Uncle Sean's Update - 11/15/24

Happy Friday!!!
 
Only one more full week to go until Thanksgiving Week ☺️🦃!!!!!  But first, here is the Uncle Sean Update for 11/15/24:
 

• The BLS Oct CPI report came in at 2.6% in line with expectations and slightly above last month’s reading of 2.4% with shelter prices continuing to drive the majority of the increase in CPI.  Core CPI remained at 3.3% also in line with expectations.  On a monthly basis, CPI was 0.2% for the fourth consecutive month while monthly Core CPI was 0.3% (also meeting forecasts).  CNBC has a good summary.

 

• 👀 For my community bank friends…  Acceleron Bank (in formation) announced their strategic partnership with Fiserv by integrating Acceleron’s FX marketplace with Fiserv Payments Exchange bringing an end-to-end automated and cost-effective international wire solution designed to benefit community financial institutions traditionally underserved in FX.  A few of the key highlights:
  • Faster Integration: Pre-integrated with Payments Exchange for seamless setup.
  • FX Marketplace Bidding: Multiple correspondent banks bid for each transaction for optimal FX rates (via Acceleron's SmartRoute system).
  • Error Reduction & Speed: Automated processing for accurate, reliable transactions.
    • 👉 Full disclosure – I love ❤️ my friends at Acceleron Bank (in formation).  They are highly intelligent, motivated, and passionate about community banking.  Good people doing good work is ALWAYS a powerful combination! 🚀

 

• Late last Friday, the NCUA conserved Alliance Credit Union of Florida (Charter 67432; total assets $59M).  Alliance has 5,394 members and 2 locations.
  • Although the NCUA did not specifically cite cause for the conservatorship, a quick look at FedFis Credit Union data shows:
    • Alliance has a FedFis Rating of 4.60 as of 9/30/24 placing them in the bottom 1% of all CU’s (yes, we have CU ratings as well 😊).  They appear to be having some loan delinquencies and charge-off’s – particularly in the Used and New Automobile segments. Significant increases in Credit Loss Provision on the Income Statement and increased Noninterest Expenses (specifically Office Operations) have resulted in material losses YTD of $2.4M which has resulted in equity decline to a balance of only $376K.
      • Housekeeping note…  Keep in mind that a conservatorship is not a failure.  The NCUA can place a CU into conservatorship in order to resolve operational problems that could affect that CU’s safety and soundness.  During conservatorship, the CU remains open, members may transact business, and accounts remain insured up to applicable limits.  If the CU is unable to overcome its operational issues the CU can move to merge with another CU, or the NCUA can liquidate the CU.

 

• 😬 While we are on the subject of failures, the FDIC and the OIG released their Material Loss Review of Republic First Bank (FDIC 27332; total assets $5.9B as of 12/31/23).  Per the FedFis write-up in April 2024 from yours truly 😊, “Republic Bank had significant operational performance issues involving duration risk, liquidity, and unrealized losses in the securities portfolio…  Total tangible equity of $101M renders them insolvent when adjusting for HTM Securities at FV.”
  • The Material Loss Review gave the same conclusion in that the bank “could no longer hold its “held-to-maturity” debt securities to maturity, requiring the Bank to reclassify them as “available-for-sale” securities.  Because of insufficient liquidity, the Bank then further determined it was “more-likely-than-not” that it would have to sell these securities before the recovery of the amortized cost, thereby requiring the Bank to recognize significant fair value losses in its net income.  Once this occurred, the Bank became critically undercapitalized for PCA purposes and was closed by the PAoDBS.”
    • Also of note is the direct quote “…the dysfunctional Board and management team was a significant contributing factor to the Bank’s troubled condition, its inability to adjust strategies and address increasing risk, and its eventual failure.” (bold emphasis added by Uncle Sean).  HOLY MOLY that’s got to sting a little bit!!! 😲

 

• Payments flex 💪…  The RTP® network, operated by The Clearing House, continues to break records including:
  • Now averages over 1 million payments per day and set single day records of 1.46 million transactions valued at $1.24 billion on November 1.
  • October record of 31.7 million transactions valued at $25.4 billion, up 6.2% and 9% respectively, from September.

