u/Kerry_Kittles

The reports of Harrison Barnes buying a bank are a bit overstated. It’s probably more accurate to say that he acquired a bank charter because the bank he acquired is so small. Some details because all banks have to file with the FDIC and you can easily check the Call Report for any bank in the USA:

“Community State Bank” in Paton, Iowa has:

1 branch

$41.4 million in total assets

$34.6 million in total deposits

The typical formula for ROA at a bank is NII / Avg Total Assets - quarterly net interest income as of 2Q was $284k. Annualizing that is about $1.1 million.

1.1/41.4 is an ROA of about 2.7%.

This is actually a really great ROA. Here’s the problems though:

Assets are in decline - -25% off the 2021 highs.

The conversion of ROA to ROE is poor. The bank is essentially overcapitalized. ROE is only 4.7%. This is because the bank runs on a 20% leverage ratio. Basically think of that as running at 5 to 1. For this bank to earn a healthy return (above cost of capital), the bank will need to 2x its leverage ratio and start running at 10-1 at least.

About 25% of total capital is real estate. Thats not too crazy but we don’t know that much about the riskiness of the book and whether or not more leverage makes sense.

The Fed of Richmond indicates “New banks today may need anywhere between $15 million and $30 million in start up capital. It can take months or even years before a new bank is able to turn a profit.”

So basically Barnes is not “buying a bank” … there has only been about 100 “new banks” since 2008-2009 because it’s so expensive to get a charter. The $25 million he is spending … maybe like $3 million of it is for the bank itself (basically half of tangible book value because the returns are so poor and it’s got declining assets. The remaining $22 million is just for that bank charter basically.

It seems highly likely to me given his Silicon Valley connections that he’ll run it as some sort of digital neobank too. So I wouldn’t expect a blitz of new branches. It will be like a tiny Sofi or something.

Now that it’s the offseason, the NBA needs to address a critical integrity of the game issue.

When there’s a last second full court shot, oftentimes, fans, media, players run onto the court BEFORE the ball has landed.

This seems like it’s not a big issue - after all - the ball either goes in or it doesn’t, right?

WRONG!

Per NBA rules, after the buzzer sounds, the ball is still in play until someone touches it. THIS MEANS THAT THE BALL IS STILL IN PLAY IF IT BOUNCES ON THE COURT.

So, under current rules and governance of games, the full court bounce shot is taken away by fans, media, players off the bench, coaches, OR EVEN THE REFS THEMSELVES that catch the ball before it has the chance to bounce in.

This takes away a key aspect of basketball - the full court game winning bounce shot off the free throw line.

This could be a game changing situation in a future playoff game - and it’s not reviewable.

Personally I hope someone fixes this issue. Otherwise they will be fired for this blunder.