Seattle-based First Sound Bank announced it has reached a mutual agreement with BM Technologies, Inc. (BMTX) to terminate its previously announced merger agreement. The Bank will continue to do business as a locally owned, independent community bank, providing commercial and private banking services to its target customer base consisting of small businesses, high net worth individuals, professional service firms, and non-profit entities. Its target market will continue to be King, Pierce, and Snohomish Counties.

Commenting on this decision, Marty Steele, President & CEO of the Bank, said, "When we announced this proposed merger in November of last year, we knew that the regulatory approval process was likely going to be lengthy because of its non-traditional nature: trying to merge a regulated bank with a fintech company. 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. 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."  

Luvleen Sidhu, BMTX's Founder, Chair and Chief Executive Officer, commented, "The prolonged regulatory approval process provided us the opportunity to reflect on our broader strategy to maximize the value of BMTX-serviced deposits in the context of an evolving macro environment. Interest rates and their outlook are materially higher today than last year when the merger was announced. 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. We are working towards a new sponsor bank agreement with variable pricing and improved economics."

BMTX recently signed a letter of intent (LOI) with a new sponsor bank and is working towards a transfer of deposits to the new sponsor bank in the first half of 2023.