Sunday, August 12, 2018

Guest Post: FInancial Markets and Economic Update by Dorothy Jaworski


Economy and Momentum

At the end of June, 2018, the current economic expansion turned nine years old.  We have one year to go to match the longest expansion since World War II, which was the prosperous period engineered by Maestro Greenspan from March, 1991 to March, 2001.  He also ended that expansion by tightening and then keeping interest rates too high for too long.  After easing and keeping rates low


for three years, the Fed began tightening from June, 2004 to June, 2006.  By the time it was clear to all of us that the economy was being dragged down by the housing and mortgage crisis, the Fed finally lowered rates, but it was too late.  They were forced then to take rates to zero to deal with the financial crisis.  Rates that were too high did not cause the crisis, but certainly did contribute to it.  And here we are, all of these years later, looking to match the record length of GDP growth of ten years and watching a Fed that continues to raise interest rates.  We know that even the best of them raise rates too much, keep them too high for too long, and then are forced to lower them to try to save economic growth, usually too late.  There was a reason they had to lower rates to zero and keep them there for seven years.


Five more quarters to go and I believe in 2019 we will set a new record length for an expansion, albeit without hitting 3% GDP growth for any one of those ten years.  This is because the economy has been gaining momentum, however modest, from the tax cuts and deregulation.  The economy has grown 2.2% annually since 2009, while the record expansion of the 1990s saw growth of 3.6%.  The second quarter of 2018 saw growth of 4.1% (the highest quarterly growth since 2014) and the third quarter may be close.  Growth for the entire year of 2018 is expected at 2.8% and 2019 at 2.4% to 2.5%.


Why Worry?

You know me by now.  I worry about the economy and the Fed’s tightening campaign.  In my career, I’ve lived through many years of the Fed raising interest rates and it’s my experience that they usually tighten too much and keep rates high for too long, just like in 2001 and 2006-2007.  And does the following sound familiar?  They often cite unemployment they think is too low and inflation that could soar as their reason to keep raising rates.  They often fail to appreciate the message of the flattening, or inverting, yield curve.  Their reliance on the Phillips Curve continues to surprise me.  Unemployment is low, but there is considerable capacity in the higher pool of available workers and wage increases remain modest.  Inflation had risen earlier this year, but has been heading back down recently.

As well as the economy has been doing from the momentum of tax cuts and reduced regulation, there are always looming issues.   Consider the trade wars and tariffs.  There are some signs of slowing in the housing markets; both existing and new home sales in June fell amidst rising mortgage rates and fewer gains in home prices.  The flat yield curve is showing the pressure on short term rates to rise from both the Fed and unusually high issuance of T-Bills by the US Treasury, while longer term rates are sensing that inflation is falling back and growth may eventually slow.  Hedge funds are not happy with longer term rates as they keep shorting Treasuries and futures, expecting rates to rise and they do not.  The 10 year Treasury has touched 3.00% once in the past several months and is hovering just below that level at 2.95%.  The two year Treasury today is 2.66%, so one can see how flat the yield curve has become.  By the way, JP Morgan’s CEO, Jamie Dimon, recently said he thinks the 10 year Treasury should be at 5%...

Debt levels are still extremely high and economic growth will be restrained if debt service is not covered by income growth.  US Treasury debt now stands at 103.9% of GDP; levels above 90% have been demonstrated to slow economic growth.  Aha!  One of the causes of low growth since 2009 is uncovered!  Low productivity continues, just as it has since this recovery began in 2009, averaging only 1.3% since that time.  Low productivity is often associated with weak economic growth.  Another of the causes of low growth since 2009 is unveiled!  An obvious one is low inflation.  Gas prices pushed above $3.00 per gallon a few months ago and could lead to slower consumer spending.  And for all of the Fed watchers out there, money supply growth, as measured by M2, has continued to weaken on a year over year basis, from +7.1% for the year ending June, 2016, +5.6% for the year ending June, 2017, and +4.2% for the year ending June, 2018.   Milton Friedman, anyone?

In our local area, we are still seeing modest growth in Philadelphia and surrounding counties.  The Fed’s Beige Book remains fairly positive, citing “modest” growth.  Housing has done well, despite median sales price growth which is less than national averages and lower inventories of properties for sale, which may be propping up prices.  In 2Q18, Bucks County median prices rose year-over-year by 3.9%, compared to the national Case Shiller index at over 6.0%.  We have to live with national interest rates and the Fed and the yield curve affect us all.

