It's Not Too Corny to Talk About Love and Banking

’Tis the season to wake up to news that a former financial manager for the Jacksonville Jaguars has been accused of stealing more than $22 million from the NFL team through its virtual credit card program between 2019 and 2023.

This, my friends, is just another reminder that the business of banking is never boring.

Steve, did you see that this employee pickpocketed the team for that amount of money?

You know what? That’s why people go to church every Sunday, have a little bread and a little wine, and say, “I can do better.”

It doesn’t surprise me.

Well, this guy did pretty well because he was buying Teslas and pickup trucks, a condo on the beach, designer watches. He was placing bets on gambling sites. He joined a country club. He was chartering private jets for his friends.

You know what he really did that surprised me?

What was that, Al?

He was buying crypto.

I thought crypto was dead. Does this mean that it’s coming back?

I’m telling you, I’ve got laser eyes sometimes. No one believes me around here.

Bitcoin certainly made a recovery this year from the start. It’s where we are at the moment.

This guy is not in the running for any GonzoBanker of the Year awards from Cornerstone Advisors, nor is he going to be making any guest appearances on Plugged In.

But it certainly allows for an interesting start to this conversation between my man Steve Williams, who’s over in Scottsdale, Arizona...

Hey, hey.

...and me, Al Dominick, who is just slumming it in the District of Columbia.

We wanted to take a few minutes to look back on 2023 before really focusing on the first quarter of 2024.

Like we’ve done all year, we’ve taken some creative license from a few songs that some of us have put on repeat.

If you were to hop onto Spotify, you’d find that Steve unwrapped his Wrapped Spotify playlist.

So I thought we’d have a little bit of fun with his top five songs today.

You’re going to see an ’80s boy in parachute pants with these songs, but let’s roll.

There’s some MC Hammer waiting in the wings, but Steve’s top five songs were “Missing You,” “Only the Young,” “Let My Love Open the Door,” “Stone in Love,” and “Blood on Blood.”

At least, that’s how I interpreted everything.

This might be a challenge for some people, but really not for the two of us, right, Steve?

Well, Bailey, my videographer here, is looking at me like, “I’ve got to go back to the history books for some of these hair-metal songs or something.”

Don’t you worry, Bailey.

We’re going to toss this all up on our shadow Spotify playlist that we love to encourage people to listen to when they need a break from their yacht rock and other holiday setlists.

I thought we could start off with “Missing You,” which was the number-one hit single from John Waite’s 1984 album No Brakes.

If you’re not familiar, the lyrics talk about a man who’s just in total denial about his emotions when a relationship goes south.

I think it was probably his biggest hit.

I think we can use this, Steve, in a creative way because I’ve really been missing the GonzoBanker Awards that come out only once a year.

Since you’re one of the originals, one of the OGs of the GonzoBanker Awards, I thought we could get a little background from you before we give a shout-out to some of the folks who might be in the running for 2023’s Gonzo Awards.

Cool.

Cornerstone’s going to be 22 years old in February.

For 20-plus years, we’ve been geeking out on banking, and we created the GonzoBanker Awards long ago just to salute what we loved about banking, the bankers, the people in the industry, the technologists.

It’s really fun looking back on those awards.

It started with all of us sitting in a room when we were a small company.

Now, with 170 folks, we actually put out a survey and ask people to nominate what they saw that was interesting and who really rocked it during the year.

Just a little fun.

I looked back at our last three GonzoBanker of the Year Award winners.

Last year, it was Dave Brager at Citizens Business Bank out in Ontario, California.

This is a bank that is just enjoying the fact that they spent decades building core deposits in this rate environment, and they’re rocking it.

Randy Chesler from Glacier Bank, the year before, built a tremendous franchise, executed fabulous M&A.

Before that, the very famous Jill Castilla.

We’ve seen a lot of Jill this year.

But two years ago, we were saying, “Watch this. This is number one with a bullet.”

We’ve had some credit union folks.

April Clobes from Michigan State University Federal Credit Union was last year, and she’ll be on our podcast early in 2024, as you know.

