Uncle Sean's Update - 12/20/24

Happy Friday!!!
 
Ho Ho Ho!!!! 🎅 This will officially be the last Uncle Sean Update for 2024 as I will be taking a few days off next week for Christmas (fortunately for me I still have several days left before I even begin Christmas shopping – LOL)!  So from our family to yours, we wish you all a very Merry Christmas and a Happy and Healthy New Year! 🎉🍾🙏  Here is the Uncle Sean Update for 12/20/24:
 

• 👀 Another exciting announcement from the Bankers Helping Bankers BHB Fund with an investment in Infinant – exciting times for sure!!! 🚀
  • Infinant is impressive (and highly critical in the BaaS space) in providing financial institutions the ability to “power their digital and embedded banking channels without core replacement” on a single platform under 100% bank-control to satisfy regulators. 💥  Love this!!!

 

• It’s Fed Week!!!  In line with market expectations, the FOMC voted to cut rates by 25 basis points bringing the federal funds rate down to 4.25% - 4.50% (down 100 basis points for the year since Sept); and continues the $60B per month balance sheet reduction in treasury and MBS.  But the mood was increasingly hawkish as the SEP (link provided below) reflects only 2 potential rate cuts in 2025, down from 4 as estimated in Sept with many inflationary data points remaining stubbornly sticky while labor markets and economic growth remain relatively strong.  More detail below if you want to get your “inner Fed freak on” like me 😊:
  • FOMC Summary of Economic Projections (SEP)
  • Chairman Powell’s Press Conference Transcript (27 pages) and video (about 53 minutes)

 

• Meanwhile, the BEA November PCE Report (the Fed’s preferred measure of inflation) gave a bit of good news, albeit extremely slight, in terms of tepid inflation…  The PCE price index rose at a 2.4% annual rate (up from 2.3% in Oct) while Core PCE increased at 2.8% annually (same as Oct), both slightly under expectations of 2.5% and 2.9% respectively.
  • But wait – there’s more!!!! The 3Q2024 GDP (third and final estimate) came in at 3.1% up from 3.0% in 2Q2024 showing a continued strong economy; and thus arming the FOMC with the weapon of patience related to future rate cuts.

 

• The OCC published their Semiannual Risk Perspective - Fall 2024 edition (40 pages).  Not really any huge surprises here (the report reflects data from June 30, 2024).  A few key points:
  • Fraud remains a top concern for the banking system
  • CRE (office and multifamily specifically as not all CRE is created equal) risks remain elevated
  • Cyberthreats continue to evolve in complexity targeting banks; and heightened exposures from key service providers and third parties
  • Other operational risk including “increasingly complex relationships with fintech firms” specifically mentioning BSA / AML a heightened compliance risk in those relationships

 

• Additionally, the OCC published their 2024 Annual Report to Congress echoing much of the same including fraud and “risks associated with third-party arrangements to deliver bank deposit products and services.”  Also specific mention of AI in financial services which is a hot topic these days.

 

• ❤️ Uncle Sean loves this too - Gesa Credit Union (Charter 68278; $5.6B in total assets) launched a direct digital brand called ValorFI Heroes offering high-yield savings, checking, and money market accounts, plus CDs.  Available to current and retired educators, first responders, healthcare workers, law enforcement, veterans, and their supporters – their niche is 501(c)(3) pledged donations with every swipe of the members debit card with proceeds supporting a specific hero group.  Very cool!!!
  • Per a LinkedIn post by Mr. Jeffery Kendall, this looks to be powered by Nymbus – although I am not at all surprised as they are very active in the Direct Digital Bank space (especially on the CU side). 👍
    • That’s right… Direct Digital Banks (err – CU’s) are not just for banks… 🤠

 

• Plug and Play (an innovative incubator type platform connecting banktech with banks) announced a new relationship with The Huntington National Bank (Nasdaq: HBAN; FDIC 6560; $200B total assets) as its newest collaborator in the fintech program – go to plugandplaytechcenter.com/industries/fintech for more info on Plug and Play’s fintech (banktech) innovation platform.

 

• Mesh Payments teams up with SoFi Bank as their new sponsor bank and Galileo (owned by SoFi) for payment processing. 👍
  • I can’t help but feel we will see much more of this SoFi / Galileo bundled service for what looks to be a regulatory compliant embedded finance solution in 2025 as SoFi Bank (FDIC 26881; $29B total assets – up 36% YoY and 42% YoY growth in Equity – source: FedFis) is certainly hitting their stride!

