3/30/26 Banking on Business: A Conversation with AJ Antongiovanni

The Moneywise Radio Show and Podcast Monday, March 30th 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 facebook: Moneywise_Wealth_Management LinkedIn: Moneywise_Wealth_Management Guest: A. J. Antongiovanni, President and CEO of Mission 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. AJ Antongiovanni and Mission Bank is not affiliated with nor endorsed by LPL Financial or Moneywise Wealth Management].

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

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  Call or text in at 661-396-1000.

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  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.

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  Now, let's start the MoneyWise Show.

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  And 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 KGO Money Talk, 1230 a.m., 101.1 FM, and always streaming at MoneyWiseGuys.com. You can call or text into the show 24 hours a day at 661-396-1000. Today, I am your host, Sharad Waite, here with Steve Z.

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  Yeah.

• 1:05Speaker 03

  Steven Nicholas, how you doing?

• 1:06Speaker 00

  I'm good. Happy Monday.

• 1:07Speaker 03

  Happy Monday to you and spring break.

• 1:10Speaker 00

  Yes.

• 1:10Speaker 03

  Have you noticed the increase in pre-teens driving around in golf carts and electric bikes and stuff?

• 1:19Speaker 00

  Uh, the e-bikes for sure.

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  The e-bike thing, it's, I saw, I'm not kidding you, it looked like an eight-year-old riding a motorcycle down a main, a main road out in Rosedale with, with their six-year-old sibling on top of their shoulders, no helmets. It was insane. Like, what is going on? What are these kids? It's like they're Cirque du Soleil.

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  Spring break, baby!

• 1:44Speaker 03

  Yeah, it's insane. There's a lot of, a lot of crazy things going on out there.

• 1:48Speaker 00

  I do see a lot of kids on bikes, not, not, not that young.

• 1:52Speaker 03

  Yeah.

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  But the, the big thing is like the, they riding the willies, going the opposite side of the road, and I'm like... Man, put a helmet on.

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  Yeah, put a helmet on. I mean, try just like not riding a bike.

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  In the middle of the road.

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  Yeah, there's AJ, he's here. We're gonna have, coming up here real soon, AJ Anton Giovanni, CEO of Mission Bank. But before we do that, I'm gonna go through some of the listener questions. We love getting our questions and comments from our listeners. So keep them coming our way, 661-396-1000. So the first message is, so I know it's not preferred, but if someone had an emergency, should they ever tap their 401k? You know, this is, this is a great question. It does beg the question of what, you know, when, when does it make sense to tap into your 401k? It's not the worst thing that can happen. You

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  know, worst thing would be that you don't have a 401k at all. At least if you had a 401k, it can be used there in the event that there is an emergency. And I think, I think I struggle with sometimes answering this because I don't want to tell somebody to never tap into their 401k because it certainly, there could be some situations where you have to. And because there's just really no other option. So let me lay out first what I would recommend that you do. If you can, try these before you have to tap into your 401k. So remember, your 401k is set in, in, it's designed specifically for money

• 3:33Speaker 03

  that is going to be used after your, after work, after you're done working, in retirement. And so IRS has put up rules that will penalize people if they pull that money out before they are in retirement age. And

• 3:56Speaker 03

  So they're really trying to incentivize people to keep their 401ks there for their long-term future needs. So first, what you want to do is before you can tap into your 401ks, a few different areas that you want to try to, you want to try to go to first. Your emergency fund, obviously, you need cash in an emergency fund. We preach this all the time at Money Wise, how important it is to have an emergency fund, which is money that is just set aside in a savings account somewhere that you can go and you can access in the event of an emergency. This is generally three to six months of your living expenses. And that is a good rule of thumb, because if you have that, then you don't even need

• 4:39Speaker 03

  to worry about your 401k. You can leave your 401k where it is. Let it, let it ride, not, not touch it. If you don't have the emergency funds, try cutting your expenses. Increase your cash flow. Maybe there's some, a side gig. Maybe there is something you can sell. Maybe there is some expense that you don't need for a little bit. If you can pause some of that discretionary spending, or delay some future large purchases, that might free up a little bit of cash. But if you still don't have the cash after that, try a low-interest loan, or some sort of structured loan. 0% interest, you know, on, on, sometimes can be given on credit cards.

• 5:20Speaker 03

  Now, this is tricky, because I'm hesitant to recommend somebody put debt on a credit card versus their 401k. But if this is going to be a short-term expense, and it's something that you know that you can pay off quickly, there's nothing wrong with being able to, with taking a 0% interest loan, and then paying it off, and not paying any interest. If you can do that in time, if you're really disciplined enough, there's nothing wrong with that. You just have to be, be aware of what you're getting into with that, with those loans, not just credit card, but any sort of loan. Sometimes people look at their home equity line of credit, or even just a personal loan. And sometimes those can be very

• 6:05Speaker 03

  Reasonable rates, sometimes that can be very inexpensive. And the benefit of those over your 401k is you're not mortgaging your future. You're not mortgaging, you're mortgaging your future retirement, your future lifestyle. You're sort of dealing with it more on the short term. Now, if you don't have those options, you don't have the cash, you don't have the emergencies, can't cut your expenses, you don't have somebody to loan it to you. Now you have some potential options of pulling out from maybe other investments. So you have just your taxable investments, that's a good place to pull from rather than from accounts that have, are not taxable, like an IRA. Because if you pull money out of that IRA, you're gonna have to pay taxes on that.

