Evolve Bank & Trust

analysisEvolve Bank & Trust of West Memphis, Arkansas, is a state-chartered member bank of the Federal Reserve System, owned and controlled by the registered bank holding company Evolve Bancorp, Inc.; both are supervised by the Federal Reserve Board and the Arkansas State Bank Department. The FFIEC's National Information Center lists the bank under RSSD ID 592448 and FDIC certificate 1299 and the holding company under RSSD ID 1142411, both at 301 Shoppingway Boulevard. Through its Open Banking Division the bank offered deposit accounts and payment processing to fintech partners, which in turn offered financial products to end users. ^{1 2 3}

analysisThe Federal Reserve's order of June 11, 2024 was addressed to Scott Stafford as the bank's president and chief executive and to B. Scot Lenoir as chairman of Evolve Bancorp and of the bank. Evolve's 2023 investor kit describes Lenoir as founder and chief executive of Evolve Bancorp, who founded the bank in 2004 after running First Mercantile Trust Company, sold in 2000, and Stafford as a former senior vice president of National Bank of Commerce and investment banker with Duncan-Williams; a financial-data profile lists Lenoir as chairman, president and chief executive of Evolve Bancorp and Evolve Financial Group and as a former chairman of the bank. These titles are as stated at each source's date; the record gives no complete management history. ^{1 4 5}

analysisAccording to the CFPB, Evolve signed a Bank Services Agreement with Synapse on or about April 18, 2017, when it was Synapse's only partner bank, and a Master Bank Services Agreement on or about September 23, 2022. Evolve says that, as part of a revised cash management program begun in the fall of 2023, Synapse created Synapse Brokerage and hastily migrated funds away from Evolve to AMG, Lineage and American Bank, which Evolve calls the Synapse ecosystem banks; Pathak says the program was a response to Evolve raising its reserve requirement and withholding interest payments. ^{1 2 3}

analysisEvolve's position on the shortfall is that only Synapse could keep accurate ledgers of each end user's funds and that Pathak's claims rest on demonstrably inaccurate ledgers his company prepared; Pathak blames discrepancies between the two companies' records and Evolve's fee debits. These are competing statements that no court or regulator has decided. Evolve completed its own reconciliation as of October 18, 2024 and began paying end users on November 4, 2024; it declined, citing litigation, to give the trustee reconciled balances, and the trustee wrote that she was disappointed in results that notified some end users of amounts considerably less than the Synapse ledger showed. ^{3 4 5 1 6}

analysisOn June 11, 2024 Evolve Bancorp and the bank consented, without a formal proceeding or adjudication, to a cease-and-desist order of the Federal Reserve Board and the Arkansas State Bank Department, based on examinations in 2023 and 2024 that found deficiencies in risk management and consumer compliance in fintech banking and in anti-money-laundering and sanctions compliance. It requires clearly defined ledger responsibilities between the bank and its fintech partners and bars new fintech partners, products or programs without prior approval. The Federal Reserve said the action was separate from the Synapse bankruptcy; in July 2024 its general counsel told the trustee that it expected supervised banks to return customer funds consistent with applicable law and would continue to monitor Evolve's progress. ^{1 2 3}

analysisIn its parent-only reports to the Federal Reserve, Evolve Bancorp reported net income of about $7.87 million for 2024, including $8.72 million of income from the bank, and a net loss of about $7.39 million for 2025, including a $3.02 million loss attributed to the bank. Over 2025 the parent's equity capital fell from $114.1 million to $107.3 million, its long-term borrowings stood at $51.1 million at year-end, and the group's consolidated assets fell from about $1.81 billion to about $1.29 billion. Both reports name KPMG of Atlanta as external auditor. A business-press report said the bank lost $8.76 million in the first six months of 2025 while keeping its focus on banking-as-a-service. The amounts are rounded from figures reported in thousands, and the parent-only schedule does not show the bank's own statements. ^{1 2 3}

analysisYotta's federal suit accusing Evolve of fraud and negligence was dismissed on February 18, 2026 because Synapse was a necessary party, without reaching the allegations' merits; Evolve had argued that it was entitled to the fees it took. Yotta appealed, and the Ninth Circuit's mandate was entered on the district-court docket on October 6, 2026; the appeal's outcome is not visible in the retained docket. In March 2026 Yotta sued again in California state court, alleging, as reported by the trade press, that Evolve stole millions of dollars from Yotta's customers in a Ponzi or Ponzi-like scheme; no ruling in that case is in the record. Evolve and Evolve Bancorp are also defendants, with AMG and Lineage, in consolidated putative consumer class actions in Colorado, pending at the cutoff with no finding of liability. ^{1 2 3 4 5}

analysisA trade-newsletter headline of September 7, 2025 reported, citing sources, an FBI inquiry into Evolve's fintech program in which Mercury was among the programs under scrutiny for transnational money movement; only the headline and subheading are retained, and the record contains no confirmation from the FBI, Evolve or Mercury and no charge against either company. ⁶