Palo Alto Networks founder seeks to acquire Calif. bank

• Key Insight: Palo Alto Networks founder Nir Zuk applied to acquire voting shares in California-based Liberty Bank, N.A.
• Expert quote: "Investors hope to provide an AI template for the industry and potentially a platform for expansion" through the deal, according to Columbia professor Todd Baker.
• Forward look: The rate of tech entrepreneurs entering financial services through founding or acquiring banks could increase in a friendly regulatory environment.

Nir Zuk, the founder of Palo Alto Networks, has applied with regulators to acquire California-based Liberty Bank, N.A. through the purchasing of shares.

Zuk, an Israeli entrepreneur and billionaire, submitted a request to the Federal Reserve to acquire voting shares of the $442 million-asset commercial bank under the Change in Bank Control Act.

According to a regulatory filing released on Wednesday, he applied "to acquire voting shares of DMG Bancshares, Inc., and thereby indirectly acquire voting shares of Liberty Bank N.A., both of Irvine, California." DMG Bancshares acquired Liberty Bancorp, the holding company for Liberty Bank in August 2022.

The notice did not specify whether the acquisition would be for a majority stake in the company. Liberty Bank did not respond to a request for comment by time of publication.

Zuk is not the first tech entrepreneur to try entering financial services through banking. Erebor Bank, a digital bank launched by a group of tech founders including Palmer Luckey and Peter Thiel, was granted a national bank charter by U.S. regulators in February after receiving conditional approval from the Office of the Comptroller of the Currency last October.

Todd Baker, managing principal of Broadmoor Consulting and a professor at Columbia University, told American Banker that the investment appears to be a "demonstration project" for Zuk and fellow investors.

"By introducing AI-based systems into the operations of a small U.S. bank in a low-risk, small-scale way, the investors hope to provide an AI template for the industry and potentially a platform for expansion," he said.

Zuk founded cybersecurity company Palo Alto Networks in 2005. He served as the company's chief technology officer until he retired last year.

Zuk then co-founded eOS, an agentic-AI platform, and brought the startup's technology to the Israeli digital challenger bank Esh Bank. The digital bank entered a sale agreement with Israeli card company Isracard last month at a reported $130 million valuation.