Uncle Sean's Update - 6/17/22

​Happy Friday & Happy Father’s Day Weekend!!!
 
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• Shout out to Lineage Bank as the latest community bank to join the BHB Banking-as-a-Service (BaaS) platform!

 

• It’s Fed Week!!!  In a slight pivot from an estimated 50 bps move, although widely expected since the beginning of this week, the FOMC raised interest rates by 75 bps.  The response was, In large part, due to the CPI that came in at 8.6% for May signaling that inflation had not yet peaked.  For the “diehard Fed Superfreaks” like me, you can check out the following:
  • Federal Reserve issues FOMC Statement showing a 75 bps rate increase and quantitative tightening (QT) to remain on track as announced in May (which was $47.5B per month ramping up to $95B per month in Sept).
  • Chairman Powell’s Press Conference Transcript (27 pgs) – note that he mentions the Fed could hike rates by 50 to 75 bps again in July, but will be decided on a meeting by meeting basis.
  • FOMC Summary of Economic Projections (17 pgs) signaling more rate hikes to a median of 3.4% Federal Funds Rate by the end of 2022, 3.8% by the end of 2023, and 3.4% for 2024 (keep in mind that we are now at a benchmark of 1.5% - 1.75% so there is a ways to go). 
    • As always, even though it makes for good press - please remember that the Summary of Economic Projections (SEP) / “dot plot” is not policy or a plan of action, but simply a median of current assumptions based on current economic data as it stands today.  Meaning, the FOMC will pivot as they see necessary based on new data as it comes in.
  • It is worth noting that a 75 bps rate increase is the largest since 1994 (more on that in the Random Uncle Sean Stuff below)…

 

• I watched the stock market this week…  and…  well…  I threw up…  LOL!!!

 

• Frost Bank and Citizens Financial Group (Citizens Bank, N.A.) join the ranks of large FI’s eliminating NSF and overhauling overdraft programs.
  • Frost Bank expands overdraft grace & eliminates NSF fees for consumer banking customers.
  • Citizens announces Citizens Paid Early (early access to direct deposit) and commits to eliminating NSF fees by the end of 2022.

 

• Celsius (crypto lender) freezes withdrawals after a brutal crypto market downturn forced liquidity problems. 
  • Question - How do you stop a Bank Run???  Just tell people “no, you can’t withdraw your funds”…..   Yeah, that should work just fine (sarcasm)….  😲
  • To make matters worse, WSJ is reporting that Celsius has hired restructuring attorneys – yep, this is about to get ugly…  And you can bet the regulators and lawmakers are taking plenty of notes.

 

• C2FO launches CashFlow+ Card allowing businesses to get their receivables paid faster without typical discount fees via direct funding to a Sutton Bank issued Visa card - PLUS a 1% cash back reward on all purchases.
  • I really like this product concept; and those folks over at Sutton Bank continue to do cool things in the business embedded finance / BaaS sponsor arena.

 

• American Express announced the Abra Crypto Card – the first crypto rewards credit card on the American Express network.  

 

• Of course it wouldn’t be a full week without another BNPL mention…..  PayPal extends their BNPL offering by announcing “PayPal Pay Monthly” to give customers a more flexible way to pay instead of having to pay off purchases over six weeks as before – now they can make payments over a 6 - 24 month period….. 
  • Uhh - doesn’t this smell like just a regular credit card to anyone else?  Up to $10K limit, rates up to 29.99% (depending on credit), monthly payment schedule, what am I missing???  Have we gone too far in calling everything a BNPL solution?

 

• VyStar CU and Heritage Bancorporation mutually agree to terminate their merger agreement citing difficulties in obtaining the necessary regulatory approvals in a timely manner.  Per the announcement, “each company will bear its own costs and expenses in connection with the terminated transaction, and that neither party will pay any termination fee as a result of the mutual decision to terminate the purchase agreement.”

 

• Canadian owned VersaBank announced an agreement to acquire Stearns Bank Holdingford, N.A. (FDIC 10160) for USD $13.5M in a bid to obtain a US OCC charter.  The deal provides VersaBank access to US deposits to fund the growth of their Receivable Purchase Program recently launched in the US.  Upon closing, Stearns Bank Holdingford will be renamed VersaBank USA, N.A..
  • Here is a little more about VersaBank’s POS Financing model via Receivables Purchase Program that just entered the US market in March.
  • Note that the BHC, Stearns Financial Services Inc. and the two related banks, Stearns Bank of Upsala, NA (FDIC 9336) and Stearns Bank, NA (FDIC 10988) are NOT part of the merger agreement.

 

• Notable FinTech funding for the week:
  • Kinly (fintech banking app focusing on BIPOC – fka First Boulevard) raised $15M in Series A funding according to Axios (sorry about the paywall).
  • Narmi (digital banking and NAO solution for FI’s) raised $35M in Series B round.
  • Able (AI platform to streamline the commercial loan process for FI’s) exits stealth an announced a $20M Series A funding raise.  Check them out at able.ai.
  • HomeLight (proptech platform) raised $115M in capital consisting of a $60M equity extension of their recent $100M Series D plus $55M in debt financing.  HomeLight also announced the all stock acquisition of Accept.inc in the still red-hot “all-cash offer” arena.

 
 
Random Uncle Sean Stuff:

• HAPPY FATHER’S DAY to all the Dad’s out there getting’ it done!  Now quit loafing around and mow the yard, wash the cars, and grill up some food for everyone!
• I must admit, when I read about 75 bps interest rate hike being the largest since 1994, Uncle Sean immediately took a trip down memory lane:
  • In 1994, I had recently left Sheshunoff and was working at NorthCorp Realty Advisors (actually Crown NorthCorp) as their Cash Accountant in the Contract Department recording cash sweeps and reconciling to financial statements from third-party property management firms.  We were a SAMDA contractor with the RTC and would buy bulk performing asset blocks that had been repossessed (mainly multifamily and CRE).
  • Aunt Patty and I got married that year!  We lived in a tiny rent house near Princeton, TX for $400 per month (had two window units for AC and a propane space heater on the wall for heat).  We had a dog named Cutter.  I had a beat up 1987 GMC S15 pickup with way too many hard miles on it; and Aunt Patty had her infamous navy blue 1982 Pontiac Phoenix LJ hatchback (affectionately named “the turtle”) – a car that we still laugh about today.  LOL  😊

• Shout out to my niece, Laurel Mayo who had a birthday this week – Happy Birthday!!!!  21 again, eh??  Me too Lalo, me too!

• And it would not be a proper sendoff to Father’s Day Weekend without some Dad Jokes:
  • Reaching into a pair of pants and finding money is always a good thing….  Until the person wearing them makes eye contact!!!
  • The #1 surefire way to avoid stress at work is…  Don’t go!
  • One big difference between Mom’s and Dad’s is that if Mom says “smell this” it usually smells nice. 

 
 
Have a GREAT Father’s 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 [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.