“I learned a long time ago that reality was much weirder than anyone’s imagination.” –Hunter Thompson
“This Year was brought to you by the number 2020 and the letters W, T and F” –Big Bird (more or less)
Well, HST and Big Bird had it right. Anybody who ever again says they have seen it all loses all future cred at Cornerstone. Bankers started the year with good business plans, strong balance sheets, and optimism. The big topic was the impending war for deposits. Remember that?
Then, in 90 days, COVID-19 turned everything on its head. Everything. Financial institutions had to fundamentally change their delivery, support, and relationship management models at scopes and speeds that were unheard of. We compressed about five years of change into about six months.
And how did community banks and credit unions respond to the COVID craziness?
- By making 9 million small business loans totaling $750 billion, more than the previous 10 years combined. Financial institutions went from having no PPP lending program at all to funding their first loan in 90 days – and this with literally last-minute regulatory guidance.
- By providing unprecedented loan relief and loan counseling/assistance for millions of their customers impacted by the pandemic.
- By meeting the deposit and banking needs of customers and members minus branch systems that were shuttered in a two-week period. And, by the way, without missing a beat.
- By creating secure and productive remote work environments for employees and helping their teams deal with the stress of working at home (with kids learning from the same house, spouses working in the next room, and myriad other pressure points). Collaboration and teamwork went virtual, but it was there every day.
We all have heard about a lot of bad things this year, but you know what we didn’t hear? Bad things about the banking industry. Our clients showed banking at its best – obsessed with customer well-being, good corporate citizenship, and strong community focus. It was everything banking is supposed to be, and the Cornerstone team is speechless with admiration. Sure, earnings were down, but that’s something we can deal with in ’21/22. Even George Bailey would have given you the thumbs up.
Now, what could put an insane year on a positive track better than the Gonzo team raising thumbs through the GonzoBanker awards? We can’t think of a thing. So, let’s go! Sit back and enjoy our take on the best and worst of banking in 2020 as you celebrate the holidays. And even they will be weird… as one pundit said, “Who would have predicted that this year when the ne’er-do-well nephew lights up a joint at the family Christmas gathering, the illegal part will be the gathering?”
For those of you wondering about the strict methodology and rules we use to give these prestigious awards … uh, we’re still working on that.
And now to the bank web awards…
The Bank Awards
Most Oft-Heard Statements of 2020
- “You’re on mute!”
- “Can you hear me okay?”
- “Can you see my screen?”
- “I like your background … where was that picture taken?”
Bank Merger of the Year
South State and CenterState nudges out the recent Huntington/TCF deal. South State and CenterState cut a great “gene pool mixing” deal that positions the now $30 billion bank well across a vibrant Southeast footprint. Expect more cost-driven MOEs in 2021!
Bank Deal of the Year
PNC nabs BBVA USA – paying 1.3 times tangible book for the attractive geographic footprint of BBVA weeks before the COVID vaccine starts to ship should spell accretion and strong future strategic positioning for PNC, especially in Texas where a brain drain from California led by Elon Musk will continue. This is a classic bank deal – one acronym buys another at a good price and plans to cut the hell out of cost while adding markets.
Credit Union Merger of the Year
Minnesota-based Firefly and TruStone credit unions come to terms on a solid combination in the Twin Cities area. Congrats to Tim Bosiacki and Dale Turner and their teams for creating a $3 billion better-scaled organization that is now one of America’s top 100 credit unions.
Credit Union Deal of the Year
$800 million Xceed Financial Credit Union joining forces with $5 billion Kinecta. Hats off to the executive team and board of Xceed for seeking a combination that better positions their membership for the future with scale. Looking forward to seeing what the combination of CEOs Keith Sultemeier and Teresa Freeborn will do next.
