Uncle Sean's Update - 4/1/22

 Happy Friday!!!
 
It’s already the second quarter – how did that happen???  Here is the Uncle Sean Update for 4/1/22:

• A HUGE salute to Tennessee Bankers Association for being the latest community bank association to offer the Bankers Helping Bankers platform for their member banks in Tennessee!  This is how we win in community banking!!!

 

• Some quick macro-economic data for the week:
  • U.S. economy added 431,000 jobs (estimate was 490,000) in March and unemployment dropped to 3.6% (estimate was 3.7%).  CNBC reports that despite the jobs miss, the 1st quarter ended with nearly 1.7 million jobs added.

 

• Check out Plinqit (savings app) announcing they are now integrated with Jack Henry Banno Digital Platform .  We talked about the JKHY open platform a few weeks ago – basically if you are a JKHY bank, you can easily integrate new technologies (such as Plinqit) to your bank through an open platform marketplace.
  • Plinqit is a mobile-first savings platform that that pays customers to learn about personal finance thus driving higher user engagement for financial institutions.  I like it as I am a huge proponent of financial literacy!
    • One more time – “Wealth does not create financial literacy, rather it is financial literacy that creates wealth and ultimately financial independence.” – Uncle Sean 😊

 

• Alkami (Nasdaq: ALKT) announced an agreement to acquire Segment, Inc. for $135.5M in cash.

 

• Yep – it was just a matter of time…  Voyager finds themselves in a bit of a legal battle as securities regulators in at least seven U.S. states are scrutinizing Voyager's interest-bearing crypto accounts as unregistered securities.  The specific states are New Jersey, Texas, Oklahoma, Alabama, Washington, Kentucky and Vermont.
  • Voyager is the firm touting 9% debit card rewards (which we pointed out in the 11/19/21 Uncle Sean Update was really Circle lending spread based on conversion to USDC with no SIPC or FDIC insurance once converted).  Shouldn’t be much of a surprise as we also mentioned in the same update that BlockFI was being scrutinized for the same (high-yield crypto accounts) to which BlockFI ultimately settled for $100M fine with the SEC back in February and pulled the product.
  • To be fair, Voyager responded to the cease and desist orders by stating they are fully cooperating and communicating with the regulators - but they feel that their Earn Program and Voyager Earn Accounts are not securities.
  • Uncle Sean expects to see much more SEC and state regulatory action in this space (high-yield interest earning crypto lending accounts) going forward.

 

• The SEC issued internal interpretive guidance to staff this week stating crypto custody arrangements should be treated as liability on the balance sheet of the custodian, accounted for at fair value, and fully disclose the related risks to investors (shocking, right? – sarcasm).   Kinda makes me wonder how in the heck custodians were reporting this to begin with??? LOL!!!  All kidding aside, I believe this has more to do with the actual disclosures than the recording of a liability (I hope so anyway).
  • If you want to get your inner accounting freak on (like me) – you can read the SEC Staff Accounting Bulletin (SAB) No. 121.
  • Meanwhile, “U.S. regulators remain undecided on how to treat cryptocurrencies, with regulators still discussing new rules for how banks should handle digital assets.” 
    • Hear that sound???  That’s my biological banking clock ticking – LOL!!!!

 

• Paystand (cloud-based hybridized B2B payment platform built on SaaS and blockchain) is launching a DeFi Visa Corporate Expense Card (currently in wait-list mode) with Bitcoin points rewards.  Interesting to me from a corporate treasury perspective if you want to “dip a toe into crypto” in a low risk business rewards standpoint.

 

• MetaBank (very active sponsor bank) announces name change to Pathward as part of a rebranding.  Meta Financial Group, Inc., MetaBank’s public holding company, will also be changing its name to Pathward Financial, Inc. by the end of this calendar year.
  • This comes after Facebook (err Meta) bought the MetaBank names and rights for a cool $60M as Facebook changed their name to Meta to more align with Metaverse.
  • Hell yeah – for $60M I will sell my name too!!!  Any takers?

 

• Hackers steal over $615M in crypto from Axie Infinity’s Ronin Network – OUCH!!!!  The hackers exploited a vulnerability in the bridge between Ronin Network and the Ethereum blockchain.
  • The article does state that cross-chain bridges (i.e. network integration) are “still an area of development”, but I can’t help but wonder if this raises broader questions about the overall security risks of integrating multiple blockchain networks (interoperability)?
  • As bankers, we are more than just a little bit familiar with the risks and perils of network interoperability!

