2024 In Review: Banking's Big Moves // Plugged In 1x37

Coming up, the last episode of 2024’s Plugged In series.

Oh, good. I thought you were going to say forever, that we’d been canceled.

Just for 2024. We’re going to wrap things up. I brought a little champagne for my man Steve Williams to enjoy while we’re here. We’re going to pop some bottles.

Wow. We might be talking models, financial models, that is.

And just doing some cool stuff. To all of our listeners, thanks for joining us throughout the year. This is going to be a bold, maybe slightly reckless, grab bag of predictions for the upcoming year. We’re coming off a 12-month stretch where things were really interesting. Steve and I wanted to get the bubbles on the mic if we can. If not, I will fake them, but there’s champagne flowing here.

We want to send some toasts to people and acknowledge things that have really been impressive. We also want to call out some of the challenges we think people need to keep in mind as we plan for the first quarter of 2025.

In the past, we’ve used music. We’re going to continue to do that. I haven’t had a chance to look at Steve’s Spotify Wrapped playlist, but if memory serves, this time last year it was all Taylor Swift.

Taylor, Taylor, Taylor. I stopped doing soccer driving, so I dropped off Taylor’s top 0.1% and became an old guy again with Springsteen, U2 and Journey.

Party, party, party. It was fun being in Tay’s top 0.1% during 2023, but it didn’t happen in 2024. That’s one of the big headlines of the year.

That is the headline for Plugged In. Steve is back in business. What else is back in business is the M&A cycle in the banking space. I had to write this down because there were a lot of deals announced this year that I think give people confidence the next few years are going to be a wild ride.

SouthState Corporation’s planned acquisition of Independent Bank Group in McKinney, Texas, earned our GonzoBanker Acquisition of the Year Award for banks. That was an approximately $2 billion all-stock deal. We’d also be remiss if we didn’t talk about UMB Financial’s plans to acquire Heartland Financial.

Big deal. Heartland is a more than 100-year-old bank, and UMB is doing something really large. I think it’s one of the largest deals they’ve ever done.

What was interesting about that one to me, Al, is that Heartland essentially rolled a lot of its equity into UMB equity. This isn’t your classic cash deal with a little symbolic stock. This was Heartland going all in and saying, if we merge with you, we see value appreciation for UMB in the future.

I like that. Tip of the hat to the Heartland team. I think that’s what attracted UMB, which is fairly conservative. They’re not out bungee jumping in terms of how they’ve created value for the family and shareholders over a long period of time.

It’s interesting to look at some of the deals that were announced because you find some of the serial acquirers in the banking space getting back into the game. In my hometown of Washington, D.C., I was really happy for Rick Adams and his crew at United Bank when they announced their plans to acquire Piedmont Bancorp. That deal was approved about a week ago here in December. The bank is going to cross $32 billion in asset size and have more than 240 locations from the Mid-Atlantic all the way down to Atlanta, Georgia.

Not to be outdone, WesBanco also announced plans to acquire Premier Financial in Defiance, Ohio. We had Jeff Jackson on Plugged In this year, and that was a great discussion. He talked leadership, culture and why a deal like that made sense beyond what it looked like on paper.

As we’ve talked about, any good spreadsheet jockey can make the numbers look great. The value it creates for the communities they serve is what he feels really confident about.

And core deposits. To get those Ohio core deposits with your engine, deposits were quite valuable in 2024. That was a good deal from the standpoint of building a base of core funding for the future.

Again, there are so many deals we could recognize. Another Gonzo Award winner was Atlantic Union’s merger with Sandy Spring. I know there are lyrics we could pull from your playlist to talk about mergers of this size, but think about Sandy Spring, Dan Schrider and his crew running a really strong organization, and John Asbury, Maria Tedesco and the team at Atlantic Union. They’re building something really powerful and meaningful.

Right, a roughly $40 billion bank. What was interesting to me is that they became this D.C., Maryland and Virginia powerhouse. The branch overlap wasn’t that significant, so they really complemented each other and expanded at the same time. I hope the integration goes well. It’s going to be great to watch, and that’s a very edgy bank at $40 billion.

You think about edgy banks and markets that attract people’s attention. I’m from Boston, even though I live in D.C. I just gave you a Red Sox book for Christmas.

He did. Here’s the evidence. Amazing Tales From the Boston Red Sox Dugout.

Plenty of those. I won’t make one Buckner joke.

This is a page-turner. Four championships, you know. It might make me sleep a little easier.

I think about what’s happening in Boston. Berkshire and Brookline, similar-sized institutions, a few weeks ago basically came out and said they’re looking to do something together. We’re going to be paying attention to that. I made some calculations, and it seems there were about 100 bank deals with an aggregate value of more than $14 billion announced so far this year.

If you compare that with this time 12 months ago, there were only about $4 billion worth of transactions announced. Another one in the Northeast is Enterprise and Independent. There has been a lot of activity. Jeff’s deal was earlier in the year, SouthState was summertime, but many of these have come in the last half of the year. That’s why it supports your outlook that 2025 is going to be busy.

I’d also point out the credit unions are very active in merger discussions. We talked about a Gonzo Award winner, First Tech Federal Credit Union and Digital Federal Credit Union, doing the largest credit union merger in history. That’s another signal in the credit union space that has people looking around and saying, wait, this is actually happening here, too.

Yeah, a roughly $12 billion and a $16 billion institution combining to make a $28 billion one. It’s going to be quite busy. Who can integrate and keep their soul and continue growing? That’s going to be the question. That does not always happen. There have been plenty of studies suggesting a majority of mergers do not create long-term value, so we shall see.

We shall see. I can’t disagree with any one of these deals individually.

When you’re talking about different types of organizations trying to figure out what their path forward is, the underlying message we’ve picked up on this year at Plugged In is execution. You can have great ideas, great teams and spreadsheets that look good, but unless you’re actually able to execute, it’s all just talk.

When it comes to talk, there’s somebody who really talks the talk well, our friend Tom Michaud, CEO of KBW. Tom is the only two-time guest on Plugged In, and he’s proud of that fact. We’re proud that we have a chance to talk shop with him.