GonzoBankers of the Year
Jill Castilla, Citizens Bank, Edmond, Okla. Yeah, we know that GonzoBanker is not the first publication to recognize the highly visible Castilla. Yet, we simply must celebrate Jill’s amazing energy, passion and tenacity when it comes to America’s community financial institutions. During a busy year we saw Jill supporting her local community, blogging with Mark Cuban, spinning up new PPP technology and innovating with things like curbside banking. Jill is continually demonstrating just how loud a $300 million community bank can roar!
Brett Martinez, Redwood Credit Union, Santa Rosa, Calif. Let us break it down for you. In the past decade, Mr. Martinez and his Gonzo team have quadrupled the credit union from $1.7 billion to $6+ billion while increasing net worth from 7% to 11.5% and knocking out a 1.25% ROA in a margin-compressed COVID year. But here’s the real kicker – Redwood simply bleeds its member focus and commitment to community. Once again in a year of pandemic, wildfires and social unrest, the Redwood team has been both a financial and hands-on leader of relief and commitment. Bravo Brett and team!
GonzoBanker Lifetime Achievement Award
Goes to Mike Rechin, retiring CEO of First Merchants Bank – what a dude! It took Mike only 13 years to more than quadruple the bank from $3 billion to $13 billion while making First Merchants a Forbes Top Five Performer. A consummate commercial banker with a connection to his people and common-sense humility, Rechin also deserves credit for leaving FMB in the steady hands of newly named CEO Mark Hardwick and President Mike Stewart.
John Beale, longtime CIO of City National Bank. For more than 20 years, John has helped City National grow its niched commercial and private banking businesses with strategic technologies. An early innovator in commercial workflow and analytics, upcoming CIOs could learn a ton from John on how to partner and engage constructively with lines of business. Hats off to all the hard work and success Mr. Beale achieved on the entrepreneurial journey from $4 billion to $70 billion in City National’s assets.
Dave Mooney, retiring CEO of Alliant Credit Union. This former Chase banker deserves great credit for transforming Alliant Credit Union into a progressive digital player often cited by consumer finance publications as a top national choice for checking accounts. Mooney started the journey of digital disruption long before it was safe to be bold, ultimately closing all the credit union’s branches. Kudos to blazing new trails that many institutions are taking on in 2020.
Transparent Banker of the Year Award
CenterState’s Chris Nichols. Chris’ public posts including his playbook for dealing with COVID-19 were gobbled up on social media. Agree or disagree with Chris’ spin all you want, but he puts it all out there to help his peers. Well done!
The Valuation That Would Make Elon Jealous Award
Goes to Chris Britt and the team at Chime. A recent funding round with a valuation of $14.5 billion got the eyes popping across the industry as Chime crossed a reported 10 million users of the app. The Gonzo team who gave Chime the “Egregious Valuation” award last year at $4.5 billion is just glad we own some Bitcoins at this point. Whether this turns out great or a bubble that pops, Chime has jolted the staid banking industry into thinking about who will acquire future retail customers and where value creation may emerge.
The most surreal statement we heard from bank CFOs at the end of 2020
“We may have too much in our allowance for loan losses.” Fingers crossed that Pfizer and Moderna bring home this scenario for banks, although who knows at this point?
The Tiny Bank that Did It Award
UBank of Texas. Shana DePaoli (CEO) and Justin Armstrong (president) have transformed a sleepy, small-town community bank into a force to be reckoned with in the East Texas market – hiring top talent across all areas and driving a culture of Common Sense, Consistency and Efficiency, all while delivering a top-level client experience!
The 2020 Unsung Hero Award
Goes to all retail banking executives who had to manage closing branches, trying to re-open branches, closing branches with new cases and supporting front-line workers through stressful work/life balance juggling. These executives truly “hurt” for the teams they were asking to do hard, ungrateful work and the Cornerstone team salutes you big time!
To all the I.T. staff who had to mobilize remote work environments in a matter of weeks and then take lamebrain calls 24/7 from all of us remote neophytes. (“Oh, so I need to be on the internet before I connect to VPN?”) This group deserves an extra spike of something in their holiday egg nog.
