Seattle-based First Sound Bank is joining a financial technology company.
Last month, fintech company BM Technologies (NYSE: BMTX) announced plans to acquire First Sound for roughly $23 million in cash. The combined company will go by BMTX Bank, and the deal, which is expected to close in the second half of 2022, will provide BMTX with its own bank charter, eliminating the need for BMTX to run its banking services through a partner bank.
First Sound president and CEO Marty Steele said First Sound will continue serving local customers despite the acquisition and name change. He added that joining forces with fintech companies is a good way for banks to avoid losing customers to fast-moving startups.
"The banking industry is traditionally a conservative and slow-moving industry," Steele said. "I think most of the banks will end up partnering with fintechs."
Steele said First Sound currently has about 20 employees, but he expects the team to at least double that number over the next two years. Steele will become BMTX Bank's COO, and he will remain in charge of the combined bank's community banking division.
BMTX, headquartered in Radnor, Pennsylvania, went public on the New York Stock Exchange through a merger with a special purpose acquisition company in January, before which the company was called BankMobile. The company helps consumer brands create bank accounts. BMTX, for example, powers the T-Mobile Money checking account. BMTX also partners with colleges to create student bank accounts for accepting financial aid credits.
The company says it has about 2 million accounts. Customers Bancorp incubated BMTX and now provides the fintech company's back-end banking services.
BMTX is part of a larger trend of fintech companies shedding the need for a partner bank by gaining their own charter and Federal Deposit Insurance Corp. insurance. LendingClub, for example, acquired Boston-based Radius Bank in February and gained a bank charter in the process. Varo Bank, a startup that was founded in 2015, went a different route and gained approval from regulators in 2020 for its own national bank charter, a process that took about three years to complete.
Steele said First Sound Bank was an attractive option for BMTX given the bank's proximity to T-Mobile in Bellevue. He said that about half of the combined bank's deposits will come from T-Mobile.
First Sound, founded in 2004, offers both business and personal banking. The bank had about $150 million in assets in 2020, according to Business Journal research.
“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,” Luvleen Sidhu, CEO and founder of BMTX, said in a news release.