Regardless of what I may worry about, we are faced with the reality that The Fed continues to indicate that they will raise interest rates- one or two times more in 2018- and several times in 2019.  Short term rates will rise along with them.  Long term rates may hold steady, unless stronger inflation makes a comeback, or may begin to fall back if economic growth slows.  Let’s hope we make it five more quarters to a record expansion before that happens. 


Globe Trotting

We were on vacation in Paris during July and got to experience France’s semifinal and final wins of the World Cup.  The streets of Paris looked just like South Philly after the Super Bowl win.  The fans there are as passionate as Eagles fans, but I will keep that a secret.  Philly has a chance to go wild again this year if the Phillies keep playing well; they are in first place for the first time since the end of 2011.  We also traveled to Metz and Normandy and accepted more honors for my Uncle Stephen by the great French people who live along the Moselle River.  We stood on Omaha Beach, with families enjoying vacation there, paid tribute to the fallen soldiers at the Normandy Cemetery, and climbed the 900 steps to the top of Le Mont Saint Michel.  Along the way, we witnessed building construction and renovation in Paris and in the small towns of France, showing an economy on the way to recovery.

Our economy here in the US is gaining momentum, too, especially on the concert circuit.  I got to see Rod Stewart again last week.  Life is good!


Thanks for reading!  DJ 08/09/18











Dorothy Jaworski has worked at large and small banks for over 30 years; much of that time has been spent in investment portfolio management, risk management, and financial analysis. Dorothy has been with Penn Community Bank and its predecessor since November, 2004. She is the author of Just Another Good Soldier, and Honoring Stephen Jaworski, which details the 11th Infantry Regiment's WWII crossing of the Moselle River where her uncle, Pfc. Stephen W. Jaworski, gave his last full measure of devotion.

Saturday, July 28, 2018

For Financial Institutions, Is There Such A Thing As Too Much Capital? Yes. Yes There Is.

I was on a panel at a bankers conference with an investment banker and two bank fund investors. One of the investors' opening remarks was about banks that were over-capitalized. I panned the audience to see if regulators were present.

But there were enough open jaw gapes to see that many bankers share the regulatory belief that there is no such thing as too much capital. And that may be true for financial institutions that don't take investor money. But if your bank is shareholder owned, then you may be hoarding their money. And as a bank shareholder myself, I like to make my own hoarding decisions.

I have written on these pages about a method to estimate your "well capitalized", a question your regulators may have asked you. Having done this, and seeing that your strategic plan has you comfortably above your well capitalized and trending higher, what do you do with the excess capital?

Derek McGee of Austin law firm Fenimore, Kay, Harrison, and Ford had four to-the-point ideas in a recent Bank Director Magazine article. I would like to lay out his four ideas with my take on them.


1. Dividends. "Returning excess capital to shareholders through enhanced dividend payouts increases the current income stream provided to shareholders and is often a well-received option. However, in evaluating the appropriate level of dividends, including whether to commence paying or increase dividends, banks should be aware of two potential issues. First, an increase in dividends is often difficult to reverse, as shareholders generally begin to plan for the income stream associated with the enhanced dividend payout. Second, the payment of dividends does not provide liquidity to those shareholders looking for an exit. Accordingly, dividends, while representing an efficient option for deploying excess capital, presents other considerations that should be evaluated in the context of a bank's strategic planning." 

My take: Amen Derek! In a blog post this year, Bank Dividends: Go Ahead and Drink the Kool Aid, I called for the same thing. And to use special dividends and deliberate shareholder communications to help overcome shareholder expectations mentioned above. I have not experienced a bank that made the pivot from being a growth company to a cash cow, where profits are maximized and dividends are plentiful. It is a natural evolution of a company built to endure. 


2. Stock Repurchases. "Stock repurchases, whether through a tender offer, stock repurchase plan or other discretionary stock repurchase, enhance liquidity of investment for selling shareholders, while creating value for non-selling shareholders by increasing their stake in the bank. Following a stock repurchase, bank earnings are spread over a smaller shareholder base, which increases earnings per share and the value of each share. Stock purchases can be a highly effective use of excess capital, particularly where the bank believes its stock is undervalued. Because repurchases can be conducted through a number of vehicles, a bank may balance its desire to effectively deploy a targeted amount of excess capital against its need to maintain operational flexibility."