• 6:51Speaker 03

  So, you know, look for the taxable investment accounts. Then you have your Roth IRA contributions. Obviously, one nice thing about a Roth that a lot of people forget is that you can pull that money out. You can pull the principal out at any time and not pay any penalties or taxes on that. It's just if you're pulling out that interest or those gains on it, where you may have to worry about potential taxes or penalties on that money. Otherwise, a Roth after five years is tax-free. So you can pull that money out tax-free. That leaves the last option, which is a 401k loan. And this is where you're just gonna want to be very, very serious.

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  Because if you've exhausted all these other options and you need it, it's not terrible idea. It's not great, but it's not terrible. So there's no taxes on that money as long as you repay it. And the good news is that interest that you're paying is going into your account. And so you're kind of paying yourself that interest. However, you're paying that interest with after-tax money. So that, you know, you gotta be aware of that. You're paying, you're paying the loan with money that you've already paid taxes on, and you're putting it back into an account. That is then, when you pull the money out, you're gonna have to pay taxes on it again. So there's certainly some down. Downsides to borrowing from your 401k.

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  And, and so you just want to kind of be aware of those, of those potential pros and cons of borrowing from your 401k.

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  You have to pay, when you do borrow, you have to pay it back within five years. Unless that money is going towards a first home purchase, first home buyer purchase, and you get a little bit, you can get longer time to pay that off. The downside of the biggest risk that I see from people borrowing from their 401k is that they don't have a stable job and they lose that job. Guess what? You got to pay that loan off right away. And that means if you don't have the money for it, all that money becomes taxable to you. That means if you are under the age of 55, you're going to have to pay an early withdrawal penalty on that. You're going to have to pay the income taxes on it. So it can be really, really disastrous.

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  So you just want to be really, really careful when it comes to 401k withdrawals. So that's a great question from our listeners. Really appreciate them. Keep your questions and comments coming our way, 661-396-1000. Now we're going to take a quick break. We come back, we're going to be joined by our guest, A.J. Anton Giovanni from Mission Bank. We're Money Wise. Don't go anywhere.

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  Are you nearing retirement and currently working with a financial advisor? Are you not sure if you're invested appropriately? Call our offices at 661-847-1000 to sit down with a Money Wise financial advisor for a no obligation assessment of your investment.

• 9:54Speaker 03

  Welcome back to Money Wise. I'm Sharad Waite, your host today. Our guest today is A.J. Anton Giovanni. He is the CEO of Mission Bank, right here, headquartered right here in Bakersfield. A.J., welcome back to the show.

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  Thank you. Great to be here.

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  Did you give any, you don't give requests for music, did you? Did Steven ask you what your favorite musician is? I'm just curious.

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  I didn't.

• 10:17Speaker 03

  Oh, okay.

• 10:17Speaker 04

  No, no, I kind of like all, all types. I like, I love Taylor Swift, so if you want to play some Taylor Swift, we can go with that.

• 10:24Speaker 03

  I like Taylor Swift too.

• 10:26Speaker 04

  I went and saw her when she was Just Country up at Save Mart Center.

• 10:30Speaker 03

  Oh, wow.

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  In Fresno.

• 10:31Speaker 03

  Oh, wow.

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  I didn't make the big tour a couple of years ago, but.

• 10:35Speaker 03

  The heiress tour?

• 10:36Speaker 04

  Yeah.

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  The billion dollar tour.

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  I missed out on that one.

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  She shares a big Swifty too.

• 10:41Speaker 04

  Yeah.

• 10:41Speaker 03

  I can't call myself a Swifty anymore since my wife, she goes, you're not a Swifty. And then she rattles off like all the facts that you need to know to be able to call yourself a Swifty. I was like, okay, whatever. I don't know. I'm not a Swifty then. I'm just a bank fan. I think, I think she's awesome, talented. AJ, so Mission Bank, how are things, how are things going on in the banking world?

• 11:05Speaker 04

  The banking world's good. I would say it's, it's good, not great. You know, we do basically two things. We collect deposits, right? So people have money in their checking accounts and savings accounts. And then we aggregate that up and we loan it. And for us, it's businesses, business purpose loans. And so we're always chasing more deposits or more loans. And we want both, just good customers, good quality businesses. But we're usually short on one or the other. So right now it happens to be deposits, which actually the whole, the whole deposit market share is shrinking a little bit. If, if you look at Bakersfield, this is public statistics. We've shrunk about a billion dollars in deposits over the last couple of years.

• 11:42Speaker 03

  When you say we, you're saying that.

• 11:44Speaker 04

  The entire Bakersfield market, all deposits in every bank that's insured by the FDIC.

• 11:52Speaker 03

  Oh, interesting.

• 11:52Speaker 04

  If you just add it up, I forget the exact numbers. Again, we could go look, but it was like $10 billion and now it's $9 billion.

• 11:59Speaker 03

  Wow. Wow. What's interesting, Mission Bank is primarily a business, is a business bank.

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  All business banking.

• 12:06Speaker 03

  And so you've also seen deposits go down, which I mean, that can either mean that like businesses are just needing that cash.

• 12:16Speaker 03

  Or, I mean, I don't know why, why, why else would deposits go down?

• 12:22Speaker 04

  I think that, yeah, they're, they're spending the money on, they're buying buildings and buying equipment and doing different things. Our businesses are generally locally owned. So the owner takes the money out of the business to go buy something else. They put in the stock market and different, different asset classes. So, yeah.

• 12:42Speaker 03

  Is there anything right now that it worries you about the economy?

