8/31/26 Social Security, Scams & Smarter Banking

The Moneywise Radio Show and Podcast Monday, August 31st BE MONEYWISE. Moneywise Wealth Management I "The Moneywise Radio Show & Podcast" call: 661-847-1000 text in anytime: 661-396-1000 website: www. MoneywiseGuys.com https://www.moneywiseguys.com/ facebook: Moneywise_Wealth_Management https://www.facebook.com/moneywiseguys/ LinkedIn: Moneywise_Wealth_Management https://www.linkedin.com/company/moneywise-wealth-management-bakersfield/ Guest: A. J. Antongiovanni, President/CEO of Mission Bank website: https://www.missionbank.bank/ The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision. A. J. Antongiovanni & Mission Bank are not affiliated with nor endorsed by LPL Financial or Moneywise Wealth Management

• 0:00Speaker 00

  Live from the basement inside the historic Woolworths Building in downtown Bakersfield.

• 0:05Speaker 01

  Call or text in at 661-396-1000.

• 0:29Speaker 02

  Securities offered through LPL Financial, member FINRA/SIPC. Investment advisory services offered through LPL Financial. LPL Financial and MoneyWise Wealth Management are independently owned and operated.

• 0:37Speaker 00

  Now, let's start the MoneyWise Show.

• 0:41Speaker 01

  Welcome to the MoneyWise Show. We are live from the basement of the historic Woolworths Building in downtown Bakersfield. For the next hour, you are on News Talk 96.1 and 1230 AM KERN, streaming live at MoneyWiseGuys.com. You can call or text into the show 24 hours a day at 661-396-1000. Today, we are your hosts, I'm Sammy Abiyawi, joined with?

• 1:05Speaker 03

  Frank Lee.

• 1:06Speaker 01

  Frank Lee.

• 1:07Speaker 03

  Hey Sammy.

• 1:07Speaker 01

  Welcome to the show.

• 1:08Speaker 03

  Hey.

• 1:09Speaker 01

  Excited to have the show with you today. We've got a bunch of good listener questions. They're always good, keep them coming. But we also have a very, very good guest coming in later. And I'm just excited to be here with you in the same room.

• 1:23Speaker 03

  I am too. We are the dynamic duo.

• 1:26Speaker 01

  That's right.

• 1:26Speaker 03

  Yes.

• 1:27Speaker 01

  The dynamic duo.

• 1:28Speaker 03

  Yes, we are.

• 1:29Speaker 01

  DD.

• 1:29Speaker 03

  Yes.

• 1:31Speaker 01

  That's our new stuff for the show, Stephen. Double D. Double D.

• 1:38Speaker 01

  Let's start with the market, Frank. How are we doing today?

• 1:40Speaker 03

  Yeah, let's take a look. So a little bit of red to start off the Monday, start of the week, but up for the month. I think that's where a positive note for a lot of Wall Street's heads are right now. But for now, Dow Jones down about 65 basis points, S and P 500 down 48 basis points, NASDAQ 44, and Russell 2K 85 basis points. So that's where we're at right now at the hour. We still have about 50 minutes or so until the market close, so who knows?

• 2:11Speaker 01

  Yep, definitely. Who knows? In the meantime, we have some listener questions that I would like to address. I'll read the first one.

• 2:18Speaker 03

  Okay.

• 2:18Speaker 01

  My mortgage payment is only around 1,800 per month as I am on a 30-year and don't have much debt. But with the high cost of gas, groceries, and everything else, how much should I really be putting back each month? Am I maxing out? I am maxing out my 401K, but the more I hear about social security, I would like to not work for 45 years and not be able to retire.

• 2:47Speaker 03

  Yeah.

• 2:48Speaker 01

  Very good question. I think there's two segments to this question. First, the question about social security and not being able to retire. Let me just explain, I think, some of the things that we're talking about as far as social security. When we hear social security not being able to service us as retirees, if you retire in the future, the talk is, it's running out of money, right? It's running out of money. And let's dive into why is it running out of money? Or at least, why do people think it's running out of money?

• 3:27Speaker 01

  We don't have as many people going into the workforce as many people retiring. So the way it works, social security, so people put in, like I'm putting it away, you're putting it away, your mom, your dad, whoever, right? So the retirees are pulling some of that while we're building and it's just, that's how the fund works.

• 3:51Speaker 03

  Yeah.

• 3:51Speaker 01

  Right?

• 3:51Speaker 03

  Yeah.

• 3:52Speaker 01

  But it doesn't mean that it's going to run out of money. If you look at the trends, yes, there is that fear. But we also are working, as an economy, we're working on bringing in back jobs. We're bringing back manufacturing. We're, as long as we keep creating jobs in our economy, the fear should be less, in my opinion.

• 4:17Speaker 03

  Yeah, so to dive into that just a little bit more, I think to your point, there is a dichotomy when it comes to social security and how that really is manufactured. Social security, the way it works, the main part of it is that we have to have enough people working in the workforce. Because if you look at your payroll, your pay stub, you'll notice a certain portion of it going into social security. Well, that portion has helped funding the current retirees.

• 4:43Speaker 01

  Correct.

• 4:44Speaker 03

  The issue that we're facing right now is the social security trust fund running out of money. That's the main headline.

• 4:54Speaker 03

  Because over the course of the years, how social security's been built, they've been putting it into this trust fund, and that's what's been helping pay for a lot of retirees.

• 5:04Speaker 03

  But there's been some issues along the way, which we won't get into. But with that issue, what economists are projecting is that if nothing is fixed, if the trust fund isn't alleviated or relinquished or solved, there is a projected haircut across all social securities going forward in 2033 or 34. So if Congress doesn't do anything to help fix this issue, we're expecting at least 20% reduced social security. So, you know, just think about it, if you're bringing in like $1,000 per month, that's 20% haircut across all.

• 5:46Speaker 01

  Yeah.

• 5:47Speaker 03

  That's the issue. But to run out of social security completely, it's, I think, it's a misnomer.

• 5:55Speaker 01

  Correct.

• 5:56Speaker 03

  Misunderstanding.

• 5:56Speaker 01

  And now, the first part of the question is about, you know, gas prices versus how much to put away. And to me, yes, there is truth. I just filled up my truck and it hurts.

