Transcript
All right, well, we’re back in the saddle.
Back in the saddle.
Back in the saddle.
Steve Williams, Cornerstone Advisors.
Al Dominick, also with Cornerstone.
And forgive me for thinking about what’s going on in the Southeast right now in SEC terms. For those listeners who are thinking about Gary Gensler and what he does for the Securities and Exchange Commission, I’m talking about Florida, Georgia, Alabama, LSU, all the big boys that really make up our Saturdays.
Is there, like, 67 teams in the SEC now? It seems like they’re expanding.
But I thought about SEC football in the spirit of who we’re going to be talking with today.
We’re dialing up this new episode of Plugged In with a really special CEO who’s calling Columbus, Georgia, home, at least as a headquarters.
We have Mr. Kevin Blair, who’s joining us remotely from Georgia.
We’ve got to say hello to Kevin.
Hey, guys.
Hey, Kevin.
We’re going to have a little bit of fun because, as I was going through some of the prep, I noticed that Kevin and I spent a little time in the Commonwealth of Virginia.
We don’t have that SEC alumni base.
He’s a JMU guy. I’m a W&L man, so we were right down 81 from each other.
But I’m sure we appreciate some of the things that are going on not just on a Saturday in the South, but really across Monday through Sunday as customers do different things, business has changed, and the concept of banking continues to evolve.
Yeah.
I’ve worked with and watched Synovus for 30 years.
They’re never not interesting.
Kevin, this organization always has something cool going on, so I’m ready to dive in.
We’re going to dive in.
At this point, listeners are probably well familiar with our propensity to pull music as a means to start a conversation.
We have five Georgian bands that I selected.
Steve has no idea who’s coming.
Kevin doesn’t either.
So, just as a little cheat sheet, we’ve got the Allman Brothers, Charlie Daniels, R.E.M., the Indigo Girls, and Ludacris.
Wow.
How’s that for diversity?
Sounds like Georgia.
We’re not even going to start with Charlie Daniels. The band’s classic is going to come up later. You’re not going to know when that will be.
I thought we could get rocking and rolling with our Allman Brothers friends, who really kick things off by “Ain’t Wastin’ Time No More.”
We ain’t wasting time as we jump into this episode because the teams being built across the country have different compositions.
I was really struck by some of the dances that Synovus has made with its teams and how it’s doing different things.
In some ways, I think of that old Steve Ballmer chant on Microsoft’s stage where he was, “Developers, developers, developers.”
I have to imagine that Kevin might walk into a boardroom saying, “It’s talent, talent, talent.”
I noticed that you spent a little time with Admiral McRaven recently for a leadership series that you did.
I thought we could kick things off by talking about leadership as you really think about it today.
Look, I think it is the most important element of every strategy.
You can talk about sitting in the boardroom, talking about differentiating, go-to-market strategy, or approach to segmentation.
All of those things matter.
But at the end of the day, the products and services we provide are fairly highly commoditized.
I believe that, especially in this digital world that we live in, at Synovus we believe you have to match the high-tech approach with a high-touch approach.
For us, talent has been something that’s very important to me.
Number one, maintaining and growing the talent that we have at the bank.
We just finished our Voice of Team Member survey for this year, looking at our engagement levels, and we are at 91%, the highest level that we’ve ever had.
That puts us in the top 5% of all industries.
I think it speaks to the talent that we have in our company, but more importantly, their leaders who are creating an environment that is conducive to allowing people to do their best.
We all know that when you have an engaged workforce, you’re getting discretionary effort.
You’re winning with your clients.
It’s no secret that we won this past year the J.D. Power Number One Bank in the Southeast for service, and more importantly, for trust.
It all correlates back to having a team-member base that comes to work every day purpose-driven, focusing on what’s best for the client.
I do think that’s so important.
Not only do we look at those engagement levels, we look at turnover levels.
Our turnover this year is the lowest it’s been in 15 years.
