Customers Bancorp spinoff BM Technologies to cut staff by 25%

BM Technologies, the former unit of Customers Bancorp known for disbursing financial aid to college students, announced a major cost-cutting effort that includes steep layoffs.

Radnor, Pennsylvania-based BM Technologies, a financial technology firm that went public in 2021 after it was spun off by Customers, said Monday it would reduce its workforce by about 25% after it called off a deal to acquire a Seattle bank. The failed acquisition of First Sound Bank was originally billed as a bid to diversify and build a national lending platform.

In addition to downsizing its staff, the company said it would also trim expenses elsewhere, including third-party service provider costs.

BM Technologies CEO Luvleen Sidhu said in a press release that the combination of stubbornly high inflation, rising interest rates and the threat of recession this year necessitated steps to strengthen the company's financial foundation.

"The fintech industry is still in its early stages and continues to grow, but market dynamics are substantially different than they were a year ago," Sidhu said. "Companies across the spectrum must adjust to new market realities including the current high interest rate and inflationary environment."

BM Technologies said that the job cuts would largely be made over the first half of 2023, and would save $15 million this year and $18 million in following years. It expects to report $1.5 million to $3 million in charges in connection with the cost reductions, with "substantially all" of them occurring in the first quarter.

Additionally, the company said in the release that it had promoted Jamie Donahue, its chief technology officer, to president. He is now responsible for leading information technology, operations, product and program management, and sales teams. Donahue joined the company in 2020.

BM Technologies also said it transitioned Robert Ramsey, its chief financial officer, to a new corporate development role. The company named James Dullinger, its chief accounting officer, to the additional position of CFO. Dullinger has been the company's top accounting officer since March 2022. 

The company also said Raj Singh, former vice chairman of investment banking at Raymond James, had joined its board.  

BM Technologies' $23 million deal to buy First Sound Bank, announced in November 2021 and originally expected to close in the second half of 2022, was called off in December amid regulatory delays. The companies in November had disclosed they needed to resubmit a merger application to address a series of questions from regulators.