The Banker Next Door

Episode 253: Social Security Benefits received COLA adjustment, was it enough?

This episode examines several articles from Investopedia, which address the recent cost of living adjustment (COLA) to social security benefits. Was the adjustment enough for retirees? In addition, we look at the Social Security Administration website and an example of the Social Security online statement. Links to both Investopedia articles, the Social Security Administration website, and the online statement and provided below.  
Link: Social Security Benefits Were Adjusted This Week. One Expert Said It May Not Be Enough
Link: Social Security's 2.5% Boost: What Enrollees Need to Know Now
Link: Your Social Security Statement
Link: Online Services | SSA

Episode 252: Review of ICBA's check fraud detection guide

This episode examines the Independent Community Bankers Association (ICBA) new check fraud detection guide. The guide provides solutions available to community banks for detecting instances of check fraud. The guide covers technology solutions, such as software and federal government systems, and operational mechanisms, such as check cashing limits and new account reviews. A link to the guide is provided below.
Link: Check Fraud: A Practical Guide to Altered, Forged, and Counterfeit Checks for Community Bankers

Episode 251: The rise of Private Credit!

This episode examines the rise of Private Credit. Private Credit has become big business on Wall Street, and they are now looking to offload this risk onto retail investors.  What is Private Credit? How did it start? Why is wall street trying to offload these loans through ETF, Mutual Funds, and Bond transactions? Can they do that? This all seems eerily familiar, like we saw this movie in 2007-2009. Anyone remember the movie the Big Short? Links to several articles are included below.  
Link: Wall Street Races to Bring Private Credit to the Masses - WSJ
Link: Private Credit vs. Private Equity: What's the Difference?

Episode 250: OpenAI wants to become a for-profit organization, how does that work?

This episode examines the case of OpenAI as it wants to change from a nonprofit company into a for profit company. OpenAI started as a nonprofit organization in 2015 that wanted to responsibly develop AI as an open-source platform. That all changed in 2019 when the company formed a for profit arm that developed ChatGPT. OpenAI is now valued at $156 billion. It also just completed a $6.6 billion fundraising round. It has two years to turn itself into a for profit company. There remain many legal and ethical hurdles in transforming this company. Links to several articles are included below.  
Link: OpenAI’s Complex Path to Becoming a For-Profit Company - WSJ
Link: OpenAI Nearly Doubles Valuation to $157 Billion in Funding Round - WSJ

Episode 249: What is going on with data-centers?

This episode examines the current debate raging over data centers. This topic is at the crossroads of commercial real estate, big tech, AI, environmental issues, and energy requirements. Data-centers have become big business as big tech needs a massive amount of data to drive the development of AI. These data-centers have gotten massive and require a lot of electricity and water. While there is push back against building data-centers in certain areas, big tech is getting creative in signing deals with energy companies to reopen nuclear power plants and build new ones. Links to multiple articles are included below.
Link: Data-center development boom prompts big questions from residents, lawmakers - The Business Journals
Link: Google Backs New Nuclear Plants to Power AI - WSJ
Link: Three Mile Island’s Nuclear Plant to Reopen, Help Power Microsoft’s AI Centers - WSJ
Link: Amazon Joins Big Tech’s Foray Into Nuclear Power - WSJ

BND: Strategy Room 10-18-2024

The Banker Next Door (BND) weekly live stream show. Strategy Room provides financial news, commentary, top stories in the business world, economic indicators, and all things banking for the week.

Episode 248: Is a CRE concentration a bad thing?

This episode examines an article from Bank Director titled “Capitalizing on disruption: California’s entrepreneurial Five Star Bancorp.” We ask the question is a concentration in commercial real estate (CRE) a bad thing? Five Star Bancorp has a niche in financing manufactured housing. This niche makes up 86% of their loan portfolio and resulted in a value of 682% of its risk-based capital, which is way above the regulatory guidance of 300%. However, the bank’s performance is phenomenal! They have been able to show investors, regulators, and customers that this niche is a strategic advantage, not a major concern. A link to the article is included below.    
Link: Capitalizing on Disruption: California’s Entrepreneurial Five Star Bancorp | Bank Director

Episode 247: M&A update for 3Q 2024 and bank merger review

This episode examines several articles from S&P Global (subscription required). First, we go through an update on 3Q 2024 M&A activity. How are bank deals trending? What is the aggregate deal value looking like? How does the current market compare to the last four years? Second, we look at a recently announced merger between ACNB and Traditions Bancorp in Pennsylvania. We look at the merger process as the deal goes from letter of intent to competitive bid, to initial offer, through further negotiations, and then reaches culmination. In addition, we consider the third parties involved in the transaction, which include lawyers and investment bankers.  

Episode 246: Should you be concerned about your bank board's performance?

This episode examines an article from Bank Director titled “Addressing poor performance in the boardroom.” What should your bank do if you have a board member that is not performing? What tools are available? Should your bank consider performance evaluations, age limits, and term limits? What is the impact of having the same person hold the role of CEO and Chairman on the board? To have a high performing bank, you need a high performing board. A link to the article is included below.
Link: Addressing Poor Performance in the Boardroom | Bank Director

Episode 245: What does a successful core conversion look like?

This episode examines an article from ICBA titled “Helpful tips for streamlining the core conversion process.” What should you know about the ins and outs of going through a core conversion? The article goes through five critical stages. 1) make the decision to convert, 2) calculate conversion costs, 3) have the right internal conversations, 4) evaluate providers, and 5) listen to peers. A core conversion is one of the toughest and most difficult things any banker can go through in their career. A link to the article is included below.
Link: Helpful Tips for Streamlining the Core Conversion Process (independentbanker.org)