 

• 💪 Plinqit (white-label high-yield and automated savings to help FI’s grow deposits) announced record growth as High Yield Savings by Plinqit surpasses $2 Billion in deposits – HOLY SMOKES!!!!  Congrats to the entire Plinqit Team – keep up the good work!!!

 

• 🤔 Rumor mill (because Chime has not confirmed)…  As reported from Bloomberg, Chime has allegedly submitted a confidential filing for an IPO.
  • Recall last month where Klarna (BNPL) filed a confidential draft registration statement for proposed IPO, but Klarna actually confirmed the filing.

 

• The Federal Reserve Board issued a public enforcement action against Lineage Financial Network, the Bank Holding Company (BHC) for Lineage Bank (FDIC 6100; $214M), largely focused on the BHC maintaining the financial and managerial resources to serve as a “source of strength” to the Bank.
  • Worth noting that the Federal reserve PR mentions, “The Board's enforcement action against Lineage Financial Network is independent of the bankruptcy proceedings regarding Synapse Financial Technologies, Inc.”

 

• And of course it would not be a complete week without a CFPB lawsuit 😬 although this specific litigation was not entirely unexpected (especially if you followed some of the Zelle congressional hearings this past summer)…  This week the CFPB sues JPM. BofA, WF, and Early Warning Services (EWS), the operator of P2P payments platform Zelle, alleging the companies failed to protect consumers from fraud.
  • As an FYI…  JPMorgan, Bank of America and Wells Fargo are among the seven banks that own Zelle, along with PNC, U.S. Bank, Truist and Capital One.  The latter four do not appear to be mentioned in the suit.
    • Payments Dive has a really good summary including immediate pushback from EWS and JPM.  Yep – I expect this to get ugly! 😯

 

• Sixth Street has agreed to buy up to $4B of Affirm's BNPL loans over the next three years.  The transaction creates “the ability for Affirm to extend up to more than $20 billion in loans over the next three years as the company continues to scale its payment network.”  (bold emphasis added by Uncle Sean)  WOWZA!!!!

 

• Notable FinTech funding for the week:
  • Parafin (embedded finance infrastructure) raised $100M in Series C funding round at a $750M valuation.
  • Bureau (identity verification and fraud prevention platform) $30M in Series B round.
  • Leap Financial (Cross-border payments with AI-powered remittances) raised $3.5M in Seed round funding.

 
 
Random Uncle Sean stuff:

• Ole Saint Nick will need to keep an eye out for all those drones / “alien spaceships” (LOL) along the northeast seaboard! 🦌🛷🎅  Be careful Santa – tell Rudolph to go into stealth mode over Jersey, Alabama, and Texas as to not get shot at!!!! 🤣
• And more drone news…  Wing (a subsidiary of Google’s parent company, Alphabet) is expanding its drone delivery service to DoorDash customers in the DFW Metroplex enabling 50 area merchants to make drone deliveries to homes through the DoorDash app.
• 🏈 Congratulations to Travis Hunter for winning the 2024 Heisman Trophy!!!  He is the first full-time, two-way player to win the Heisman since the early 1960’s; and the first defensive player to win the Heisman since Michigan cornerback Charles Woodson in 1997.  By the way…  He is also an Academic All-American sporting a cumulative 3.798 GPA. 💥  Congratulations young man – nicely done!!!
  • Speaking of college football….  Here is the bowl season schedule including the playoff rounds – all in chronological order.
• We made it!!!!  Here are the Dad / Bad Jokes for the week:
  • For the English majors and grammar police (you know who you are 😊)…  If Santa and Mrs. Claus had a baby, what would it be???  A subordinate Claus, of course… 🙄🤣
  • What did Adam say the day before Christmas?  “It’s Christmas, Eve!!!”
    • Oh c’mon – that was a great one!!! 😆
  • If anyone is wondering what to get me for Christmas, tell them I wear a size 6 month vacation! 😉
  • Dear Santa, before I explain…  How much do you know already??? 😬🙃
  • This past year I was able to keep all of my New Years resolutions (tucked away in a journal on the bookshelf…). 🤷‍♂️
  • And last but not least, this one comes in from my friend, Mr. Cal Roberson with Integris (managed IT services - check out their financial institution industry expertise at integrisit.com/industries/financial/):
    • The Weight Watches website just asked me if I accept cookies…  Is that a trick question? 😅🍪  LOL – thanks, Cal!!!

 
 
Have a GREAT weekend; a very Merry Christmas & Happy New Year - and please stay safe!!!  See y’all next year!!! 🤠
 
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.