Uncle Sean's Update - 5/28/21

Happy Friday!!!!
 
Happy Memorial Day Weekend and congratulations to all the graduates as we also celebrate Graduation Weekend!!!  Here is the Uncle Sean Update for 5/28/21:
 

• Yep, I’m sure you heard about it…..  Although originated by Bloomberg, pretty much every major news outlet covered the “007’ish clandestine” rumors related to hidden code within Square’s app detailing plans for checking and savings accounts (this is Uncle Sean yawning)……..  Hey – did everyone forget that SQUARE FINANCIAL SERVICES IS A CHARTERED BANK now????  Of course they will offer banking products and services - C’MON MAN!!!!!!  LOL!   My only question is why in the heck has it taken a year since the charter was granted?

 

• HSBC (the 15th largest bank in the US per asset size of $195B as of 3/31/21) is exiting US retail banking to focus on international banking and wealth management.  The press release stated that they will sell 90 branches out of 148 retail focused branches, HSBUS will retain about 20-25 and repurpose into international wealth centers, 35-40 will be closed.  As part of the retail branch divestiture (pending regulatory approval; financial data as of 3/31/21):
  • Citizens Bank is purchasing East Coast retail and online bank portfolio including 80 branches, 800,000 customer relationships, $9.2B in deposits, and $2.2B in loans.
  • Cathay Bank is purchasing West Coast retail business including 10 branches, 50,000 customer relationships, $1B in deposits, and $800K in loans.

 

• It certainly took long enough, but Joan Brown (80) was sentenced to three years and eight months in prison, five years of supervised release, and ordered to pay $1,016,900 in restitution by United States District Judge Joshua Wolson for her scheme to embezzle credit union funds for which she provided management services through a company which she co-founded (Service Center for Credit Unions).  Joan had previously pled guilty in Sept 2020 to 6 counts of embezzlement of credit union funds and 11 counts of making false entries in credit union records arising from her embezzlement of more than $1 million over several years from six small credit unions that resulted in these CUs failure and liquidation by the NCUA – all of which were liquidated on 4/5/2016.  If you want to geek out even more, you can read up on the NCUA OIG Material Loss Review report issued 2/23/17 that specifically details the fraud.

 

• CNBC published their 2021 Top 50 Disrupter List.  No surprise that FinTech dominates 5 of the top 10 with the likes of Robinhood, Stripe, Brex, Marqeta, and Chime.

 

• Another CU acquisition of a bank (err – 2 banks actually, bringing the total YTD to 4).  GreenState CU (charter 60269; $7.5B in Total Assets as of 3/31/21) in North Liberty, IA announced two bank acquisitions this week – Premier Bank (FDIC 12493; $383M in Total Assets as of 3/31/21) in Omaha, NE and Oxford Bank & Trust (FDIC 9260; $759M in Total Assets as of 3/31/21) in Oak Brook, IL.  GreenState CU is no stranger to bank acquisitions as they acquired 7 branch locations from First American Bank in Iowa back in 2019 which drew the ire of the Iowa Division of Banking, but was ultimately settled.

 

• Blue Ridge Bank, NA (NYSE: BRBS) sure grabbed my attention a lot this week!!!  First as the Sponsor Bank for Aeldra (neo immigrant bank);  Second - I learned that they recently became the new sponsor bank for Bridge (PFM Mobile App) as Bridge also moved from Mastercard to Visa Debit Card; and Third – in less than 4 months after completing the acquisition of Virginia Commonwealth Bank, the systems were consolidated and the new Blue Ridge Bank signs went up (congrats). 
  • Recall back in Feb. where we mentioned that Blue Ridge Bank was the first commercial bank to service both cash and Bitcoin through 19 of their ATM’s via partnerships with  BluePoint ATM Solutions and LibertyX.
  • Cutting edge tech, sponsor bank to fintech companies, AND an acquisitive bank….  You bet that Uncle Sean will be following Blue Ridge Bank!!!

 

• Atomic (payroll API for direct deposit acquisition) partners with Welcome Tech to “enable direct deposits for the nearly 3 million account holders and 9 million community members of Welcome Tech, many of whom will gain access to bank accounts for the first time.”  Recall about a month ago, we talked about Welcome Tech raising $35M in Series B and serving the Hispanic immigrant community through their PODERcard and Saber es Poder (knowledge is power) platform.   Atomic is another great fintech with a single API to enable direct deposit that covers “over 165 unique payroll connections” and  “approximately 65% of the U.S. workforce with a combined reach of 95 million workers.”  It’s nice to see these firms partner together.

 

• Acorns (wealth mgmt investing app) is going public via SPAC merger with Pioneer Merger Corp.  The transaction values Acorns at approximately $2.2B and will trade on the Nasdaq under the symbol OAKS once the deal closes (expected later this year).  Check out the Investor Deck where Acorns discloses 4M US subscribers and plans to grow to 10M by 2025, but is only expecting $126M top line revenue estimate for 2021 while 2019 and 2020 actual revenue was $44M and $71M respectively (yep - that’s another stratosphere multiple).

 

• In case you are keeping score, Robinhood lost their bid to block the Massachusetts state regulators' case against them.

 

• And more FinTech funding updates:
  • Stavvy (digital closing platform in the mortgage and loan servicing space) raised $40M+ in Series A funding round.  Valuation was not disclosed.  Funding to be used to fund the company’s aggressive hiring initiative (headcount grew over 400% last year).
  • Snapdocs (another digital closing platform in the mortgage space – seeing a trend yet?) raised $150M in Series D funding round bringing total funding to $260M and a valuation in excess of $1.5B.
  • Resolve (spinoff from Affirm) raises $60M.  The article refers to Resolve as a B2B Buy Now Pay Later (BNPL) platform.  Not to belittle Resolve or their capital raise (which is very cool and impressive) – but isn’t “B2B BNPL” just a Factored Supply Chain Finance solution where the invoicing business gets paid quickly (i.e. factoring – for a fee of course) and the purchasing business is granted extended payment terms (i.e. supply chain finance)?  I guess “B2B BNPL” just sounds a little more hip!!!   
  • Tilled (start-up payments facilitator “PayFac-as-a-Service”) raised $11M in Series A funding round.  Valuation was not disclosed, but Tilled plans to use the funding to grow from 15 employees to 50 by the end of the year.
  • SpotOn (SMB cloud-based integrated platform for POS, payments, brand building, data analytics, etc.) raised $125M in Series D funding launching them to a$1.875B valuation.   
  • Zeta raised $250M in Series C with a valuation of $1.45B.
  • Forter (e-commerce fraud prevention) raises $300M in Series F funding for a $3B valuation.

 

• And lastly – Uncle Sean almost always refrains from commenting on rumors until they become fact…..  But…..  CNBC is reporting that Klarna is close to finalizing another funding round valuing the BNPL firm just north of $40B led by SoftBank - CHA-CHING!!!!  The exact amount of the funding round was not disclosed, but estimated to be less than the $1B that was raised just two months ago in March (that round valued Klarna at $31B). 

 
 
Random Uncle Sean Stuff:

• Phil Mickelson becomes the oldest major champion ever, at the age of 50, after winning the 2021 PGA Championship in spite of the 200-1 odds against him.  I’m not really a golf fanatic, but this is a very cool story.  CBS Sports has a good write-up here.

• Only 92 more days until college football!!!!  WOOHOOO!!!!!!
• Congratulations to our son Parker as he graduates high school this weekend.  Mom and Dad are proud of you young man!!!!  There is a slight chance of rain (outdoor venue), but a 100% chance of some Momma tears from Aunt Patty.

 
 
Have a GREAT Memorial Day 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.