OK, a show of hands. Who saw 2022 coming and accurately predicted the headlines?
All of you with your hands up… … uh huh. Pull ’em down. No, you didn’t. Nobody did. It would have required a few trips to the local dispensary to dream up what bankers have endured this year.
A few modest examples of the 2022 roller coaster ride:
- The Fed rate hikes in 2022 totaled 425 basis points. Four. Two. Five. Remember 300BP rate shock simulations? Thing of the past! We got to see it play out in real-time!
- As expected, these rate hikes stopped the mortgage industry in its tracks. Financial institutions that relied on mortgage banking fee income as a key earnings component have been left to make big adjustments.
- As if that wasn’t enough, regulators took a sledgehammer to debit fee income with Reg II changes that will begin reducing card-not-present interchange fees starting in July 2023.
- In January, we were discussing crypto and the need to formulate customer crypto strategies. In December, the founder and CEO of Crypto Exchange company FTX were arrested in the Bahamas (yah, don’t ask) and charged with fraud and conspiracy. Now that’s what you call a change of momentum.
- In 2021, there were more than 120 fintech IPOs in the U.S., with Coinbase alone attracting $86 billion. In 2022, there was… wait for it… exactly one. 2022 was the year the fintech industry and venture capital firms figured out that banking is harder than everybody thought.
- Employees came back to work in the office. Well, except for the ones who didn’t. Except maybe they did partly. Except for the ones who just ignored the emails and kept working at home. Good grief, where was that dispensary again? At a time when talent was the No. 1 issue raised by CEOs in our surveys, bankers had to craft a new and compelling post-Covid value proposition to attract it.
Whew. What a year.
And now it’s award time – GonzoBanker style – and we have assembled a list of industry players worthy of special call-outs for their accomplishments this year. For new readers we will reiterate the rules we rely on to determine award winners: there aren’t any!
So relax, put up your feet, indulge with your favorite indulgence, and enjoy our salute to 2022 industry stars.
The Wow the World Changes Fast Award
Goes to 2022. Just a year ago, the industry was anticipating a rate cut or two (we got seven), Omicron was raging, inflation was “transitory,” there were no Russian troops in Ukraine, crypto was hot, banks were awash in liquidity, and it was raining funding on fintechs. Add to that Tom and Gisele were happily together and Kanye was a billionaire. Oh, what a mere 12 months can do.
The Portfolio of Stocks to Short Award
Goes to all the hot tech and defi players that bought pricey ads at the 2022 Super Bowl. Just look at this esteemed list: Rocket Finance (down 47%), Salesforce (down 48%), Carvana (down 90%), Coinbase (down 87%), FTX (token down 97%), and E Toro (badly hurt but hanging on). And, never forget this Matt Damon lament for Crypto.com: “These mere mortals, just like you and me, as they peer over the edge, they calm their minds and steel their nerves with four simple words that have been whispered by the intrepid since the time of the Romans: Fortune favors the brave.” Do NOT calm your minds, GonzoBankers!
The “You Were Right Grandpa” Award
Goes to investing in U.S. treasuries. Tired of keeping their 401k balances in cash for the second half of the year, a whole new generation discovered treasuries and clicked on the “Bonds and Fixed Income” tab in their Schwab app for the first time. Banks saw their excess liquidity melt away, but the good news for financial institutions is even your crappiest digital account opening platforms run circles around Treasury Direct.
Acronym of the Year – CCCA (Credit Card Competition Act)
U.S. Senators Dick Durbin (D-IL) and Roger Marshall (R-KS) with a rare bi-partisan move showing that pinch-your-banker-and-hug-your-merchant is apparently as wholesome America as apple pie.
Matt Taibbi Too Big to Jail (Yet) Award
Sam Bankman-Fried of FTX. Arrested in the Bahamas as of this writing, but we’ll see. The alleged combo of gross incompetence, widespread political contributions, and good ol’ crookedness never seems to go out of style. 2008 called and wants its headlines back.