• 12:47Speaker 04

  I mean, I, right now, I was expecting it to be heading towards like a lower GDP and some type of maybe a mild recession. If you would have asked me six months ago, I thought that was coming in 2026 with all things going on. But I do not see it. We don't feel it. Our customers in general and our markets are doing, are doing pretty good. And so, right now, I mean, you always have the geopolitical stuff that could happen and, you know, oil going $150 a barrel. I can't predict those things. If it happens, it happens. But, you know, I can't say that I'm worried about it. So, right now, I would say, interest rates

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  is the biggest topic. And we have Trump and the new Fed Governor, Fed Chairman, and all that stuff, and independents, and those kind of weird things, which for us, just stable interest rates are the best.

• 13:39Speaker 03

  Right.

• 13:39Speaker 04

  Right. If they're going up or going down, when they get to zero like they were a few years ago, that's not good for banks. Our margin is squeezed. But, in general, just stable markets, when you have the noise and people not sure, and then you start getting weird inverted yield curves, where the short-term Treasury bills are actually earning more than the long-term, that's not good for banks. So, that, that's actually probably the biggest issue that we've experienced over the last couple of years, is the inverted yield curve, because we're paying more on deposits, and then we're loaning it out longer term. And the whole world's supposed to work where there's a positive spread there.

• 14:13Speaker 03

  Right.

• 14:13Speaker 04

  Two or 3% between the short and the long, and that's how we make a gross margin. And so, when that gets inverted, it's a, it's a challenge.

• 14:22Speaker 03

  Well, it seems like the expectations for interest rates to be cut have continued to get pushed out where it's less and less likely. And now, we have the, with fuel prices going up, adding to inflation, that doesn't help the Fed either.

• 14:38Speaker 04

  Right.

• 14:38Speaker 03

  And, and so, yeah, it's always, it's always interesting that the banking world, you don't want the rates to be too high, and you don't want them too low.

• 14:47Speaker 04

  No.

• 14:47Speaker 03

  There's like this golden lock zone.

• 14:49Speaker 04

  There's a, there's a golden lock. And I think we're actually kind of in it.

• 14:51Speaker 03

  Yeah.

• 14:52Speaker 04

  Like, we're, we're right where we probably should be, right? So, think about just, you open a money market or a CD at a bank, you should earn 2% or 3%. It shouldn't be point one, which it was for a long time. That's just too low. And then you go buy a building or something, you buy six, seven percent, seven, that, that's what you should be paying.

• 15:10Speaker 03

  Right.

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  For a, for a mortgage on a commercial building or, or a home loan.

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  Right, right.

• 15:15Speaker 04

  So I think we're kind of in that spot right now.

• 15:18Speaker 03

  Yep.

• 15:18Speaker 04

  But.

• 15:19Speaker 03

  Yeah.

• 15:20Speaker 04

  We'll see.

• 15:20Speaker 03

  So right now in the headlines, there's a lot of talk about the private credit market and the private credit world. This is, this is a, an, a sector that's about three trillion dollars large. So it's, it's a pretty good size. It's still a fraction of the overall equity market. The global equity market says a hundred trillion. So three trillion, like, okay. What, it's, it's.

• 15:48Speaker 04

  It's a big number, but yeah.

• 15:49Speaker 03

  It's the same number that is cryptocurrency. Cryptocurrency is about that. It's about three trillion total. If you add up all the value of all cryptocurrency and across the globe. And so I like that comparison because, you know, not long ago, the, the buzz was all crypto is going to all fail. And then it's going to have this contagion and the whole markets are going to like fall apart, which hasn't happened.

• 16:09Speaker 04

  Right.

• 16:10Speaker 03

  But now the private credit world, they're starting to see some cracks in that, which is. I, I'm curious if you're seeing any of that at the bank.

• 16:20Speaker 04

  Well, for us personally, we're not in that space. So, so businesses that are going out and, and in the private credit market are not our customers. And so we're aware of it. We see it going on, but it, it's not something that we compete with or we're not. It's just a different target market from what we're going after. I personally think that it will, it, it'll be a problem. I think it usually happens. We seem to get into these credit issues periodically. It's cyclical, started in the eighties with leverage, leverage buyouts. And then it, it came out as something that we just kind of changed the name, right? And the investment bankers think of these new things. They call it something different, but it, it's essentially making risky loans.

• 17:01Speaker 03

  Right.

• 17:01Speaker 04

  And, and then somebody puts a model together that says, we'll be fine if we just charge enough interest. And why aren't the commercial banks doing that? Because they can't. All of our loans are reviewed by the federal examiners. And there's parameters that we should all be staying within. And that's why there's much less credit risk in a commercial bank portfolio. Not that you can't make a bad loan because that happens. But generally speaking, we make decent loans. We lose 1% or something, one and a half percent. And then these riskier loans go to the private credit market and they're just loans that probably never should have been made. Not all of them will go bad. Some will work out. Not all of those businesses will experience trouble.

• 17:40Speaker 04

  But I, I think that this is probably something that, I don't want to say it's the tip of the iceberg. I don't know how big it's going to be, but I think it'll get worse.

• 17:48Speaker 03

  Yeah, it's, it'll be fascinating to see if that, if that does fall apart and then what it could impact. The, the few years ago, I guess it's been now almost three years in 2023, there was, uh, there was a little bit of a scare. With banks across the country, starting with, it was the Silicon Valley.

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  Silicon Valley Bank.

• 18:07Speaker 03

  And then, you know, a few of them started.

• 18:08Speaker 04

  That was called March Madness, but it had nothing to do with basketball, unfortunately.

• 18:13Speaker 03

  That's what the bankers call it, March Madness.

• 18:14Speaker 04

  Yeah, we, I go to these things like, oh yeah, March Madness. And go ahead.

