Simple, the online banking start-up from Portland, Oregon Pacific Bancorp (OTCMKTS:ORPB) announced along with Banco Bilbao Vizcaya Argentaria SA (ADR) (NYSE:BBVA) (MCE:BBVA) that it had decided to accept an offer from the European finance giant. In an effort to expand its presence in the United States, BBVA will shell out $117 million for the non-traditional online bank. Simple, known for its lack of fees and data-rich transaction platform, will allow it to enter new markets abroad while providing BBVA with roughly 100,000 customers in the States.

Banco Bilbao Vizcaya Argentaria BBVA

Despite the fact that Simple often criticizes the banking structure it’s effectively joining, the company hopes to remain largely unchained as it will continue to manage itself and remain an independent entity.

“The biggest difference from a consumer perspective is that we’re going to have significantly more resources so we can grow faster,” Josh Reich, the co-founder and chief executive of Simple, said in an interview yesterday.

A bank or not a bank?

To call Simple a bank is a bit of a misnomer as it uses Bancorp to “physically” house its customers’ accounts. With the finalization of the deal, those accounts will be moved across the Atlantic to Spain.

According to sources close to the deal, Francisco González, Banco Bilbao Vizcaya Argentaria SA (ADR) (NYSE:BBVA) (MCE:BBVA)’s Chariman became interested in the bank when he heard Simple co-founder Shamir Karkal criticizing the customer service offered by traditional banks.

Apparently, González then sent Karkal a handwritten note to saying that “all banks aren’t bad” and meetings between the two got serious last autumn in Spain.

Simple’s growth potential

Simple is growing fairly quickly. It “opened its doors” in 2009. At the start of last year, the bank had a mere 19,000 customers but recently topped the 100,000 mark.

“Each month it’s growing faster than the prior month. That’s one of the reasons why the bank was interested in us,” Mr. Reich said.

That growth saw over $1.7 billion in transactions from customers using their white card that works like any other debit card.

Though it is not profitable, Simple has broken even, according to a person familiar with the matter who was not authorized to speak publicly on it. The company makes money from interchange fees when customers swipe their cards. One advantage the company has is that it gains most of its customers through word of mouth or referrals, allowing it to spend little on marketing.

BBVA to allow Simple avoid charging fees

“We have, at the end of the day, a very low cost model that is revolutionary from a bank perspective but doesn’t fit the short-term mindset that is common at a lot of venture capital firms,” Mr. Reich said, adding that Banco Bilbao Vizcaya Argentaria SA (ADR) (NYSE:BBVA) (MCE:BBVA) would allow the company to continue to avoid charging fees.

While initial reports suggest that Simple will concentrate its efforts on expansion in the States, the deal will certainly help any future expansion into Europe and beyond.