The Taylor Swift “It’s Me Hi, I’m the Problem” Award
Goes to Sen. Dick Durbin and CFPB Director Rohit Copra. It’s them. Durbin pushed to add card-not-present transactions to his amendment, then proposed the same for credit. This could be a net negative for consumers. Chopra seems to view all bank fees as “junk” and predatory. Both are good headline grabbers, but fraught with unintended consequences.
THE BANKER AWARDS
Acquisition of the Year: big Bank acquires a Purchase
TD Bank Group Acquires First Horizon. First Horizon is a great franchise with a valuable Southeast footprint. TD has been a player that maintained its acquired market share so we are hoping this one doesn’t get messed up like other Canadian banks that have struggled in the Southwest.
Acquisition of the Year: big Bank Acquiring a Fintech
Midsize bank stalwart Synovus went after the embedded finance market with the April acquisition of a 60% stake in payments processing firm Qualpay, launching Maast money-as-a-service.
Acquisition of the Year: Fintech Acquiring a Bank
For anyone thinking the fintech threat is over, SoFi was tenacious in finally getting the Golden Pacific Bancorp deal approved in March. SoFI gets a commercial bank that brings deposits, compliance, AND business lending.
Acquisition of the Year: The No Time to Breathe Award
Seacoast Bank is at it again… and this time it is blowing past $10B in a big way. In just five months, Seacoast announced three bank acquisitions (Drummond, Apollo, and Professional) totaling a little over $4.7B in assets, which will rocket the bank to more than $15B in assets. All three of these banks made the top 10 U.S. bank deals announced in 2022, and Professional was #2 on the list after TD announced First Horizon. Since 2014, Seacoast has been on a buying spree acquiring 14 banks. Congrats to a well-run acquiring machine!
Merger (MOE) of the Year: Bank
Provident Financial Services, Inc. merges with Lakeland Bancorp. Hats off to Thomas Shara at Lakeland and Tony Labozzetta of Provident for architecting the new $25 billion super-community bank in New Jersey. Let’s see how this new scale allows for big investments in future innovation.
Merger (MOE) of the Year: Credit Union
Goes to New England Federal Credit Union and Vermont State Employees Credit Union. This merger had a big dollop of controversy but hats off to NEFCU CEO John Dwyer Jr. and VSECU CEO Rob Miller who drove member value with a combined $3+ billion leader in the Green Mountain State.
GonzoBanker of the Year: Bank
David Brager, Citizens Business Bank (Ontario, Calif.). There’s nothing more Gonzo than a CEO who simply bleeds the soul of front-line relationship managers, and Brager could write a bestselling book on this topic. In less than three years as CEO, Brager has knocked out both organic growth and successful M&A while making CVB Financial one of the top-performing banks in the country. A relationship bank with a 37% efficiency ratio? As Joe Biden would say, “Come on man… outstanding.”
GonzoBanker of the Year: Credit Union
April Clobes, President/CEO, Michigan State University Federal Credit Union (East Lansing, Mich.). It’s hard to understand how Clobes has time in the day to drive her unlimited amount of leadership activities. Since taking the reins at MSUFCU in 2015, Clobes has more than doubled the size of the credit union, started a successful service organization (the Reseda Group), built an innovation center (The Lab), and started the development of a new digital platform (Nextly). All of this while knocking out a stellar 1.35% ROA and leading industry, community, and philanthropic efforts everywhere. Bravo April!
Lifetime Achievement Award
In the banking industry, we salute:
- Chris Murphy, 1st Source Bank – For the past 43 years, Murphy has guided the growth of 1st Source Bank’s niched and entrepreneurial approach to banking. With the recent announcement of Andrea Short as CEO of 1st Source Bank, Murphy will remain chair and CEO of the holding company. Kudos on this transition and the legacy Murphy has built.
- Randy Newman, Alerus Financial – For 40 years, Newman guided Alerus out of a flooding disaster in North Dakota to the creation of a diverse financial powerhouse focused on banking, mortgage, wealth management, and retirement services. Newman also architected 25 business acquisitions from 2000 through 2021. His passion for innovation, community, culture, and clients provides a leadership template for all future GonzoBankers.