He was on record saying KBW expects the banking industry to grow earnings by 6% in 2025 and 12% in 2026, largely due to stronger net interest income. He also said large banks will get a boost from a rebound in global dealmaking activity, and he notes that investors have really warmed up to the banking side of the opportunities because of the improved operating environment and the November election.

That’s from the horse’s mouth. This is the guy who sees a lot of deals. Whatever your political leaning, the data shows that in the summertime, when things started to change after the Biden-Trump debate, and then through the election, you saw bank indexes moving.

Jamie Dimon was quoted a couple of weeks ago talking about bankers dancing in the streets when they think about the future regulatory environment. Whatever your leanings, that’s some of the expectation going into 2025.

And I think that frees up the idea that maybe mergers will be approved more quickly because approvals have been glacially, mind-numbingly slow if you go back into 2022 and 2023.

There’s a lot of positive stuff. Unfortunately, there’s some negative news I read before coming in here, all around the Fed signaling its intent to keep interest rates higher than investors had expected in 2025. I think they’re penciling in just two rate cuts for the next year. Yes, stocks across the board have rebounded in a meaningful way, but inflation has been sticky.

I think we’re going to deal with some false surprises. Powell started to lower rates, but the long end of the curve went up, so you didn’t get a mortgage refinance boom coming. There’s plenty of talk about whether Trump’s agenda is going to be inflationary, or whether economic growth itself will be inflationary.

They’re kind of like Gilda Radner on Saturday Night Live, “Never mind.” I don’t like being a CFO in this industry right now because you’re constantly updating the model and stress test.

If you listen to Plugged In, you’re constantly hearing Jay Powell’s name. Sometimes it’s positive. I think you called him Santa Jay Powell on an episode. I’m not sure we have the proper description given today’s news.

Yeah, he’s become Krampus.

There we go. All right, that was one big theme. We’re caroling our way through this wrap-up. I wanted to switch gears and talk about some of the technology and vendor challenges we’ve made note of. There’s operational risk, there are compliance concerns, and we’ve had a year where banking as a service has really been through the wringer in a lot of ways.

On the tech front and regulatory end, you mentioned Jamie Dimon. He’s had some pretty interesting quotes about bringing knives to fights when it comes to making sure the industry is protecting itself and talking about the value it has. Let’s talk about the challenges we’ve started to pick up on with some of the vendor relationships.

If I was going to put a theme around technology in banking in 2024, and I’ve heard this come out of the mouths of technologists, CIOs and even private equity folks who invest in this domain, it’s complexity. There is a mind-numbing and growing complexity.

Some of that is, I’ve got to keep up with digital, data and now AI, so I’m adding more. Some of it is the regulatory side. I’ve got to be thinking about KYC, AML and everything that goes with that.

Some of it is the market ecosystem. It used to be, I got everything from Fiserv or everything from FIS. Now I’ve got a stack of all kinds of things. I’ve got my digital stack, contact center stack, fraud and risk stack. You have more applications, more vendors and a greater need for integration to deliver that customer experience or have speed to market, just as the technologies are getting more broken apart between new and old and different vendors.

If I were in the C-suite and wasn’t a technologist, I would understand that my complexity has grown. That adds risk and creates the need for special kinds of resources.

Internally, I need an IT group that knows how to integrate and work with a bigger basket of vendors and technologies. I also need partners out there who can act as the glue, integrators who know how to manage big, hairy projects. It is not the old world of, “Daddy Fiserv or FIS will take care of everything.”

In this new world, you add the fintech partnerships we want to do, and those have to integrate back into the enterprise and the experience.

When you talk about being in the C-suite and maybe not having the depth of knowledge that’s required at this point, instead of running from that reality, this is where vendor relationships become meaningful. If you have true relationships and partnerships where you can learn from others, and you’re willing to say, “I understand the old ways won’t open new doors for us, and I have to get smarter,” that’s important.

It’s me who has to get smarter. I can’t delegate that to other people.

Part of the challenge we’ve seen is some of the more established technology companies have been bleeding talent. I think that puts additional stress and potential reputational risk onto organizations that may not have the deepest bench to do the technical work they need to stay relevant.

Right. If I assume everything is going to be handheld for me behind the curtain at the big outsourcers, I shouldn’t. They’re not even saying that anymore. They’re trying to be straight.

If I’m not building capability with partners or in-house, I could have operational risk. We’ve seen this. We saw a credit union get fined by the CFPB this year for a bad digital conversion.

It isn’t only credit risk and liquidity risk. Regulators are saying, are you managing a complex, technology-driven industry in a safe and sound manner? I think you’re going to see a lot more regulatory focus on how we manage it going forward.

You’ve been in a lot of strategic planning sessions over the course of the year. I’ve been invited into quite a few myself. It’s been fascinating to hear the level of sophistication teams are starting to bring to leadership and the board to say, “We have to make sure we’re rock solid and able to answer certain questions, and we also have to prepare for some that may not be as comfortable to address.”

And to use our smarter bank word, hyper-efficient. I’m going to have to get hyper-efficient to be able to have some IT folks dealing with the regulatory requirements and some others going for speed to market.

I don’t want to get slowed down because my IT group is spending two-thirds of its time answering exam questions or putting in new infrastructure to meet regulatory requirements. Where’s the customer experience? Where’s the new niche capability? How am I leveraging data to drive the business? You’ve talked a lot about having that product mindset and speed to delivery.

Smarter bank concepts sound nice for us to talk about, but when you hear someone like April Clobes from Michigan State University Federal Credit Union talking about speed to market and how she has built research capabilities, and has been getting into the university system through NIL deals now that it’s legal, you realize leadership can’t be outsourced.

Some of the tech work we’re discussing can’t be delegated either. You have to own the uncomfortable truth that the world has moved at such a pace that we have to move faster.

It’s kind of a new management measurement you have to think about. I’ve got my profitability, I’ve got my risk profile, and now, what is my speed down the highway? I can be very profitable and very risk-averse, but if I’m not moving, that probably opens up our other topic, growth. Where are we going to see growth in the industry?