I think that’s a function of people voting with their feet.
They’re staying at the company.
I think that’s another difference-maker.
When you think about banking, you’re trying to build relationships.
That’s the buzzword today.
Everybody wants to be a relationship bank.
Well, I think you guys know it’s hard to develop a relationship with any sort of provider if every time you’re dealing with that institution, it’s a different face.
You’re having to understand and connect.
When you can go into the bank, whether it’s with a consumer transaction or whether it’s a commercial relationship, and you’re dealing with the same commercial assistant, the same relationship manager, it’s a whole lot easier to build that level of trust.
That allows us, obviously, to be able to serve that client, but also to deepen the wallet share.
So talent is so important.
Now, what I would tell you is we’re invested in our talent, but we also have to continue to invest in bringing in talent from outside.
I don’t like to think about some of the challenges some of our peers are dealing with, with mergers and changes in their operating model.
But people are looking for a platform that they can come to that allows them to deliver their best, whether that’s serving their clients or being able to do the best job they can do.
Over the last two years, we’ve been adding.
We’re up about 3% in the number of heads that we have at the company.
I think that’s important because it shows that not only are we growing our balance sheet, but we’re growing the talent that we have.
Now, we have to be selective.
We’re in an expense-management environment.
But we think that if you stop recruiting, then you’re in a position where you stop growing.
We need to develop the internal talent, keep them engaged, and ultimately continue to serve as a platform that attracts talent from other institutions.
Kevin, with a great blend at Synovus of tech and traditional banking, with kind of innovative tech, where did you guys land in the design of your hybrid workplace?
Working remote versus in office, and being able to attract talent looking for that work-life balance?
I don’t know that there’s a one-size-fits-all model.
When I read in The Wall Street Journal or in a lot of the publications where people are either saying everybody has to be in the office or everybody has to be working remotely, what I’ve found is that you have to listen to your leaders and you have to have a good pulse on the team members themselves.
What we’ve done is the hybrid approach.
We probably have about 70% to 75% of our team members back in the office.
But when I say they’re back in the office, that doesn’t mean they don’t have flexibility to work a day or two from the comfort of their home office, or that if they need to be home for a personal situation, they don’t have the tools and resources to be able to do that.
I think when you try to paint a very hard line to say everybody has to be 100% in or 100% out, you’re saying that every position is the same.
We all know it’s not.
We can track productivity through logins and keystrokes and things like that.
If we have positions where we’re worried about productivity and they’re not making widgets, so you can’t see what they’re doing, we have ways of figuring out whether those people are productive or not.
But what we found is that instead of trying to mandate it, we’re trying to create an environment where people want to come into the office.
A couple examples.
In all of our major facilities in the Southeast, in Tampa, in Fort Lauderdale, we’re building a new facility in Columbus, here in Atlanta.
I’m in Atlanta today.
We’re trying to make the office a place where people want to come.
Then you’re not having to tell people, “I want to see you in the office.”
They want to come in.
They want to collaborate.
They want to spend time with their leaders and with their peers.
So you’re not having to dictate it.
Our model has been one that allows the leaders to make those decisions.
I’ll tell you, just common-sense-wise, in our larger cities where traffic is an issue, there’s more value placed on working from home because you could burn an hour, two hours, three hours a day in the car.
If you give those hours back to that team member, we feel like we’re getting that back where they’re actually being more productive at work.
Yeah, good old Atlanta traffic.
Who doesn’t like that?
Before we move off to the next topic, I did mention Admiral McRaven.
Some folks may remember he gained a lot of fame for a commencement address where he talked about the first thing you do in the morning is make your bed.
It’s getting something accomplished.
You didn’t make your bed today, Steve?
Come on.
But Kevin, I’m curious.
Again, you spent some time with him.
Were there leadership lessons that he shared that you’re trying to bring into your organization because you think it will create that type of dynamic that people really gravitate toward?
It’s a really good point.
We’ve had Admiral McRaven at three different locations.