• 6:11Speaker 01

  It hurts, like 100, almost 100, and I have a diesel truck. And it's, you know, some of my buddies, if they're listening, they have gas stations. I'm sorry, but I don't go, I go to Costco, man. It's cheaper. I'm sorry, it's cheaper and I get the points on the car. I mean, it's just like, it's a much better setup. And to me, that's what we need to be looking at. So when we start, you know, talking about a long-term thing like mortgage versus what I see as a short-term problem we have in the gas, at the gas pump and groceries, two different things.

• 6:52Speaker 03

  Yeah, yeah. And I want to circle back on that 401K because this individual is doing a good job of saving.

• 6:58Speaker 01

  Yes.

• 6:58Speaker 03

  Now, if it was a different story of like, I'm not putting much into my 401K and I have all this debt and bills, and that's a different story. But with you maxing out your 401K and if you're getting a match on that 401K, you are definitely ahead of the curve. Because that does work in your favor over the course of, you know, 10, 20 years, depending on.

• 7:20Speaker 01

  I'll take advantage of the fact that you're here, you're our financial advisor, right?

• 7:23Speaker 03

  I think, yeah, yeah.

• 7:28Speaker 01

  I just want to make sure, man.

• 7:31Speaker 01

  So as an employee, I'm putting money away in the 401K. My employer is matching. As an employee, what should I be doing in addition to just putting money away?

• 7:40Speaker 03

  Yeah.

• 7:41Speaker 01

  Because that's, like, I have a sister and I say, hey, what are the funds that you use in your 401K? She's like, I don't know.

• 7:48Speaker 03

  Yeah, yeah, yeah.

• 7:49Speaker 01

  You know, that to me is, we could do more, right, Frank?

• 7:53Speaker 03

  There's a great question to that. So when it comes to a lot of the investment portion, let's get that out of the way. Typically, you don't have to really do much in terms of selecting. 401Ks do a great job of having a QDIA, which is the, no, I'm not, DQIA.

• 8:13Speaker 03

  Oh my God, no, I'm getting that mixed up. Anyways, it is the default qualified investment alternative, meaning that if you don't make a selection, they're going to put you in a target date fund. That target date fund is appropriate for every participant because it gauges when you're starting to work, when you're contributing into that plan, and when you're expected to retire.

• 8:33Speaker 01

  I see.

• 8:34Speaker 03

  So it's going to allocate the assets appropriately for that individual. So when you do get closer to retirement, you're not having a lot of volatility in the market. There's no, it's like a 50-50 blend. You don't have much market exposure. So that's how target date funds work. In terms of the 401K itself with this individual, there could be some other alternatives that we can do rather than just maxing out the traditional 401K side. Because a lot of 401Ks now, all of them should, have a Roth 401K available to them. So without getting into the specifics and not really knowing what this individual's background is, that could be an option for them to look into.

• 9:19Speaker 03

  But overall, what I would say about this person is to understand exactly how much money you need, right? How much are you going to have the same amount of expenses when you go into retirement? Is it going to be less? Is it going to be more? I think those are some of the key metrics that you need to find out first in order to see whether or not you need to be saving as much. Because it could be that this individual's 30, maxing out their 401K, which is great, but maybe you don't need to be maxing out your 401K. Maybe that can go into other things.

• 9:48Speaker 01

  So scenarios differ based on the individual?

• 9:51Speaker 03

  Yes.

• 9:52Speaker 01

  Stage of life, work, whatever.

• 9:54Speaker 03

  Yeah, goals and what you want to do. So I think that's what you need to ask yourself first before you get into this. Because it could be, the scenario could be that, yes, you actually can retire in X amount of years, but.

• 10:08Speaker 01

  Great, great answer. I guess he is a financial advisor after all, Stephen. Um, we have one more question before we go on a break. I would like to tackle this one. Have you guys ever talked about money maxing? I heard about about it this morning on the news, but haven't he ever heard of it? Figured it is some type of a new trend. Our friend, Big Al.

• 10:32Speaker 04

  And I did meet Big Al this weekend.

• 10:33Speaker 01

  Oh, you have?

• 10:34Speaker 04

  At the, uh, at, at, uh, the diner.

• 10:37Speaker 01

  Oh, you, when you came here.

• 10:38Speaker 04

  Brunch, exactly. I was, it's weird. I know we talked about running into clients or friends of the show. I was actually, uh, leaving the bathroom after washing my hands and he said, Stephen?

• 10:51Speaker 01

  How did he recognize you? Is it your dolphin hat? Dolphin hat?

• 10:54Speaker 04

  He said, hey, it's Big Al. And I was like, oh, nice to meet you.

• 10:59Speaker 01

  That's awesome, man. That's, that's what the luncheonette does. And that's basically, it's, it's working its, its purpose, which is.

• 11:04Speaker 04

  It's magic.

• 11:05Speaker 01

  Yeah. I mean, a community hub. That's exactly why we have the luncheonette. And that's why we're open on Sa- Sunday, because we wanna make it an even bigger hub. But and extend and extend it to Sundays. And we've, I, I was happy.

• 11:18Speaker 04

  I love breakfast.

• 11:19Speaker 01

  Oh, my God.

• 11:20Speaker 04

  And when I saw that the brunch up at the diner, I was like, okay, we gotta try this. Yeah. So fresh, man.

• 11:27Speaker 01

  It is so good. It's, the quality is so good. It's just, just warms my heart, really.

• 11:32Speaker 03

  When you guys bring in breakfast burritos, man, I'll be here every morning.

• 11:35Speaker 01

  Oh, it's, it's. Our breakfast burrito on Br- on Sunday is really, really good. Like the eggs are fluffy.

• 11:41Speaker 04

  Pastrami, avocado.

• 11:44Speaker 03

  Don't get me started, man.

• 11:46Speaker 01

  Well, yeah, we are open on Sunday for brunch. So yeah, stop by and try us. Uh, so going back to, to, to money maxing, Frank.

• 11:56Speaker 01

  I, Big Al, if you're listening, this is something we've always talked about at the show, but we didn't call it money maxing. We just called it something else. We call, we, for me, I call it being part, do budgeting. Make sure that you don't have multiple, multiple, uh, subscriptions to video streaming. You only need one. Uh, you, you, you don't, you don't need the Louis Vuitton. You can, you can, you, Michael Kors is fine, you know? So those are some of the things that we've always talked about on the show. And I think now it's becoming, we, we, we should have been the ones.