Stock to Own in 2020
Zoom. Market cap in January: $19B. In December: $113B.
Biggest Tanking Revenue Line of 2020
Overdraft fee income. A few trillion in deposit growth in the banking industry and closed bars, sports centers, concerts, restaurants and retail had a wee bit of impact on this critical revenue item.
Best Use of Card Rewards for Seat Upgrades
We saw a Great Dane in the Comfort Plus section of the plane. You know that dog either has Capital One or Delta Amex.
Mixed Metaphors Quote of the Year
Bank EVP recruited into the industry six years ago from being a CTO in other industries: “Banking has a decent coat of paint on it, but you get in here and it’s duct tape and bad.”
The Gonzo In Remembrance Award
Goes to the vibrant and unforgettable Irene Oberbauer, retired CEO of San Diego County Credit Union. To know Irene was to know personal connections, energy and optimism. Not only did Irene create a unified team with tremendous growth at “County” in her time she also spent every moment in retirement fighting for those in need through her work with the Susan Komen Foundation and Make-A-Wish. This is a Gonzo soul who will live in people’s hearts forever.
To Idaho Central Credit Union Chair Dorothy Ricks, who passed away unexpectedly in November. Dorothy was the example of community citizens coming together to do great work as credit union volunteers. Her spunk and kindness will never be forgotten.
To Jack Henry’s Michael Rhodes, who we also lost in November. Michael always stood out for wanting to do right by clients and shoot straight with his core systems prospects. The Cornerstone team has many great memories working with Mike on deals over the years.
The Smarter Bank Awards
The Gonzo team once again would like to bestow “Smarter Bank” awards to institutions that are driving into the future with a clear view of the industry’s new realities. Legacy banks need not apply. At Cornerstone, our six components of a Smarter Bank are as follows:
- Strategy – focus strategy on crucial bets tied to a distinct business model
- Data – leverage data for breakthrough performance
- Experience – engineer customer experience to drive revenue growth
- Technology – make tech a top-down discipline from the C-suites
- Ecosystem – actively manage the bank’s vendor and partner ecosystem
- Talent – create a network of connected talent
Drum roll please…
The Strategy Award
Goes to Axos Bank. It’s great to see Axos continue to hone its strategies and maintain the margins/credit quality that the market is rewarding. There have been many come-and-go digital banks. Axos is proving some staying power in difficult times. For a digital bank, Axos has a net interest margin twice that of Wells and BoA with an expense ratio under 2% – that helps drive a 15.5% unadjusted ROE in a tough COVID year!
The Data Award
Goes to Citizens Business Bank, Ontario, Calif. While institutions wax poetically about spinning up data architectures and leveraging robotics, Citizens CEO David Brager and Chief Operations Officer David Harvey have led the usage of transparent cross-sales data to drive the leading commercial relationship banking culture at CBB. These gritty bankers prove what some hard work and a practical build on Microsoft Power BI can create to drive a business.
The Experience Award
Goes to BCU, Chicago. BCU has worked tenaciously to create a near-lights-out lending process with its consumer originations. Leveraging digital point-of-sale, workflow automation and auto-decisioning, the speed and productivity this gang has achieved would blow most banks away. Hats off to VP David Brydun, COO Jim Block and the whole team that drive this Smarter Bank capability.
The Tech Award
Goes to JPMorgan Chase CIO Lori Beer. The momentum hasn’t stopped since Beer took the helm of a $10+ billion tech budget in 2017. New rollouts like Chase Complete Business banking with the Square rival Quick Accept and the You Invest brokerage and robo-platform keep giving Chase a fresh edge over other large banks.
The Ecosystem Award
Goes to TransPecos Banks’ Dub Sutherland for growing a startup brand in BankMD through working directly with NYMBUS and running straight into a niche screaming with national potential. While deposit-focused digital banks were NOT hot in 2020, high value specialized loans and payments relationships never go out of style. What Dub built is impressive, and NYMBUS stepped up for more than tech.