We have one more tomorrow night in Orlando.
What we did is we signed, and we’re going to continue to sign, leaders who can come into our marketplaces and inspire.
We’re calling it Journeys to Inspire.
Listening to other leaders and what they’ve done to be successful in their careers, to try to inspire not only our team members, but we bring in prospects and clients.
Each event we’ve had, Atlanta, Tampa, and Fort Lauderdale, has had over 300 people attend.
We’ve given out his new book.
His new book is called The Wisdom of the Bullfrog.
That’s obviously a reference to his Navy SEAL days.
He walks through a lot of life lessons.
For me, it’s about stating a purpose where everyone can rally around that purpose.
Whether that’s a military application or whether it’s in the corporate world, and we see this in our engagement surveys, people want to understand why they’re doing what they’re doing.
If we all can have a common purpose and work toward that, it breaks down a lot of the barriers that prevent us from being successful in execution.
He has a million stories on how that worked for him.
The other thing that really sticks out for me is, in his definition of winning, it’s probably different than what we have in the corporate world.
When you apply a military application, understanding the team around you and making sure that you hold each other accountable.
We spend way too much time talking about performance reviews and how HR can help us in managing performance.
That’s not necessary in the military.
In Admiral McRaven’s world, you lift each other up.
If you exercise that accountability within your team, you’re not having to rely on some performance-management process.
You’re working to make each other better.
Then that common goal, that team outcome, is something that you celebrate, or you hold each other accountable when you fail.
I think there’s so much to take away from his thoughts.
Ultimately, we’ll continue to do some of these Journeys to Inspire with some other leaders that allow our clients and our team members to really be able to emulate some of the best leaders that we can talk to and learn from.
Great way to bring clients and employees together.
That’s awesome.
Yeah, really awesome.
And no one ever charged a hill for EPS or C&I or deposit beta.
So I like the purpose comment there.
There we go.
All right, so now we’re going to flip over.
I’m going to bring Charlie Daniels in.
I’m going to say, “Try as I might, I can’t wait any longer, so if you care to take a dare, I’ll make a bet with you.”
You know, that’s “The Devil Went Down to Georgia.”
But that bet that I’m going to make with you, Kevin, is the size of your institution today tracks to becoming about a $100 billion bank at some point in the relative near term.
I’m not going to throw a dart and tell you the exact month, but you’ve got to be preparing for this.
Could you help us understand how you can continue to move a ship of your size toward that potential goal?
The first thing I’d say, Al, is you’re right.
We try to establish a growth profile that allows us to exceed the growth of our peers.
It starts, you started this whole conversation with the SEC, but it’s really the Southeast.
When you look at the population growth in our five-state footprint, it’s two times the national average.
Same thing on household-income growth.
It’s just pretty exceptional.
If you’re going to be in a fast-growth footprint, you better deliver outsized growth.
As we think about our future, one of the things that we’ve already completed is an assessment of what would be required when you pass through that $100 billion mark.
Obviously, with the new tailoring rules, the $100 billion line is going to be substantial.
We had an outside firm come in and assess our current capabilities and evaluate where we would need to invest further, both resources and technology.
What I would tell you is our leadership team here, a lot of folks have been here for a great deal of time.
We’ve also had a good mix of folks coming from super-regional banks.
I would say when we look at our risk practices today, they’re largely consistent with what you would see in a bank that’s already over $100 billion.
The biggest difference, and probably the biggest expense, is around data analytics and reporting.
Today, we already do stress testing and we do a modified liquidity-coverage ratio, but we’re not having to do a 2052a.
We’re not having to present our CCAR findings.
We’re just doing a capital plan.
A lot of it will just be fingers-and-toes resources to produce reports.
A lot of it will be building databases and data flows that allow us to provide more consistent and frequent reporting.
Then the last, obviously, probably the costliest, will be just having to raise capital from a TLAC perspective or having to do things there.