- Lynndel M. Bartulis, Newtown Savings Bank – For more than 20 years, SVP and CIO Bartulis have helped Newtown Savings Bank grow. She was a trailblazer and an early innovator in analytics. She is known for her knowledge, leadership, dedication, and willingness to partner with her colleagues. As COCC’s Susan Salecky concludes, “Lynndel was the first female bank techie I met. She paved the way and inspired many by leading with grace and passion in a field she loved. She is an icon and will be missed.”
In the credit union industry, we tip our hat to:
- Kent Oram, Idaho Central Credit Union – Oram is a dynamic leader who created the famous Green Team and knocked out 15 years of record 20% growth while vaulting Idaho Central to the #1 financial institution in the state, all while caring like crazy for employees and communities. Tune in to our Plugged In podcast.
- Benson Porter, Boeing Employees CreditUnion – Porter led BECU through an amazing streak of growth in the Pacific Northwest, all while building an innovative, stakeholder-driven brand respected nationally.
- Chuck Purvis, Coastal Community – Purvis waved the flag of innovation in the credit union industry, helping Coastal become famous for its usage of interactive teller machines (ITMs) and launching the Constellation Digital Banking platform.
- Teresa Freeborn, Kinecta Credit Union – Freeborn drove so many important initiatives in the industry while providing a role model, mentorship, and undying support to the industry’s leading women. (Look for her just-released book Suits and Skirts.)
- Barry Nelson, Travis Credit Union – Props to Nelson for taking Travis Credit Union to new heights as a community financial leader focused on improving financial wellness for all. Nelson always brought a straight-shooting style and wicked sense of dry humor to the table, and his teams flourished around him.
The entire Cornerstone team was so saddened by the losses of….
- John Pembroke, CEO of Credit Union Executive Society (CUES). Pembroke was a humble, soft-spoken, and inspirational soul who loved people and the power that comes from relationships and lifelong learning. We will miss his heart-warming smile every day.
- Steven Schnall, CEO of Quontic Bank. As Quontic co-founder George Lazaridis so aptly put it, “Steve was a charismatic leader who inspired progress, got results – and managed to have fun along the way.” We will miss his get-it-done spirit and are grateful to have known him.
The Appropriate CFPB Target Award
Goes to MoneyLion for lots of obvious inappropriate behavior including violating the Military Lending Act regarding capped lending rates.
The Generational War Award
This goes to Jamie Dimon and most other bankers over 60 who want all employees back in the office NOW. Sorry, but the smart kids aren’t interested in needlessly driving back and forth to buildings.
The Calm Before the Storm Award
Goes all the commercial banks with commercial real estate portfolios with heavy office concentrations. (See The Generational War Award above.) Every data point is showing the average square footage of new office leases going way down, and some prognosticators think this could mean hundreds of billions of dollars of valuation losses. Be careful out there.
The Gimme-a-Good-Example Award
Goes to Apiture’s Daniel Haisley at Finovate, who said, “Think of embedded banking like a supermarket branch where you get access to the supermarket’s customers. You aren’t competing with the supermarket.”
The Heckuva Good Point Award
Goes to KBW’s Tom Michaud at AOBA: “PayPal and Square are already the fourth and ninth largest U.S. banks by market value.”
The New Name for Community Award
Goes to Frank Sorrentino of Connect One Bank, who humorously and insightfully defined his bank’s move into Florida as the “6th Borough of New York.”
The Authors of the Year Award
Goes to Allison Netzer and Liz High for their provocative tome, Think Like a Brand, Not a Bank. Thanks for elevating the pressing need for bankers to think more like marketers.
The Biggest Self-Inflicted Fee Reduction in History Award
This goes to the reduction in checking overdraft (ODP) fees. Who says banks and credit unions are not customer friendly? Let’s just hope pay ratios on items presented on insufficient funds continue at current rates or billers and payees will deal with many more returned items. Maybe we will go back to the old days when merchants put bad checks under their glass countertops for all the world to see.