The Talent Award
We’ve recognized the Idaho Central Credit Union “Green Machine” in past years, but this organization needs a nod in the area of talent. This gang has made talent recruitment, onboarding and succession a true science. They have created innovative lean knowledge transfer and learning portal capabilities. They have proven the ROI of a “hire ahead” strategy to support growth, and, most importantly, they place team member well-being as a sky-high strategic priority. This consistent focus earns ICCU a whopping 4.3 Glassdoor rating and the honor of being named the best large company to work for in Idaho for four straight years!
Banking Tech Awards
Technology of the Year Award
Goes to a plethora (“Jefe, what is a plethora?”) of technologies focused on virtual customer engagement. When COVID-19 pushed the fast-forward button on digital disruption, banks scrambled to improve ways to better interact with customers remotely. Players like Glia, POPi/o, Agent IQ, Finn AI, Live Agent, Posh Technologies, Vee24 and Temenos with Infinity Engage were all technologies gaining heightened attention and experimentation in 2020. It will be a different world in retail delivery post-COVID, and a great deal of test and learn is under way regarding virtual customer interactions.
The Agile Award for Rapid Tech Deployment
Goes to every vendor, bank I.T. group and part-time hacker that cobbled together PPP workflows on the fly in a few weeks. For years, it has felt like bank technology projects moved at a sloth-like pace, but the PPP juggernaut proved that our industry can shake off its bureaucratic habits and make things happen. Now let’s apply this same no-huddle scoring to the world of digital origination, customer analytics and front-to-back office workflow and start building a Smarter Bank.
The Future is Now Award
Goes to contactless cards and card-not-present payments. It feels like soon we will be ordering our burger online in the drive-through and having it “delivered” at the window.
The Best Card Loyalty Reward
Goes to ugh… CASH! Airline miles, dining rewards, concert tickets? Not too attractive this year and Bitcoin not yet on the menu.
The Buzzword That Didn’t Accomplish a Ton in 2020
AI and Machine Learning. Lots of bragging – little delivery.
Best Accomplishment for Analytics in 2020
Colton the 24-year-old intern with the goatee and tie-dye virtual background on Zoom calls who wowed the executive team with SQL/Power BI reports.
Pandemic Impact Quote of the Year
“The hustle just looks different now.” –MX’s Kara Parkey
Hyperconnected Investor of the Year Award
Goes to Canapi Ventures. Beyond the high profile 2020 investments in the likes of Alloy, Blend, Built and Moov, Canapi has a leadership team of bankers and fintechers on boards of nCino, Apiture, Live Oak Bank, Payrailz, DefenseStorm, and probably 15 other places we don’t know about. Canapi is the Seven Degrees of Kevin Bacon halved with someone in this group 1 (2-3 at most) degree away from every bank and fintech decisionmaker in America.
The Banking Vendor Awards
Bank Core Deal of the Year
This award goes to FIS IBS winning the core business at west coast private banking giant First Republic Bank. First Republic was a looooong-time Fiserv TotalPlus core customer, making this win even sweeter for FIS!
Credit Union Core Deal of the Year
Bank Digital Deal of the Year
$43 billion Wintrust announced its plans to move forward with the D3 digital platform, the first signing on D3 since the NCR acquisition last year. Wow, what a difference a few years have made at NCR!
Credit Union Digital Deal of the Year
Lumin signed its largest client to date when it announced bringing $2.5B OneAZ Credit Union into the fold. Lumin successfully duked it out with large, established competition and smaller boutique brands alike. Nicely done!
Golden Cufflinks Awards
When it comes to exciting the audience with enthusiasm, interesting but no-BS presentations and incredibly high-touch account management, it is hard to beat this year’s winner of the Golden Cufflink Award – Greg Beckwith and his team of presenters and sales support staff from COCC. This team even sometimes allows their CEO to present in person! Great job to the team from COCC!