But we feel like our risk practices will be mature by the time we get to that $100 billion mark.
Our data, we’ve already started to build our infrastructure.
For us, it’s just going to be more of the capital impact and probably some of the work that needs to be done.
I would just end this by saying scale’s important in a lot of ways.
But I always like to provide this thought when people talk about this, especially we’ve heard this rhetoric recently about “too small to succeed.”
When we went through the March 10th bank failure mini-crisis, when I joined Synovus seven years ago, I’d get the question coming from a larger bank like, “Why would you join a smaller bank? How do they win in this environment, which is a race for scale?”
My argument to that is, we’ve been winning the whole time.
We’re continuing to grow market share against larger banks in many areas.
The great equalizer in all of this is fintech.
If you can go out and leverage R&D from a third-party company that’s developing great technology and solutions and capabilities without having to develop your own proprietary solution, you can do it in a much more scalable way with software as a service.
Scale matters.
Look, we want to grow and we look at that as an outcome of our success.
But I’m not a believer that you have to go be over $100 billion to be successful in this space.
I think it’s actually the contrary right now.
At $61 billion, we’re kind of in that really good sweet spot where we have all the capabilities and functionalities to compete, but we don’t have the enhanced prudential standards to have to contend with.
Yeah.
I’d want to pack as much revenue and capital management into it before I crossed 100.
It will be a fun ride between 60 and 100.
Speaking of fintech, you’ve got to talk to us a little bit about Maast and what you’re doing there.
We talked fintech.
This is one of those digital banks that stood up in parallel to Synovus.
If we were to use music, we’d have to go against R.E.M. and “It’s the End of the World as We Know It.”
There are lines like, “Lenny Bruce and Lester Bangs, birthday party, cheesecake, jelly bean, boom.”
I have to write this down.
I can’t even keep up.
It is a great song.
But there’s been so much focus around innovation at Synovus, and Maast represents digital banking, banking as a service.
That’s why I use those lyrics, because when you start trying to sing along with R.E.M., you’re like, “What the heck am I singing?”
It’s the same thing with Maast.
What the heck’s going on?
You’ve got a successful franchise, a great organization, strong digital team already in place.
What took you to start something like Maast?
Look, we had a really talented team here that was in our payments area.
We started kicking around this idea several years ago.
If you think about what Maast is, it’s really a channel.
Think about it as a channel.
What we were working with is the disintermediation that’s occurring in banking.
In yesteryear, everyone had to come through bricks and mortar in order to access our bank services.
Now we allow folks to have much more autonomy by giving them access to whether it’s a physical channel or a digital channel.
What we learned is that more than 50% of all small businesses today are beholden to a software-as-a-service platform that helps them run their business.
What we know about small businesses, the one thing they can’t create more of is time.
A lot of these small businesses are sole proprietors or partnerships.
They’re intermixing their business with their personal endeavors.
But ultimately, we know that they’re on these software platforms a lot during the day to run their business.
We said, look, if we can integrate banking services through their independent software vendor partner, then it’s a one-stop shop.
That started with providing payment facilitation.
We go to the software vendor.
We allow them to basically become a merchant acquirer.
Based on our history as being a sponsor organization through the merchant-acquiring platform, it’s an easy way to enter through the software.
The software then gets to create more revenue.
What’s happening today with all these software vendors, they’re getting more and more competition, so their margins are starting to contract.
If we can come to them and offer them a solution, give them a cut of the revenue, then they’re able to improve their margins by offering an even better solution to their end users.
Maast for us is a full digital-banking solution that started with payment facilitation that now provides full banking solutions.
It has a Nymbus core on the back end, which allows us to have real-time data.
It allows us to have the API connections that add in additional services.
As that client relationship grows from a deposit relationship or money movement, it can then add payroll and lending capabilities, all within the same platform that they’re working on every day within their business.
How’s the deal flow, Kevin, in terms of pipeline and new potential partners looking right now?
I was with our team last week.