• 12:33Speaker 03

  Yeah, it's, it's, so it is, uh, cause I, I looked it up and for, uh, our listeners out there, let me give you a quick, a quick description. So money maxing is a financial trend, cultural shift that encourages people to take control of their money by creating everyday habits that lead to long-term financial success. It's about being proactive, resourceful and creative to get the most of your income without necessarily living with less. So, yeah, I mean, it, in a, in a nutshell, we, we kind of do talk about it inadvertently. Like this, this is money maxing, but we've never really coined it money maxing.

• 13:06Speaker 01

  Yeah.

• 13:06Speaker 03

  All right. Uh, so I, I think to your point, yeah, we, we, we do talk about it, um, as financial, as vi- financial advisors. Uh, this should be the, the, the main thing that we talk about. But.

• 13:18Speaker 01

  All right. We're gonna take our first break. When we come back, we have, uh, uh, our guest, A.J. Anton Giovanni. President, CEO of Mission Bank. We'll be right back.

• 13:33Speaker 01

  I did not know A.J. sent his, uh, list, music list ahead of the show.

• 13:39Speaker 01

  Welcome back to the Money Wise Show. I'm Sammy Abia. We're here with Frank Lee. We are joined by A.J. Anton Giovanni, President, CEO of Mission Bank.

• 13:49Speaker 04

  Sammy, this brings back great memories. One of my best friends in high school, and I'm still friends to this day. Uh, and his main thing was like back when you had a tape or a CD. I think he only had one. It was Run DMC. So it was like on repeat every time we drive somewhere.

• 14:05Speaker 01

  That's amazing. Well, welcome to the show. Um, I'm very, very excited to have you here today. A.J. is my former boss for our listener, listeners.

• 14:13Speaker 04

  Sammy, everybody knows we were all working for you.

• 14:17Speaker 03

  Right? Sammy has that presence when he walks in.

• 14:19Speaker 04

  We did work together for many years.

• 14:21Speaker 01

  Yes, many, many years.

• 14:22Speaker 04

  And you can always come back.

• 14:23Speaker 03

  Yeah.

• 14:25Speaker 04

  There's still a chair there with your name on it.

• 14:28Speaker 01

  You hear that, Frank?

• 14:28Speaker 04

  That'll be a different show. That'll be a different show.

• 14:31Speaker 03

  Yeah.

• 14:31Speaker 01

  Well, well, welcome to the show. Uh, we got a, a lot of things I wanna talk to you about today, but one of the hot buttons that, that we have, we at Money Wise, but also in the banking in general is, is fraud.

• 14:43Speaker 04

  Yeah.

• 14:44Speaker 01

  And, and, and fraud is rampant. It's happening. There are victims. One of the things we've recognized and we see is even if it's happening and taking place, a lot of the time it's not reported.

• 14:54Speaker 04

  Right.

• 14:55Speaker 01

  Right?

• 14:55Speaker 04

  Hundred percent.

• 14:56Speaker 01

  And, and, and you've mentioned a couple of examples when we're off air. I just wanna just talk to our listeners and, and talk about this subject because it's, it's happening. A lot of it is happening.

• 15:07Speaker 04

  Yeah, it's, it's, uh, it's huge. It's on the rise in the banking industry for sure. All the banks are dealing with it. The, the federal agencies, the regulators, Federal Reserve Bank, they're organizing working groups and, uh, different industry associations are coming together. Figure out what can we all do? And now with AI, I think that exacerbates it. Just because of all the reasons why AI makes everything else easier, it makes fraud easier. It's also helping us on the detection side too. So there's always this battle between us and the, the criminals.

• 15:35Speaker 01

  The good and the bad.

• 15:36Speaker 04

  The good and the evil. Um, so there was one example that came out in the Wall Street Journal. It was a couple of months ago, but it's a very great example, cause this has happened to numerous customers that we know of. But like you said, we can't disclose that. We're not gonna disclose that. But this one was public because it was in the Wall Street Journal. It was a municipality. Uh, it was a beach town in, uh, South Carolina. And what happened there was one of their, uh, vendors got hacked. So it's not the city that got hacked. Their, their vendor was compromised. Uh, criminals were inside their network. So they have access to all their emails without being detected. The city was undergoing a big project, uh, a, a construction project.

• 16:19Speaker 04

  So this hacker figured out that they owed a certain contractor $500,000, $496,000, half a million dollars. So they initiated an email to the city to request payment, but they put in their own ACH information.

• 16:36Speaker 01

  Oh, wow.

• 16:37Speaker 04

  So they said, and, and it looks totally real because they're sending it as if they are the customer and they have the history of emails. So they have all this context of people and names and little inside things that you would only know if you knew these people, right?

• 16:50Speaker 03

  Yeah.

• 16:51Speaker 04

  So they're very sophisticated. They're very smart. They send it in, say, look, we've changed banks. Uh, you owe us this 496,000. Please send the ACH to this bank account wiring or, uh, routing number. The city sends it off. They, they feel like they paid the vendor. They don't find out until about several weeks later, when the contractor, small business owner who needs that $500,000 calls and says, excuse me, city, but can you pay me? You're late on your payment. Well, they look at it and say, no, we already paid you. We paid you six weeks ago. Here's evidence of the ACH going through. And then obviously that, you know, turns into it was fraud. And so now the criminals have a half a million dollars.

• 17:32Speaker 04

  The contractor is still out. They don't know what to do. The city, as, at the time of this article, had still not paid the small business owner. So he's out the money, cause he's already spent it, right? He's already put the materials in, the labor. And now the city doesn't know what to do and they've sent the money out. So if they pay a second time, that's a half a million dollars out of their budget that obviously that's a big number that they weren't planning for. So that very specific type of fraud has happened to numerous, I wouldn't say numerous, but several customers of Mission Bank where it's not them. It's not our customer getting hacked. It's their vendor.

• 18:04Speaker 01

  Vendor.

• 18:05Speaker 04

  And then they're initiating these fraudulent requests for payment.

• 18:08Speaker 01

  In this case, the, the vendor is this, uh, like, when I, when I do bill pay, I, I, I I pay, but the check comes from the third party.

• 18:17Speaker 04

  Right.

