Uncle Sean's Update - 7/16/21

Happy Friday!!!
 
Here is the Uncle Sean Update for 7/16/21:
 

• This was AWESOME and made Uncle Sean smile – Congratulations to University of Tennessee at Martin for winning first place out of 35 competing universities at the CSBS 2021 Community Bank Case Study Competition.  Check out their winning report - Analysis of TriStar Bank: Serving the Community During a Pandemic and Supporting Diversity, Inclusion, and Economic Fairness.
  • University of Arkansas won Second Place with their report - Southern Bancorp Bank: Serving the Underserved Since 1986.
  • Southeastern Louisiana University captured Third Place with this report on minority owned bank, Liberty Bank & Trust - Liberty: Financial Freedom for All.
    • Huge congratulations to ALL 35 Teams that participated in the competition!  Uncle Sean is very happy to see such interest and great work coming from young people across our nation as we celebrate community banks and the critical role that they serve in our communities!!!!  GREAT JOB to EVERYONE!!!!

 

• The Big 4 Banks reported 2Q21 earnings this week.  Without going into tedious detail (which I will do if left unsupervised for too long – LOL), the headlines at the 50,000 foot level are: 1) continued reserve release reflecting solid economic recovery with Consumer Segment charge-off’s and loss reserves mainly back to pre-pandemic levels – caution remains in industry specific commercial segments; 2) loan volumes are disappointingly flat especially weighed down by less consumer cc balances, but is widely expected to pick up in 2H21; and 3) debit and credit card purchasing volume has been huge.  Here are the Big 4’s 2Q21 investor decks if you want to get weird (like me):
  • JPM 2Q21 Earnings Deck; BOA 2Q21 Earnings Deck; Citi 2Q21 Earnings Deck; WF 2Q21 Earnings Deck

 

• Apple is launching Apple Pay Later as a BNPL feature for any Apple Pay wallet purchase.  Goldman Sachs is reportedly the lender for the platform.  Note that this new offering is separate from the Apple Card 24 month payment plan (0% financing for iPhone and other Apple products only) as it is for ANY Apple Pay purchase.  There are two different platforms for the BNPL platform – first is a four interest free installment plan payable every two weeks, and second is a longer payment plan (undefined as of yet, but presumed to be 12 months) with interest.
  • For the record, Apple Pay is currently accepted at over 85% of U.S. retailers and anywhere that accepts contactless payments. 

 

• Two of Uncle Sean’s favorite top 10 Rock Star Sponsor Banks are making more headlines this week:
  • Cross River Bank (these guys are CRUSHING it) is bringing Fly Now Pay Later airfare financing to the U.S.
  • Serial acquirer and fintech sponsor Blue Ridge Bank announced a definitive agreement to acquire FVCbank in all-stock merger of equals transaction – check out the Investor Deck reflecting $306.6M purchase price with 2.1 year payback.

 

• Square is the latest to announce a proposed bitcoin-focused DeFi platform.  Although the new business unit has not been named yet, it will include Seller, Cash App and recently acquired Tidal businesses.  You can read more about DeFi on Uncle Sean's 7/9/21 Update.

 

• Discover is partnering and investing in Sezzle (BNPL firm) with a $30M investment to “integrating a buy now, pay later solution on the Discover Global Network. Further, a dedicated referral program will be implemented that introduced Discover credit and debit products to Sezzle’s user base.”

 

• PROG Holdings, Inc. (NYSE:PRG), the fintech holding company for Progressive Leasing, announced the acquisition of BNPL firm, Four Technologies, Inc. – terms were not disclosed.  Steve Michaels, CEO explained “Combining Four with Progressive Leasing and Vive Financial, our lease-to-own and revolving credit companies, builds upon our direct-to-consumer growth strategy and delivers an exceptional value proposition to retailers looking to offer their customers additional payment options.”

 

• LendingClub (parent company to LendingClub Bank) settled with the FTC this week with an $18M payment for consumer remediation that does not include any admission of liability.

 

• GreenSky (home improvement fintech loan facilitator) gets tagged with a $2.5M civil penalty by the CFPB and is being required to refund or cancel up to $9M in unauthorized loans.  If you really want to, you can read the entire 5 page CFPB Consent Order here.  GreenSky entered into the agreement with the CFPB without admitting any liability or wrongdoing.