The challenge of developing a great product is everybody wants it.
We’ve already signed up nine clients.
What we’re trying to do, as we onboard those clients, is take it with a gated approach so that you’re not onboarding so many clients that you’re not delivering the client experience that you want.
We’re actually putting some controls in up front.
I think we have a pipeline of another 10 or 15 that have already signed the paperwork.
We’re trying to just focus on the initial nine to 10 that we have.
We want to make sure that their experience is what we anticipated.
Then we’ll start to onboard the additional clients.
I said on our last earnings call there are three legs of this stool.
The first leg was, we have to determine whether there’s interest and demand from these ISVs.
I think we can check that box.
We have that.
We continue to have interest in it.
The second is, can we offer enough solutions that get enough traction that allows us to earn revenue through that banking-as-a-service platform?
It’s too early to know that yet because we’re just onboarding this first set of clients.
The third is, what will be the end-user adoption?
Is it 10% of the clients?
50% of the clients?
5% of the clients?
That will determine how big it is.
But I feel like we’ve been able to prove that these clients want some banking-as-a-service capabilities.
The software vendors want to provide it.
Now we just have to execute in order to get the revenue where we want it to be per client.
We love these niche, swing-for-the-bleachers, do-something-new ideas.
I think it leverages the great history of TSYS and payments.
What you have that many banks don’t have is product managers who grew up delivering product like you have now over at Maast.
But also, it goes into this idea that you’re tailoring the relationship to the customer, to the client’s needs.
Earlier, you talked about trust and how it’s shifting.
This is just another way that you can develop trust in a digital world where Maast, which stands for Money-as-a-Service, really becomes a wonderful part of their business process.
The trust gets developed based on actual behavior, not because you’re just talking a big game.
I hope when we edit the video of this, we can get Woody, the Maast mascot of the organization, flipped up.
Beautiful retriever.
I want to meet Woody sometime.
We’ve got a few pictures that we could probably throw behind us when we’re all said and done.
Now, we’ve talked some classic Georgian artists, probably the most famous of Ray Charles.
I couldn’t really come up with anything for this one because I want to talk M&A real quick.
I think there’s only one way to use the Indigo Girls.
It’s “Power of Two,” their song.
I won’t even bother to try to sing it.
But my old colleague Jack Milligan, who’s the editor emeritus at Bank Director, once called bank M&A really the industry’s great game.
We’re starting to see deals announced, and this is after a period where there was just nothing.
I realize there’s a lot of chatter behind the scenes.
We’re starting to see private equity firms come in, change the game a little bit.
There are seller expectations that have to be balanced with the pragmatic approach of who’s going to buy you.
I’m just curious, Kevin.
You’re sitting in a seat where I’m sure you’re seeing a lot of opportunities if you wanted to go after them.
But broadly speaking, how do you look at the M&A environment at the moment?
What kind of has you thinking, “We’ve got to spend a little bit more time than we had over the last few quarters”?
Look, I think all of the factors you mentioned, and in the environment we’re in, let’s be honest.
The level of uncertainty that exists today with interest rates, with concerns around credit, with the regulatory environment, when you have those sorts of big rocks to break, you’re going to have probably more sellers than you have buyers.
I think there are a lot of banks that are looking at their one-, two-, three-year forecast and saying, “Look, I’m not sure that we can continue to provide growth on our balance sheet, through our P&L, at a level that our shareholders would be excited about.”
I think when you’re one of those CEOs and you have that sort of three-year forecast, your fiduciary responsibility is to say, “Can we create more value through M&A?”
I think that’s starting to exist.
As you guys know, there are two big impediments to M&A today.
Number one is the regulatory environment.
There’s a little bit of confusion on whether there’s a constructive environment to approve some of these transactions.
Obviously, the First Horizon-TD deal had a lot of people concerned about the next deal that gets announced and whether they can get it approved.
I think the Banc of California-PacWest deal was a unique deal, as we all know.