• 18:18Speaker 01

  Is this like what, what you're talking about? This third party vendor potentially could be, uh, at risk?

• 18:24Speaker 04

  Um, no, in, in the system, this was, this particular payment was sent out via ACH. Or if you were doing bill pay and a third party is cutting a check, it would, it would be the same thing. It's just the check is going to a fraudulent account. You think you're paying the correct account, um, and the name's correct.

• 18:42Speaker 03

  Yeah.

• 18:43Speaker 04

  Right? Now in bill pay, that most likely would not happen, especially when you're using like utilities, right? So you go in there, you pay PG&E or you pay Spectrum. All of that is in the system. So the fact that you would get this email saying to reroute it would never happen, right?

• 19:00Speaker 01

  Yeah. $500,000 for a small business is, is just, just crazy.

• 19:04Speaker 04

  That's huge.

• 19:05Speaker 01

  Huge.

• 19:05Speaker 04

  I don't know this. I mean, I only know what's in the article, but for, for a lot of small businesses, that could be a hundred percent of their profit for the year.

• 19:12Speaker 01

  A lot of these hackers, I mean, to you now, are, um, for, foreign hackers?

• 19:17Speaker 04

  Yeah, what, what is, is kind of known out there. I mean, in any certain situation, you don't necessarily know for sure, but, uh, you know, the cybersecurity experts are out there dealing with this kind of thing and there's very clear trends. And, and a lot of it is state-sponsored, uh, or state-sanctioned hackers in certain countries. Um, I know, you know, one of them that we found out about, uh, was, you know, suspected to be, uh, a Russian, uh, organization. And, and so they're very sophisticated and they're very well-funded.

• 19:49Speaker 01

  Yeah. Looks like it after five, receiving $500,000.

• 19:53Speaker 04

  Yeah.

• 19:53Speaker 01

  Can you imagine how many $500,000 they hit? Like?

• 19:57Speaker 04

  Yeah, I, I can't, I, a lot.

• 20:00Speaker 01

  Yeah.

• 20:00Speaker 04

  Numerous, numerous. And, and like you said earlier, is nobody really knows the number. Cause most of these go undetected or you, you really never trace it back to one specific group.

• 20:13Speaker 04

  So I don't know if you guys are familiar with the dark web, but all this stuff is.

• 20:17Speaker 01

  I'm not, A.J., I'm not.

• 20:18Speaker 04

  Well, I have to get my other computer out for that. No, but, uh, we, like I said, we, we're, we're always trying to do our best and, and working with different organizations to prevent fraud, research and find out stuff. And so I just know from these, these experts that get involved when there's been an incident that, um, on the dark web, that's where you find all this information. It's, it's fairly public. It's, it's funny. They know the different organizations, cause they'll have seen the fraud. They go, oh yeah, I worked on this one. This, this looks like so and so. And they have a name.

• 20:48Speaker 04

  So they, they get to know these organizations, even though they're still somewhat lurking in the shadows.

• 20:54Speaker 01

  Yeah, it's something that, uh, we, I'm, I'm glad you, you're here today to talk about this because for us in the financial advisory world, it's happening as well.

• 21:03Speaker 04

  Yeah.

• 21:04Speaker 01

  And, and people are being taken advantage of, especially the elderly, the retirees. So.

• 21:09Speaker 04

  Yeah, hundred percent. It's like you said, especially on the consumer side with, uh, with elderly and, and it's so easy. And, um, there's a few things we can do that we can talk about too, to just do our best to combat it.

• 21:20Speaker 01

  Well, there you have it. When we come back, we're gonna keep talking about fraud and things that we can do when we come back.

• 21:43Speaker 01

  That's right. Wake up. Be careful. There's frauds out there. Welcome back to the Money Wise Show. I'm Sammy Abiarwood. Frank Lee. We are joined here with A.J. Anton Giovanni, President and CEO of the last remaining bank headquartered here in Bakersfield.

• 22:00Speaker 04

  Wow, that's right.

• 22:01Speaker 01

  Do you feel pride when I say things like that?

• 22:04Speaker 04

  Oh, 1,000%. Oh, 100. No, I really do. I mean, there's a famous APG and he was the founder of Bank of America. It was called Bank of Italy when it first started and he had this saying that if you drive to a town, and this is in the 30s, 40s, 50s, and every little small town had a bank. And he said, look, if the bank goes away, the town's going to go away. So obviously banking is vital to our economy and I think the fact that in the United States, we created this dual system where you have very, very large banks, Wells Fargo, Chase, B of A, that are trillions of dollars in assets. And then you have the mission banks of the world and other community banks, I think is one of the geniuses and definitely having that in any local economy

• 22:46Speaker 04

  is important. And so the fact that we're the only one here in Bakersfield, we're very proud of that because like I said, I think it just helps our communities grow and be prosperous. And I don't think you're going to see the pace of new banks starting up, which you used to see for various reasons.

• 22:59Speaker 01

  Yeah, I mean, it's, it's, it takes a lot of money. It takes, it just takes a lot to start one. And, and, and one of, some of the things I want to talk to you about later is, is just talent is one of the things. But I want to continue on this fraud conversation and Frank, I think, asked the question about what can business owners or individuals, like some of the triggers that they can pay attention to?

• 23:23Speaker 04

  Yeah, absolutely. So we're exclusively a business bank, right? And so we're really focused on that. And that's where you have larger dollars, right? Consumer fraud can be big to that individual, but it's a thousand, maybe five, 10,000. This, we're talking about hundreds of thousands of dollars. So one, a huge red flag, and it occurred in the example we were talking about, is when you get a change of bank account information, send your payment that you've been sending to this, this entity, right? You've been paying this vendor for, for however long, and then there's a request to change. So anytime you get a change notice, a request for change, that to me is a red flag. And what you need to do is somebody at your organization needs to call and hopefully a number that you already have, because they'll spoof websites, they'll spoof phone numbers on emails.

