BM Technologies Announces Strategic Merger with First Sound Bank

BM Technologies, Inc., one of the largest digital banking platforms in the country, announced the signing of a definitive agreement to merge with First Sound Bank, a Seattle, Washington-based community business bank. BMTX will pay up to $7.22 in cash for each share of FSB common stock or approximately $23 million in aggregate consideration, subject to certain closing conditions and adjustments as outlined in the definitive agreement. The combined company, to be named BMTX Bank, will be a fintech-based bank focused on serving customers digitally nationwide, supported by its community banking division that is expected to continue serving the greater Seattle market. The transaction is subject to regulatory approvals and other customary closing conditions, and is expected to close in the second half of 2022.

Top Globalfintechseries.com Insights: Cetelem Uses DRUID’s Conversational Technology to Simplify the Process of Updating Personal Data

This strategic merger is expected to be significantly accretive to the combined company’s revenue, EBITDA, and earnings trajectory over the next 1-3 years, with financial, operational, and strategic benefits materializing immediately after close and meaningfully growing as the business continues to scale. The transaction bolsters BMTX’s ability to deliver technological and customer centered innovation through a full suite of digitally-advanced banking products in a regulatory compliant, safe and sound manner.

“This is a thrilling milestone for BM Technologies and is a major step forward in executing our vision to create a disruptive FinTech bank that combines the best of financial technology with a strong and compliant FDIC-insured institution,” said Luvleen Sidhu, Chair, CEO and Founder of BM Technologies. “As one of the largest digital banking platforms in the country with approximately 2 million accounts, this merger allows BMTX to lead a new wave of financial innovation by enhancing its focus on technology, inclusion, easy-to-use products, and customer education with the mission of creating ‘customers for life’. This merger is expected to meaningfully expand our already profitable, technology focused business model and will enhance our diversified earnings, as we bring BMTX-serviced deposits onto our balance sheet and generate superior fee-based income supported by interest income economics from deploying those deposits into loans over time.”

“Looking ahead, BMTX Bank expects to add direct to consumer and small business operations, marketplace lending, robo-advisory and blockchain based payment systems to sustain our competitive advantage into the future,” Sidhu continued.

Commenting on the proposed transaction, Marty Steele, President and CEO of First Sound Bank said, “As a local bank, we remain committed to our community and are excited about the opportunity to leverage BMTX’s innovative digital banking technology, Banking-as-a-Service business model, low-cost deposit funding, and better access to the capital markets in order to scale our SBA, commercial and private banking, mortgage, and other business lines. Together we are looking forward to this partnership to create a nationwide deposit gathering and lending platform with the power to deliver an integrated customer experience at the highest level.”

The combined entity will be led by Luvleen Sidhu as Chair and CEO of BMTX Bank, who will also be directly responsible for digital banking initiatives. Marty Steele will lead the combined company’s community banking division and also serve as COO of BMTX Bank.

The company intends to gradually support the onboarding of BMTX-serviced deposits onto the balance sheet with additional capital. These onboarded deposits are expected to be deployed into earning assets, including loans that generate attractive returns, positioning the combined company for long-term sustainable success. “With developments in AI and machine learning coming to market rapidly, we intend to remain a very customer focused and innovative company with a unique strategy that cannot be easily replicated,” concluded Sidhu.

Browse The Complete News About Fintech : Lake Harvest Zambia Joins the Tingg Digital Payment Ecosystem

Potential strategic benefits of the merger include:

• Creates a FinTech bank leveraging BMTX’s best-in-class and proprietary Banking-as-a-Service (“BaaS”) offerings and nationwide deposit gathering capabilities with a bank charter
• Accelerates earnings power by supplementing fee-based income with net interest income
• Offers new products and services over time through an expanded BaaS offering, direct to consumer initiatives, marketplace lending, personal investing and robo-advisory services and blockchain based payment systems
• Attracts new customers and enhances customer retention through the addition of banking products and services that leverage BMTX’s unique, low cost, high volume customer acquisition strategy and marketing strength
• Enables BMTX to support other FinTechs with its banking platform
• Enhances customer value creation and engagement by providing access to lending products and promoting better financial health by helping them manage their cash flow and savings

First Sound Bank is a locally owned, independent community bank providing commercial and private banking services to small to medium sized businesses, not-for-profit organizations, entrepreneurs, and professional service firms throughout the Puget Sound market. FSB operates through a single office location in downtown Seattle.

BM Technologies is one of America’s largest digital financial services platforms with approximately 2 million accounts. The Company focuses on millennials and underserved middle income Americans providing convenient access to a suite of financial products to its customers. BMTX’s proprietary Banking-as-a-Service business model leverages its partners’ existing customer bases to achieve low cost, high volume, customer acquisition. BMTX currently also provides disbursement services at approximately 745 college and university campuses (covering one out of every three college students in the U.S.).

Advisors
Wedbush Securities Inc. initiated the transaction and served as exclusive financial advisor to BM Technologies in connection with the transaction and Nelson Mullins Riley & Scarborough LLP served as its legal counsel. Keefe, Bruyette & Woods, A Stifel Company served as exclusive financial advisor to First Sound Bank and Keller Rohrback L.L.P. served as its legal counsel.

WEBCAST

The company will host a live webcast to discuss the transaction and its third quarter results at 9:00am ET on Monday, November 15, 2021. The webcast can be accessed via its investor relations site (ir.bmtxinc.com) by clicking on “Events & Presentations”, then “Events Calendar,” and following the link under “Upcoming Events;” or directly at Q3 2021 Earnings Webcast.