I don’t know that that provides anybody with great comfort.
But we’ve got to get clarity with our regulators on M&A and whether that’s something that they’re willing to accept and approve.
That’s number one.
Number two, as you guys know, with merger accounting, if you were to buy a bank today, you have to mark their balance sheet to market.
That requires a lot of capital.
As we saw with the Banc of California-PacWest deal, that capital was provided through private equity, to your point, Al.
I think that’s where you’ll see private equity play.
I don’t think private equity has a great deal of interest in banks just because of the regulatory environment.
It’s something that makes it hard for them to want to own a bank.
I think private equity will help to provide the capital because if you can do that, there’s tremendous synergy.
When you look at the deal metrics today, if you can mark a balance sheet to market and you can take the capital hit, the EPS accretion that comes out the other side is humongous.
It’s big.
Yeah.
The paybacks are getting shorter.
You’re right.
Very short.
As rates moderate, I think as these marks come down a little bit, the uncertainty doesn’t go away in the system.
I think you’re going to see more and more M&A.
The other thing I would tell you, and it’s something that we all need to keep top of mind, Boston Consulting Group shared a number with me this past year that shocked me.
They said that two-thirds of all middle-market lending that occurred in this last year happened outside of traditional banks.
Two-thirds of middle market.
What’s happening today, banks are being disintermediated by private placements, private equity, and capital markets.
If the pie keeps getting smaller because of these shadow providers, there probably needs to be fewer banks executing in that space.
I believe that you’ll continue to see consolidation.
I think rates need to come down.
The regulatory environment needs to become a little more constructive.
Ultimately, I think you’ll see folks that go out and do transactions.
We’ve had some bank mergers that haven’t gone very well, and I think that’s put a question mark on some of the mergers of equals.
But I think if someone can do it right, get the cost saves, but also build the synergies, you’re going to see other people go and try to do the same thing.
We need to have some success there for people to want to do it.
Yeah.
That accretion from the mark is going to be very tempting at some point, and the ability to do a balance-sheet restructure.
Speaking of the Southeast, what if we could have the folks at Chick-fil-A in charge of merger approvals?
That would be my dream.
I’d be okay with that.
And if we could get lunch out of there too.
Well, we are coming up on time, so I want to just wrap things up by giving a little shout-out to two of your colleagues.
Zach Bishop and Liz Wolverton.
Two awesome folks who have been seen on social media rocking some very sweet Air Force Ones.
I know there’s been this whole sneaker craze.
You mentioned Nymbus.
Jeff Kendall, their CEO, I think kicked this whole thing off.
But you guys have taken it to another level.
You’ve got the whole swagged-out team doing things.
I know how proud everyone is of getting something new.
I’m going to use Ludacris and his song “Act a Fool” because, “You just bought a new pair and they scuffed your shoes. What you gonna do? Act a fool.”
I like the idea that you’re getting something that gets people excited.
I want to put this against some of the new stuff that’s hitting our industry that’s got everyone talking.
Generative AI, not just ChatGPT, but generative AI, has really been this summer’s big intellectual focal point for many people, ourselves included.
You can also spend a lot of time going down rabbit holes if you’re not careful.
We saw this with crypto, with blockchain, the whole DeFi space.
You can spend a lot of time on things that may not have a material impact on your business today.
But you’d also be maybe putting yourselves at a disadvantage if you didn’t commit to some learning.
Not a lot of people in my metaverse branch, by the way, right now.
But it might change.
Here’s where I want to ask you, Kevin.
If you’ve got your Air Force Ones on and you’re walking around feeling pretty good about things, how do you think about what’s on the near-term horizon that your team needs to spend time looking at and learning about, but it may not have that impact on your next quarterly earnings report?
I think this is the most difficult thing about being a public company because you’re incented to squeeze every ounce of expense and accelerate every dollar of revenue into the existing quarters so that you can exceed your expectations and deliver for the shareholders.