 

• Congratulations to Blend Labs who began trading today (NYSE: BLND).  Shares jumped 11% at the open to $20 giving BLND a valuation north of $4B!!!

 

• Fintech funding updates are smoking hot this week - and includes a slew of new rounds for cybersecurity solutions:
  • Arctic Wolf (cybersecurity firm for SME’s) raised $150M in Series F funding.
  • Virsec (cybersecurity platform using real-time integration to prevent “zero-day” cyber hacks) raised $100M in Series C funding round.
  • AttackIQ (cybersecurity “breach and attack simulation solution” startup) raised $44M in Series C funding to ramp up international expansion.
  • Cybereason (cybersecurity tech platform) raised $275M in Series F late stage crossover financing round led by Liberty Strategic Capital founded by Steve Mnuchin, former U.S. Treasury Secretary.
  • Keep an eye on this one….  Stytch (an API-first passwordless authentication platform) raised $30M in Series A funding.  The article mentions that “Stytch was founded by two former Plaid employees, Reed McGinley-Stempel (CEO) and Julianna Lamb (CTO), who built user authentication features that ‘millions’ use to connect their bank accounts to apps like Venmo, Coinbase and Robinhood. The company was founded on the premise that passwords are no longer secure, and make companies easy targets for hackers and expose them to account takeover risk.”
  • Remote (international HR, payroll, and compliance platform for businesses) raised $150M in Series B with a valuation just north of $1B.
  • Jasper Card (fka Creditstacks) raised $34M in Series A with an additional $100M in receivables financing.  Valuation was not disclosed but Jasper intends to use the funds to “grow its AI technology to further develop its underwriting model and introduce a new line of financial services.”
  • M1 Finance raised $150M in Series E with a valuation of $1.45B and is M1’s fourth funding round in 13 months.  Last $75M Series D was just four months ago. 
  • Railsbank (BaaS neobank) raised $70M in Series B funding.  Valuation was not disclosed, but was “hinted” at the high hundreds of millions per the article.  Proceeds to be used for international expansion, presumably U.S. as part of their Credit Card-as-a-Service platform (Railsbank is based in London).
  • Cardless (Credit Card-as-a-Service platform for digital cobranded card issuance) raised $40M in Series B funding round.
  • Rumored for months now, Revolut (UK Neobank with an expanding presence in the U.S.) finally announced that they raised $800M in Series E funding with a stunning $33B valuation – HOLY COW!!!!!  The previous Series D round was last July 2020 at $580M with a valuation of $5.5B.  Revolut plans to use the funds to expand U.S. presence and product offerings (recall where Revolut has submitted a draft application for FDIC insurance and California DFPI bank charter in March 2021). 
    • A quick look at their recently released 2020 Annual Report shows $306M USD ($222M pound sterling at 1.38 USD conversion) in top line revenue on page 38…..  Which is a valuation of about 108X revenue – DANG!!!!!!  Also of note, Net Loss before OCI is $284M USD ($206M pound sterling) and appears to be getting worse – top line revenue grew by 34% in 2020 while losses increased 93% (yep – that is going the wrong way).  I’m confident that the VC firms involved in the funding know way more than I do regarding Revolut’s future and scalability, but that sure looks expensive!

 
 
Random Uncle Sean Stuff:

• 42 days until college football!!!!
• Aunt Patty and I found the tiniest baby scorpion I have ever seen last night after dinner.  That little baby was about the size of a match head.  Of course we now have to burn the house to the ground, but I digress.  LOL!!!

• And…..  DAD JOKES – They’re Baaaaack!!!
  • What did 50 Cent do when he got hungry?  58!
  • On March 10, 1876 Alexander Graham Bell makes the first phone call ever….  And moments later he was notified that his car’s extended warranty had expired.
  • Last week while buying bird seed, the cashier was shocked when I asked how long it takes for the birds to grow once I plant them….
  • I accepted a position as the head of Old McDonald’s Farm.  Now I am the CIEIO!!!!
  • Staring curiously at a jar of Molasses…….  So what do they do with the rest of the mole?
  • I’m not necessarily stating that I am Batman “per se”, but…..  Batman and I have never been seen together…   Just sayin’….!!!!

 
 
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.