Uncle Sean's Update - 5/2/25

Happy Friday!!!
 
I can’t believe it is May already – certainly hoping the proverbial April showers do indeed bring May flowers!!! 😊🌻🌷  Here is the Uncle Sean Update for 5/2/25:
 
👀 With plenty of eyes on the FOMC meeting next week (5/6-7), here is a quick look at some economic updates this week:
 

• First quarter advance estimate for GDP came in at -0.3% (+0.1% expected, +2.4% prior) - the first negative GDP rating since 1Q2022.  However, a substantial pull-in of imports (negative to GDP) due to presumed tariff concerns impacted GDP by -5.03%.
  • When pulling out many of the Liberation Day anomalies, “Real Final Sales to Private Domestic Purchasers” was 3.0% versus 2.9% in 4Q2024.

 

• The BLS April Jobs Report came in with a solid 177,000 jobs added (138K expected, March was revised down by 43K to 185K; and Feb was revised down by 15K to 102K); and the unemployment rate unchanged at 4.2% (as expected and 4.2% previously).  Yahoo Finance has a good summary.
  • Keep in mind that employees on paid leave or receiving ongoing severance pay are counted as employed – so the full effect of DOGE reductions may not be captured until late this summer (paid administrative leave through Sept. 30).

 
More interesting merger news (and a CU liquidation):
 

• 👉 Another CU acquisition of a bank…  This week it is Frontier Credit Union (Charter 68376; total assets $698M) to acquire First Citizens Bank of Butte (FDIC 22502; total assets $75M).
  • If you are keeping score, this is now the 6th announced CU acquisition of a bank for 2025.  This compares to 22 for 2024, 11 in 2023, 16 in 2022, 13 in 2021, 7 in 2020, and 16 in 2019. Source: FedFis Bank M&A data.
    • 💥 Warning – here comes an Uncle Sean “off the rails” moment with some unsolicited commentary and speculation…  I haven’t seen anyone else post about the financial structure yet, so here goes…
      • “Comparatively speaking”…  This CU appears to be struggling with some asset quality issues in their concentrated indirect automobile loan portfolio.  They have a “relatively” poor liquidity position, high net charge-offs and delinquencies, a comparatively weak capital position in relation to amount of delinquent loans and loan loss allowance, and poor profitability (again, all relatively speaking).  Also carrying $28M in other borrowed funds even though Total Loans/Shares & Deposits is only at 89%.
      • The target bank is an old bank (est. 1977) to have only $75M in total assets – so I am assuming that succession planning is probably a determining factor in their decision to sell.
        • Uncle Sean’s opinion – this is a way for the CU to pick up some cash to help with liquidity (the bank has $18M in cash) plus another $22M in AFS securities (mostly treasuries at 1-3 years per RC-B so this sets them up nicely if the FOMC cuts rates in the next couple of quarters after mark-to-market merger accounting adjustments).  Also allows for low cost deposit grab at 1.75% for IB deposits ($53M worth) as well as a $33M loan portfolio comprised mostly of 1-4 (which the CU is familiar with) that includes a small amount of C&I ($4.6M) – also with mostly short dated repricing tenors.  This also allows the CU to further diversify away from their concentration of new and used vehicle loans – which has been a bit of an underwriting problem.  Worth noting that the target bank is running 7% yield on loans (10% for C&I) with a 4.03% NIM.
          • Don’t get me wrong – I’m all for free markets and I don’t have a dog in the “tax exempt CU acquisition of tax paying bank” fight…  But it does “feel” wrong to lose an FDIC charter to prop up a CU that is struggling with indirect automobile loan performance. 🤷‍♂️
            • 🤔 Maybe CU’s that acquire banks should do so in a reverse merger style and lose their NCUA charter and have to adopt the FDIC charter and taxable status going forward????  Just thinking out loud (which pretty much always gets me in trouble – LOL!!!)…  Send me an email or comment on LinkedIn and let me know your thoughts!!!! 🤙

 

• This one is cool to me a I spent many years running around Central and South-central Oklahoma in my younger days (fond memories for sure; and I love that Arbuckle Mountain area and the CNRA)…  Chickasaw Banc Holding Company (FR 3045721), bank subsidiary is Chickasaw Community Bank (Native American bank; FDIC 11521; total assets $549M) to acquire Oklahoma Heritage Bank (FDIC 22855; total assets $101M) headquartered in Roff, OK (which is just up the road from Sulphur, OK in case you were wondering 😊).

 

• First National Bank of Omaha (FDIC 5452; total assets $31.8B) to acquire Country Club Bank (FDIC 8888; total assets $2.2B) headquartered in Kansas City, MO – bringing together two privately owned institutions with multi-generational family leadership.