Growth stories are hard to come by. When you hear them, you get jazzed up and sit a little straighter in your seat. You mentioned that your Spotify playlist is back to the classics. Remind me of one of your favorite songs you’ve been listening to this year.

You never understand your Wrapped songs. You go, I don’t think I listened to that. But “Where the Streets Have No Name” by U2 was my number one song, and I don’t remember listening to it. It’s the Mandela effect going on here.

That’s how you go to bed at night, just turn that on.

I do love the intro, though. I probably saw three of the concerts on The Joshua Tree tour where they opened with it. That was my number one, “Where the Streets Have No Name.”

You talk about a band that’s been able to show consistent growth. Think about the Sphere. How many times did you go onto LinkedIn and have a banker posting from Las Vegas, “Look at this cool digital experience that I’m a part of,” and they’re at the Sphere listening to U2 or Dead & Company?

That’s a story, and it aligns with the theme you wanted to talk about, which is growth.

Telling a real, credible growth story is a challenge. There are a handful of banks out there that have done this really well. I love what David Findlay has been doing at Lake City Bank, what Dave Brager has been doing at Citizens Business Bank. They’ve both been on Plugged In. We’ll drop their comments somewhere in the show notes.

But if you’re going to an investor and you cannot be succinct with where your growth opportunities are in the first six months of 2025, what have you been talking about?

I think it’s important when you and I do strategic planning. Some of our clients are more commercially focused and some are more retail, but there are things outside of banking right now where you can see incredible growth.

The traditional mutual fund industry has exploded with assets under management, taking deposits away with Treasury mutual funds over the last few years. The shadow banking world of private credit is over a trillion dollars now.

A lot of bankers say, “They’re not really a threat because they don’t do the same kind of lending as us.” When you dig in, they’re trying to do some of the things banks are trying to do.

Then we can talk about fintechs. To me, Al, the chart I’ve been holding up to people to say, put a lump in your throat and don’t be complacent on growth, is SoFi.

Yeah. Anthony Noto and the whole group there. The number I cite is when COVID started they had about one million members. You mentioned in the Gonzo Awards that they’ll end this year with more than nine million members. Literally in four years, eight million new household members across lending products, investing products, traditional banking and wallets. We should take that seriously.

I tell people to read The Innovator’s Dilemma by Clayton Christensen. It talks about disruptive innovation. They’ll come in at a smaller market that you don’t deem your most profitable, then they will scale up and kick your butt if you’re not careful.

Tony DeSanctis, who runs our education platform, has been quoting roughly 44 million debit cards on the street for four major fintechs, Chime, SoFi, Cash App and Venmo. We have to watch those folks because they’re getting growth that we need for funding going forward.

What you’re saying reflects the challenges that come with being a banker today. There are so many things that command and demand your attention. Yes, you’ve got to think about your team, running your business, protecting the reputation and the clients you serve. Then you’ve got to think about how you’re going to grow and change.

You have to do that growth and change in an environment where Venmo, Chime, Cash App and others are trying to compete and create an experience different from what you’re able to deliver.

Something you brought up that I want to bring in here is M&A. I can go out and pay a point and a half or two times book. But you talk about someone who is our Regional Bank Gonzo Banker of the Year this year, Kevin Blair at Synovus.

You mentioned to me, and I didn’t know this, that he’d announced wanting to hire 80 more relationship managers across the footprint.

I think strategic planning should include the buy-versus-build question. Do we buy a franchise, pay a premium and get what we need in the balance sheet, or can we have an organization, a culture and a place where good bankers want to go? Where I want to be an RM on this platform, the Synovus platform, versus the Acme Bank platform.

Talent becomes important. Leadership development becomes important. It becomes shareholder value. It isn’t cushy. If I can get 80 RMs doing $20 million apiece in production every year, I’m going to grow that thing.

Yeah. That’s probably a great way to wrap things up. Over the course of the year, as much as we’ve talked about tech, it’s been talent first. You get the right people in place so you can think about the products and services you’re offering, then your financial performance can naturally follow. It comes back to the people side.

I want to close this part of the episode by asking you to talk about that pipeline concept you introduced over the summer at a strategic planning session we were part of. You said it’s not like you can hand this to a recruiter and walk away. You have to treat this like you would a sales project or lending pipeline. Talk about that.

Just like our sales pipeline, how many banks out there have a talent pipeline that’s very strategic? Meaning they’ve gone out, talked to folks, gone to LinkedIn and said, these seem to be the RMs doing good things in my marketplace. I see them at community events. I see them in economic development situations. That’s a discipline they have to have.

Then there’s the question Dave Findlay talked about so well, as did Mike Daniels. How do they come into your culture and not dilute it? How do you keep an entrepreneurial regional or midsize bank and not let four guys from Citi ruin it, or something like that?

I like that you brought up people because I was just closing out our Gonzo Awards blog that’s going to drop tomorrow. This is the 30th anniversary of a famous quote by a technologist. Bill Gates in 1994 said banks are dinosaurs, we can bypass them.

Here we are, and you and I are still talking about banks, great banks and banks creating shareholder value.

It comes down to the fact that it isn’t only bits and bytes. You can get scale and technology, but the people in our portfolio that we get to talk to on Plugged In are doing great things in communities. They’re building niches.

We talked about Kim Sponem at Summit Credit Union, who has a mission around female wealth creation in the United States as it ties to financial wellness and financial products. I love that connection. That’s the thing the technologist missed 30 years ago about why this industry is cool.

That’s also why I like to use the hashtag Own the Outcome around Plugged In. You see people owning it. They want to do it, they want to do it the right way, and they’re setting examples for others.

As we wrap this up, we’re going to try to help set examples by tying some of this Gonzo Award talk into what follows this part of the episode.

We’re going to stitch it together and take what we covered earlier today in Scottsdale, where we recognized some exceptional banks, credit unions and technology companies.