• 24:06Speaker 04

  And hopefully you have a relationship, somebody that you can actually talk to and really personally identify them and ask them the question. If this municipality had done that, there was no way they would send that out, right? They'd say, I mean, this local, if you read the article, I mean, it's a small town with, with 10,000 people or something. I mean, everybody knows everybody. They know this contractor. And so if they had called, he would have said, absolutely not, I didn't change my bank account information. And they would have stopped. So I think that, that is a huge red flag. Also on the business side, check fraud, just traditional check fraud where you steal it out of the mail and wash it and change the route or change the payee number is really rampant. And so the best thing we can do is something called Positive Pay where the, our customer,

• 24:50Speaker 04

  the Mission Bank customer sends us a file every day, uploads the payee, name, the dollar amount and the check number. So every check has to reconcile. And if any of those three are off, it kicks it out. And it catches, we, we have not had an instance of fraud that wasn't caught and actually became a loss if a customer is on Positive Pay. So that's the best thing that, that I know to do as far as a business owner for check fraud and ACH. But if you set up a new ACH based on a request, that's not going to catch it, right? Because you thought that, the municipality thought they were paying a real bill to a real customer to their regular account. So those are the two things I think about.

• 25:32Speaker 01

  You, you mentioned Boss Pay or Positive Pay. When I was a banker, one of the things I faced dealing with clients, oh man, it's, it's, it's an extra step for my day. But the, that's not the answer in my opinion, because if you do not have Positive Pay and you do get engaged or in fraud or fraudulent activity, you have to close that account and reopen.

• 25:53Speaker 04

  Right, right.

• 25:54Speaker 01

  And then that just takes away from your business, takes away from, maybe you have to reset all these ACHs and what have you. So Positive Pay has always been something I've been a fan on because it reduces the risk substantially.

• 26:07Speaker 04

  Yeah, we're dealing with local businesses, right? Some are very large businesses doing hundreds of millions, not hundreds of millions, but tens of million dollars in revenue. Some of them are two, three person operations, right? Very successful. But this is an additional amount of work that you have to do. And so that is really the only reason why I think a, or a business owner would not do it is because of that additional workload, which is real. So there is an additional step there. You have to spend time every day. It doesn't have to be a lot of time, but you have to do it. And what I say, Sammy, is to your point, if you actually get fraud, then you are going to have an additional workload to, to deal with, changing accounts and all that. But the other issue is we all need to fight the criminals, right?

• 26:49Speaker 04

  Because in some cases, the customer loses their money, right? That's happened to Mission Bank customers, unfortunately. I don't want to see that. In some cases, Mission Bank takes the loss, not the customer. Well, that's our money, which I don't, I don't want to lose. Or the other bank takes a loss. But the winners are all these, are always the criminals, right? And so it just, it's, it's really like I said, the best thing that we can all do. And it does take a relationship. You have to work together because the bank can't do it without participation from the business owner.

• 27:20Speaker 01

  Great advice, you guys. If you have any questions regarding this subject, please keep them coming. I want to, I want to move on from the fraud because it's scary, very, very scary. And I want to talk a little bit about some fun stuff, especially around Mission Bank. Again, the last remaining bank headquartered here in Bakersfield, local board, a lot of local talent. And how are we doing? How are you doing with, with, with that? Like I, I faced a challenge at Money Wise, financial advisory, just find talent. You want to start it? You want to go and get it from somewhere, but it's not readily available.

• 27:55Speaker 04

  Yeah, I agree. Well, there's a couple of things. One is we have invested a lot of money, time and energy into our own internal training programs. For relationship managers, I can tell you stories. You know, some of these people, they start entry level. Some cases right out of college. Sometimes they've had other jobs, but not in banking. And within two years, they have their own portfolio and they're making a very good salary, bonus potential. And then it just goes up from there. And so that's something that we're really, we're really proud of. And there was a time, I think, when being a commercial banker was not, it wasn't too glamorous, right? If you went into the financial world, if you're graduating with finance degree,

• 28:40Speaker 04

  you want to be an investment banker and private equity, there's these buzzwords. But I think it's, it's coming back in favor. And like I said, we have several examples, people that I can point to at Mission Bank. And like I said, they, they now have careers that are supporting families. So it's, it's, it's really cool.

• 29:00Speaker 01

  So, so you said training, which banks typically, like back in the day, Bank of America, Wells Fargo, the large banks had training programs, right? That was kind of like the pipeline for commercial bankers. But they don't anymore.

• 29:13Speaker 04

  No, not the same type of training.

• 29:15Speaker 01

  And for a bank, I mean, you're a $2 billion bank. You're, you're not that small, but you're not that big either. It's a substantial investment from your end in talent. Yeah. How is, I mean, I know you give some example and it's working and stuff. Is that something, that's the plan going forward? We're going to, you're going to continue on that?

• 29:34Speaker 04

  Yeah, absolutely. We're going to keep doing it. So the relationship manager and then the business banker, those are the two key roles for us because they, they are the ones that are interfacing with the customer. And that's, that's who pays all of our paychecks. Nothing happens till a customer writes a check. So that's our focus. But then internally in back office roles, finance, accounting, compliance, centralized operations, IT, all those areas, we're doing similar. It's more broad-based management training. We will pay for people to go out and get specific technical training in, in whatever their discipline is, compliance or IT and those kinds of things. But it's tough and we want to be a place that people want to work.

• 30:17Speaker 04

  So at least within Bakersfield, if we're known for that and we can attract talent. And so far, it's worked really well. We have a couple fully remote team members where they're working in Phoenix or in the Bay Area. And that's because there's a, it's a very technical area. Typically that person won't be a supervisor of a team. And so that's one way because of everything we know now with virtual and, and everything that we can expand our, our reach. That's a double edged sword because you get somebody that's good, but we like it when people are together. We think that that is one of the best ways for us to collaborate, make better decisions, be more creative, really get the benefit of our culture, which we think is important in that development.

• 30:59Speaker 04

  If you're working out of your home office every day and you're in Phoenix, then there's something you're missing. And so we want to do that in certain areas, but we, our goal right now is to keep that fairly limited.

• 31:12Speaker 01

  Yeah, that's, that's the advantage of your size, but also the way you, you do business is how nimble you are in your decision making. And I faced that myself. I mean, in my consulting days, when I left the bank and I became a consultant, my relationship with Brian Isley, for instance, you know, one phone call. Yeah. One phone call away and the loan gets either, I can do it or I cannot do it.

• 31:32Speaker 04

  Right.

• 31:33Speaker 01

  It does not take 10 different steps.

• 31:35Speaker 04

  Right.

• 31:36Speaker 01

  And that's probably, in my opinion, one of the best things that, that you have as a bank.