Jim Hayes, who was at State Employees’ Credit Union and now is at State Department Federal Credit Union, is a terrific leader.

Brett Martinez out at Redwood Credit Union in California, who does nothing but sleep and help his community.

Some great folks that we really enjoy.

But Al, one quick thing about the awards.

We really like to dig deep and think about change in the industry.

I went back 20 years to 2003, and a little bit of the technology of the year in 2003 was a word we don’t even say anymore: check truncation.

First of all, the word “check truncation” was in the back office.

How we would take the MICR numbers and start to move that data between banks.

That was the precedent to Check 21, which is now check imaging, which became mobile deposit.

Life moves on.

We were having fun with those kinds of innovations, and here we are now with large language models and machine learning.

Wow.

So check, is that spelled C-H-E-Q-U-E?

I mean, how does that even work?

Yes, and I hang out in my call centre.

That’s what you do in Canada and London.

Brilliant.

We can continue down this path, or we can say some of the fun that we’ve been having internally over the last few weeks has been collaborating with the team.

Our partners, the managing directors, we’ve got consultants who are out walking the mean streets of the country all the time.

We’re trying to surface some of these really great stories that need to be memorialized in this upcoming Gonzo Award ceremony that we’ll be putting out.

Is there anything that really stands out to you?

Last year, I was really pleased to nominate Frank Sorrentino for his spot-on description of the sixth borough of New York City being the state of Florida.

I’m curious if there are any ones that are kind of hitting you in a good place.

I think we definitely want to give a nod to one of our guests, Brent Beardall from WaFd, who started the year with a real scare and tragedy in his life.

But as you and I have talked about, he has taken that event and turned it into energy, optimism, reaching out, and a word he uses: love.

It’s not too corny to talk about love and banking.

We’re going to salute that energy that Brent brought to the world.

You know what’s interesting, Al?

Deal flow is interesting.

Not a lot of bank deal flow in 2023.

Let me hold this up for you.

It’s been very light compared to the 2021 era, and we could go back to the late ’90s and see an explosion of M&A.

We think this is going to come back.

We’ll talk about that later.

Even in the fintech world, the PE and venture world was kind of a quiet year.

So we think there’s a lot of pent-up demand for deals coming in the years ahead.

There’s some stuff percolating.

I know that we’re going to get excited in future months to really dig into some things that are announced.

I think this is a nice way to transition to your second favorite song because it also ties in with something that you’re talking about, which is all around pent-up demand.

Again, Spotify does a nice job of teeing things up, and you were public with this.

It’s “Only the Young.”

Knowing you, I thought you were talking about Journey, but I also know that Taylor Swift has co-opted that song.

Everything Taylor touches turns to gold.

I know you’ve been to some Taylor Swift concerts with your stepdaughters.

With my daughter, we’ve got a lot of Taylor in the rotation.

So I’m just going to use “Only the Young” by Taylor Swift on this one.

All right.

I’ll point out quickly, I was a top 1% Taylor listener because of my stepdaughter’s soccer practice in 2023.

That was told to me by the data from Spotify.

A likely story, Steve.

I know that you’ve been listening to it morning, noon, and night.

Ask for a friend.

Exactly.

I had to look up these lyrics.

They didn’t come naturally.

But they did say, “Don’t say you’re too tired to fight. It’s just a matter of time. You can run. There’s a finish line.”

That whole idea that we’ve got to run, we’ve got to perform, we’ve got to be ready to roll.

I think this is why we think that 2024 will be the year of the CFO.

When you just showed that chart around M&A activity being really in the refrigerator for the last few years, I think CFOs are in this really interesting position as we move toward the first quarter.

There is a lot percolating.

There is a lot incubating.

We just think that this is a big, big, big year for a bank’s chief financial officer.

You want to build on what I’m thinking about?

Let’s zoom out for a bit.

We had a central-banking experiment of the last 15 years across the Western world that’s never been done before.

We got lulled into a different kind of world.