Fastest Change in Expectations
Bank Deposit Liquidity. Eighteen months ago, all we heard from our clients seemed like something out of a western movie: “Deposits? We don’t need no stinking deposits.” Now it’s easy to find money market rates north of 3% and CD rates north of 4% and everyone is once again focused on attracting funds.
The Remorseful Pioneer Award
Goes to Blue Ridge Bank for bringing a ton of regulatory attention to the BaaS space.
The Best Out-of-the-Box Guest Speaker Award
Goes to Tom Brown and the Second Curve Capital team for the inspiring message from Clemson CEO Jim Clements. What an amazing leadership story.
The Devil’s in the Details Award
It goes to every bank and credit union that forgot to negotiate CPI caps over the last five years. It’s amazing how fast those hard-fought price discounts disappear when you forgot to model out 7% annual price increases.
THE SMARTER BANK AWARDS
Every year, Cornerstone salutes the “smarter banks” that are modernizing their business and growing in focused and strategic ways. Let's salute this year’s standouts:
The Smarter Bank Strategy Award
Goes to Aaron Graft, Triumph Financial for building a payments network (for trucking) with its factoring arm becoming the second largest factor in the transportation industry while starting Triumph Pay, which is what has investors valuing the company as it is.
The Smarter Bank Technology Award
Goes to MVB Financial. The team at MVB leaned into innovation five years ago, and now with the acquired Trabian team, this bank leaned deeper into being a tech leader. Team MVB Chief Strategy Officer Matt West with Trabian CEO Matt Dean has been exciting to watch.
The Smarter Bank Ecosystem Award
Goes to Encore Bank. What an amazing success story. This bank hit $3B in three years by being the Smarter Bank! The team at Encore is thinking about banking differently and hiring top performers around the country who are owners and want to build something unique. Erin Simpson, chief operations officer, and Allan Rayson, chief innovation officer, and chief technology officer, think about their operations and technology differently as well by partnering with fintechs that are also invested in the bank and understand the bank’s strategy with several of them on the board. Bravo Burt Hicks and the rest of the Encore team for your Gonzo approach and for creating a Smarter Bank.
The Smarter Bank Data Award
Goes to CUNA Mutual for driving its CuneXus platform into the market and all the financial institutions using these straightforward tools to increase lending activity via simple data-driven engagement. CuneXus is not trying to be everything data – it’s just working to solve a problem and it does the job very well.
The Smarter Bank Customer Experience Award
Goes to Brent Beardall, president, and chief executive officer, WaFd Bank. The Cornerstone team likes to see bold moves and Beardall and the WaFd team in Seattle certainly hit the mark with the creation of Pike Street Labs, the new digital product development firm that is enabling WaFd to take control of its future digital destiny.
The Smarter Bank Talent Award
Goes to Jeff Semonovich, chief information officer of Western Alliance Bancorporation. Semonovich leveraged his Ohio roots and first-hand experience with this fantastic workforce to partner with the State of Ohio to create a technology center of excellence for this Phoenix-based regional bank. That’s what leaders do addressing the difficult I.T. talent market.
The Smarter Bank Innovation Award
Goes to Lincoln Savings Bank – Iowa (LSBX). Nothing screams business model diversification like thin margins, fee income pressure, and a looming recession. Hats off to Eric Skovgard and the team at Lincoln Savings Bank for the ongoing commitment to the bank’s LSBX subsidiary. Early into the game, its first banking-a-service partnership dates to 2014. Lincoln and LSBX continue to find new ways to develop and grow banking and payments revenue streams with their partners.
THE TECHNOLOGY AWARDS
The Technology of the Year – Cloud-Based Core
“Microservices” became the buzzword bingo term of the year. Every vendor was eager to highlight they're coming soon microservices-based architecture even if most couldn’t explain the benefits other than “it’s more open than the platform we sold to you as an open platform seven years ago.” But with the need to develop faster, lighter, and more open applications to meet fast-evolving customer and business needs plus banks tired of waiting for better monolithic cores and open banking standards looming on the horizon, this technology is here to stay. At least until the next new architecture comes around.