• 18:19Speaker 03

  It seems like now we're, I'm pulling back, you know, from a few years ago, but there, the, the, the government has shown more and more.

• 18:29Speaker 03

  I guess, uh,

• 18:32Speaker 03

  ease at bailing, not, I guess, bailing out, uh, not bank shareholders, but bank, um, depositors.

• 18:40Speaker 04

  Yeah.

• 18:41Speaker 03

  And it's always just a shock to me, the statistic that nobody, no FDIC insured depositors ever lost a dime.

• 18:50Speaker 04

  No.

• 18:50Speaker 03

  Ever, like in the history of our country. And they seemed like to make it very clear, the government made it very clear a few years ago, they're not going to let that happen.

• 18:57Speaker 04

  Right.

• 18:58Speaker 03

  And so there was this March Madness, as you call it, the banking scare. How is there any, since then, has, has there been, are there any scares or potential scares out there in terms of the banking world?

• 19:14Speaker 04

  Not that I know of, but I'm trying, I'm always trying to, I told our board, because we were caught up in it, we were fine. If you look at the, the reasons why a couple of those banks got into trouble and eventually failed, then you know, we were not doing those types of things. But I don't know what the next thing is. Cause that was a, that was a run on the bank. The reason they got shut down so quickly is $40 billion. It was about a hundred billion dollar bank, $40 billion left in two days. Everybody just got on their phone, started texting. They were all in this small circle of venture capitalist funds and they all just pulled their money out via wire before the run would take a while because you had to go in and get a cashier's check.

• 19:52Speaker 03

  Right.

• 19:53Speaker 04

  And that's how you can move your money, right? So you could kind of slow it down and the president would be there talking to people and making them.

• 19:58Speaker 03

  No, no, please don't take your money.

• 19:59Speaker 04

  Please don't take your money out. And so they had to shut it down so quickly and it freaked everybody out because they initially said, we're not sure if we're going to fund those deposits. That was on a Thursday night, which they normally shut them down on Friday. So the weekend people aren't accessing the system.

• 20:15Speaker 03

  Yeah.

• 20:15Speaker 04

  By Sunday, they said they're fine. We're going to insure all the deposits. But I don't see anything like that out there right now. I don't see any big, the private credit thing, I don't think will largely affect most of us. And so, you know, that'll happen, it'll affect those companies. That'll probably affect the stock market because there's always bad news and everybody else. But as far as just the economy or any other big issue out there, I'm not, I'm not seeing it right now.

• 20:40Speaker 03

  Talk about Mission Bank itself. It's a, it's founded in Bakersfield.

• 20:45Speaker 04

  Yep.

• 20:46Speaker 03

  Headquartered here in Bakersfield.

• 20:47Speaker 04

  Yep.

• 20:48Speaker 03

  One of our only local banks.

• 20:50Speaker 04

  Right.

• 20:51Speaker 03

  Here, truly local.

• 20:52Speaker 04

  The only.

• 20:52Speaker 03

  The only. Gosh, I always have to think about that.

• 20:55Speaker 04

  Yeah.

• 20:55Speaker 03

  I mean, I guess Valley Strong is a credit union.

• 20:58Speaker 04

  Yeah.

• 20:59Speaker 03

  And so technically they're not a bank.

• 21:01Speaker 04

  Right.

• 21:02Speaker 03

  But, but this being our only local bank, how does the bank decide when and how it grows and goes into other markets?

• 21:13Speaker 04

  Yeah. Well, we're, we're always looking because we're on a growth path. You can go look at our statistics. We've been growing 15 plus percent a year for over a decade. And so in order to keep that going, we're always looking around. Generally speaking, we're going to go to neighboring markets. So we recently, well, it's been about five years now, we went up to Visalia. We went to Lancaster, Ventura, San Luis Obispo. So there's, if you go over the hill, the grapevine, then you get to Santa Clarita, Burbank. Those areas are markets that we're looking in. We recently opened an office in Westlake, off of the 101, right near Thousand Oaks, right on the border of Los Angeles and Ventura County. And the key for us is finding the right people. So ours is relationship based.

• 21:56Speaker 04

  So very, very few people just walk into our office or a business banking center off the street and say, hey, I'm here. I saw your sign. I'm going to open an account.

• 22:04Speaker 03

  Right.

• 22:05Speaker 04

  Right. That's not the type of banking we do. Retail banking, that's how it works. But in our world, it's more about relationships and knowing somebody that is a banker that has that relationship. And what we're finding is there's been a lot of consolidation in the industry. Bigger banks are buying medium banks, medium banks are buying smaller banks. And every time that happens, they lose that local feel, that relationship-driven model. And so the customers start to experience it. Actually, I think it's happened in our market a little bit. And so that's where we can come in. And what we've been able to do is scale the bank, but hire good people that value that relationship and produce them. We have a different model than anybody else I know. Literally, it's just our org chart, what we do.

• 22:48Speaker 04

  We're doing the same services, but the way we deliver those is much different than any other bank out there.

• 22:53Speaker 03

  Well, explain that. Explain that a little bit more, like why? Because it seems like it's so regulated that banks are banks.

• 23:00Speaker 04

  Right.

• 23:00Speaker 03

  What they can, they can change their interest rate, they can change some of their fees.

• 23:05Speaker 04

  Right.

• 23:05Speaker 03

  They can have good service, but...

