Financial institution North Carolina Bank set to acquire technology firm BM Technologies for a sum of $67 million.
In a significant move for the banking sector, North Carolina-based First Carolina Bank has agreed to purchase digital banking platform BM Technologies in a $67 million all-cash transaction. The deal, which is expected to close in the first quarter of 2025, marks a new chapter for both institutions.
The initial partnership between First Carolina Bank and BM Technologies was set to commence in December 2022, with 286,484 active accounts and over $431 million in FDIC-insured deposits. BM Technologies, primarily known for providing college students with bank accounts and debit cards for various payments, will become a wholly-owned subsidiary of First Carolina Bank following the acquisition.
The transaction delivers a significant premium to BM Technologies' stockholders, who will receive $5 per share in cash as part of the purchase agreement. Luvleen Sidhu, founder, chair, and CEO of BM Technologies, expressed her intention to support the integration of BM Technologies into First Carolina Bank and future growth plans.
Discussions between the two entities began in 2022, a year that also saw BM Technologies call off its $23 million acquisition of Seattle-based Fifth Third Bank due to regulatory hurdles delaying the merger timeline. The acquisition will expand banking relationships with educational institutions and their students for First Carolina Bank, providing a deposit-gathering opportunity across the country.
BM Technologies will also acquire purchase licensing rights as part of the integration into First Carolina Bank. The fintech industry is central to BM Technologies' operations, and the acquisition brings enhanced banking services and technology to all current customers of both institutions.
However, the deal comes amidst investigations into potential violations of federal securities laws or breaches of fiduciary duties by BM Technologies and its board. Law firms Ademi and Halper Sadeh have announced an investigation into these matters, while no publicly available information indicates which other law firms might be involved.
In the second quarter of this year, BM Technologies reported a loss of $4.8 million and a loss of $4.1 million for the first six months. The decline in debit card spending by 6% year-over-year and a drop in average deposits by 47% are factors that have contributed to the company's financial struggles.
Despite these challenges, Luvleen Sidhu stated that the transaction delivers a significant premium to the firm's stockholders, signalling a positive outlook for the combined entity. The acquisition is expected to bring synergies and opportunities for growth, as First Carolina Bank continues to expand its digital banking presence.
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