• 31:43Speaker 04

  Well, you know, banking Sammy is largely a commodity, right? Our dollars are the same dollars as Bank of America. Our loans, sometimes the terms or rate can be a little bit different, but it's all pretty standardized because we're all regulated and there's competition. So one of the very few things we can do to be different is what you said, have a one-on-one relationship, somebody who actually knows you, not just because you can call them and say hi, but they know your background, they know your history, and they're qualified to make a decision. They've been trained and that's the training that nobody's doing anymore, right? So if you're calling somebody at another bank and they've had training, it's usually sales training, right? So they're, they're selling you something, they're good at that. But as far as making a decision, especially on a, on a loan or credit,

• 32:27Speaker 04

  then they're packaging information and sending it to another person or another area where they are really trained to make those decisions. So we're, we're doing it kind of old school where our bankers are trained to be knowledgeable and, and they can, you know, be an advisor, truly. Because if the answer is no, we should tell you why. And hopefully if we're making the right decision and you trust us, you know, that should be something that you think about. And very least, quick, we'll do it quickly. And if there's somebody else out there who'll make a loan allows you to go move on to that option quicker.

• 32:59Speaker 04

  Awesome.

• 32:59Speaker 03

  We had a quick question about Mission Bank. Um, I, I think you mentioned this earlier, but just wanted to get this out. Uh, does Mission Bank open to locals for personal use, like a checking or even a savings for teenagers? They've been using current schools for a while, but they weren't sure with Mission, uh, if they only did business banking.

• 33:18Speaker 04

  Yeah, our focus is on business banking. On the lending side, it's a hundred percent. So if you want to auto loan for your teenager, we, we just, it's actually in our policy, we won't make that loan. Because it's a consumer based loan, the rules are different. On the checking account side, yes, we do that. So typically if somebody's coming in and opening an account at that level, it's probably because their parent or relative or somebody they know is a business owner, or maybe one of the key employees at a business. And so we have that relationship and, and then we're, you know, we're, we're very happy to do that for, uh, for the teenager. So, um, yeah, my kids all had checking accounts and debit cards in the, in junior high. So they had to support Mission Bank too.

• 34:01Speaker 01

  I don't know if it was you or someone else, uh, that, that, uh, when their kids came to the bank, they were like, I want to see where my dollars are.

• 34:10Speaker 01

  That was very, very cute, you know, it's like, I want to see my dollars. I know I have dollars here, so let's take me to the vault and show me exactly where they are.

• 34:15Speaker 04

  Yeah. They, they thought they all had a cubby hole with their name on it. Yeah.

• 34:22Speaker 01

  Well, I, I want to talk a little bit, if, if, if you have any more questions about this.

• 34:26Speaker 03

  Oh, no, no, no.

• 34:26Speaker 01

  I, I want to talk a little bit about artificial intelligence, AI and the world of banking.

• 34:30Speaker 04

  Yeah.

• 34:31Speaker 01

  I'm very familiar with it upstairs in the world of financial advisors.

• 34:34Speaker 04

  Right.

• 34:34Speaker 01

  But in the world of banking, how is that affecting you? Let's just start there.

• 34:37Speaker 04

  Yeah.

• 34:38Speaker 01

  Are you using it today?

• 34:39Speaker 04

  Yeah. Yeah, absolutely.

• 34:41Speaker 01

  And, and every aspects of the bank, I'm going to assume, and like certain aspects more than others?

• 34:45Speaker 04

  Yeah, well, I don't know, because we have a number of people and we just did an internship program, which is actually really cool too. We've hired a number of people out of internship programs, but we had these, uh, mostly college age, uh, uh, you know, interns, and they were able to implement real AI tools that streamline operations. And in one case, I saw their presentations, um, in, in a centralized operation, there was a repetitive task happened once a month. And it was getting data, reviewing it and doing something with it. Anyways, it was very somewhat manual, still done in Excel and did some digital format. It wasn't like we're printing it and marking up paper, but they took a process that we estimated took, uh, forty five minutes, every week and made it into three minutes.

• 35:30Speaker 01

  Using AI.

• 35:31Speaker 04

  Using AI.

• 35:32Speaker 03

  Wow, forty five to three.

• 35:33Speaker 04

  Yeah, forty five minutes to three every week of the year. So multiply that by fifty two weeks, and that's the amount of time savings that we got out of this thing. And this is an intern, you know, he didn't work at a bank until a month ago.

• 35:45Speaker 03

  That's smart.

• 35:46Speaker 04

  Yeah, yeah, they're really smart. What's that?

• 35:48Speaker 01

  Did you hire them?

• 35:50Speaker 04

  So I don't know that we had a spot open, but, uh, I can tell you this, I went to the intern day and we had sixteen interns. And I didn't realize how many we had. And I, I was doing the math, I'm like, that's one tenth of our total, like employee base.

• 36:04Speaker 03

  Sixteen interns.

• 36:05Speaker 04

  Yes, we, we don't even have a hundred and sixteen employees. So it's more than ten, but it's like twelve percent of our employees. I'm like, that's a big investment. Like, I don't know if this is worth it. And then I heard their presentation, like, oh, this was, this was. Oh, totally worth it. Infinite return on that investment. So, uh, really, really good interns. Um, at least one or two of them, I know we did hire, I don't know if that specific one we hired, but, um, that was really cool. I would say our primary use has been in back office areas and that's one story, but just other stories like that. Writing policies, as you know, Sammy is like, I mean, it's ridiculous how many pages of policies we have to maintain for the government. And so now you just put it into, uh, we use Copilot, have an insulated environment.

• 36:49Speaker 04

  So our information isn't going anywhere and, and it writes the policy for you. The key is for us, and this one, I said, use AI as much as you want, but you own the outcome. Don't ever tell me AI made the mistake, right? You have to still vet that and own it. And that's where I think, um, on the frontline, you mentioned, uh, or asked about underwriting. We are not doing any underwriting using AI. We are on a loan platform called Encino, which is one of the biggest in the industry. And it does have that capability. So I think in the relatively near future, so spreading information should be done automatically. Um, the initial underwriting, uh, should be done automated through AI. Um, I, I've heard some stories like at Wells Fargo where AI is actually making the lending decision.

• 37:33Speaker 03

  Really?