I remember when I was in my MBA class, there was a case study on 3M.
Everyone knows the story with 3M, where every year they try to develop between 10% and 25% of their revenue five years out.
What we try to do internally, and Zach and Liz both from a digital and innovation standpoint, we’re thinking about what future sources of revenue look like.
Because when you think about the game of growth, if all you’re doing is trying to grow the same businesses over and over again, there’s a law of diminishing returns.
We talk about taking some of the pressure off some of our existing businesses by introducing new sources of revenue.
My rule of thumb is 10% of the revenue three years out needs to be from new thoughts and ideas.
That’s how Maast came up.
It’s how we started adding in more around analytics.
It’s how we developed our corporate and investment bank, which was an extension of our commercial offerings, about two years ago.
It’s hard to do.
But I think you’ve got to keep your folks focused on that three-year forecast.
That three-year forecast is never accurate because a million things change, as we know.
Interest rates, credit environment, whatever.
But when you’re looking out three years, it forces you to make decisions that are not just good for the short run, but are good for long-term shareholder value.
Look, in environments like this where you’re having to be tight on expenses, we’ve been very clear.
We’ll cut back on expenses just like everybody else.
But what we won’t do is, if we have an idea that we think is accretive to the shareholders, we’re not going to cut that back to a point where we’re not going to invest in it.
I think what that allows us to do is, when we get to the other side of this environment, margin contraction and credit uncertainty, we’re in a better position than others.
We’ve seen it happen where everybody just takes the easy way out and they stop spending on everything.
I’ve heard examples where they won’t let their relationship managers travel to see clients.
They don’t let business development happen.
Well, that’s a faux pas because if you’re not out being seen, some other bank is being seen instead.
We keep that mindset.
We focus on the three years.
We’re mindful.
We may cut back the incremental expense each year on some of those initiatives.
But if we’re believers, we’re not going to be able to justify to ourselves that there’s still not an ROI there.
It’s hard, but you’ve got to stick to your guns.
Ultimately, I think that’s what will allow us, when we get into these out-years, to continue to differentiate ourselves from a growth standpoint.
I think, to put this in perspective for our audience, for being in Kevin’s chair at his size of $60 billion, when you lose about 30 basis points in NIM because of what’s happened in this environment, that’s over $1.5 billion of revenue.
Now we’ve got to get really scrappy with investing.
Kevin, looking at your Q2 results, one thing really impresses me.
That non-interest-income CAGR that you guys are knocking out, more than double-digit over the past year, is impressive in this environment.
I think it comes from you telling the team to be scrappy with new sources of revenue.
It is.
It’s Treasury and Payment Solutions.
We made a major investment there three years ago.
Brought in a new team.
We’ve added 80 people over that timeframe, 32 new capabilities.
The last two years, we’ve added to our wealth teams, our family office.
You’ve got to make sure that people who rely on fee-income strategies aren’t based on interest rates.
Look, I love mortgage, but a lot of people made a lot of money because mortgage rates were low.
It wasn’t anything we did.
You’ve got to actually have an intentional strategy to say, “What differentiates you from a fee-income perspective?”
We know some of those businesses are lower margin, generally, wealth and others.
You’ve got to have a concerted strategy.
I think our team has really executed on that.
It’s going to give us some ability, along with Money-as-a-Service and some of our other banking-as-a-service platforms that we’ll announce in the coming weeks and months.
I think we’ll have a good tailwind as it relates to fee income going forward.
Yeah.
It’s hard work.
You’ve got to be patient.
But you get credit not in the short run, but in the long run.
I think that’s right.
Amen.
Amen.
We just have to say thanks to Kevin for talking about this great game of growth.
It’s been awesome to spend a little bit of time with you.
We appreciate you getting Plugged In with us.
He’s Steve Williams. I’m Al Dominick.
We’ll catch you again in a future episode of Cornerstone Advisors’ Plugged In.
Thanks so much, Kevin.
Thank you, guys.
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