Uncle Sean's Update - 10/22/21

 Happy Friday!!!!
 
This week we are coming at you live from our FI Fintech Roundup in wonderful Fredericksburg – deep in the heart of the Texas Hill Country!!!!  We are winding it down today and It has been CRAZY AWESOME!!!  I know that we will have a ton of updates, pics, and stories coming out next week (I think we broke LinkedIn yesterday, LOL) – but if you missed it this year, be sure to hit us up early (like next week) as this event books up FAST!!!!  One quick plug about our Bankers Helping Bankers product launch  - we did good (shout out to the ENTIRE FedFis Team)!!!!  Uncle Sean is SUPER PROUD to be a part of this; and I am completely stoked about the future of community banking!
 
Don’t forget to sign up here to have the Uncle Sean Update sent direct to your inbox each week (all the cool kids are doin’ it).  Here is the Uncle Sean Update for 10/22/21:

• At the completion of our conference, It is completely fitting that the headline of the week goes to Brian Barnes, Founder and CEO of M1 Finance.  Mr. Barnes proceeded to buy The First National Bank of Buhl (FDIC Cert #5105; Total Assets $30M), a nationally chartered bank.  Worth noting in the M1 blog, the bank was purchased by Brian Barnes and not by M1 as “M1 will ideally own a bank in the future but has work to do before it’s ready to become a bank holding company.”  The assumption of course is that Mr. Barnes will eventually sell the bank to M1 when M1 is ready to become a BHC.  Also of note is that The First National Bank of Buhl is the smallest nationally chartered bank in the U.S. (pricing consideration because it’s not the bank that Mr. Barnes wants – it’s the Charter).  In the interim, it will be interesting to see what M1 products are backed by The First National Bank of Buhl new BaaS sponsor bank strategy.  Uncle Sean feels that this will certainly be a trend going forward.  Let’s take a look at some of the different ways that FinTech companies have obtained a bank charter recently:

• • Adyen used their European Bank license to obtain a U.S. Charter as a Foreign Bank Branch allowing them to operate in the U.S. as an FDIC insured bank
  • Varo Money received their approval for national bank charter through the traditional application process after years of working with the OCC, FDIC, and Federal Reserve and spending hundreds of millions of dollars during the process (including having to put up $104M in capital requirements)
  • LendingClub got their bank charter through the $185M acquisition of Radius Bank and took about a year to complete the transaction
  • Jiko became a bank holding company with the completion of their acquisition of Mid-Central National Bank
  • Square Financial Services also took a “fairly” traditional route for approval of their ILC Bank Charter by applying with the FDIC and the Utah Department of Financial Institutions
  • SoFi recently dropped their application for a national bank charter by announcing an agreement to acquire Golden Pacific Bancorp (although not completed yet) and changing their application from a de novo to a “change in control application”.  Even though SoFi had been granted preliminary approval of their national de novo bank charter by the OCC, they still were seeking approval from the FDIC and Federal Reserve – and SoFi felt the “change in control” method would be a more simple and expedited process (and of course cheaper).
  • Additionally, we have recently seen Opportun, Moven, and Brex withdraw their U.S. charter requests as the de novo application process (that includes a strict written business plan) proves to be more arduous than expected.
    • What’s the punchline you ask?  It’s that a bank charter is one hell of a regulatory and financial moat; and everybody wants one!!!

 

• Tether was hit late last week with a $41M civil monetary penalty issued by the Commodity Futures Trading Commission (CFTC) to settle allegations that Tether “misrepresented to customers and the market that Tether maintained sufficient U.S. dollar reserves to back every USDT in circulation with the ‘equivalent amount of corresponding fiat currency’ held by Tether and ‘safely deposited’ in Tether’s bank accounts.”  The CFTC enforcement order goes on to state that Tether only held sufficient fiat reserves in its accounts to back USDT tether tokens in circulation for a mere 27.6% of the days in a 26-month sample time period from 2016 through 2018.  OUCH!!!

 

• Third Coast Bancshares, Inc. (the bank holding company for Third Coast Bank, SSB, a Texas state savings bank headquartered in Humble, Texas) filed their  S-1 with the SEC to raise up to $75 million in an IPO. It plans to list on the Nasdaq under the symbol TCBX.