 

• Cadence Bank (NYSE: CADE; FDIC 11813 – no BHC) to acquire Industry Bancshares, Inc. (FR 2112439), a multi-bank holding company of Texas banks, in an all-cash transaction “between $20M and $60M” based on Industry Bancshares’ equity capital at the closing of the transaction. 
  • Yes, that’s more than just a little odd; and this Banking Dive article spells it out as “unique.”  Here is some additional detail from call report data (source: FedFis Bank Analyst platform) due to securities portfolio issues (AOCI losses) with the bank subsidiaries that helps to clear up the “unique” nature of the purchase price 😲:
    • Citizens State Bank (FDIC 12501; total assets $1.13B; total AOCI -$206.5M; total equity -$44M)
    • Bank of Brenham, NA (FDIC 57102; total assets $620M; total AOCI -$102M; total equity -$21M)
    • Fayetteville Bank (FDIC 3195; total assets $630M; total AOCI -$116M; total equity -$35M)
    • Industry State Bank (FDIC 12506; total assets $790M; total AOCI -$140M; total equity $7.7M)
    • The First National Bank of Bellville (FDIC 3099; total assets $731M; total AOCI -$124M; total equity -$26.5M)
    • The First National Bank of Shiner (FDIC 5529; total assets $813M; total AOCI -$159M; total equity -$44.2M)

 

• The NCUA closed Unilever Federal Credit Union (charter 5736; total assets $46.7M as of 12/31/24 call report) via involuntary liquidation and discontinued its operations after determining the credit union was insolvent and had no prospect for restoring viable operations.
  • It’s not completely unheard of, but it is somewhat rare that a CU is liquidated prior to going into conservatorship.  Looking back, there have only been 5 examples of this since 2019 (one was fraud) with the largest being $12M in total assets.  Smaller CU’s (less than $50M) can fail very fast.

 

• Flex (personal finance software for business owners) acquires Maza, a finance app designed for Spanish-speaking solopreneurs and consumers in the U.S..  Post closing, Maza will operate as Flex Consumer.

 
Core Processor headlines:
 

• Fiserv (NYSE: FI) processes their first card-based payment transactions under their new Georgia merchant acquirer limited purpose bank charter (MALB).

 

• FIS (NYSE: FIS) announced the launch of its next-generation enterprise treasury platform, Treasury and Risk Manager – Quantum Cloud Edition.  “In addition to leveraging the power of the public cloud, this version of FIS’ treasury and risk management solution offers a new Liquidity Hub module for harnessing data from multiple sources – such as enterprise resource planning systems and bank APIs – to enable cash-management analysis in real time.”

 
Product launches and funding:
 

• Zest.ai announced their AI-automated underwriting and fraud detection platform is now integrated with Temenos Loan Origination solution.

 

• Kraken launches “embed” – its new Crypto-as-a-Service solution allowing for embedded de-fi within trad-fi…  (🤯 Oh my head 😅!!!)  All kidding aside – check out Kraken Embed to see how banks, fintechs and payment platforms use Kraken to launch regulated crypto quickly and seamlessly.  Kraken Embed is already live with Dutch neobank, bunq (which recently applied for broker dealer license in the US).

 

• Square expands banking services to give sellers instant access to their cash flow as well as free and easier ways to manage their earnings.

 

• Fasten launches the Fasten Rewards Visa credit card for auto-related rewards targeting dealerships as a distribution strategy.

 

• Xero small business platform launches US online bill payments powered by BILL.

 

• Notable FinTech funding for the week:
  • Persona (the red-hot identity verification space) raised a $200M Series D round at a $2B valuation – CHA-CHING!!! 💰
  • Thunes (global cross-border payments) picked up a $150M Series D round to supercharge its expansion in the U.S.
  • Fundthrough (invoice factoring platform) raised $25M in Series B and subsequently announced the acquisition of Ampla (small business banking platform including lending).

 
 
Random Uncle Sean stuff:

• We are live – oops, I mean “autonomous” LOL!!!  Aurora Innovation has successfully launched a commercial self-driving trucking service in Texas with the initial route between Dallas and Houston.
• To all my outdoor enthusiast and backyard birders, check out this app - https://merlin.allaboutbirds.org/.  I downloaded this to my phone yesterday and really enjoy it.  It identifies birds by their call / sound  and provides pictures of the birds it identifies – super cool!!!  Special thanks to my friend and colleague, Mr. Rick Boals, for letting me know about this app! 😊 🐦
• And of course some obligatory Bad / Dad Jokes:
  • If time is money, does that mean ATM’s are time machines…??? 🤠
  • Apparently, Humpty Dumpty had a terrible winter…  Which sucks because I heard he had a great fall…  🤦‍♂️🙄
  • Universal parenting knowledge…  You can have kids, or you can have a complete and matching set of silverware.  You cannot have both! 🤣
  • A father noticed that his son was spending way too much time playing computer games, so he said, “Son, when Abe Lincoln was your age he spent his time studying books by the light of the fireplace.”  The son pondered this for a moment and replied, “When Abe Lincoln was your age, he was President of the United States.”  Well played young man, well played! 🏆

 
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.