• 23:08Speaker 04

  It's the service that you can differentiate, right? So our loan and the loan down the street is going to be comparable, right? We're regulated, the terms might be a little bit different, the interest rate might be a little bit different. Same thing on deposit accounts, right? Our online banking platform is good, it's mobile, it has all those things. But every bank is fairly commoditized in those ways, right? So we deliver a much higher personal, like concierge banking. So one thing is you walk in our office on Riverwalk, which you've been out there. You'll notice... Something it doesn't look like a bank.

• 23:38Speaker 03

  Yeah.

• 23:38Speaker 04

  If you didn't know you're going into Mission Bank, you might have thought you walked into a Morgan Stanley or an accountant's office. And so we removed the tarot line, the vault. Everyone in that office is a business banker who's at a much higher level, like what we would typically in the old way, call a branch manager. And they're much more able to develop those relationships. So that in itself is something that nobody else is doing. Actually, we talked about those banks that failed. Another one that actually we somewhat copied this from First Republic.

• 24:10Speaker 03

  Oh, yeah.

• 24:11Speaker 04

  And they were doing this, but on a larger scale and major metros for ultra-high net worth individuals. And I got to know, I knew a couple of people on the board, got to know the president, walked in a few of these. And I said, this is the, this is the way the whole future is going to go. We've been doing this for over a decade. And so that in itself, and the way we set that up, and then we have a very decentralized decision-making model. So our people are allowed to make much more decisions at a higher level without calling headquarters.

• 24:38Speaker 03

  Right.

• 24:39Speaker 04

  Whereas other banks, whether it's waiving a fee or approving a loan, different things. And we have built out checks and balances. The only way you can delegate that authority is you have to have the responsibility. So you have to have the accountability. So we built systems to do all that, whereas everybody else is focusing on efficiency, which is basically don't allow them to make decisions. Everybody make the same decision unless you call headquarters.

• 25:02Speaker 03

  Right.

• 25:03Speaker 04

  And then somehow somebody that's far removed from the customer and making that actual decision.

• 25:09Speaker 03

  Yep.

• 25:10Speaker 04

  Makes it. So those are, I'd say, the two things that we're doing differently, like I said, than anyone else. And the end result is that customer is going to feel much more of a sense of ownership from our employee. They're going to get things done, be responsive. And so far, people like it.

• 25:25Speaker 03

  Yeah.

• 25:28Speaker 03

  I've experienced banking, not with Mission Bank, but other, other banks. It's incredibly impersonal and it seems like, especially the national banks are doing everything they can to get rid of their physical locations.

• 25:42Speaker 04

  Right.

• 25:43Speaker 03

  And they're trying to. It just seems like-

• 25:46Speaker 04

  Well, Bank of America just closed downtown.

• 25:48Speaker 03

  Yeah.

• 25:48Speaker 04

  Right here in the corner. The B of A building is no longer the B of A building.

• 25:51Speaker 03

  Right. I know.

• 25:52Speaker 04

  That's wild.

• 25:52Speaker 03

  Chase just closed down up on Chester and Oildale. Now, Oildale doesn't have a single bank.

• 25:57Speaker 04

  Yeah.

• 25:57Speaker 03

  There's not a single financial institution in all of Oildale.

• 26:00Speaker 04

  Yeah.

• 26:01Speaker 03

  But that's just the way that industry is going. They're working, they're working, just like the fast food industry. They're trying to get rid of their workers, automate things.

• 26:08Speaker 04

  Right.

• 26:10Speaker 03

  It does-

• 26:10Speaker 04

  Have you heard of an ITM? I kind of cut you off. Go ahead.

• 26:13Speaker 03

  Oh, no. No, don't tell me what an ITM is.

• 26:15Speaker 04

  It's, it's a, it's like a virtual person who talks to you.

• 26:19Speaker 03

  Oh, no.

• 26:20Speaker 04

  Yeah. It's like a- I've been in office, I just snoop around. When I'm in other markets, I just walk into banks and credit unions to kind of see what's going on in there. And I've been to one where it was just a, it was a, like a teller line looking thing, but everything had like a little cubby hole to it. And you hit a button and then a virtual like image of somebody that wasn't actually in front of you came on.

• 26:42Speaker 03

  Like a, not a real person, like a, like a, like a robot, like a AI person?

• 26:47Speaker 04

  No, it was a real person.

• 26:48Speaker 03

  A real person. I see. Like a screen.

• 26:49Speaker 04

  Like a screen.

• 26:50Speaker 03

  I see. Gotcha. Oh, yeah. Yeah. I mean, it, it, that, that, that, I mean, I know we're talking about just retail banking.

• 27:00Speaker 04

  Yeah.

• 27:00Speaker 03

  And Mission Bank is business banking, giving loans, commercial loans. That's, that's its bread and butter. But the retail banking world just seems like it's, it's all just going, it's all going digital.

• 27:12Speaker 04

  It's all going digital and like I said, that, that's one of the kind of extreme example. But the point is there's no relationship there.

• 27:18Speaker 03

  Yeah.

• 27:19Speaker 04

  Cause every, every time you get, there's a bank of people in a warehouse somewhere. I don't even know where they sit.

• 27:23Speaker 03

  Right.

• 27:23Speaker 04

  Right? Whereas when you walk into ours, they know your name. They know your family's name, your dog's name. They know where you went on vacation.

• 27:31Speaker 03

  Yeah.

• 27:32Speaker 04

  We used to get a, I really shouldn't say the names. We used to get a guy from banks that started IDing customers to do their transaction. And literally some of these people were in Shaft or in Bakerfield, had been banking at this particular bank for 30 or 40 years. And then somebody says, well, can I see your ID? And so there are differences, right? You don't have to ask for it. You just have to ID the person. Well, we know the customer. It's Sam or Bill or Sally. And so there are ways that you can differentiate. It's mostly on the service side, but the way we're able to deliver that is is kind of what makes it unique.