 

• Blend (mortgage and consumer loan platform for banks) announced the launch of Blend Income Verification to gather and verify non-traditional income sources (i.e. gig wages) to enable FI’s to make more loans.  Initially available to Blend’s mortgage product but will soon scale to Blend’s other consumer banking offerings.

 

• X1 launches Smart Credit Card to a waitlist of more than 350,000 people in the U.S.  The X1 Card is a Visa card issued by Coastal Community Bank.

 

• Piermont Bank (Sponsor Bank) expands their BaaS offering by launching BancFI, a credit platform to support fintech lending.

 

• TransferMex (Mastercard prepaid GPR issued by Axiom Bank) selects Tern Commerce for cross-border payments to Mexico for $1.

 

• Q2 and NYDIG announce a bitcoin trading solution and publicly announced the signing of Five Star Bank (NY) and UNIFY Financial Credit Union to enable their banking clients and members to buy, sell and hold bitcoin.

 

• Expensify rolls out cards and a free plan for SMB's ahead of their S-1.

 

• FinCEN Report shows that ransomware activity in financial institution suspicious activity reports (SARs) soared in 1H21 and is up 30% for the first six months of 2021 compared to ALL of 2020.  FinCEN identified about $5.2 billion in outgoing bitcoin as potentially tied to ransomware payments. DANG!!!!!!!

 

• Notable FinTech funding for the week:
  • Brex (neo business bank) raised $300M in Series E at a $12.3B valuation just six months from their Series D valuation of $7.4B. 
  • N26 (European based challenger bank) raised $900M in Series E round at a valuation of $9B boasting 7 million clients across 25 countries (U.S. presence is still “coming soon” since Aug 2019, but the U.S. waitlist prompts an N26 Visa debit card issued by Axos Bank)
  • Deel (global hiring, payments, and compliance) raised $425M in Series D funding round at a $5.5B valuation
  • Republic (investment platform) raised $150M in Series B round
  • Alviere (embedded finance) raised $50M in Series B for total funding of $70M since April
  • FTX (cryptocurrency exchange) raised $420M in capital at a $25B valuation.  This is a top-up of their July Series B round.
  • Ando (ESG neo bank) raised  $6M in Seed funding

 
 
Random Uncle Sean Stuff:

• We lost General Colin Powell this week – Soldier, Servant, Statesman, and the epitome of an American Patriot.  A retired four-star general, two-tour Vietnam veteran, former U.S. National Security Advisor, former Deputy National Security Advisor, former Secretary of State, former Chairman of the Joint Chiefs of Staff, two-time recipient of the Presidential Medal of Freedom, a recipient of the Soldier’s Medal, Purple Heart, a slew of peace time military medals, and a family man.
  • The White House issued a Proclamation on the Death of General Colin Powell and ordered flags to be flown at half staff until sunset on October 22, 2021
  • Definitely take a look at this documentary in the Academy of Achievement as well as this tribute in the Military Hall of Honor
  • Lastly, don’t forget to check out this video of Colin Powell and then Vice President Biden back in 2016 racing their corvettes in an episode of Jay Leno’s Garage – now that’s pretty cool!!!  Rest in peace General Powell.
• And a few Dad Jokes:
  • Did you know that the average alligator can grow up to 12 feet?  But personally, I’ve never seen one with more than 4 feet….  Hehehehe!!!!
  • If you divide the circumference of a pumpkin by its diameter, you get pumpkin Pi…. I laughed way too hard at that one!!!!  LOL!!!!
  • What did the Jack-o-lantern say at the Halloween party?  Let’s get smashed!!!
  • What’s the best thing to put in a pumpkin pie?  Your teeth!!!!

 
 
Have a GREAT weekend and please stay safe!!!
 
Uncle Sean
 
 
Sometimes known as Sean Mayo – contact me directly for scope and pricing of custom reports / analysis projects at smayo@fedfis.com | 214-604-6961 – or you can contact FedFis Sales Team at 512-960-0911 | info@fedfis.com #FedFisHasTheData FedFis
 
FedFis, LLC disclaimer – The views and opinions of Uncle Sean are of his own and may not necessarily represent the views, endorsements, and/or opinions of FedFis, LLC – we all know he’s a little bit different; but that’s why we love him.