 

• Some familiar bank serial acquirers making moves this week (data source: FedFis):
  • Nicolet Bankshares, Inc. (Nicolet National Bank; $7.7B Total Assets) to acquire Charter Bankshares, Inc. (Charter Bank; $1.1B Total Assets) for $158M per the investor deck (oh yeah - Uncle Sean loves those investor presentations!).
  • Hometown Financial Group, Inc. ($3.6B multi-bank holding company) to acquire Randolph Bancorp, Inc. (Envision Bank; $803M Total Assets) for $146.5M.
  • Seacoast Banking Corporation of Florida (Seacoast National Bank; $9.7B Total Assets) to acquire Apollo Bancshares, Inc. (Apollo Bank; $1B Total Assets) for $168.3M per the investor deck.
  • National Bank Holdings Corporation (NBH Bank; $7.2B Total Assets) to acquire Bancshares of Jackson Hole Incorporated (Bank of Jackson Hole; $1.6B Total Assets) for $230M.

 

• Don’t look for Credit Union acquisitions of Banks in Mississippi anytime soon as Governor Tate Reeves signed a bill into law that stating that, “banks registered in Mississippi can only enter into a merger or acquisition deal with a bank or financial institution that is insured by the Federal Deposit Insurance Corporation (FDIC).”  Banking Exchange has a good summary with links to the actual House Bill.

 

• Here is another one that we wrote about a few months ago in the 10/22/21 Uncle Sean Update where Adyen (international payments giant) used their European Bank license to obtain a U.S. Bank Charter as a Foreign Bank Branch allowing them to operate in the U.S. as an FDIC insured bank.  Well, surprise, surprise, surprise (in my best Gomer Pyle voice), Adyen announced their expansion plans to offer embedded finance and business banking services in the U.S. “without the barriers of regulatory complexity, lengthy product development, or sponsor bank restrictions."  Fortune also has a good write-up detailing the banking services including multi-currency bank accounts, corporate credit cards, short-term merchant cash advances, and instant business loans.
  • Don’t get me wrong – I don’t blame them at all.  In fact, I applaud their approach.  The bigger issue is that I am still waiting to see if this “fintech / foreign bank branch entrance” becomes a trend due to an overly restrictive U.S. de novo process for new bank charters.

 

• Citizens Financial Group, Inc. (Citizens Bank; $188B Total Assets) made a series of announcements this week:
  • Citizens joins the growing ranks of financial institutions offering an Overdraft-Free Checking Account called EverValue Checking with a monthly fee of $5.
  • They also announced the launch of an Earned Wage Access (EWA) program for their corporate clients to give employees on-demand access to their earned pay as an employee benefit.  Additionally, Citizens will be launching Citizens Paid Early™ in the second quarter of 2022 allowing customers to access their direct deposits up to two days early.

 

• Notable FinTech funding for the week:
  • It’s official and I can write about it now…  Cross River Bank (leading BaaS bank, sponsor bank, host of a direct digital bank, payments API leader, and crypto pioneer) raised $620M in Series D funding round at a massive $3B valuation – WOW!!!!! 
  • Outgo (banking solution for freight carriers) raised $3.4M in funding and emerged from stealth to assist owner-operators in the freight industry with a holistic platform including “automating broker setups, invoicing, factoring, collections, accounting, and tax services without contracts or minimums.”  The factoring is cool as it employs a variable rate approach that declines daily based on the number of days financed (I know – it’s about time that became the norm).  There is also an Outgo Business Visa Debit Card issued by Blue Ridge Bank, N.A. that uses interchange to offset factoring fees.  Check them out at Outgo.co.
  • FinPay (patient health financing and literacy platform) raised $15M in growth round (Crunchbase lists this as a Series D) citing revenue growth in excess of 360% over the last two years.
  • Cloaked (consumer identity protection) raised $25M in Series A funding round.
  • Modern Treasury (payments infrastructure) raised $50M as a Series C-2 round bringing the total C raise to $135M (the initial $85M Series C was raised back in October) with a valuation in excess of $2B.
  • Effectiv (AI based fraud and risk mgmt. platform for mid-sized banks, CU’s, and fintechs) raised $4M Seed Round.

 
 
Random Uncle Sean Stuff:

• The Final Four is set!  For the men it is Villanova vs Kansas and UNC vs Duke (separated by just 10 miles in NC, the Tobacco Road Rivalry is widely seen as one of the most intense rivalries in all of U.S. sports).  For the women it is South Carolina vs Louisville and Connecticut vs Stanford.  Should be an exciting weekend!!!
• I don’t really have any cool April Fools stuff – other than the historic BBC Spaghetti Tree Harvest hoax from April 1, 1957.  Now that’s pretty damn funny!!!!!
• And some Dad Jokes to kick off the weekend:
  • When everything is coming your way, you’re probably in the wrong lane!!!
  • Research has shown that laughing for 2 minutes is just as healthy as a 20 minute jog.  So now I’m at the park eating a bag of chips and laughing at all the joggers!!!
  • The word hyphenated has no hyphen but non-hyphenated does.  Hmmm…
  • And lastly, here’s a question for all the mind readers out there……………………….  😊

 
 
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.