Uncle Sean's Update - 3/11/22

​Happy Friday!!!
 
Don’t forget to set your clocks forward as Daylight Savings Time begins this Sunday (excluding most of AZ and HI)!  Here is the Uncle Sean Update for 3/11/22:
 

• As expected, February Consumer Price Index (CPI) data came in smoking hot this week.  CPI rose 0.8% in February, and was up 7.9% over last year, the sharpest 12 month increase since 1982.  Core CPI came in at 0.5% for Feb and 6.4% YoY.  Next week is Fed Week (FOMC meeting), and pretty much everything I see points to a 25 bps increase in interest rates as the Fed will likely take a long, protracted approach to tackling inflation due to larger geopolitical concerns surrounding the war in Ukraine.

 

• Dollar General (DG) enters the banking space with their launch of Spendwell banking platform.  Not totally surprised given the recent additions by Walmart (One), 7-Eleven (Transact), and Walgreens (Scarlet).  Uncle Sean gives a breakdown of the services in the spendwell app:
  • There are two card products.  A 1% cash back rewards debit card with a $5 fee (waived with direct deposit) redeemable only on future DG purchases; and a free / no fee debit card.  Both are Visa debit cards issued by MetaBank with no overdraft fees (not allowed to overdraw).
  • Available via mobile app as well as online.  Additional features include Bill Pay, subaccounts, A2A and P2P.  Cash reload at all Dollar General locations for free (minimum add of $20); fees apply at other retail locations. 
    • Did you know that Dollar General has 18,000 locations across 47 states – WOW!!!!  From a footprint perspective, that’s greater than JPM, BofA, Citi, and WF combined.
  • Mobile Deposit Capture is by Ingo Money and First Century Bank.    
  • And as an interesting add - BNPL powered by Sezzle (in beta at 1,700 locations in Texas – keep in mind that Zip is in the process of acquiring Sezzle).

 

• The White House issued the widely anticipated Executive Order on Ensuring Responsible Development of Digital Assets, and there is a lot to unpack.  Thankfully, the White House also issued a Fact Sheet on the EO summarizing the key objectives; and GBBC has a great summary.  Additionally, there are some directives with specific timelines (they will be busy):
  • Treasury Department CBDC Report due within 180 days.
  • Treasury and Labor Department Report on Risk, Opportunities, and Policy Recommendations (consumer focused) due within 180 days.
  • Attorney General Report on Law Enforcement (detection / investigation of criminal activity related to digital assets) due within 180 days.
  • Director of the Office of Science and Technology Policy and EPA Report on Climate Impact (energy impact of crypto mining / distributed ledger technology) due within 180 days.
  • Treasury and the Financial Stability Oversight Council Report on Financial Stability due within 210 days.
  • Treasury Department to establish Framework for International Engagement with foreign counterparts due within 120 days.

 

• The Federal Reserve goes on a marketing blitz for FedNow!  The Fed announced their FedNow Explorer (watch the welcome video).  This is great and I was blown away as I am used to the Fed typically delivering “no flair / ultra-conservative” data tables and narratives, but this is super cool!!!
  • Be sure to check out the Service Provider Showcase with profiles of 70+ service providers supporting the FedNow instant payments including payment processors, core banking system providers, mobile and online banking platform providers, and other segments.  Nicely done!

 

• Huntington National Bank joins the ranks of FIs restructuring overdraft by lowering their OD fees from $36 to $15.

 

• Another CU buying a bank this week…  Arizona Federal Credit Union (Charter #1747; total assets $2.8B) announced an agreement to acquire Horizon Community Bank (FDIC #57411; total assets $539M).  This is the 5th such deal of a CU buying a bank for the year and the 4th in March (source: FedFis).

 

• Better.com (online mortgage lender) is at it again – this time laying off 3,000 employees (almost 50% of their workforce) in a new round of cuts.  This comes just a few months after CEO Vishal Garg infamously and unceremoniously terminated 900 employees in a Zoom meeting.  Somewhat surprisingly, he is still CEO.  

 

• The CFPB and several state AG’s are investigating Block (Square) and its Cash App service specifically targeting Cash App’s handling of “customer complaints and disputes.”