I like to joke, Al, the poor VP of Finance running the ALM models for 15 years was like the Maytag repairman.

Then kaboom, in 2022 and 2023, here we go.

We’re off to the races with balance-sheet management, liquidity management, margin management.

I feel sorry for the CFO.

They wake up every morning with the reality of that from an earnings standpoint.

But they know that, from the fight for relevancy, what you said, they’ve got to perform, but they also have to transform.

They can’t have an investor deck that says, “We’re ignoring AI,” or “We’re doing nothing with data.”

There’s no transformation of our delivery to digital.

All of that investment agenda has to continue.

I do want to say, it was a wild year.

We’re looking right now at very low valuations.

But I want to brag for a little bit, Al.

This chart, in May of this year, it was right after First Republic had failed in April.

You had SVB, obviously, Signature, and others in March.

People were talking about PacWest.

So I mortgaged my house.

I sold my car.

I took my wife’s jewelry without telling her.

I went in on the KBW Regional Bank Index at 35.

It’s now at 48.

So it’s way down from before, but you can see a bit of, “I’m not dead yet,” in regional banks.

Sitting here at seven times earnings with 4% dividend yields, if these CFOs can get their teams to perform well enough in 2024, we can let some time take away some of those bond losses that we saw holding back M&A.

I think it’s going to be a busy year of continuing with that investment agenda on transformation.

Then we’re also going to start seeing some consolidation rear its head again.

I think this goes to this third point, which is all around perform, perform, perform.

That’s to earn the right to transform.

This is something that our partner Terrence was able to articulate nicely as we thought about where we as a firm can add value to some of these conversations.

Without going down the Cornerstone route, I thought I’d take you down a Pete Townshend path since I know this was your third favorite song.

“Let My Love Open the Door” has a lyric that says, “When everything feels all over, everybody seems unkind, I’ll give you a four-leaf clover, take all worry out of your mind.”

That’ll be my gift to 2023.

First of all, it’s not me singing it, so that’s gift number one.

Gift number two is just putting it out there that, for the last few years, this whole idea that you’ve got to run a business, be trying to protect the business, while at the same time thinking about how you change it, I think bank boards in particular have understood and really put their arms around that thought this year.

If we look back, it wasn’t about margin expansion.

It was about margin protection.

It was about the liability side of the balance sheet.

Really making sure you’re pricing things appropriately.

A lot of work has been done this year that I think positions smarter banks to be in a spot to be opportunistic over the next 18 to 36 months.

When we think about perform, perform, perform, it’s a lot of activity that’s already happening and just getting even smarter and more efficient.

But earning the right to transform, I think, ties into certain models that we’ve been playing around with.

You want to tease out one that we affectionately call our Creative Bank Performance Model?

I think right now it’s about intentionality.

When we see our clients executing well, they’re thinking of the revenue side.

They’re not saying, “Let’s pray and light candles for deposits.”

They’re breaking down the growth goal into where can we use analytics to improve retention of our large depositors?

Where can we gin up small business in a more intentional way?

What can we do with our digital front door to open things up?

How do we do product management and loyalty around that?

I think that’s the revenue side.

Then there are dollars under the couch cushions in most banks.

It’s really just getting the data to know, with our vendor contracts, with our operating efficiencies, with how we are driving execution, there is money there.

It’s really about building that discipline.

But I think also, Al, one thing to really take a reflection on in 2023 is, you’re right, we had to perform.

So there was a lot about risk mitigation when it came to liquidity, capital, getting margin there, keeping the regulators comforted that all is well.

You saw the Senate Banking Committee attempting that yesterday.

But you warned us.

You said early in the year, “I hope this focus on risk mitigation doesn’t make us a risk-averse industry.”

I will say, if I was going to give us a report card, we pulled back a bit on transformation.

We saw things like some of the challenges with banking as a service this year.

I know you and I agree: Don’t stop the transformation, even though there are hiccups along the way.

There is still opportunity for modernized banks.

When you see something like the Goldman-Apple divorce, it also shows us that Big Tech and big national finance are not immortal.