• 28:08Speaker 03

  Do you see AI changing things in your world at all?

• 28:13Speaker 04

  Yeah.

• 28:13Speaker 03

  Or how do you see AI changing the banking world?

• 28:16Speaker 04

  Well, we're working on it. We we have several people in the organization and pretty much somebody in every department is experimenting with it and using different versions of it. We have to be very careful with the non-public information. So that's our number one concern. We're not sending any information to the outside world. But I think it's going to make us more efficient. So I mean, I think the idea that I just actually the article in the Wall Street Journal today, some large institutions, some banks, it was some other just Fortune 500 companies, where the org chart actually had virtual agents listed with names and they had a manager.

• 28:54Speaker 03

  Oh, boy.

• 28:54Speaker 04

  So a human person had, and they had just named like Fred. Fred's an AI agent, but Fred, I have to do a review on and give them like a grade on how well they're doing their job. But Fred is just a virtual agent that somebody created.

• 29:07Speaker 03

  That's nuts.

• 29:08Speaker 04

  Yeah, they figured out, oh, that's not the way we should do this. It was like causing super like, well, what's Fred responsible for? They're talking about Fred like he exists.

• 29:16Speaker 03

  Right.

• 29:16Speaker 04

  So I don't know that that's ever going to be a thing for me, but but making us significantly more efficient, just with Excel, like you just tell it, do this and boom, you have this spreadsheet that maybe took somebody three days to build out and they just did in 10 minutes.

• 29:30Speaker 03

  Right.

• 29:31Speaker 04

  And so, yeah, we're doing those things. And I think we're, I'm actually going to be part of a group of CEOs. There's eight of us throughout the United States, some friends of mine that that were all been in this group for 10 plus years. We meet once a month and share ideas. Well, one of our guys in Tulsa has a company that they built software. They sold their company, basically this guy's retired, but now he's trying to invent something for AI specifically around underwriting and underwriting commercial credit. So we're going to be kind of his test group and see if there's a way to speed that up. Is it the way I feel like? We're still going to want to have that relationship manager that has that one-on-one connection, but then if they can go back to their desk, upload all the financials

• 30:12Speaker 03

  Right.

• 30:12Speaker 04

  and have that run some analysis

• 30:14Speaker 03

  Right.

• 30:15Speaker 04

  with a human who's actually trained to make a decision. We're not going to turn it over to the AI bot.

• 30:21Speaker 03

  Right.

• 30:21Speaker 04

  But that workload that again, maybe took that person two or three days to input into Excel and Word and create this report that we have to do to get it approved and show to regulators and all those things, that can all be done in the background and significantly shortcut, well, what does that person do now? They have more time to actually be in front of the customer and do the part that is fun, really, and also impacts the customer. So I think it'll, it'll have huge efficiencies, mostly in back office areas that the customers won't necessarily know, will just all become that much more efficient.

• 30:56Speaker 03

  Yeah, no, I'm, I'm, I'm, there's so many exciting things with AI. There's some terrifying things about it, but the efficiencies that it can bring, and now in our world, it's, it's, it's, it's been a game changer for us.

• 31:09Speaker 04

  Oh, yeah, I would imagine.

• 31:10Speaker 03

  And, and so, you know, we, we, we love it. We, we've embraced the technology here money-wise, but, you know.

• 31:19Speaker 03

  Lastly here, AJ again, AJ Anton Giovanni, CEO from Mission Bank. Thanks for taking the time.

• 31:24Speaker 04

  Yeah, it's awesome. Great to be here.

• 31:26Speaker 03

  Last question before you go, and that is, I'd like to ask any, anybody who's involved in a business that has, where they're, where they're serving businesses. Cause that gives, you're on the pulse of the true economy when you're, and we're talking about primarily small businesses. I'm, I'm sure that, that Mission Bank deals with. And so can you give us sort of the, I know the bank is doing well. How, how are your customers doing? How are the businesses that you, that you know about? How are they doing economically speaking?

• 32:02Speaker 04

  Yeah, I would say just across the board, most of our customers are doing pretty good. I don't think there's, there's always a few bright spots where somebody's really knocking out of the park. But right now, I don't, I don't see a lot of that, but I also don't see a lot of, a lot of issues. I think, actually you mentioned food service and the labor issue there. And, and I think we've got inflation on the food, on the cost of the food side, the gross, the product. But on the food side, on the, on the service side, it's just continuing to go up. So I think that, that's a little bit of a challenge.

• 32:39Speaker 03

  What about ag?

• 32:40Speaker 04

  Yeah, several ag sectors have not been good. The wine grape industry is disastrous, not good at all. Almonds were really bad a few years ago. Now this year, actually, I think most farmers probably should have made a profit. Whereas the last couple of years, most of them, not all of them, but most of them probably lost money. So the price of almonds has got back to where, where it's more profitable now. Milk, dairy guys, not, not great right now, although they're selling their cows for like record beef prices.

• 33:13Speaker 03

  Yeah, the beef is insane right now.

• 33:15Speaker 04

  Beef's insane. And that's interesting because if you have like a herd of cows and you can just sell off cows that you may have retained, that's just all profit essentially.

• 33:26Speaker 03

  Right.

• 33:26Speaker 04

  Right, but then we have other cattle ranchers that are buying small calves and then they rent them on their grass and then feed them and then sell them. That's tough because yes, they're selling them at record prices to go to slaughter, but they're buying them for a lot more, a lot of time from dairies.

• 33:43Speaker 03

  Right.