You can hear from Steve and me, our chief research officer Ron Shevlin, our head of fintech Sam Kilmer, and our editor at large Mary Wisniewski. We were able to aggregate ideas that reflect the roughly 210 people who work at Cornerstone on behalf of banks, credit unions and tech companies on a day-to-day basis. We all care so much about seeing this industry be successful.

Which is part of the reason we started Plugged In in the first place. Let’s talk about the good stuff, acknowledge the challenges, but remind everyone that the path ahead can be navigated if you go together.

It was fun. We get to announce the awards, but the whole team at Cornerstone is out there in banks, credit unions and with vendors, looking at demos, negotiating contracts. They helped give us the fodder to understand and recognize those in the industry who are making good trouble and becoming smarter banks.

Building a smarter bank and making good trouble, that’s Steve Williams’ call sign for the end of 2024. For Al Dominick, I’m just going to say thanks and happy holidays to everyone. We look forward to seeing folks in 2025, wherever we wind up. We’ll see you soon.

Happy holidays.

Welcome in and happy holidays from all of us at Cornerstone Advisors. I’m coming to you from Scottsdale, Arizona, with my main man Ron Shevlin. How are you doing? I’m Al Dominick, and together we’re doing something just a little bit different today. We appreciate everyone taking the time to get connected around what’s happening in the great industry we’re all part of.

We’ve got something called the GonzoBanker Awards that, over the years, have been written down and sent out in email form. This year we decided to try something a little different.

Ron, what could go wrong with trying something new? We don’t have it scripted. We don’t have it edited like we usually do, so it’s very different this year. We’ll see how this goes.

This can go off the rails fast if we’re not careful.

We’re going to try our best to keep things interesting, lively and fun. This is an awards ceremony of sorts that has its roots going back 20 or 25 years. People talk to Ron, me and various others at Cornerstone about this whole GonzoBanker concept, so I thought we’d kick things off by reminding everyone of a great American writer named Hunter S. Thompson.

Fear and Loathing in Las Vegas could be replaced with Fear and Loathing in Scottsdale today, because that Rolling Stone writer inspired our approach to sharing ideas and information in ways that sometimes rattle the cages but always provoke something interesting.

It’s all about truth-telling. That’s our mantra. Truth-telling over fortune-telling is the way we’re going to roll.

If you think of Rolling Stone as a magazine you looked forward to reading as a kid, or Sports Illustrated’s Faces in the Crowd, it’s that spirit that brings these awards together today.

You’re not talking about the swimsuit issue, are you?

Which one are you talking about? Is my wife watching? I don’t know, and my mom certainly doesn’t want to hear about the swimsuit issue. You probably have a Kathy Ireland favorite.

Elle Macpherson. Oh, I’m dating myself.

I told you. These are the Gonzo Awards, and this is Cornerstone Advisors, so you’re going to get some serious stuff and some maybe not-so-serious stuff over the next 30, 40, I don’t know, 50 minutes.

If you aren’t able to make sense of all this, we are going to put out the written form. You’ll be able to read and see a lot more than we cover today. We have some cool stories and things we want to celebrate as a group.

Ron and I have our naughty and nice list for the holidays ready to go. We’ve got some interesting things to share with everyone, and we should probably hop right into these awards because, again, this is a reflection of 210 people who care about the industry and show up every day thinking about how we can help banks, credit unions, fintechs, venture firms and private equity groups make sense of this industry.

The first award goes to our friends at SouthState for the acquisition of Independent Bank Group. This move into the great state of Texas deserves tons of accolades.

Independent Bank Group is also a wonderful organization, and to see this deal announced really was a signal that the M&A wave people have been speculating about over the last few years was coming home. It’s one of the biggest deals we’ve taken note of, and it gives SouthState the opportunity to expand its footprint into Dallas, Houston, Austin and Denver. We want to give a tip of the cap to both teams for making that deal happen.

I’ve also got to jump in and give SouthState a hand for the work it’s doing on the technology front, specifically the AI work that Chris Nichols and his group are doing there. It is definitely industry-leading work.

Totally. Shout out to Chris, because if you aren’t following him on LinkedIn, this is the shameless plug to do so. He is wildly prescriptive in his own right and does a wonderful job of sharing how the bank is trying to position itself for the future in a way that inspires others.

M&A is a topic that has driven this industry over the last 20 or 25 years. Consolidation has been the name of the game, so that Bank Acquisition of the Year is important for us to shout out. So, too, is the Bank Merger of the Year.

Dan Schrider and John Asbury are the two CEOs who will take the bow for this one, but really it’s the teams behind both that need proper credit.

I realize this technically was an acquisition, with the roughly $25 billion Atlantic Union acquiring Sandy Spring, but when you think about the Mid-Atlantic, how competitive it is and how attractive that geographic region looks, this is a deal we thought deserved proper kudos.

I love what Dan and John have done to build their teams and cultures, and we hope the integration goes as smoothly as possible.

We’ve got two banks that have hit the highlight reel already. Those who know me would probably laugh when I say it’s time to talk credit unions, and Ron is probably one of those.

There’s some really interesting stuff happening in the credit union space. A deal announced this year will not surprise those who are familiar with GonzoBanker, but we still have to put it up on the screen. Our Credit Union Merger of the Year is First Tech Federal Credit Union and Digital Federal Credit Union.

This deal really got people talking. It’s the largest merger of equals in the credit union space that I’m aware of. To see what Shruti and Greg, the two CEOs, are looking at and aspire to create is impressive.

First of all, remember that so many other credit unions and banks are merging just to get to the size of one of these two credit unions, let alone the combined size. It’s important to recognize that this isn’t simply a deal about reaching scale because they already had scale.

Steve Williams and I had a chance to talk to Shruti and Greg right after the deal was announced, and one thing that stood out was that they’re going to be spending roughly $100 million a year in technology and innovation to develop digital products. They understand how important digital is.

A hundred million is nothing to laugh at.

No. It’s one of those deals where it gets announced, you do a double take, then you come back and say, that’s going to be compelling if they can pull it off. We send our best to both organizations as they take those steps forward.