Good entrepreneurial institutions can dig in there, keep trying things.

But I think we’ve got to have a risk appetite for execution, for trying new things, for leaning into technology.

Don’t confuse that with the fact that we can be very conservative when it comes to credit, capital, liquidity.

What you’re saying lines up with certain conversations we’ve had on this particular series where we’ve said, look, over the next five to seven years, what we’ll call smarter banks, they’re going to be hyper-efficient.

They’re going to become even more differentiated.

They’re not going to use the word agile, but they’re going to be nimble.

Personalities.

Lots of personalities.

They’ll be data-driven, to your point, and they’re going to be opportunistic.

These are terms and themes that seem simple on the surface, but they’re very challenging to execute on a recurring basis.

Smart business leaders understand you can create the proverbial flywheel by getting your teams thinking in these terms.

I want to encourage everybody, if I could, to go out and grab from an investor-relations website the latest investor presentation and look at how they look at their business.

From design thinking, from market segmentation, from an expert AI and data perspective.

I think we need to look at some of these players.

Intuit has knocked it out of the park.

When I asked on LinkedIn recently, “What’s their secret?” some Intuit folks said, “Guys, it’s our culture. We are a culture of execution.”

I encourage you to go look at that investor deck, compare it to the average traditional bank investor deck, and say, “What’s the gap we need to fill when it comes to transformation, customer experience, those types of domains that are outside of finance, M&A, and credit?”

Also, think about the conviction the leadership teams have when they decide to sunset something like Mint.

In some ways, what happened this year is no different from when Capital One decided to exit a very profitable business line and people looked at them like, “Why would you do this?”

Understanding what you don’t want to be, again, is one of those business strategies that people love to talk about, but very few actually put into practice.

Apple, Amazon, Google, Microsoft, they’ve all made a ton of mistakes along the way on the way to trillion-dollar valuations.

Absolutely.

We’ve got to think that way about execution.

If we’re thinking about execution, we want to keep to our script, if you will, which is again to borrow from Steve’s Spotify playlist for 2023.

Since we’ve already used Taylor Swift, I’m going to come back to Journey just for a second and talk about “Stone in Love” from Journey’s 1981 album.

Oh my God, what a good song.

You probably love this one as much as I do.

Because if we’re going to use Journey, we’re going to take a journey.

That journey will be away from our computer screens, with the two of us reminding people it’s okay to read and listen to things that inspire us that wouldn’t normally fall into your day-to-day routine.

I was thinking about some of the best things that we’ve heard or read this year.

While I’m surrounded by things like Wine Spectator, which is a guilty pleasure, I would say probably one of the best books I’ve read, and I know it’s not new, and I know a lot of golfers have read it and they look at me funny when I say this, The Match by Mark Frost was my favorite book of the year.

This is a golfing story about a best-ball foursome between what were then the two greatest living golf professionals, Ben Hogan and Byron Nelson, and the two greatest amateurs, Harvie Ward and Ken Venturi.

This is a book, if you love competition, if you love to think about how we can control two things in our lives, our attitude and our effort, that I think would really resonate with folks looking to put a paperback in their luggage.

That’s been out.

Banking and golf, they go like this, don’t they?

Surprisingly, they do.

People do enjoy a good day out on the course.

So that’s something I read.

What about you?

Maybe it’s cliché, but I would say Walter Isaacson’s biography of Elon Musk was a real hit for me this year.

What I really took away that kind of sits with me every day now, thinking about smarter banks, is the Musk algorithm.

First, define the requirements.

Don’t overengineer stuff.

Then take every step out you can.

I think that goes to our hyper-efficiency goal.

That kind of engineering focus on what he calls first principles.

I encourage people, read up on first principles and the Musk algorithm.

We can apply that to banking.

The winners standing in 2030 are going to be those types of organizations.

Tied to that was a really cool white paper I’d ask people to download.

It was called The Techno-Optimist Manifesto by Marc Andreessen and Andreessen Horowitz.

All this fear of social media and misinformation and AI.