The Overhyped Tech of the Year
Goes to the (wait for it) Metaverse. Despite Chase and Snoop Dogg’s efforts at inhaling this conceptual haze, it’s more buzzword than contact buzz. Look no further than Meta’s stock price.
The Overhyped Tech of the Year – Runner Up
Goes to algorithm-based stablecoins. Yeah, that hasn’t worked.
The Underhyped Tech of the Year – Blockchain
Use cases for smart contracts with embedded business logic like tying automatic payment streams to vendor service level agreements or commercial loan covenants… tasty.
Core System Deal of the Year: Bank
FIS wins Valley National with the IBS platform. FIS was able to snatch victory from the jaws of defeat at high-profile Valley Bank. Valley had already chosen to replace its FIS Miser core with Fiserv DNA and was a year into the conversion when Valley announced an agreement to acquire Bank Leumi and decided to move to Leumi’s FIS IBS.
Core Deal of the Year: Credit Union
Fiserv DNA in every large credit union core deal. DNA continued its multi-year dominance in large credit unions with every credit union with over $3 billion in assets making a core replacement in 2022 by choosing DNA. That streak could be at risk in 2023, but the track record is impressive in the hyper-competitive core field.
Digital Deal of the Year: Bank
Alkami wins at $8 billion, Premier Bank. Premier Bank’s partnership with Alkami means the first IBS bank to make the move to Alkami. Varun Chandhok, CIO of Premier Bank, and the team worked hard to vet solutions. They ultimately felt the partnership and technology offering was the best choice in alignment with Premier’s strategic goals.
Digital Deal of the Year: Credit Union
Big Mo Award
Speaking of Lumin, the Gonzo team has to recognize Lumin’s impressive 2022 momentum. Lumin is blazing the trail with a 45% YoY growth on new client signings, 12% annual user growth, and 100% uptime of the platform. A digital hat tip to Jeff Chambers and the Lumin team on their journey.
Kevin Bacon “Remain Calm” Award
Goes to the new Fiserv. After hundreds of long-time Fiserv support, install, training, and sales staff exited (see also “Generational War Award”), Fiserv execs sent out an email highlighting a new “Client First Mindset” and “Client-Centered Location Strategy” to “better serve you when we are innovating and collaborating.” To its credit, Fiserv acknowledged that the strategy meant closing 70 small offices, “saying farewell to top talent,” and “your day-to-day contact may have changed as a result of this strategy.” In all seriousness, we hope for better reports from Fiserv customers in the year ahead regarding support – the stakes in the industry are too important.
Golden Cufflinks Award – Tie
- Q2’s Joe Cody. Cody goes above and beyond to ensure his clients are engaged throughout the entire demo adding in details about banks and credit unions that hit the nail on the head. Knowledgeable from retail to complex treasury needs, Cody is one of the best.
- Alkami’s Nola Sedlaczek has the demo lights on before the sun comes up. Her client demos are on point and go flawlessly. Clients are impressed with no login issues and her ability to tie client-specific information to their business that hits the digital ball out of the park.
Goes to John Findlay of LemonadeLXP. Five named examples (two banks, two CU, and one fintech)were covered in seven minutes at Finovate and offstage before the gong. Now THAT is how it’s done.
Golden Demo of the Year Award
Goes to the team at MANTL. Every demo presented by MANTL is like going to the movies, where everyone at the demo is on the edge of their chairs wanting to know more about the platform and what it can do for their institution. MANTL presents a best-in-class client experience of how to open retail and business accounts in a friendly UX and management console.
The Insider Sleeper Deal to Watch Award
Goes to CSI. The $1.6B acquisition of the community bank core processor was put together by Centerbridge and Bridgeport, whose founder Frank Martire is former FIS and current NCR chairman.