My take: Institutional shareholders own greater than two thirds of publicly traded financial institutions' shares outstanding. And share buybacks are a favorite of theirs. The challenge is that they would like to liquidate their ownership when the value is at its peak. Meaning the financial institution purchasing its shares would likely enjoy minimal earnings accretion and create book value dilution. But, as Derek pointed out, it is a highly effective use of excess capital when the bank believes it is undervalued. One bank stock analyst thinks every bank should calculate the earnings accretion of a prospective merger versus the earnings accretion of a share buyback. If the buyback is more accretive, why do a riskier merger?


3. De Novo Expansion in Vibrant Markets. "Banks can also reinvest excess capital through organic expansion into new markets through de novo branching and the acquisition of key deposit or loan officers."

My take: When a race car enters the pits, it is losing time. If not to recalibrate, refuel, and re-tire, drivers wouldn't do it. If you compare bank strategy to a 500-mile race, banks would also enter the pits. But if you compare bank strategy to a few times around the track, you would be foolish to do so. Think of the short race as budgets, and the 500-miler as strategy. You have to be willing to accept the short-term setback of entering the pits (i.e. making strategic investments like Derek mentioned) to position you to win the race. 


4. Mergers & Acquisitions. "Banks can deploy excess capital to jumpstart growth through merger and acquisition opportunities. In general, size and scale boost profitability metrics and enhance earnings growth, and mergers and acquisitions can be an efficient mechanism to generate size and scale. Any successful acquisition must be complementary from a strategic standpoint, as well as from a culture perspective."

My take: Derek's "complementary" comment was right on. Listen to my firm's most recent podcast on M&A cultural integration featuring an interview with Jim Vaccaro, Chairman and CEO of Manasquan Bank, that is in the process of merger integration as I type. In addition to a cultural fit, the geography and balance sheets should be complementary, and the earnings accretion should exceed what the buying institution could achieve on its own. Tangible book value dilution, which tends to get a lot of play in the investment media, should not be to the level to cause long-term downward pressure on the buyer's stock price. 

Out of the four, M&A is the least within the control of the financial institution, as this takes a willing partner.


What other uses of excess capital do you propose? 


~ Jeff



Sunday, July 08, 2018

Bank Innovation: Three Ideas

I usually take more time researching blog posts than writing them. Today is an exception. Rather than searching reputable sources for how this bank or that bank innovates, I thought I would give it to you straight from the gut.

Because experience tells me that bankers are struggling with innovation. There is so much buzz about it, we are challenged to separate the wheat from the chaff. Fintech, regtech, martech (new one), AI, RPA, Chat Bot, actual bot. What's a banker to do?

At its core, innovation should solve problems. Problems we know we have. Problems we may not know we have. Customer problems. Process problems.

And who knows or can anticipate these problems better than 1) our customers, and 2) our people. 

Here is my opinion that may not sit well with some of my readers: Innovation through rapid change will rarely be led by those long in the tooth. Their experience clouds their view of the pace of change, especially if their experience is with slow, methodical, decades-in-the making change. Because we tend to believe past is prologue.

I'm full of idioms when I shoot straight from the gut.

I'm not telling you to build an innovation culture surrounded by young people. Make innovation a bank wide call to arms. But in creating a culture of innovation, don't have your long in tooth leaders shooting down innovation arrow after arrow offered by your short timers.

Here is how I think you could foster such a culture:


1.  Make Innovation Problem-Resolution Based. Nothing is more frustrating than expending organizational resources on a non-existent problem. Changing IHOP's name to IHOB comes to mind. HSBC putting actual robots in branches is closer to home. Community financial institutions' resources are already taxed by technology and regulation. Don't over-tax by encouraging innovation on problems that don't exist either internally or with our customers. So when you establish an innovation culture, the subject line of the memo proposing the innovation should be the problem the institution is trying to solve. Let your competitors waste resources on cool gizmos that only end up being resume' bullets for tech weenies.


2.  Coach Long-Timers. I've called them stoppers, sergeants, and old-schoolers. These are the people that implemented processes in the past that your innovators are now trying to solve. Like the cumbersome process that may exist in your bank to send wires. The story goes like this: a fraudulent wire got through, the bank CEO sternly directed ops personnel to ensure it doesn't happen again, and it now takes a DNA sample for someone to get a wire out. And the owner of that process is the department manager of the innovator trying to solve for a problem created by their boss. Here is where senior management will earn their leadership chops. Turn the stoppers into innovators. Or at least facilitators of innovation.