• 33:44Speaker 04

  So, so that's kind of depends on which part of that you're in.

• 33:48Speaker 03

  Yeah.

• 33:49Speaker 04

  I would say that grape deal wasn't great last year. Table grapes was huge for us, right? We, I mean, there's a few crops that we produce pretty much for the whole world.

• 33:58Speaker 03

  Right.

• 33:59Speaker 04

  Table grape's one of them, almonds is one of them. So grapes were not that good. Citrus has been really good. That's been one really bright spot. So the citrus, the citrus growers have been doing really well.

• 34:12Speaker 03

  Yeah.

• 34:12Speaker 04

  So I would say it's probably 60% of the commodities are not that great, but 40% maybe are.

• 34:20Speaker 04

  Better profitable or like in the case of citrus doing really good.

• 34:24Speaker 03

  It could be so much worse. It seems like considering what we're what we've been dealing with with labor costs, everything, you know, commodities, insurance, everything has gone up. So that's promising that there is that things are going well.

• 34:41Speaker 04

  Yeah.

• 34:42Speaker 03

  Their mission.

• 34:42Speaker 04

  Now, one area, I just got this text about another refinery up north that we may shut down.

• 34:48Speaker 03

  Yeah.

• 34:49Speaker 04

  And how that's gonna change, you know, the price of gas and things like that. So this came from one of our customers that owns a gas station. And apparently the price of diesel has doubled in the last month from like $4 to $8 a gallon ish. So.

• 35:04Speaker 03

  No.

• 35:04Speaker 04

  Yeah, that's not good.

• 35:05Speaker 03

  It's not good. No, that if this oil issue doesn't, oil today closed up above 100 bucks for the first time, closed above 100 bucks for the first time since 2022. So we've, if this, if it continues to go up and if it's sustained for a long time, it's going to hurt a lot of people. It's, it's just this major challenge, especially in California. We have so much, we have energy problems big time.

• 35:33Speaker 04

  Yep.

• 35:34Speaker 03

  Well, good. AJ, thank you so much. Thanks for coming on the show. Really appreciate it. It's AJ Anton Giovanni from Mission Bank. We're money wise. Don't go anywhere.

• 35:41Speaker 00

  Don't forget, Money Wise is more than a radio show. We're an independently owned local wealth management firm with 60 plus years of collective experience. Our financial advisors are here to help you, Kern County. Together, let's be smart, be safe, be money wise.

• 36:03Speaker 03

  We're money wise. Thanks for tuning in. I'm Sherrod, your host today, here with Stephen Nicholas. Thanks to AJ Anton Giovanni. It's so crazy. We have one bank in town, one locally owned bank in town. Or not owned, but founded.

• 36:20Speaker 00

  In Zero, in Oildale, is that what I heard?

• 36:23Speaker 03

  Zero in Oildale. Yeah, our friend John Cox from the Bakersfield Californian wrote a really great article last week, Wednesday or Thursday of last week about the bank closing down in Oildale. There's some great, great lines in that, including people that he interviewed in Oildale. I highly recommend this. This article is really interesting. But yeah, no banks in Oildale. And I guess some people can maybe stretch the borders of Oildale beyond what it, what it is. But as far as I know, there's, and as far as the Bakersfield Californian, John Cox, there's no banks and, no banks in, in Oildale. We have a couple more listener messages and comments here.

• 37:08Speaker 03

  I'll go ahead and get started with these. It says, Money Wise, "You say that your taxes will be lower at retirement. I say, not if you've been lucky to save 15 to 10% of your wages, starting at age 25, and leaves at 62, and you have well over $2 million. And lifestyle continues living well above your means. That tax rate will be 25 to 35%. Young people, listen to Money Wise and you'll live good." That's great. It's interesting because the, the, the idea of having a lower tax liability

• 37:47Speaker 03

  in retirement is definitely a generalization. You can have a lot of money and have, and be in a very low tax bracket. And there's famous examples of this. Warren Buffett famously said that his secretary is in a higher tax bracket than he is. And that's true because Warren Buffett, while he's a billionaire, his taxable income, the money that he actually earns and receives is, is very, very small amount. His, his assets grow, and that's where his wealth comes from. And that's not always taxed. And so the same can be true for somebody who is in retirement. You may have saved up a couple million dollars

• 38:30Speaker 03

  in your retirement fund, but you're only taxed on it as you pull it out over the years. And so generally speaking, most of us have a lower taxable income, earned income.

• 38:45Speaker 03

  When we're working versus when we're retired. So just a little clarification on that, but thank you for the compliment. Another question here from our listeners that says, aside from oil, what is an overlooked sector in the market today with the current dips? This is really interesting. It did allow me to go and do a little bit of research. You know, I was just curious what sectors out there are currently maybe overlooked. And, you know, this is, this is a natural cycle, business cycle is that you have, you have booms

• 39:25Speaker 03

  and you have busts. You have expansions and you have contractions. And oftentimes you have money that is going towards concentrated sectors for a period of time because there's a lot of attention in that, whatever that sector is. And what that can do sometimes is ignore other sectors that there aren't any problems. They're just not money flowing to them. They've kind of been overlooked. So the biggest example I can think of now is how much emphasis has been in the large growth tech companies and AI specifically, AI companies have gotten so much attention and so much capital

• 40:07Speaker 03

  that it has, it has perhaps investors have neglected some of these other areas. So essentially, if you just kind of look at the other sectors that are around AI but aren't AI specifically, there may be some opportunities in some of these sectors that weren't there previously. Industrials, for example, this is important because industrial stocks are oftentimes involved in infrastructure and infrastructure building. So that is somewhat related to AI because that involves a lot of, a lot of construction and infrastructure. But if you're looking for, you know, engineering and, and construction, equipment manufacturers, rails and logistics,

• 40:51Speaker 03

  I know it's slow. I know it can be boring. But sometimes those are important. When we talk about diversification here at Money Wise, we're emphasizing diversification among not just sectors, different sectors, but also across different governments, different countries. And you want to diversify yourself among all of those different sectors because you're always going to have these sectors playing off of each other where one is strong and the other isn't. And so staying exposed to all of those sectors, even if you think some of them that you have are boring, and they may be boring now, but they may not be boring later.