We’ve had a great run over the last 12 months talking smarter bank concepts with various folks. Money gets thrown around, and $100 million is a nice round figure to discuss, but money alone doesn’t drive the judging for the GonzoBanker Awards. It’s performance, execution, culture and identity as organizations are being shaped and shifted.

You mentioned earlier that we’re trying to be truth tellers, not fortune tellers. We want to give credit and acknowledgment to folks getting smarter in their business setting.

Before we do that, let’s talk for 30 seconds about the smarter bank concept and where that came from. I’m sure you remember reading your book about 10 years ago.

My book? Is this a shameless plug? Can we put a link in the comments so people can buy the Smarter Bank 1.0 version you’re alluding to? I believe it’s available on Amazon for about 45 cents a copy now.

Did you discount it for the holidays?

I don’t have to discount it. It’s a bargain sale at this point.

The term smarter bank came around about 10 years ago when I came to the realization that it wasn’t enough to be a smart bank. You really had to be a smarter bank.

We at Cornerstone have developed the thinking around that. There are several things you’ve really got to do well as a bank or credit union these days. You have to be hyper-efficient, have a differentiated strategy, be nimble, be data-driven and be opportunistic. We’re going to give awards in each of those categories.

Our Smarter Bank Hyper-Efficient Award goes to a credit union whose team are ardent students of efficient operations. They have a dedicated operational excellence team, have done extensive process-automation work and have paid it off with a roughly 2.5% noninterest-expense-to-assets ratio. It’s a pretty cool story.

Ron has teased me over the last few months about “hyper-efficient,” saying, aren’t we just trying to get to efficiency? But I think this is an example of hitting certain performance thresholds and saying, I’m not done. I’m going to continue to press forward. That’s a big reason the award is being presented.

Knowing these guys, they never think they’re done with efficiency. They’ve done a lot of robotic process automation and work through that operational excellence group. They’re never done, and I think that’s one of the messages of building and maintaining a smarter bank.

Steve, you just scared the heck out of Ron and me. It’s like the voice of God just showed up at the awards.

Longtime fan, first-time caller.

It’s only because Steve is 15 minutes late getting to the office that he’s not sitting on the couch with us. I know we’re going to have some other famous Cornerstoners hop in, so just to warn people, it isn’t only going to be Ron and my voices dominating this discussion.

The next Smarter Bank Award is Differentiation, and the winner is Western Alliance Bank. Ken Vecchione and his team have grown the franchise to roughly $80 billion in assets with a strategy focused on very specific, and potentially risky, niches like homeowners associations, hotel franchises, and the entertainment and gaming industry.

They do it with a lot of industry and credit expertise. The result is a net interest margin that exceeds pretty much anybody else at that asset level.

We also have to give them huge kudos for silencing the naysayers and short sellers who were writing them off in 2023.

I give Ken and his team tons of credit. You’re right, they were getting taken down when we go back to Signature, the panic around regional banks and what was happening in Europe with Credit Suisse. There was a lot of trepidation around banks of their size.

To watch Ken and the team not simply rebound but really rally and do something impressive is awesome.

I figured Cornerstone gave Western Alliance that award because they’re here in the great state of Arizona where Cornerstone is. I know Ken has some great basketball tickets. It could be that we have a voter or two hoping Suns tickets show up in their inbox.

Yeah, that’s probably Steve Williams looking for some tickets.

Guys, in the dark days when the shorts were doing their thing, this stock got down around $20. It has roughly quadrupled over the following 18 months. Ken and the team believed in it. That’s making trouble, and I really respect what’s happened there.

It’s a great long-term performance story. The bank was started by Robert Sarver at his kitchen table more than 20 years ago. It’s a great story of entrepreneurial banking.

And on the storytelling point, I want to give a shout-out to our friends at Bank Director, who put together an event where they brought Ken and their board chair together to share the journey they’ve been on, from starting the organization with Robert through the dark days to picking things back up.

It’s that spirit of community and being honest and transparent about what didn’t work and what did. It lets people understand there isn’t only one way to run a business or treat your team. All kidding aside, tons of kudos to Western Alliance for what they’ve been able to do over the last 18 months.

Let’s keep going. Jack be nimble, Jack be quick. Our Smarter Bank Nimble Award goes to SoFi.

To be honest, Al, I only picked SoFi because I was hoping to get Super Bowl tickets out of this.

Wait, that’s why I was volunteering to announce it, because I was hoping to get out to L.A., too. That stadium is massive and incredible.

Maybe we can share. You get the first half, I get the second half, and we’ll meet at halftime.

Seriously, why did we pick SoFi for the Nimble Award? Number one, the stock has boomed back, close to a 100% gain this year. But it’s really about the strategy.

They’re growing diversification away from loan income. They’ve seen breakout growth from their third-party loan platform, which generates fee income, and growth of the Galileo technology platform. They have many engines for future value. It’s paying off with growth from roughly one million members at the time of the pandemic to more than nine million members now. That’s very nimble.

They’ve done some impressive things.

Can I add something there, Al?

It’s our man Sam Kilmer. Come on in, Sam.

I just wanted to say quickly about SoFi, one thing I find really interesting about them is they’re a fintech and they’re a bank. Wait, they’re both. That’s another sign of the times. Back to you.

Sam, is that a special holiday hat you put on for this awards ceremony?

It does have that Santa Claus kind of look.

I think Steve Williams is rocking that velvet smoking jacket over there, so yes.

That’s my Dodgers hat. In some future awards, we might give the Sam Kilmer Hat Award. The Mad Hatter is what Ron and I are thinking about calling it, but that’s for future use. We’ve got some other awards that are more immediate.

The Smarter Bank Data-Driven Award goes to Aaron Graft and his team at Triumph Financial. Hats off, no pun intended, to Triumph for really winning out because of the TriumphPay platform for the transportation industry, focused on being the frictionless center of presentment, settlement and payment experiences for truckers, carriers and shippers. The result has been a stock trading close to three times book value.

From the outside looking in, it’s such an incredible story. People talk about diversification and differentiation as key components of future growth, and what they’ve been able to do is amazing.