3.  Recognize and Reward. I called for a bank wide awards ceremony in a post two years ago (Five Ideas to Build an Accountability Culture at Your Bank). Innovation awards should be a part of the ceremony. Perhaps a central feature of it. Hand out a trophy. Give out meaningful cash and/or vacation time. Salute Long-Timers for fostering the culture that led to innovation. Demonstrate tangible results. Emphasize the problem solved.


These are my ideas on how to build an innovation culture that focuses innovation efforts on solving problems, real or emerging.

What other ideas do you have, or have heard of, that can move financial institutions forward fast enough to build a long-term future?


~ Jeff

Thursday, June 28, 2018

A Bank Analyst Makes Recommendations. I Make a List.

What should you look for in a bank stock?

How should I know? I'm not a financial advisor. I would have to take a test to prove that I am worthy of such predictions.

But I read. And part of my reading includes Boenning & Scattergood's quarterly Bank DCF Analysis. In the report, analysts Matt Schultheis and Scott Beury laid down the criteria they recommend investors use when evaluating bank stocks:


1. Superior Growth Prospects

2. Excess Capital

3. Strong Deposit Franchises


Well, ok then Matt and Scott. I'll search on that.

I sorted all publicly traded US banks on the following criteria: year over year asset growth (2016-17) greater than 10%, tangible equity/tangible assets greater than 9%, and CD's as a percent of total deposits less than 30%. I also filtered out banks with greater than 2% non-performing assets/assets.

This netted a total of 78 banks ranging in asset size from $113 million (Republic Bank of Arizona) to $44 billion (Signature Bank). No SIFI banks. 

I then set out to single out the best bank in a few of the categories. The first was for growth, as measured by year over year asset growth. I skipped banks that grew via acquisition during that time. The second was to highlight the most favorable deposit mix, as determined by the lowest level of CDs. I know this is imperfect. There could be ample municipal deposits in checking or money market accounts. Not an ideal funding source but also not CDs.

The third category was performance judged by their first quarter 2018 ROA. Again, not ideal. But directionally correct. The fourth was value based on the bank's price/tangible book. Most of the 78 financial institutions were below $1 billion in total assets. Investors tend to favor price/book metrics in looking at smaller institutions. The lower the multiple, the more value that might be on the table for the investor.

The last category was a balanced approach between all of the measurements I used, including EPS growth. There was judgement involved and I must admit I tended to discount the smaller financial institutions because of their low trading volumes and inefficient valuations. Personal bias, I know. My apologies to Metro Phoenix Bank ($181 million in assets, 1.88%/11.83% ROA/ROE). 

The results are in the table below.


MCB - Metropolitan Bank Holding Corp., New York, NY
IIBK - Idaho Independent Bank, Coeur d'Alene, ID
SBT - Sterling Bancorp, Inc., Southfield, MI
FSDK - First Citizens National Bank of Upper Sandusky, Upper Sandusky, OH
BOCH - Bank of Commerce Holding, Sacramento, CA


Who else should be on the list?


Drop me a line with your contact info if you want the spreadsheet with all 78 banks.


~ Jeff



Note: I make no investment recommendations in my blog. Please do not claim to invest in any security based on what you read here. You should make your own decisions in that regard. FINRA makes people take a test to ensure they know what they are doing before recommending securities. I'm sure that strategy works well.




Monday, June 11, 2018

Branch Talk

"The legacy [of build it and they will come] is an inefficient allocation of resources dedicated to supporting a less relevant delivery channel..."

So went an informative branch research report put out by my old friend and excellent bank stock analyst, Matt Schultheis of Boenning & Scattergood. At lunch recently, he said that the battle for retail deposits has already been won. Won by the national banks. It is a very similar point I made in an article to soon appear in a trade publication. 

With all of our hubris about how great community banking is compared to national banks, we are not winning market share from them. 

Here are some additional points I made to Matt via e-mail after I read his branch research piece. Edited for your clarity and context. All comments are my own, as his firm is a broker-dealer which would require a monumental amount of compliance review and disclosures. To wit, the research report actually used the term "Flavor Aid" instead of "Kool Aid" because it is likely a compliance person wouldn't let them use the obvious. #AddingValue


↭ __________________ ↭

Point 1: Pricing is becoming more transparent and I believe it will be increasingly difficult for banks to maintain deposit betas of 12 to 25, as [the research report] demonstrated in Exhibit 2. It is much easier now to switch from a local bank money market account to a Goldman Sachs Marcus account than last year, and it will be even easier next year.