 

• Dave (NASDAQ: DAVE) makes business model changes in light of last week's FTC complaint.  Per the article, the neobank announced compliance-focused changes to its business model during the 3Q earnings call, including a new sponsor bank that was not identified, but stated it was publicly traded.
  • 👀 For what it’s worth…  The legacy incumbent sponsor bank is embattled Evolve Bank & Trust…  Of course no one asked me 😊, but thinking out loud here…   I’m wondering if the new sponsor bank could possibly be SoFi (NASDAQ: SOFI) since Galileo (a subsidiary of SoFi) is currently involved in powering Dave banking products...  Want more strategic intel like this???  Contact our very own Bobby Button and ask about our FedFis FinTech Analytics© database (Uncle Sean loves a shameless plug). 💥

 

• Mastercard launched Mastercard Biz360 in partnership with Hello Alice and vcita.  The Biz360™ platform is a comprehensive digital solution designed to help financial and service providers offer their small business customers a way to consolidate the digital tools they use to run and grow their businesses.

 

• Paychex announced the launch of Paychex Funding Solution to give small and mid-sized business quick access to capital via invoice factoring without needing to be a Paychex payroll client.  Paychex also offers Small Business Loans through Biz2Credit.

 

• Mesa announced the launch of the Mesa Homeowners Card premium credit card that offers rewards focused on homeowners including mortgage payments and home expenses – without an annual membership fee.

 

• Having been anticipated for a while…  Klarna (BNPL) finally announced confidential draft Registration Statement to the SEC for proposed IPO.  Of course, due to the confidential nature of the registration, valuation and share info was not disclosed.

 

• Warrior Rising expands access to capital for veteran-owned businesses through partnerships with Parlay Finance and Live Oak Bank.  Nice!!!! 😊

 

• Grasshopper Bank (FDIC 59113; total assets $871M) partners with EnFi AI-based advanced credit analysis and risk monitoring solutions to boost operational efficiency.

 

• Following a successful pilot launch in April 2024 incorporating Galileo and SoFi Bank, Rapid Finance expands availability of Rapid Access Prepaid Mastercard to all eligible business Line of Credit (LOC) clients.

 

• Notable FinTech funding for the week:
  • Parker (fintech banking services for ecommerce brands) raised $20M in Series B funding round.
  • Affiniti (SMB co-branded credit cards) raised $62M in capital including an $11M Seed Round plus $16M in debt financing (of which $15M has option to upsize to $50M for a total of $51M in debt financing).
  • Talli (digital payments platform for the legal industry) raised $4M in Seed funding.

 
 
Random Uncle Sean stuff:

• It’s here!  The Jake Paul vs Mike Tyson boxing match is tonight Nov 15th at 7:00PM CST live on Netflix (but I expect the actual main fight to start much later).  At 58 years old, will Mike Tyson’s power and supreme knowledge of the sport be enough to defeat Jake Paul at 27 years old?  Reaction time should play a role plus a significant reach advantage for Paul (76” versus Tyson’s 71”) – not to mention stamina.  At Mike’s age, can he still get inside and deliver those powerful uppercuts and hooks with body roll and pivot without getting hit hard by Paul; and will Paul’s relative inexperience be his downfall?  Guess we will see tonight…  Here are some fight predictions from boxing experts.  It’s the classic “young bull versus old bull” scenario…  At some point youth will win out, but it may not be tonight! 🥊
• You can stop scrolling now – you made it to the Dad / Bad Jokes 😊:
  • Did we do it???  Did we save the daylight??? 🤷‍♂️🙃
    • And for crying out loud – how much daylight are they trying to save cause it’s way too dark when I get off work now!!!! 🙄😉
  • I’m not sure what my spirit animal is, but I’m fairly confident it has rabies! 😅🤪
  • What do you call a boomerang 🪃 that doesn’t come back?  A stick… 🫤
  • And last but certainly not least – another PSA from Uncle Sean….  No matter how good the hand soap smells, NEVER walk out of a public restroom sniffing your fingers…. 🤣 😂

 
 
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 [email protected] | 214-604-6961 – or you can contact FedFis Sales Team at 512-960-0911 | [email protected] #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.