Upstart Holdings, Inc. ( UPST ) shares are trading higher Wednesday after the company announced Tuesday after the market closed that it plans to apply for a national bank charter.

Upstart shares are advancing steadily. Why is UPST stock trading higher?

National Bank Charter Plan

The company said it plans to submit an application to the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation to establish an insured national bank, Upstart Bank, N.A. Upstart will also apply to the Federal Reserve for approval to become a bank holding company.

Subject to regulatory approval, the charter would allow Upstart to reduce operational, regulatory and financial costs and complexity for the company and its third-party capital sources.

"The time is right to launch the first bank built from the ground up on AI," said Paul Gu, Upstart's Chief Technology Officer and incoming CEO. "Applying for a bank charter is the natural evolution of our business as we’ve grown in size, scale and product offerings."

If approved, Upstart Bank would be able to access deposit funding and lend to consumers directly through a single rate and fee structure.

Upstart Shares Edge Higher

UPST Price Action: At the time of publication, Upstart shares are trading 0.60% higher at $28.33, according to data from Benzinga Pro.

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