That is why I suggest banks build a cost of funds advantage by 1) having a relatively higher proportion of non-interest bearing checking, and 2) a relatively higher proportion of "store of value" accounts like interest bearing checking and special purpose savings. I define store of value accounts as those where depositors are looking for safety and ease of use/access more than rate. Such as having a real estate taxes savings account.

Point 2: I am not sure deposit market share is the metric for branch success [as mentioned in the research report]. I believe it is branch deposit size, growth and spread delivered by those deposits. The challenge with the 3,000 square foot to a 1,500 square foot branch transformation is that larger branches tend to have more deposits.

A former bank CEO, responding to my questioning one of his branch's multi-million dollar expansion, said he got $40 million MORE in deposits when he did it. The math looks good in that context. Great actually.

Over and over we see these tiny, cutesy, 1,000 square foot branches maxing out at $20 million in deposits. I say put in a big branch and get $60 million, which is the average branch size in our profitability outsourcing service. The deposits per square foot calculation works out marvelously. Perhaps lease part of the branch to a CPA or a small insurance agency or something that tends to serve the same customers you are targeting to recoup some of the build-out and real estate taxes that come with a larger branch.


Point 3: You can "spoke" from the larger hub, as the research report suggests. And if your spoke maxes out at $15 million over a reasonable time, then close it and transfer those deposits to your hub. At an 80% retention rate, Charlie Sheen would call that #winning. Another strategy would be to measure the profitability of the hub/spoke region, rather than holding every individual branch accountable for spreads and profits. Although either is better than total deposit or number of accounts goals.


Point 4: The median direct expense of a branch as a percent of deposits in our profitability database is 98 basis points. That's 98 basis points that a branch bank can't pay in interest to their depositors that Ally Bank can pay. Perhaps that's overly simplistic as Ally has elevated digital expenses, low pull-through rates, and higher back office expenses because they have no branches.

But let's say that accounts for 20 basis points on the margin. Still a 78 basis point beta. Banks have to figure out how to sell the advantage of their branch network, which by the way survey after survey says customers want, and figure out a way to lower the 98 basis points direct expense of branches or support center expenses. Preferably both in order to lower that 78 basis points. Because customers won't accept that size of a haircut for the convenience of having a branch. But I believe they will accept some haircut.

By the way, the 98 basis points direct expense is off of a $60 million average branch deposit size. That means it costs ~ $588k in direct operating expense to run a branch. If you go with a wee-little branch, perhaps you shave off $150k of that. If that branch maxes at $20 million, then your branch direct expense of the "branch of the future" is 2.17% of deposits, versus 98 basis points for the "branch of today". Which is better?

                                                        ↭ __________________ ↭


Thought you might enjoy our exchange.


~ Jeff


Monday, June 04, 2018

The Federal Home Loan Bank System: Lender of Next-to-Last Resort

"The FDIC recently has observed instances of liquidity stress at a small number of insured banks." So opened the Summer 2017 FDIC Supervisory Insights issue. And so went your exams.

At a recent banking conference an industry consultant said, matter of factly, that in times of stress your Federal Home Loan Bank (FHLB) borrowing capacity would dry up. Nobody challenged him, including me, by the way. But when I mentioned the comment to the attending FHLB rep, she was not particularly happy.

This has happened before. Regulators and consultants promulgate this untruth. And having heard it so much, bankers are beginning to believe it. 

This week I sat in a bank CEO's office where he complained, ranted really, about his latest exam and the regulators' perception of liquidity risk, driven by the aforementioned Supervisory Insights. He was confident in his bank's liquidity position, but felt regulators could artificially create a liquidity problem.

Their conversation goes something like this: pretend that your non-core and wholesale funding dries up, and you are unable to attract local funds via rate promotion because of our restrictions on rates paid above the national rate cap. What would you do? Prepare for that.

I recently wrote that I thought bankers would have to prepare to offer rates more in line with the market. I noted that there was a greater than 100 basis points difference between what a customer could earn on an FDIC-insured Goldman Sachs Marcus account than what they could earn in your bank's money market account. And that bankers are going to have to build the infrastructure that allows them to be closer to market.