They’re down in Texas. I don’t know how people feel about the college football playoffs. I didn’t go there, but I’m throwing a Hook ’em Horns up. No offense to those who went to Texas A&M. We will not be gigging them here, because Ron Shevlin has a UT background. Can I get a Hook ’em Horns?

Absolutely.

I’ve got to jump in. I hope one of the quarterbacks will play because people are sucking them both through the transfer portal with dollars. We’ll see.

I’m a Patriots fan, so don’t tease me. Just do your job, Steve. Show up on time and sit on the couch with us.

A 74-year-old man building a pro team in North Carolina. Life is good, just living the dream.

We’re living the dream because we’ve got one more Smarter Bank Award, the Opportunistic Award. The winner is Fifth Third Bank for its dual pursuit of Southeast market expansion and fintech strategy.

They’re planning to open 50 branches a year over the next four years in the Southeast, with impressive growth and efficiency numbers on the board for that expansion.

They also have innovative strategies on the fintech side. They’ve got a banking-as-a-service play with Newline, an embedded payments provider and API platform, and the Provide division through the healthcare fintech acquisition they made in 2021. Tim Spence and his team have done an amazing job.

This is a story that has roots even before Tim was running the show. Greg Carmichael was a great CEO and has since retired. I wanted to give added flavor to this.

The succession plan they put together, where Greg and Tim were able, at least from the outside, to switch positions smoothly, with Tim going from the second seat to CEO and Greg becoming executive chair, is a wonderful example of leadership manifesting itself.

Succession planning, talent acquisition, retention and development are top of mind for so many institutions. When you see a bank of this size get the leadership transition right, it gives me confidence we’re in the right space and rewarding the right things.

Can I add something quickly, going back to SoFi? Remember SoFi acquired a bank, Golden Pacific Bank, in California. In this case we have Fifth Third acquiring a fintech. It’s like dogs and cats living together. We’ve got fintechs and banks acquiring each other, and it’s making for a really interesting soup in the industry.

It’s also a new-world, old-world mix. New world, they’re buying fintechs and they’ve got a younger CEO who comes from technology. Old world, they’ve announced 50 branches a year in the Southeast for the next four years. It’s interesting how they’re mixing the two.

I totally agree with you guys. Thanks for chiming in. Now we have a very special part of the Cornerstone team who’s been patiently sitting and waiting for her moment. I’m going to let you introduce her.

Finally, we’re getting some of the good comments in here. Let’s get one of our smarter colleagues involved, our editor at large, Mary Wisniewski, who I’m sure many people on the call will already know. Talk a little bit more about the fintech side of it. Mary, are you there?

I am here. Thank you for that introduction. I do intend to bring it right now. Hi, everyone. I am calling live from my parents’ condo in Michigan.

I was thinking about how I would describe this year in fintech. Honestly, I think I’d describe it as a year of many tales.

On the dark side, the Synapse bankruptcy has been such a mess. I don’t think there’s ever been a bigger stain for fintech. On the other hand, we’ve ended on some really big deals. One, Walmart’s fintech offering, got a huge amount of money. There were also some big acquisitions. MoneyLion and Brigit were both acquired. There’s a lot going on, but let’s focus on some awards.

I’m really a fan of this innovation, and it comes from one of my guests on Money Isn’t Everything, Laurel Taylor, founder of a company called Candidly.

This is a hybrid award because there was a policy change called SECURE 2.0 that made an interesting offering possible through her startup. When someone pays down their college debt, the employer can match that payment in a tax-advantaged retirement account.

It’s something that can help a firm retain employees and widen the group of people saving toward retirement. I think it’s really cool, and she’s a very smart founder.

The next award recognizes fraud technology. We all know fraud is here and seems to be rising all the time. The good news is that there are technologies helping institutions zap it before it enters the banking system.

There are a lot of leaders working on this and making it better than knowledge-based questions like, “Who’s your favorite TV show?” I’ve had to answer Sailor Moon before, so I’m glad it’s changing.

We’re looking to leaders like Alloy, Sardine and Effectiv, which was acquired by Socure. They’re looking at signals ranging from how fast you’re typing to whether an email address is showing up repeatedly. It’s helping banks and credit unions ideally stop fraud before it enters the system.

I do have one stat from our colleague John Meyer, who pointed out Alloy’s 2024 research. Identity theft, synthetic identity and account takeover fraud accounted for 31% of all fraud losses by U.S. financial institutions in the last year. That’s food for thought.

I’ve got to join on this. I did about 20 strategic planning projects with banks and credit unions this year. Fraud is going nuts. It was one of the number-one topics, and it goes all the way up to the board. We have institutions with more fraud losses than credit losses this year. I’m glad there’s a lot going on around bringing fintech into problem-solving here.

Tony DeSanctis monitors our monthly fraud roundtable, where we get about 50 fraud officers per meeting talking about how they’re tackling the problem. I’m glad we picked this technology because it’s one of the most important problems to solve in the industry right now.

There’s nothing I’d love more than to introduce Sam Kilmer, host of Fintech Hustle. I know he’s going to take us through a journey of multiple awards, including the Golden Cufflinks.

Mary, it’s been an exciting year. Maybe not as much deal flow coming through fintech this year in terms of mergers and acquisitions, but a lot of organic growth activity. You pointed to some of the deals that were happening, which I think was great.

Another thing we like to do at Cornerstone is celebrate the hardworking people out there on the road, doing demo sessions, meeting with banks and trying to move things to the next level.

There are so many hardworking people in the fintech and vendor world. We like to celebrate some of the people doing a great job with presentations and making life interesting. That’s where the Golden Cufflinks Awards come in.

Our first winners are two people who stood out in demos. One is Mark from FiveBy, who our digital transformation team says consistently keeps demos focused on client outcomes. He makes sure you’re talking about what the client is trying to solve, then works the demo around those solutions.

In a deposit-origination context, where deposits were a very big deal this year, that matters. Most solution engineers are used to saying, “This is what it does, this is how it works.” Mark ties how the system works directly to what the client is trying to achieve. We rarely see people focus on that to the degree he does, so shout out to Mark and the team.

