-31. Retrieved 2024-10-20.

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