Uncle Sean's Update - 3/8/24

Happy Friday & Happy International Women’s Day!!!
 
WOWZA – there was a lot going on this week! 😲  So hold on to your hat as we jump right into the Uncle Sean Update for 3/8/24:

• Shout-out to my friends at R&T Deposit Solutions for their proven commitment in supporting community banks through their Bankers Helping Bankers Premier Sponsorship – NICE!!! 🤠🚀
  • "Our partnership with BHB is a natural fit because we both believe in empowering these vital institutions to thrive in an increasingly competitive marketplace”, explains Joe Jerkovich, President & CEO at R&T. “Our cutting-edge technology not only levels the playing field but also simplifies the process, making it accessible for community banks to harness the power of innovation and compete alongside larger counterparts." 💪

• Neural Payments integrates with Lumin Digital to allow Lumin’s financial institution clients to offer a branded and seamless payments experience directly within their own app and website.

• CSI announced a partnership with LinkLive to bring LinkLive’s “essential digital engagement features such as chat, desktop share, and other digital-first features like appointment scheduling and AI-powered ChatBots” to CSI’s digital banking customers.
  • Per the announcement, “existing CSI digital banking customers seeking more information about embedded LinkLive solutions can learn more here. New and existing CSI digital banking customers can explore the LinkLive booth at the upcoming CSI CX24 event on April 14-17, 2024 in San Antonio, TX.”

• Zelle® by Early Warning Services, LLC announced strong growth in 2023 up 28% to 2.9B transactions and $806B in dollar volume with 120M consumer and small businesses using the platform through their financial institution.  Growth is accelerating as 4Q2023 was the largest quarter to date “with users transacting more than $219 billion across the Zelle Network®. That means an average of more than $100 million was sent per hour.

• Galileo expands its relationship with The Bancorp Bank to offer real-time payments using the RTP® network from The Clearing House.

• Unit 21 launched two new AI-powered tools for insights and investigations.
  • Ask Your Data is the “industry-first AI-driven data analysis tool that is uniquely optimized for the financial crime landscape. With its conversational interface, users can dive deep into their data using simple queries, making complex data analysis accessible and actionable.”
  • AI Copilot “epitomizes efficiency in alert remediation. This feature streamlines investigations by pointing out the most relevant data elements, recommending a disposition, and explaining its reasoning in easily understandable language so that analysts can resolve alerts as quickly and accurately as possible.”

• 😬 The CFPB finalized a rule in an effort to ban excessive credit card late fees and reduce the typical credit card late fee from $32 to $8.  Some interesting notes (aside from the fact that the actual doc is 338 pages - whoof):
  • Applies only to large cc issuers (more than 1 million accounts), but this represents more than 95% of outstanding credit card debt
  • This even made the State of the Union Address last night
  • However, the pushback has been far, wide, and swift as many National, State, and Local industry associations have already sued the CFPB to block the bureau from implementing the new rule

• There was a slew of economic data this week (I promise I will try to be brief as I completely geek out 🤓):
  • The February Jobs Report came in at 275,000 jobs added (estimate was 198,000). The key story is that Jan was materially revised down from 353,000 to 229,000 (a whopping 35% miss) and Dec revised down from 333,000 to 290,000 (12%).  As a result, the real story is unemployment which edged up to 3.9% with wage growth negligible at 0.1% for the month and 4.3% over last year.  As always, CNBC has a good summary.
  • The FDIC released the Quarterly Banking Profile report for 4Q2023.  A bit of a “yawner” in many aspects, but recall that from a monetary policy perspective – boring is good!  I always enjoy the summary remarks by FDIC Chairman Martin Gruenberg and accompanying graph for a quick overview.  Some other key points:
    • Continued loan growth (albeit very modest in low single digits); domestic deposits increased for the first time in seven quarters (not surprisingly due to consistent increases in time deposits while non-interest bearing continued to decline); NIM declined slightly by 3 bps in 4Q to 3.28% as CoF outpaced Asset Yields ever so slightly (but still above pre-pandemic NIM of 3.25%), reserves for loan losses increased 11.5% YoY due to increased CC loans and uncertainty in certain areas of CRE (which is almost entirely borne by banks in excess of $250B in total assets); unrealized losses on securities declined (again, not a real surprise if you have been following treasury yields).
    • The number of problem institutions increased to 52 (was 44 last quarter and 39 at the end of 2022), but still historically on the low side as a percentage of all banks.
  • The Federal Reserve released the Beige Book – as expected (another yawner, which is good), economic activity increased ever so slightly overall while consumer spending is showing signs of “heightened price sensitivity” (yep, I can attest to that personally - LOL) with a shift away from discretionary goods.  Labor markets appear to be easing slightly as well.
  • Meanwhile, Federal Reserve Chairman Jerome Powell testified before Congress this week (boy am I glad I don’t have his job – LOL)…  Here are a few of Powell's remarks that caught my attention:
    • “Broad and material changes” coming to Basel III proposal.
    • Interest rate cuts are “likely at some point” in 2024, but cautioning that the Fed would take its time.
    • CRE is manageable and is an issue “we’ll be working on for years more”…  And the issue does not pose a risk to the overall banking system.
      • This next quote really hit home with me as I agree wholeheartedly….  "The pandemic is still writing the story of our economy right now and we should just be prepared to be surprised with the next chapter, as we were with 2023," Powell said.