The Digital New Kids on the Block Comeback Tour
Tyfone. You may remember Tyfone by its history in security and early entry into mobile banking, but you would recognize them by their red Converse Chucks at any industry event. Poised to take on the retail and small business digital landscape with its unique offering that helps clients to differentiate their brand, it’ll make you want to “Click, Click, Click.”
The Fear Factor Moment of the Year
Goes to the multitude of troubled digital platform conversions. This was a year when executives witnessed first-hand how a failed digital conversion impacts strategic, reputation, and operational risk. As one digital banker observed, there are now roughly 20 integration points in a single digital banking deployment – lots of potential points of failure. Going forward, change management must become the discipline of the bankers’ day.
The Focus on What Matters Award
Goes to Jon Rigsby at Hawthorne River. After 20 years in banking and five years in consulting, Rigsby partnered with Wayne Ferrell to launch Hawthorn River. Jon’s straight-shooting approach and fierce dedication to the community bank market are reflected in the Hawthorn River lending platform. In four short years, Hawthorn River has a customer base of more than 50 banks and is still growing!
The Bull by the Horns Award
Goes to the banks that joined the USDF consortium. Most community financial institutions are sitting and watching developments occurring in stablecoin and blockchain and wondering how they might feel the impact at some point in the future. Early in 2022, Amerant Bank, Atlantic Union Bank, ConnectOne Bank, FirstBank, NBH Bank, Primis Bank, New York Community Bank, Synovus Bank, and Webster Bank aligned with Figure Technologies, Inc. and JAM FINTOP to create a Bank-Minted Tokenized Deposit Referencing Fiat Currency on Blockchain. Early test cases are showing the potential to eliminate as much as two-thirds of the expense associated with interbank settlement.
OTHER GONZO NOTABLES
The Reality Check Quote of the Year Award
Bain Capital’s Sarah Hinkfus at Finovate: “There is still funding out there, the scrutiny and cost of capital just went up.”
Frothy Valuation That Would Make Elon Jealous Award
Goes to Twitter (ever heard of them?) for getting a $44 billion sales price from, well… …. Elon.
Goes to the exec of the large global bank tech company who sent a “Valued Customer” net-promoter customer satisfaction survey to our consultant (not a customer). Nice warm-and-fuzzies closing, too, with “For any questions, please contact [someone else’s e-mail address].” Can’t make this stuff up.
Not with a Bang but a Whimper (Shiny Object That Lost Its Shine)
Goes to a prior “Running the Table” award winner NYDIG. Twelve months ago, the most impressive list of strategic partners and investors was announced. Six weeks ago, they quietly reduced staff by a third.
Best Industry Afterparty
Steve McLaughlin from Financial Technology Partners’ Money 2020 party. McLaughlin and FTP are not only legendary in the industry for helping to establish the fintech industry, but their annual shindig at Money 2020 has become legendary as well, with former performers including Snoop Dogg and Eddie Vedder from Pearl Jam. The party isn’t just the place to be seen among the fintech literati. It’s about getting to take a picture of Post Malone from about 10 feet away and making your kids jealous. “Look where daddy is, kids!” This year featured Post Malone as entertainment!
So, there you have it. 2022 will always be remembered like no other in recent decades and we salute our clients for navigating a tough year. We are proud of the troublemaking financial institutions that keep creating value for customers, communities, employees, and shareholders.
How did the Troublemakers handle a crazy year?
- They kept their strategic focus and defended niches.
- They made good loans. Funny how that works in every scenario.
- They continued the ongoing journey to digital banking with a focus on their customers and providing a great digital banking experience.
- They made pragmatic investments in new payment solutions.
- They got real about reducing expenses.
- And, last but not least, they took care of their people.
These Troublemaker banks and credit unions are in this for the long run, and we are second to nobody in our admiration and awe at the passion and smarts they displayed in navigating the last 12 months. It has been inspiring and we look forward to seeing more of their smart strategies, gritty execution, and commitment to the value of people in an uncertain 2023.
Call us crazy, but we think the financial industry is stronger and the world a better place with the entrepreneurial financial professionals we lovingly call the GonzoBankers.
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