Fintech, bank abandon acquisition plans | News
Fintech company BM Technologies and Seattle-based First Sound Bank announced the mutual decision to terminate the planned $23 million acquisition of First Sound Bank by BM Technologies, which was announced last year.
BM Technologies board of directors authorized the repurchase of $10 million of shares and warrants as it focuses on its near-term sponsor bank model strategy.
“Interest rates and their outlook are materially higher today than last year when the merger was announced,” BM Technologies founder, Chair, and CEO Luvleen Sidhu said in a statement. “In this environment, we believe BMTX is better situated as a fintech with a sponsor bank without the capital needs and credit risk that an on-balance sheet strategy would entail. We believe this is in the best long-term interest of our shareholders.”
First Sound Bank CEO Marty Steele said he was aware from the start that “trying to merge a regulated bank with a fintech company” would likely result in a lengthy approval process.
“As it turned out, the regulatory approval process was in fact prolonged, which gave us an opportunity to reflect on our broad strategy of maximizing the value of the bank to all of our stakeholders — our shareholders, customers, employees, business partners and regulators,” Steele said in a statement. “Our board and senior management team now believe that continuing to grow the bank and continuing to increase its profitability is our best course of action.”