These days, as banks jockey for new deposits to remain compliant with regulatory capital reserve requirements, First Carolina Bank has followed a course that sets it apart from many of its counterparts.
 
At the end of January, the Rocky Mount-based financial institution with a branch in Wilmington announced the successful acquisition of Pennsylvania-based BM Technologies Inc. (BMTX). The $66 million purchase is the second step in a strategic process that boosts the bank’s deposits and ensures regulators’ approval.
 
BMTX and First Carolina already had a strong relationship. In December 2023, the two entities took the first step: forging a five-year partnership that brought the fintech’s almost $450 million in deposits under the bank’s umbrella. Those FDIC funds represented nearly 290,000 deposit accounts belonging to college student customers of BMTX’s BankMobile Vibe.
 
Those customers are middle- and lower-income students who receive scholarships or grants – not student loans – paid to the higher ed institution itself. Any money left over after the student’s expenses are paid reverts to the students. BMTX offers those students a bank account and debit card as a way to manage the money.
 
Since financial technology companies aren’t banks, and their deposits aren’t insured by the FDIC, they must find a bank partner for any deposit program. When BMTX’s earlier banking relationship came to an end, First Carolina stepped up. Through the new partnership, the fintech’s roughly $450 million in customer funds became the bank’s brokered deposits.
 
The FDIC categorizes deposits either as core deposits, which come directly from customers, and brokered deposits, which come from third parties. Brokered deposits are potentially less secure and could create a liquidity risk for the bank, and ultimately create problems for the FDIC, according to Peter Gwaltney, president and CEO of the N.C. Bankers Association.
 
Then came a new regulation in 2024 that made First Carolina’s initial agreement with BMTX less agreeable to the FDIC, said David Rizzo, the bank’s Wilmington market executive. The new rule affects how deposits gathered through a third party are viewed. So, the bank’s best option was to acquire BMTX, a transaction announced in October and completed Jan. 31. As a fully owned subsidiary of FCB, BMTX deposits would become core deposits.
 
“Regulators don’t love bank-fintech partnerships,” Rizzo said.  “There have been some examples that paint third-party partnerships in a bad light. We saw some headwinds coming. [The acquisition] alleviated all that.”
 
First Carolina Bank benefits from the acquisition in ways behind the substantial boost to its assets, a jump from $250 million in 2017 to $3.2 billion now.
 
“By integrating BMTX’s digital banking platform with our robust regional banking infrastructure, we're not just acquiring a company—we’re accelerating our digital banking growth strategy and establishing a differentiated market position in higher education financial services,” First Carolina President and CEO Ron Day said in a Feb. 3, 2025 release.
 
BMTX works with more than 750 higher ed institutions across the country; now First Carolina enjoys that reach. Rizzo has been named First Carolina’s higher education sales executive, a newly created post that he will fill in addition to his current role.
 
At least 70 of BMTX's 750 customer institutions are within the bank’s Southeastern U.S. footprint, giving First Carolina the potential of enhanced relationships with those colleges and universities and maintaining as customers the BMTX-enrolled students after they leave school and need loans, mortgages and other banking products.
 
BMTX also can use its financial technology expertise to design new and more streamlined systems for its parent, Rizzo said, adding that the bank will have access to significant data owned by its new subsidiary.