The Mouse That Roared Award
Goes to MK Decision for gaining great attention in the major pain-point of digital origination. Banks and vendors should be farther along in the journey to “friction-free” sales and onboarding, so the more competition and innovators the better. Congrats to the MK team for making some solid 2020 waves.
Moov – Serial entrepreneur Wade Arnold is at it again focused on the nightmarish world of bank systems integration. We love the new tech approach to a Plaid-like platform for banks and credit unions. Now the hard part is evangelizing the platform to build participation among the very begrudging commitment to third party vendor integration. We applaud every troublemaker working hard to move the ball forward, and this year’s funding round is a nice sign of affirmation.
Niche Nitty Gritty Vendor Acquisition Award
Goes to Alkami, CUNA Mutual and Built, which apparently have nerdy dreams about managing ACH/wires, online banking loan offers, and construction spending… as judged by their respective acquisitions of ACH Alert, CuneXus and lienwavers.io. Gritty is good.
Least Surprising Acquisition of the Year
FIS’ acquisition of Zenmonics. Most Zen clients were FIS clients, FIS was already a minority investor, and Zen is the backbone of FIS Digital One. And, oh yeah, Jack Henry acquired Banno in 2014, Fiserv acquired Architect in 2016, and Finastra acquired Malauzai in 2018.
Award for Who’s Buying the Champagne?
Goes to Slack and nCino. Beyond Chime’s vaulted valuation, Slack shareholders got a 45X revenue acquisition price from Salesforce and nCino shareholders got an extraordinary 2020 IPO market cap valuation at close to that. Stay frothy!
Start-up Bank Core to Watch Award
Neocova received a funding round including six community banks. Add Neocova to the list of core disrupteratis now along with Finxact and NYMBUS with banks onboard. There is real money and interest in this space now.
Change Agent of the Year Award
Goes to Scott Happ, President of Secondary Market Tech for Black Knight and former CEO of Optimal Blue. We love watching Scott and his entrepreneurial bug. After creating the massive Mortgagebot early in the century well ahead of the “cloud” craze (now part of Finastra), Happ went on to lead Optimal Blue to strong growth in the mortgage ecosystem and its sale this year to Black Knight. Hats off to a brilliant and totally real leader in the mortgage industry.
Chuck Fagan, CEO of PSCU. Five years ago, the once-mighty PSCU was struggling with execution and direction, prompting PSCU’s board to bring Fagan back to the CEO spot. Today, PSCU has executed on bold moves like its Lumin digital banking platform, entry into the bank payments market with a Jack Henry alliance, and continued innovations such as DX mobile and digital card issuance. This turnaround didn’t happen by accident, and Chuck deserves a lot of credit for firing up this focus.
The Randolph and Mortimer Duke Award for Wall Street Coveting Banking
Fruitless Chutzpah Award
To the dude that sent one of our consultants a LinkedIn request after the consultant requested being taken off the dude’s email list for spamming with a message suggesting Cornerstone meets all three of the dude’s company target criteria (we actually meet none of them).
Yeah, this year sucked, GonzoBankers. Normal times seem like a lifetime ago, and now we are all a bit fried on “new normal” and silver lining talk. Maybe the best thing we can say and dance about is we are alive, breathing and kicking. Maybe the best thing we can say is we go into 2021 a bit tattered, but probably not taking much for granted.
Like everyone, we pray for the good scenarios in our stress tests to come to light next year, and for fragile finances among hundreds of millions of citizens and millions of small businesses to begin healing.
In this very real and serious time, please make one toast for us in these next few holiday weeks: that independent community financial institutions were there on the front lines, they did not abandon their posts, but rather stayed loyal and diligent fighting for the businesses and families around them. Now, let’s modernize and evolve the heck out of these great financial institutions so they continue to play a lead role in our nation’s financial system. The world needs GonzoBankers now more than ever. Happy holidays and very best wishes to you all and your families!