• Grasshopper Bank, through its partnership with Treasury Prime, to provide banking services to Pocketbook, a white-label embedded financial solution that provides payments, banking and modern business tools to small-and medium-sized businesses (SMBs).

• Airbase (enterprise procure-to-pay purchasing system) selects Sardine to combat payment and vendor fraud.

• Cornerstone Advisors announced they have acquired Maple Street.

• Armstrong Bank (FDIC 2315; $2.5B total assets) selects Digital Onboarding to enhance the customer journey.  “Customers can enroll in direct deposit in seconds, update their default payment methods at multiple merchants simultaneously, sign up for eStatements without logging in, get the right mobile app for their devices, opt-in to email and text messages, and more.”

• It’s official – Fiserv unveils new global headquarters in downtown Milwaukee.

• Real quick….  Uncle Sean typically does not report on publicly traded banks as there are plenty of really good equity analysts out there with a ton of coverage, however – just in case you were in a coma all week….  New York Community Bancorp, Inc. (NYSE: NYCB; parent company of Flagstar Bank, FDIC 32541) announced a $1B+ Capital Infusion from Steven Mnuchin's (former Secretary of the Treasury) Liberty Strategic Capital, Hudson Bay Capital and Reverence Capital Partners.  Former comptroller of the currency Joseph Otting to be new CEO.

• 👀 Personnel moves:
  • Congrats to Jeff Harper as the newly appointed Chief Growth Officer at FIntegrate Technology as FIntegrate continues to deepen their talent bench with industry veterans.
  • ICI Consulting adds a pair a high-profile executives with extensive experience:
    • Dominique Stoeber as Senior Vice President
    • Kevin Mehl also as Senior Vice President
  • Green Dot (NYSE: GDOT) hires Melissa Douros as Chief Product Officer.

• Notable FinTech funding for the week:
  • Synctera raised $18.6M in Series A-1 Extension funding round bringing their total series A to $51.6M (original series A in June 2021 was $33M); and announced the appointment of Leigh Gross as Chief Revenue Officer.
  • Helcim (payment processing platform) $20M in Series B funding to continue expansion efforts across Canada and the US.  Helcim helps SMB’s by only charging the cost of interchange plus 8 cents transparent margin fee.  Cost structure drops as volume increases to as low as interchange plus 6 cents.  Check them out at helcim.com.
  • Argyle (payroll API connectivity) raised $30M in capital consisting of a mix of debt and equity funding.
  • Altro (credit building app) raised $4M in capital in an undisclosed round bringing total funding to date of $22M.

 
 
Random Uncle Sean stuff:

• PSA - Don’t forget to set your clocks forward one hour this weekend for Daylight Savings Time. ⏰
• Dartmouth Men’s Basketball players voted to unionize….  I can’t help but wonder (if this actually works AND if the trend continues) how this impacts “amateur status” for potential Olympians?  Not to mention perceived employer / employee relations between coaches and athletes… 🤷‍♂️
• Yeah – let’s crank out some classic Dad / Bad Jokes to get us into the weekend vibe:
  • Not to brag too much, but cashiers continue to check me out…  😉😎
  • We had a burglary, but all they took was the lamp….  I was delighted….  LOL!!!!
  • Dear Autocorrect, I’m getting really tired of your shirt…  🙃
  • And finally, some Uncle Sean wisdom for this Friday:
    • If you are feeling hungry, chances are you’re probably just thirsty.  So my advice is to drink a pitcher of margaritas and then see how you feel. 🤠🤣

 
 
WHEW – that was a lot!!!!  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.