• 41:34Speaker 03

  And you also want some boring inside your portfolio. Bonds are a good example of that. Just generally speaking, bonds aren't as risky as stocks. And so sometimes it can be tempting for you to say, why do I have 20 or 30% of my investment portfolio in bonds when my stocks are doing double-digit returns and my bonds are just getting this boring 5% or whatever it is? And you have to remind yourself that those bonds aren't there necessarily to give you such that huge return. They're there to help offset some of the losses that can come inside your stock portion of your portfolio. So again, if you kind of go and look at some of the sectors

• 42:17Speaker 03

  that have been neglected or overlooked

• 42:22Speaker 03

  and have been overlooked due to the AI buzz, I think you'll find some interesting things there. Industrials, obviously, that are tied to infrastructure, energy infrastructure, potentially some of the regional banks, small cap and small cap value. A lot of these have been neglected because so much has gone into the mega cap and the AI and the headline-driven companies. But stay diversified. You want to be exposed to all those sectors and not be too concentrated in any one.

• 42:58Speaker 03

  Another message here, it says with interest rates, where they are, how does someone know if it's still a smart time to take out a loan?

• 43:09Speaker 03

  If, if, if you're gonna borrow money, you have to decide how important that it really is to borrow, borrow the money. You know, you're, you're only borrowing money for, for certain things. Buying a car, buying a house, maybe paying for college. Other than that, when you're borrowing money,

• 43:33Speaker 03

  yeah, maybe it's to start a business. You know, you want to do that when it makes sense to do that. Take buying a house, for example. You want to borrow money to buy a house when it makes sense to buy the house, not necessarily when it makes sense to borrow. Because buying the house is the smart financial decision. The borrowing is just a, a, a part of, of, of a necessary activity to be able to purchase that home. And so you want to, you know, you want to buy that house when it makes sense to buy the house. Now, maybe if you're making a loan and you're gonna, or you're gonna, you're gonna take a loan because you're gonna start a business.

• 44:17Speaker 03

  Well, again, you don't want to not start that business because you, because, just because interest rates might be high right now, or because it might cost you a lot to borrow. That's part of building a business is, is borrowing money. You want to build the business and do that when it makes sense to do that, not just when it makes sense to borrow to be able to, to create that business. So, um, hopefully that helps. Hopefully it helps our listeners here a little bit, at least understand, you know, when it makes sense. It's just really, I just caution against anybody who is trying to time the markets, interest rate markets. Very, very difficult to time that market to get it just right.

• 45:03Speaker 03

  There was a list, Stephen, of the billionaires. The World Billionaire List has come out. Forbes put out this list here recently.

• 45:17Speaker 00

  Do they do that annually?

• 45:19Speaker 03

  Yeah, I don't know about the billionaire list, but I do know that they have the Forbes. Yeah, yeah, they do that annually.

• 45:25Speaker 00

  Okay.

• 45:26Speaker 03

  This is, this is an interesting one. It goes, the billionaire list is tracking it year after year. And I don't know how long they've been tracking. Forbes has been track, have been tracking all the billionaires. But there is a record number of billionaire entrepreneurs here in the world. 3,428. There's 400 more billionaires this year than there were last year. Last year, they were just above 3,000. Now there's over 3,400. They're getting richer than ever. The, um, the total amount of value of all of those billionaires, of those 3,428 billionaires is $20 trillion.

• 46:09Speaker 00

  What?

• 46:10Speaker 03

  20 trillion, up 4 trillion from a year before, which is insane. I mean, this, this is so much money. The United States has the most number of billionaires at nearly 1,000. So again, we have 3,400 total billionaires. Nearly 1,000 of them are American, including 15 of the top 20 are American. China is next in line. They have 610 billionaires. India has 229. They're the distant third. And, um, and so, you know, I think it's worthy explaining to our listeners a little bit about the interesting facts about a billion.

• 46:53Speaker 03

  This is something that I'm very passionate about is that is the, just how incomprehensible it is to understand what a billion is. Let a million, but then you get a billion and then you go a trillion. It just becomes even more sort of impossible to understand. A billion seconds is about almost 32 years. If you spend $1,000 a day, it would take you 2,740 years to spend a billion dollars. If you stacked $100 bills and you had a billion dollars, it would be about two thirds of a mile high.

• 47:33Speaker 03

  It's a lot. It's a big numbers. These are big numbers. The US, as I mentioned, has the most number of billionaires. And most of these billionaires are self-made. The average billionaire age is in their mid-60s, and fewer than 15% of them are women. So, there you have it. There's your billionaire catch-up for the day. I want to thank all of our listeners. I want to thank Stephen for producing the show. I want to thank all of our listeners for tuning in. If you missed this show or any of our past programs, subscribe to the Money Wise Podcast. It's commercial-free. It's on all major podcast platforms like iTunes, Spotify, and Apple. And in the meantime, remember these three things. Be smart, be safe, and always be money-wise.

• 48:19Speaker 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.