• 37:33Speaker 04

  Yeah, which I don't know at what level or if somebody has to second that or, or whatnot. I mean, credit scoring as a loan decision has been.

• 37:41Speaker 01

  Has been around for a while.

• 37:42Speaker 04

  It's been around a long time, right? This is just the next version of it. In commercial banking, what we do, small businesses are all different, right? So it's not a homogeneous, uh, product like a home loan where you're just getting FICO scores, W2s, those kinds of things. But here's what I would say is that I call it, we're going to just make our bankers bionic bankers, right? I still need that human because they are using their judgment and they're developing their relationship. But use AI to create this work product that you can then just tweak. And make some adjustments and then say, okay, this is the decision we're going to make. So we still own the decision. That person has to be qualified. I've used it, I just, I've been using it on our bond portfolio. We have like a three hundred million dollar bond portfolio. I just put every bond in there and said, what should we do?

• 38:27Speaker 04

  Like buy this, sell that, whatever. And it just, it, it gives you a report. Well, I understand it because I understand banking and why you use bonds, right? If I just gave that to the intern, I'm not going to trust them just to implement the AI suggestions, right? So that's where I think, you know, eventually it's not here today, but within six, twelve, twenty four months, we have these bionic bankers where a lot of that workload is automated. So they're just freed up to spend even more time with the customers. And then ultimately they're still responsible for the decision.

• 38:57Speaker 01

  That's, that, the relationship is, is the base.

• 39:00Speaker 04

  Yeah.

• 39:01Speaker 01

  Banking in our world and financial advisor, advisor world, same, same thing. I think the use of AI is, speeds up the, the processes that are behind the scene.

• 39:10Speaker 04

  Exactly.

• 39:10Speaker 01

  That are not customer facing. And sometimes we use AI. I mean, in our firm, we use AI while with the customer.

• 39:15Speaker 04

  Right.

• 39:15Speaker 01

  Like you, we can ask a planning software, all sort of scenarios. And it just makes us better advisors. I would say, I'm not a fine, I'm not licensed, but Frank.

• 39:25Speaker 03

  Yeah, yeah, well, echoing what you're saying, I, I think it's, uh, important to know that if you're utilizing AI, uh, for the, the right people, uh, then it becomes a powerful tool. Uh, because if you're just using it in general, then it's just, you know, that's, that's what it is. But if you're, if you put this tool in front of specific, uh, individuals, specific roles, then they just become a better advisor, better banker, better leader, and it, it helps them.

• 39:54Speaker 01

  And it gives you a lot more time to actually sit with the client, which is the fun part.

• 39:58Speaker 04

  Right.

• 39:59Speaker 01

  I mean, sitting down and doing, uh, write ups on loans is not the fun part. I mean, it's necessary, but it's not the fun part. The fun part is actually meeting with the client, asking questions, asking about their families, building a relationship. That's always been the best part of banking for me personally.

• 40:14Speaker 04

  Right.

• 40:14Speaker 01

  And I, I don't kind of bet for every person that's in the frontline.

• 40:18Speaker 04

  Yeah, absolutely. I would just, we, we have, uh, one of our team members, Sammy member, uh, Audrey, she retired today. Eighteen years with Mission Bank.

• 40:26Speaker 03

  Wow.

• 40:27Speaker 04

  Yeah, eighteen years.

• 40:28Speaker 03

  Congratulations.

• 40:29Speaker 04

  Yeah, and so I went out there and she has, I don't know, probably a dozen or more flower arrangements, cards. I mean, people are walking in. One lady said, is, is she, she's here, she's like, gonna close her account and go somewhere else because Audrey's retiring. Like, no, we got other people, they're, they're not going to be as good because that's like a lot to replace, but, but you don't have to close your account. So obviously this, uh, Audrey is very impactful on our, on our, uh, customers out there in Shafter, but why?

• 40:56Speaker 01

  Yeah.

• 40:57Speaker 04

  It's because of the relationship, right?

• 40:58Speaker 01

  And we had, uh, the, the other one from downtown, she used to be in, uh, Greenfield.

• 41:02Speaker 04

  Yeah. Phyllis?

• 41:05Speaker 01

  Phyllis?

• 41:05Speaker 04

  Yeah.

• 41:06Speaker 01

  Well, no, that one that retired after twenty five years with Mission Bank.

• 41:08Speaker 04

  Yeah.

• 41:09Speaker 01

  That, that, that's an amazing story.

• 41:10Speaker 04

  Yeah, yeah.

• 41:11Speaker 01

  She came to, to the.

• 41:12Speaker 04

  Celinda.

• 41:13Speaker 01

  Yes, she came to the Woolworths the other day.

• 41:15Speaker 04

  Yeah.

• 41:16Speaker 01

  And it was so great to see her.

• 41:17Speaker 04

  Yeah. Yeah, it was awesome. I mean, and like you said, uh, I mean, Celinda, I think was the longest tenured employee. I've been there twenty three years, but when she retired, she had been there like twenty five.

• 41:27Speaker 01

  Yes.

• 41:27Speaker 04

  And that was a couple of years ago.

• 41:28Speaker 01

  Yep.

• 41:29Speaker 04

  And Audrey, you know, eighteen years. And so we have a number of employees that are in double digits as far as their time.

• 41:35Speaker 01

  I, I, I miss her. She's always been good with clients, with follow up. And she was a big, big supporter of the clients. Like if they ask something, she makes it her own, like odyssey to get it done. Like I'm going to get this done for Joe.

• 41:47Speaker 04

  Right, right. That's, and that's like the relationship part of it. And that's where the training comes in because you can only do those kinds of things if you understand credit, if you understand treasury and those kinds of, those more sophisticated business banking products, right? Say, okay, I understand your request, but I also understand the banking world. So let me navigate that for you to get it done within the parameters, right? Because we all, we all have parameters. I can't, I, I work for a board, I work for the Federal Reserve Bank because they regulate us. Um, we can't just do whatever we want. And that's, that's the relationship part. And so we're not, we're not going to replace that. In fact, I think the more that other banks are going, not just into AI, but just automation, right? Eye tellers where you, you walk in and there's not even a human you can talk to.

• 42:32Speaker 04

  You just go up to a machine and it's supposed to understand you better because it's using AI. That's just really for us, uh, reinforcing our value proposition.

• 42:43Speaker 01

  I love going to the bank. I went today, I had run out of, uh, coins last minute. They were like, hey, we.