Andreessen put out a contrarian message.

It said, “Guys, we evolve. We get better. Things get better.”

I love this line from Andreessen’s white paper: “We believe in adventure, undertaking the hero’s journey, rebelling against the status quo, mapping uncharted territory, conquering dragons, and bringing the spoils home for our community.”

I think we’ve gotten much too inward, dark, pessimistic.

I think Andreessen’s kind of saying, “Come on, guys. Let’s look at the history of the world and get more optimistic about what technology can be and how we can have a growth mindset.”

So, a good read for everybody out there.

As you say that, it’s hard not to think about Andy Grove’s Only the Paranoid Survive.

There’s a little part in that book where he talks about how he would fire himself every year from Intel, walk around the building, then come back up and rehire himself.

In that moment of leaving the building and thinking about what he would do differently as the former CEO and also what he would do as the incoming CEO, it gave him a different perspective.

I like how you’re surfacing some ideas that people could use just to get a little bit more of a pep in their step when it comes to this.

You did talk about Elon Musk.

You encouraged me to start reading it.

Admittedly, I started it off on Audible and thought, “You know what? This is too much for me just to listen to.”

So I had to go out and pick up the physical copy.

But when I did that, I made a switch.

I had been reading Team of Rivals by Doris Kearns Goodwin, which is all Abraham Lincoln, his relationship with his cabinet, and his incredible political skills and leadership ability.

So I moved that over to my listening side of things.

I actually flip-flopped.

I started with Elon in my ears and then had to put it in my eyes.

Then with Doris Kearns Goodwin, that’s another one that you could put on Audible, get on a plane, and instead of watching a movie, just listen to how the president of the United States dealt with some really vicious infighting to find great results that benefited everybody.

One of my favorite books of all time.

It was a moment of truth in the country and the world.

For all you leaders out there who think your management team is a pain in the butt, I would encourage you to read Team of Rivals and understand how do you make lemonade out of the fact that we’re all different?

We have different operating systems.

But together, things can be really cool.

So a great lesson.

Love that book.

Now I’m actually kind of embarrassed.

We’re not doing anything really contemporary here.

I’m taking books that have been on the shelves for a while.

We’re talking about music that has been around for a bit.

But we might as well just be ourselves and own it because the number-five song on your Spotify playlist was “Blood on Blood,” which is a Bon Jovi classic.

Oh, it’s so good.

For those of you who love the synthesizers and all the other TikTok music, don’t worry.

There is an epic drum solo to get this thing started.

It’s a song about how everybody has friends from their youth that, literally, if I got that call in the middle of the night, I’d be right by your side.

Everybody has friends like that.

No matter where they go, if they’re rich, poor, you treasure them.

That’s what that song leads to me.

I think this is where we want to just remind people, let’s not forget the good stuff that happened this year.

You’ve already mentioned Brent Beardall for keeping it real.

He was in a pretty scary plane accident, took some time to recover.

I know he’s still dealing with some of the physical rehab.

But for him to be able to come out and not just give you an “I love you, man” as a throwaway line, but to actually embody and model the behavior that relationships matter, how you treat people with respect can be done without a lot of effort, but it makes a huge difference.

I know we’re going to talk as an industry about Silicon Valley Bank and First Republic, Signature, Silvergate.

Those are businesses where we shouldn’t sleep on all the great work that they did.

Obviously, this year, things got away from them.

But let’s just not forget the good stuff that happened.

We talked Brent.

Another one that I just want to shout out is Ira Robbins at Valley.

With everything that’s going on in Israel right now, to see him put himself on a plane and go over and really show what a leader has to be in trying times, I just have incredible respect for him.

I know you have other folks that you’ve come across, but who do you not want to forget as we move forward?

We serve at Cornerstone the regional bank, community bank, and credit union markets.

With our benchmarks, Al, I can safely say that the 1,500-plus institutions we serve give over $1.5 billion to charitable causes every year.

We see bankers get paraded in front of Congress as greedy and this and that.

This is part of the fabric of our country, of our community, and that’s a lot of money.