The other winner is Tomu from Jack Henry. Steve Wildman, who leads our core transformation team, talks a lot about how he establishes a great personal connection with people in the room and really knows the product he’s showing.

Engaging the audience and knowing the product well may not sound like an impossibly high standard, but they’re great starting points.

On top of that, he has some of the best demo data. He makes the scenarios realistic and entertaining, weaving references to El Chapo and The Golden Girls into an account-opening demo within a 30-second span. That’s the kind of fun you don’t always see on the road.

If you meet Tomu, you know he’s not your grandfather’s Jack Henry, and you better bring your neon green Post-it notes. Tip of the hat to both winners.

We also have a Vendor Acquisition of the Year Award, and in this case we have a three-way tie. Three deals really jumped out at us.

First, in September, Veritas Capital acquired what is now called Candescent, then known as NCR Voyix’s digital banking business, in a roughly $3.5 billion transaction. It was a huge deal.

CEO Brendan Tansill, Chief Product Officer Doug Brown and a lot of others put serious work into that. Brendan is going to be a guest on an upcoming episode of Fintech Hustle, so don’t miss it. That transaction had the private equity world swirling during the summertime.

Another major transaction was Moody’s acquisition of Numerated. Numerated operates in the loan-origination space, while Moody’s brings credit analytics and other capabilities. That’s a big acquisition.

Then CSI had what I would call pearls-on-a-string acquisitions. One was deposit and loan products provider Velocity Solutions. Combined with the acquisition CSI did late last year of Hawthorn River, a loan-origination systems provider, those two acquisitions together are what we’d call pearls on a string. Really exciting developments there.

A couple of comments, Sam. One, hats off to the Numerated team for what they built. It’s a great example of grit coming out of a bank itself, with Eastern Bank and the Eastern Labs heritage.

Everybody remembers how Numerated got on the map during PPP when the market needed something fast. I think the idea of an AI-driven credit memo is really cool. We’ll see what happens there, but that’s one of the visions I think Moody’s saw in Numerated.

With Hawthorn River, it’s a great company that loves its customers. Everyone I know who uses Hawthorn River and went to their user meetings always felt very welcome. That grit of working to change lending through technology is worth recognizing, so hats off to them for becoming part of the CSI team.

That was a pretty good tour of some of the deals in the vendor space. Next, we wanted to talk about the Core System Deal of the Year.

This was a big deal. For years, we’ve been talking at GonzoBanker about how the global core providers, companies headquartered outside the United States, have been challenged to make inroads in the U.S.

We saw it in a very big way this year. For what I believe is the first time, or one of the first times, a global provider headquartered outside the U.S. has won our Bank Core Deal of the Year.

The award goes to Tata Consultancy Services, TCS BaNCS, for a March-announced deal with roughly $20 billion-asset Central Bank in Missouri.

This follows a win TCS had years ago with Zions Bank, a deployment that became a long-term transformation effort. If you combine those two and look at the progress, you have a very large Zions deployment followed by Central Bank. The TCS team has stayed focused on getting these stood up and successful.

More regional banks are looking at alternatives to what the industry refers to as the Big Three core providers. Candidly, it’s a big opportunity for TCS and other global providers.

No one would argue the Zions implementation took longer than expected. I think even Harris Simmons, their fabulous CEO, would say that, and he has recently. With that more complete, and now a second major deal, that’s important.

To your point, Sam, this is the first global provider to win Core Deal of the Year in the long history of the Gonzo Awards. Congratulations to TCS.

On the credit union side, we have Corelation winning with Genisys Credit Union in Michigan. This one is interesting for several reasons. One is the size of the deal. Genisys is roughly $5 billion in assets, so it was a large credit union deal that caught our eye.

Another reason is Genisys CEO Jackie Buchanan. She’s an industry veteran and extremely well known, not only in business circles and on many boards in the credit union world, but she’s also a former CIO of Genisys and has been heavily involved in credit union technology councils. Jackie is very influential in the credit union movement, with a career that has leaned publicly into technology.

We should also point out Rob Landis and the team at Corelation. They’re on an unmistakable growth tear, several years in a row. I think they won this award last year as well, so it’s a big win for them for the second year in a row.

There were also good wins for Jack Henry Symitar and Fiserv DNA in the credit union space, but this was the biggest one from an asset-size standpoint.

There was a lot of deal activity, and it took us a while to narrow this down. The next one is the Digital Deal of the Year.

Really exciting development here, and a sign of the times, with Q2’s win at Byline Bank in Chicago, roughly $9.4 billion in assets, on both retail and business banking.

I call it a sign of the times because more midsize banks are moving to the same platform for retail and business banking. That’s something Byline was focused on as it thought about growth.

It’s also Q2’s combo meal. If it involves retail and business together, Q2 has been one of the leaders in this area. For a very similar reason, Q2 won this award last year. Congratulations to Q2 for a second year in a row.

How about on the credit union side, Sam? Let’s bring up the winner.

The Digital Deal of the Year in the credit union space was Candescent, the artist formerly known as NCR Voyix Digital Banking, and its D3 platform, for its June win of Golden 1 Credit Union, roughly $19.5 billion in assets.

This is one of the nation’s largest credit unions, so you can imagine how big a deal it was for Golden 1 and for Candescent.

Golden 1’s management pointed to wanting to drive its own destiny. One sign of the times is that we’re seeing more large credit unions and even some midsize banks wanting to do more customization, whether through a toolkit or a dedicated deployment.

In the last five years, this is another major Deal of the Year win for the D3 platform. Tip of the hat to Doug Brown and the team at Candescent.

And hats off to Donna Bland and the team at Golden 1. This was a long time coming with some things they wanted to do in digital. They were on some legacy products they knew they had to get off. The search was diligent, a lot of people competed for this roughly $20 billion credit union, so hats off to Donna and the team.

Al, we’re going to bring it back to you. I think you were going to talk about the award blog and then a little bit about what’s coming up in 2025.

I really miss the couch, though.

You’re always welcome to join us. Before you do, is it wrong that I want to see Sam’s dog barge into his parents’ office and say, “Are you really in here?”