 

• Late last week, the NCUA liquidated Empire Financial FCU in NJ (Charter #22344; 12/31/21 Total Assets $5.1M with a FedFis Rating of 4.67 placing them in the lowest possible percentile of all CU’s).  Jovia Financial FCU assumed the loans, assets and shares.  Empire was previously conserved on 5/24/21.

 

• Zeta (API-ready credit card processing stack for banks and fintech companies) announced a 5-year global partnership with Mastercard where Mastercard will provide support in areas such as fraud detection, risk and loyalty solutions, while Zeta will help customers make card issuance faster and more flexible with its loan-processing and credit technology solutions.

 

• It was a crazy busy week in the world of FinTech funding:
  • Acorns (savings and investing app) raised $300M in Series F round at a valuation of approximately $2B – WOWZA!!!!  This comes just about two months after they terminated their SPAC merger valued at about $2.2B.
  • Zeta (credit and payments processing stack for banks and fintech) raised $30M in equity (round was not disclosed) taking the companies valuation to $1.5B.
  • Stax (payments platform – fka Fattmerchant) raised $245M in an undisclosed funding round at a valuation north of $1B.
  • Axonius (cybersecurity asset management) raised  $200M in Series E funding round at a $2.6B valuation.
  • Propel (software for low-income Americans – check out their Providers mobile app & debit card) raised $50M in Series B.
  • AutoFI (dealership platform for online auto sales and financing) raised $85M n capital (undisclosed round) valuing the company at about $700M.  This latest round will be used to “expand AutoFi’s platform to banks, as well as captive and specialty finance companies.”
  • Branch (instant payout / EWA for contractors & employees) raised $75M in Series C with a stout 700% year over year growth in 2021.
  • Capchase (non-dilutive ARR financing) raised $80M in Series B round.
  • Milo (direct digital mortgage lender including crypto mortgages) raised $17M in Series A funding round.  Milo’s crypto mortgage product alloys customers to leverage their crypto holdings instead of liquidating them (only Bitcoin for now but expanding soon) to invest in real estate where crypto wealth is the qualifier – not tax returns or FICO scores.  Mortgage payments can be made in either fiat or crypto.
  • Chipper (app to help payoff student loans) raised $5.6M in Seed funding as student loan repayments are set to resume starting in May.  Per their blog, Chipper has helped their users save an “average of $309/month and has helped qualified applicants receive a total of $81 million in forgiveness since its launch. The company is currently growing 40% month over month, demonstrating its unique position in the student loan space.”
  • CoFi (construction finance) raised $7M in Seed round to further improve their construction financing platform matching builders with lenders and expediting payment flow as projects progress.
  • Best Egg / Marlette Holdings (credit, lending, and financial wellness platform with a Visa CC coming soon) raised $225M in Series E funding round
  • Stilt (credit builder platform + banking services targeting immigrants and underserved) raised $14M in Series A plus $100M debt facility and announced the launch of Onbo – a “Credit-as-a-Service” solution for startups to build credit products (credit builder, personal loan, line of credit).
    • This is a growing trend / evolution of FinTech that I am seeing across the board.  Essentially challenger banks that have spent years building an interface to a sponsor bank and realizing that the enterprise value isn’t just the consumer interchange revenue, but the API / system of record / KYC platform that they developed – and can now sell that as a white-label solution.

 
 
Random Uncle Sean Stuff:

• We lost Bobbie Nelson this week.  She was 91 years young and had played the piano in her brother Willie Nelson’s band for over 50 years.  NBC News has a good article highlighting the sibling relationship between Willie and Bobbie.
• Happy Anniversary to Aunt Patty and I as this Saturday marks 28 years of marriage!  That’s a long time of her having to put up with my humor (or lack thereof) – LOL!!!!!
• Speaking of bad humor – here are some Dad Jokes to get us into the weekend:
  • Don’t mess with old folks, the thought of life in prison is no longer a deterrent!
  • The next time gas gets down to $2, I think I’ll put some in the deep freezer….
  • When cows laugh really hard, does milk come out of their nose???  And here comes a “Dad Joke Run”:
    • Unless they are laughtose intolerant….
    • Sometimes it can go pasteurize…
    • That was just udderly ridiculous…
    • You may think it’s funny, but it’s snot…  It’s SNOT!!!
    • Okay, I’ll stop now!  😊

 
 
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.