BM Technologies shakes up its C-suite
BM Technologies is making some unusual moves to right its course after a choppy year and swapping out a bank relationship.
On Monday, the Radnor, Pennsylvania financial technology firm announced that Raj Singh would become co-CEO alongside Luvleen Sidhu, who is CEO and founder of the company.
In a press release, Sidhu said that Singh advised the company for nearly three years and more recently joined the board of directors.
His new responsibilities include “assist[ing] in driving revenue growth and implementing operating efficiencies resulting in improved EBITDA over the next three to five years,” she said in the release.
This appointment follows two other promotions in the top ranks in recent months. In January, BM announced that former chief technology officer Jamie Donahue was elected company president, and Jim Dullinger, chief accounting officer, would also assume the role of chief financial officer.
“The co-CEO and CFO change marks that the board is getting a lot more aggressive and willing to take decisive actions to improve results,” said Brian Dobson, senior research analyst who covers disruptive technologies, at Chardan Capital Markets.
BM Technologies, formerly known as BankMobile, is best known for managing disbursements at colleges and universities and white-labeling the bank account at T-Mobile. It is formerly a unit of Customers Bancorp in Wyomissing, Pennsylvania. Appointing Singh as co-CEO follows several months of disruption at the company. In December, its deal to buyFirst Sound Bank in Seattle was called off. The month before, the companies disclosed they needed to resubmit a merger application to address questions from regulators. In January, BM Technologies announced cost-cutting measures including laying off a quarter of its workforce, which will largely take place over the first half of 2023.
Singh previously spent 20 years at Raymond James, most recently in the role of vice chairman of investment banking. He will receive an inducement award of 500,000 restricted stock units, half of which vest over four years and half of which are performance based .
“His experience with corporate strategy, complex negotiations, mergers and acquisitions, finance and accounting, and capital markets brings both breadth and complementary skill sets to the senior leadership team,” Sidhu said in the release.
Dobson notes that co-CEOs are an uncommon tactic. He finds it is typically a temporary move before the company reverts to a single-CEO model.
“Our impression is that Singh will bring high-quality experience to help guide company strategy,” said Dobson.
There are other positive signals after a rocky few months at BM Technologies. In its fourth-quarter earnings call, the company announced that it had entered a new deposit servicing agreement with the $2.1 billion-asset First Carolina Bank in Rocky Mount, North Carolina, for its higher education business, and a new deposit servicing agreement with Customers Bancorp for its T-Mobile relationship. Both agreements provide variable rate servicing fees.
“Moving to variable rate fee structures is critical for our growth and profitability in a rising interest rate environment,” said Sidhu on the fourth-quarter earnings call. “And the new servicing fee agreements will provide us with a margin increase of more than 100 basis points on our average service deposits from the prior fixed rate servicing fee structure.”
“We see a notable improvement in our outlook for deposit servicing fees as that area should benefit from the agreement with First Carolina Bank (for University business) given Durbin-exempt status,” wrote Dobson in an analyst note.
Michael Diana, a managing director at Maxim Group, observed in his research note that BM Technologies’ “most valuable asset” is its deposit base relating to its student loan disbursement program and its T-Mobile banking-as-a-service program.
“First Carolina Bank’s new DPSA for the student loan disbursement program deposits contains more favorable variable-percentage servicing fees than the existing [Customers] agreement,” he wrote.
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