The national average rate for a money market account at the end of last year was 0.09%. The Fed Funds Rate was 1.25%-1.50%. So, according to the FDIC rate cap "guidance", you could not exceed 84 basis points on your money market accounts at December 31, 2017 if you were under regulatory scrutiny. Sixty six basis points less than the Fed Funds rate at that time.

I monitor trends. I know loan/deposit ratios are going up, and liquidity ratios are going down (see charts). But what are the chances that your liquidity position plummets, you lose access to your
correspondent line(s), you can't attract local deposits, your municipalities withdraw, and your FHLB line "dries up", all at once? As the FHLB rep mused to me, it could happen if say, an extreme black swan event much worse than the 2007-08 financial crisis happened.

More to the point, she directed me to her FHLB's president's message on their website where he wrote: "As long as markets remain open, and a member has pledged sufficient qualifying collateral and is willing to purchase the requisite amount of capital stock, the Home Loan Bank will always continue to lend to our members to help you meet your community's needs." 

We need a smarter discussion on liquidity. Before we create an artificial liquidity crunch.

The consultant at the above mentioned conference did have some solid recommendations that I would like to share, even though he is a competitor. Pretty magnanimous of me, right?

1. Create detailed funding concentration risk analytics, that includes:
     -  Stratify funding using a liquidity matrix
     -  A deposit loyalty study (to classify what regulators consider non-core as core)
     -  Determine a local rate cap (to use vs. the federal rate cap)

2. Conduct forward looking stress tests that include realistic contingency funding strategies

3. Train board members

4. Update liquidity policy and contingency funding plan to be consistent with the above process

Are you feeling pressure internally or from regulators on liquidity?

~ Jeff


Saturday, May 26, 2018

Memorial Day: Two to Remember

Life is tough. It is difficult to step back and take perspective on tough. We have an inbox full of e-mails to attend to, meetings to prepare for, and customers to serve. We cherish the three day Memorial Day Weekend to step away from it all, if only temporarily.

But the reason for the day was given to us by those that cannot celebrate it. They signed their name on the line, and we sent them to the line, gun in hand. Right a wrong. Liberate another country. Protect us. And they did.

I would like to highlight two of those individuals so I can be reflective on this solemn day. And perhaps make it easier for you to do the same. At your Memorial Day cookout, I encourage you to feature one of these selfless countrymen to your family and friends. 

Cpl. Kenneth Stuck

In 2016, more than 65 years after he was killed in action in the Korean War and labeled missing in action, Corporal Kenneth Stuck came home in a flag-draped coffin to Hummelstown, Pennsylvania.

Cpl Stuck was with the U.S. Army's 1st Cavalry while involved in the Battle of Unsan, which was a devastating loss for American and UN Troops. Multiple engagements, beginning on October 25, 1950, resulted in heavy losses among the 1st Cavalry. 

Although likely injured, Kenny survived the onslaught but was taken captive by the enemy, and imprisoned in North Korea's notorious Camp 5 in Pyoktong. Testing revealed that Kenny likely died of starvation. He starved to death. In a POW camp. 

He was buried in a mass grave of 322 bodies. Where he remained for the next 65 years. Until the U.S. Army was allowed to excavate the site, and DNA identified his remains.

On this Memorial Day, remember Kenny Stuck, one of the greater than 36,000 American troops that perished in the Korean conflict that was fought to keep South Korea free from communist rule.


Private Mikio Hasemoto

Pvt Hasemoto, a Hawaiian Nisei (Japanese American), was part of the 100th Infantry Battalion (separate). Separate because Nisei were separated from the regular 100th as a result of their heritage.
These soldiers served with honor, even though they faced prejudice, and their families lived under the cloud of Executive Order 9066, signed by President Roosevelt to remand certain people of Japanese, German, and Italian descent to camps to reduce the risk of enemy infiltration. 

Mikio distinguished himself in Italy on November 29, 1943. His unit faced a force of 40 enemy soldiers that attacked the left flank of his platoon. While under heavy fire, he and his squad leader killed 30 of them, and injured or captured the rest.

The following day was a repeat of the prior day. Although, while under heavy fire, Mikio was mortally wounded. 

He received a posthumous Medal of Honor for his actions and heroism. Remember Private Hasemoto.



Feel free to share your Memorial Day memories in the comment section.

Happy Memorial Day everyone!


~ Jeff