• 42:48Speaker 04

  No more pennies, Sammy.

• 42:49Speaker 01

  I know.

• 42:50Speaker 04

  Those aren't even a.

• 42:51Speaker 01

  Yeah, we talked about that on the show. It costs, it costs what, like, I don't know, five cents or like eight cents to make a penny?

• 42:58Speaker 04

  Yeah.

• 42:59Speaker 01

  Something like that.

• 43:00Speaker 04

  I, I forget the number, but yeah, it costs way more than a penny to make a penny. So they are, they've been eliminated from the Federal Reserve system. So, yeah, we were trying to figure out, well, we still have pennies. Like, what are we going to do with them? I don't know.

• 43:12Speaker 01

  Well, I'll take them. I'll take some of them.

• 43:14Speaker 04

  Are, are they like worth more as copper? What are you doing with them, Sammy?

• 43:17Speaker 01

  No.

• 43:18Speaker 04

  Sammy figured out an angle. I know better than to accept the first offer from Sammy.

• 43:23Speaker 03

  He always has an angle.

• 43:24Speaker 04

  There's always an angle.

• 43:25Speaker 03

  Yeah, that's what I learned about.

• 43:26Speaker 01

  No, no, the bazaar has closed, I closed that long time.

• 43:28Speaker 04

  Okay.

• 43:29Speaker 01

  I moved on, AJ.

• 43:30Speaker 04

  Okay.

• 43:31Speaker 01

  I moved on.

• 43:31Speaker 03

  Sure.

• 43:34Speaker 04

  Well, I, I honestly, I forgot. We, we made, we had to do some with these pennies, but I don't know where they went.

• 43:39Speaker 01

  Yeah. They, uh, we, no, we use them, but we changed our pricing because we couldn't access them.

• 43:45Speaker 04

  Yeah.

• 43:46Speaker 01

  No bank has pennies.

• 43:48Speaker 04

  Yeah.

• 43:48Speaker 01

  And, and, and now our clients don't care them anymore.

• 43:51Speaker 04

  Yeah.

• 43:52Speaker 01

  And if they, even if they did, they, they don't want them.

• 43:54Speaker 04

  No.

• 43:55Speaker 01

  It's like, just they, they put them in a tip jar or something, so.

• 43:58Speaker 04

  Yeah, yeah. Yeah.

• 44:00Speaker 03

  Uh, real quick, uh, on the topic of artificial intelligence.

• 44:03Speaker 04

  Yeah.

• 44:03Speaker 03

  When we were going back to utilizing them, since you are the expert in that field, you were talking about putting it, uh, for your, uh, bond portfolios.

• 44:12Speaker 04

  Mm-hmm.

• 44:12Speaker 03

  Do you notice some discrepancies or, uh, issues where it, it can be wrong?

• 44:18Speaker 04

  Oh, yeah.

• 44:18Speaker 03

  Only you would notice that, not just some, uh, intern or individual who would put this up, like catch those little tiny mistakes.

• 44:26Speaker 04

  Yeah, absolutely. You got the hallucinations and different things. I, I fired Claude the other day.

• 44:31Speaker 03

  Oh, really?

• 44:31Speaker 04

  I was so mad at Claude because what I, I was doing this presentation, basically, and I didn't realize after about the fourth, like tweak of the format, that it had reverted back to the original verbiage.

• 44:41Speaker 03

  Oh.

• 44:42Speaker 01

  Oh.

• 44:42Speaker 04

  Because it, it came up with some, but to your point, it really didn't make sense. Like it, it, it was generally right.

• 44:48Speaker 03

  Yeah.

• 44:48Speaker 04

  But I made it sense for Mission Bank.

• 44:51Speaker 03

  Yeah.

• 44:51Speaker 04

  And so I spent probably an hour writing this thing up and then realized it was gone and there wasn't a future or a previous version. So I've learned my lesson there. But anyways, but yeah, absolutely. And that's, that's kind of what we were saying is that if you were just a, a, an intern out of, out of school, you could get to the same place I got to, but then you wouldn't know enough to know it was wrong.

• 45:11Speaker 03

  Yes.

• 45:11Speaker 04

  Right?

• 45:12Speaker 03

  Yes.

• 45:12Speaker 04

  And so you have to catch those things. And some things are just errors, right? Just hallucin, does something wrong? And other things are just recommendations that it doesn't have enough context or whatever. Um, so, I mean, in the way you guys are using it, I think is very smart. It's similar to what I'm describing our bankers, I, I think will be doing here shortly. Because ultimately that relationship is I trust, fill in the blank, Frank, right? So Frank's using AI to make it even better. But ultimately it's still coming from Frank, right? And the day that I just go to AI and I direct all my own investments.

• 45:46Speaker 03

  Yep.

• 45:47Speaker 04

  I, I don't know if that's ever going to happen, but I, I don't think it's now. So.

• 45:51Speaker 03

  Yeah, exactly.

• 45:53Speaker 01

  Well, great, great show today. Thanks AJ for coming in and talking about fraud, AI, talent acquisition. Always a pleasure. Always a pleasure. Um, we want to make this a regular thing with you.

• 46:05Speaker 04

  Yeah, we didn't even get to interest rates.

• 46:07Speaker 01

  Now, we didn't even get to.

• 46:08Speaker 03

  That's right. That's right. Yeah.

• 46:09Speaker 04

  I'm watching the, uh, the, uh, your Bloomberg screen here and it said the Fed and the Treasury Department are at a tug of war over interest rates. So Besen and Trump want them to go down and, and Worsch, I think is going to raise them up. So I don't know which way they're going, by the way.

• 46:23Speaker 03

  That'll, that'll be interesting.

• 46:24Speaker 01

  We'll save that for the next time you're around the show.

• 46:26Speaker 04

  We'll do it. Thanks, guys.

• 46:27Speaker 01

  Stephen, who do we have tomorrow?

• 46:29Speaker 00

  Tomorrow will be you, Sharid, and we welcome back Mike McCoy from the Kern County Museum. But until then, be smart, be safe, be money wise.

• 46:50Speaker 02

  Securities offered through LPL Financial, member FINRA, SIPC. Investment advisory services offered through LPL Financial. LPL Financial and Money Wise Wealth Management are independently owned and operated.