Couple that with volunteer hours, sponsorships, small-business lending, real-estate lending.

I just think it’s really cool.

I think we’re going to have a very interesting 2024 that might exacerbate political polarization, Jerry Springer Show-type politics.

I think our clients are some of the adults in the room that hold things together.

There are thousands of stories we could really tell about great people in community.

That’s a lot of what we try to spend time doing when we tell the stories of Jill Castilla, Brent Beardall, or an Ira Robbins.

It’s interesting.

I mentioned our partner Terrence earlier.

He’s served up some great ideas for how we might use this show going forward.

We’ve already started to think about episodes that focus on wealth management with someone who really knocks it out of the park and has a stand-up-and-take-notice fee-income strategy.

We’re looking at banks that have a brutal story about how they reduced non-interest expenses.

If there are banks out there that have really great cash-management services, these are things that strike a chord not just to you and me, but I think to others and listeners.

We’re actively thinking about how we can tell and help tell better stories because we both believe we do not want an industry that just has eight to 10 super-large banks that all act in the Citi, BofA, JPMorgan space, with a few small folks fighting for scraps.

We’ve got to have a vibrant community banking system.

That kind of caps the year.

You and I were both at a meeting where Truist’s former CEO, retired CEO Kelly King, said, “I think the regulators want 10 trillion-dollar banks.”

You and I both got nauseous at the same time.

It’s just not American.

We love the grassroots.

We don’t trust the man, generally.

We want checks and balances.

I think you’re right.

That’s what we’re hoping the smarter banks, thousands of smarter banks, regional banks, credit unions, will be part of.

That grassroots.

That’s maybe our Christmas wish, Al.

They can do it, and we’ll be there to help.

Just to wrap things up, I know I’ve taken your playlist.

I could have tried mine.

I was looking at mine just out of interest.

Evidently, I watched a lot of White Lotus this year because “Do It, Do It Again” by Raffaella Carrà was my top song.

I love the song, but I’m not sure people would be familiar with it.

Second favorite was “Ciao Ciao,” which again I’m going to put up on the Spotify playlist.

I think people love listening to this on a Friday night when you’re having friends over for some wine and good conversation.

But the third song can really take us home because it’s by Fleetwood Mac, and it is “Everywhere.”

I think everywhere is where Cornerstone as a team has been in 2023, and certainly that’s our plan for 2024.

We’re going to just be out and about doing everything we can to help the troublemakers that Steve talked about.

I thought I’d just wrap things up.

Steve, you’ve got some big travel plans coming up, and I do as well.

Why don’t we share where we’re going to be, so if we can see people in real life, in person, we can talk about getting Plugged In on the business of banking with them.

Over the next six weeks, where do you think you’re going to find yourself?

Several bank clients.

I know we’re gearing up for the HUG Symposium in the Bahamas.

I’m going to be one of the speakers there.

I’m going to be talking to some regional leagues and even some of the venture-capital world of fintech.

So a bit busy the first couple months of the year.

That’s very cool to think about where we’re going to be.

I know I’m going to be in Nashville, Tennessee, New York City, Scottsdale, Arizona, in January for Bank Director’s Acquire or Be Acquired conference, which is at the JW Marriott Desert Ridge.

I know there’s going to be a great audience there, so looking forward to that.

Sticking around for the Janney investor event that follows.

I’ve got a trip up to Connecticut in February to see a tech company that’s doing a strategic-planning retreat before I get warm down at the Phoenix Open for a few days.

Then I’ll bounce over to Boca for KBW’s Winter Community Bank Conference.

I know that will be a lot of fun and bring a great audience.

So for both Steve and me, there are going to be some planes, trains, and automobiles in our future.

But if you are interested in seeing us, drop us a line.

Hit us up on LinkedIn.

Certainly, we’ve got some great guests from this 2023 calendar year that still have a ton of relevance.

As we said, we’ve got some really cool ones in the queue for 2024.

Really, we just want to say thanks for getting Plugged In with both Steve and me in 2023.