I’m also looking at Ron’s zip-up. I had no idea Cornerstone offered blue zips like this. Is there a merch store I can shop at to find such interesting swag? Here I thought it was a tie-and-jacket day, but evidently casual is in.

I want Mary to be in a Hallmark movie where her mom brings down an old boyfriend from high school who just happened to drop by the neighborhood. Something fun like that.

What could go wrong going live, Ron?

Nothing. Nothing could go wrong.

Steve, you did ask me to talk quickly about what’s next. This is just the tip of the iceberg. We have a lot more awards that will be shared and recognized in print form. We’re excited for that.

I also did a terrible job of teeing up some of our hosts. We’ve got great series, whether it’s Mary’s Money Isn’t Everything, Sam’s Fintech Hustle or Ron’s What’s Going On in Banking.

Ron has a research report that’s about to drop. I don’t know if you can give a tiny heads-up as to what people can expect in January. Are there darker days ahead, or is there some light on the horizon?

Let’s put it this way, they’re expecting a lot of light on the horizon. One of the first questions we ask in the survey is how optimistic are you for the coming year? Compared with going into 2024, there’s a lot more optimism going into 2025.

And the other thing I’d point to is a lot more use of technology and AI in particular.

When we look at those tools and the technology, it still comes back to people. We have a few last awards we want to give. If only my man Santa Claus could show up.

Ho, ho, ho. Al, I bring gifts. I bring you champagne for the holidays and good tidings from Steve Williams. I bring you eggnog.

Awesome. Good to see you guys. Snuggle in because we have a few awards left. We’ve got three awards left, and our studio is about to fall over thanks to you coming in. Let’s do this before it does.

One of them we might have tipped our hand on a little bit because you said we were going live and wild. But let’s first go to our Gonzo Banker of the Year for regional banks.

We had Kevin Blair from Synovus on Plugged In earlier. Synovus has always been a dynamic regional banking organization. They don’t simply say, let’s lend on commercial real estate. They like to do a lot of things.

This was a great year for Synovus and Kevin’s team, with strong stock-price appreciation and a roughly 17% tangible common equity return.

What we love about Kevin is that he’s a big fan of culture and leadership. To him, that matters as much as the balance sheet and income statement. A lot of work has been done on the technology front under the CIO and the broader team. Kevin Blair, Gonzo Banker of the Year for regional banks.

Awesome. Let’s check out the midsize entrepreneurial bank space. Who’s our Gonzo Banker of the Year?

I think we have to give a little drum roll for this one because we’re still going down to the great state of Texas.

If you don’t know about Veritex Community Bank and founder Malcolm Holland, I encourage you to do a little research on this great team. Malcolm formed his first bank when he was 26 years old. Think about that. If you want to talk about a troublemaker, Malcolm formed Veritex in 2009.

What was going on in 2009? The Great Recession. It was a quiet period in the country’s history, banking crisis, TARP, Occupy Wall Street, everything was going on.

Think about a guy saying, “I know, let’s start a bank in the middle of a banking crisis.” They took that dream at Veritex and, 15 years later, built a multibillion-dollar bank with a market cap well over a billion dollars.

What we love about Veritex is how the name ties together their mission, bringing truth, transparency and integrity to banking. We’re also big fans of CFO Terry Earley, who’s done a lot of entrepreneurial things in banking. The team at Veritex is rocking and rolling, creating what feels like Texas’ bank right now.

Terry and our partner Eric are going to be at Acquire or Be Acquired talking about some of the smarter bank concepts Ron raised, so you can check that out.

Malcolm has also been generous. He’s going to hop on Plugged In with you and me. I think we’re recording tomorrow morning. We’ll talk about this and drop that to start 2025, getting the ball rolling on entrepreneurial behavior in the banking space.

Early in the year, check in with Plugged In. We’re going to have Malcolm talk about this great story, and he didn’t even know he was winning the award when he said yes. There’s no quid pro quo here at Cornerstone.

All right, let’s go to our final award, Gonzo Banker of the Year in the credit union industry.

It is Kim Sponem at Summit Credit Union in the Madison, Wisconsin area. We love our clients, and we love folks in the industry who knock out the numbers but also do great things. If you haven’t studied Summit Credit Union and Kim Sponem, I encourage you to do it.

Kim became CEO roughly 20 years ago when this little credit union was around $200 million in assets. Now they’re knocking on the door of $8 billion in assets. More importantly, Kim has really focused on the financial wellness of female heads of household as her differentiation.

As you said, she gives some fabulous statistics about why she focuses there. Women live longer, save less and, during their careers, often earn less. They’re therefore significantly more likely to be in poverty during retirement.

Kim has made this and related issues like pay equity a focus through financial education. She’s got a program called Red SHOES where she coaches women around building wealth and becoming millionaires.

It’s a great example of making good trouble through high performance and incredible growth, becoming a large credit union and even buying a bank along the way, while also being very mission-focused.

This goes right back to that Hunter S. Thompson spirit of being Gonzo. It doesn’t matter your size or your location. It’s what you’re trying to do to help others. I think it’s a wonderful award, totally appropriate, and it’s great to have you here on the couch.

Very creative. What we love is the fact that there are thousands of troublemakers out there, regional banks, community banks, credit unions and the fintechs that support them. That’s the grassroots of America. This holiday season, we want to keep that alive.

But Ron, we don’t want them to be dumb. What do we want them to be?

Smarter. Hyper-efficient, data-driven, nimble, differentiated and opportunistic.

As we wrap up, if we do this again next year, here’s the bow tie I was going to wear. I might gift it to Ron if he’ll trade me the spiked eggnog Steve just brought. We might enjoy a little libation together to toast one another.

I want to echo Steve’s point. This is from all 210 people at Cornerstone to everyone who’s tuning in. Happy holidays. Have a great time. Thanks for allowing us to be part of your conversations and part of the journeys you’re on.

Let’s keep getting after it. This is too important a business to others for us not to be successful at it.

Make good trouble. Build smarter banks. See you guys soon.