This week we sit down with Al Dominick, CEO of Bank Director and DirectorCorps to discuss the hallmarks of great community bank leadership, trends in the industry, and what community bankers need to be paying attention to in the coming years.

The views, information, or opinions expressed during this show are solely those of the participants involved and do not necessarily represent those of SouthState Bank and its employees.

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[Intro]: Helping Community Bankers grow themselves, their team, and their profits. This is the Community Bank Podcast.

Caleb Stevens: Well hey everybody and welcome to episode 40 of the Community Bank Podcast. I’m your host for today Caleb Stevens. I’m joined by Tom Fitzgerald and we are pumped to talk to the CEO of Bank Director Al Dominick. You may know him from the acquire be acquired conference a really popular bank conference. And Tom, we are without our podcast equipment today. We’re recording off my MacBook so for all the folks out there we apologize for the technical difficulties. We do not have our mics today, but we will be back in our high-quality studio as usual next week. So thanks for bearing with us with the audio quality, but Tom give us a quick snapshot of what’s going on in the markets this week, and then we’ll jump into our discussion with Al.

Tom Fitzgerald: Well, Caleb. This has been a week of inflation news. The CPI for April came out just a day or two ago and it was hotter than expected. The surprising thing to me was how well the Treasury market took it, I think, you know we backed up a little bit on yields, but we didn’t back up a ton we didn’t go back to the highs that we got back on March 31. So I think the market is, is buying some of the transitory talks that the Fed has said that we’re going to see some spikes in pricing, but it’s going to be, you know, like I said, more of a temporary move or supply constraints. And not a long-lived, kind of, kind of inflation move so, you know, the equity markets didn’t like it.

They sold off pretty heavily. But the Treasury’s have kind of taken it in stride, for the most part, I think as we move forward into, into the next month or two. We’ll see how that pickup and pricing if it’s starting to kind of impact, consumer consumption, everybody talks about you know gas prices now over $3 a gallon, that may act as a little bit of a kind of attacks on the consumer that may slow some of the expected growth that we’re going to see, expecting to see in the second quarter. We’ll just have to kind of see how that plays out. But you know, but for now, you know, we’re kind of dealing with the inflation issue but so far, the Treasury market is taking it fairly well in stride.

Caleb Stevens: Well, you did a great episode with Joe Keating last week covering all things economics, folks, check that out if you haven’t listened to that. Provides a great overview of what’s going on with the economy inflation fears the jobs report that was a little disappointing. And so good overview there as well. But with that, let’s hop into our discussion with Al Dominick thanks for joining us. Well, Al, it’s good to see you today. We appreciate you hopping on the podcast, how are you doing?

Al Dominick: Yes, it’s awesome to see you and just to talk to you. You know I feel like it’s been an interesting 15 months, but we’ve got so much good news coming out of the CDC and other places, and masks are starting to be relaxed with the rules and feels good today.

Caleb Stevens: Yeah, for sure. Give us a little snapshot of your background everything you do at director core bank director, a lot of folks will know you from the acquire be acquired conference or mega-conference that you host every year and always have great reviews about that event, tell us about everything you do and kind of how you got into the financial sector space.

Al Dominick: Sure, I’d love to know your credit to be acquired as the granddaddy of them all. When it comes to what we do as a business. But essentially, you can think of us as providing pure insight. Research Advisory Services, all geared to the C suite and board and financial service companies. So, Director Core is our holding company name. That’s the position we’re on the CEO, we’ve got three brands bank record being prominent FinTech’s have been very complimentary, and the Director Core which as a brand allows us to talk to publicly traded companies across all industries. As well as the fast-growing private ones, we find that type of insight helps at the leadership level to show some trends and patterns that people are going to be interested in. Because you think about banks really serving their community serving their constituents, they have to really keep their finger on the pulse and understand where the markets moving not just where it is at the moment.

So I’m fortunate, I’ve got a great team that does some really interesting work across the country. I live in Washington DC. We’re based in Nashville, Tennessee. So kind of the best of two cities at my disposal. And we just, you know, what we’re trying to do is connect key decision-makers at key moments around key concepts. And if we can do that, really, you get the officer and director level, so much the better.

Tom Fitzgerald: Well, tell me. We’ve got a lot of the C suite executives listening to our programs and those that want the C suite executives listening as well. Through all of your experience and the work that you do. Are there some characteristics or traits that you see in the great leaders in the community banking field?

Al Dominick: You know, that’s a loaded question, it’s almost like, I love snacks I’m a sweet eater, like I love dessert so it’s like, you just invited me into an ice cream shop. And you said okay. Pick a flavor, it’s like do I have to pick one? Because there’s a lot of different flavors of leadership that I think stand out right now. I think empathy is really important and I think we’ve seen over the last year and a half in particularly those leaders that can say, sometimes you need a hand. And sometimes, you’re going to give a hand, you know, stand out. I think you also have to think about those leaders, and again it’s not about title but it’s about title but it’s about your intellectual curiosity, you know, are you looking at the world in a way that respects the amount of change that we’re going through. And instead of being afraid and paralyzed by new challenges, you get excited to learn more about them and I think, you know, really strong business leaders really value that curiosity portion.

Hand in hand, I think you got to get a lifelong learner. There are some great examples that I’ve come across in my career. One came out of US Bank, so you know, we’re talking about acquired be acquired briefly, this is an event that happens every January out in Arizona, the week before the NFL holds the Super Bowl. Infraction really great and influential audience but it’s a lot of content over in a two and a half-day period. For years, I could set my watch to seeing one of US banks outside directors in the front row with his notebook out 15 minutes before anything started, whether it’s 7:45 on a Sunday. Eight o’clock on a Monday 8:15 on a Tuesday and he would take notes and he would ask questions and he’d stay engaged. Are you talking about somebody who was wildly successful in his own professional career? He was on the board of, you know, at the time and I think the third or fourth-largest bank, and he constantly was interested in what the smallest businesses were doing. What FinTech’s were up to, not just what an investment banker was modeling out as what the next six months could give.

So I think there are people like that that get up from their desk and out to see the world and business leaders that can do that I think are really effective. But if we are talking about the financial sector. You know there are other things that you have to have you have to understand risk, you have to understand risk is not a four-letter word in the pejorative sense, you’ve got to make sure if you’re doing things, you’re not going to get sideways with your regulator, you got to understand the compliance constraints. And risk management is big, developing culture. Because culture is not something you can force it is something that you can be a part of, and you can set the tone so that your team is inspiring to do a little bit more. Finally, you know, it’s simple stuff, you’ve got to understand your shareholders and stakeholders and how to prioritize. And finally, if you’re not knowing how to allocate capital. I think you’re going to have a kind of rough go of it, but I don’t know how many points it is in my mind it’s seven but maybe it’s a few more maybe it’s a few less. But again I think leaders combined all different facets of that framework, in their own unique way.

Tom Fitzgerald: And I think listening to you right now I’m just going through some of those traits. I was thinking that last year, you know the empathy trait and that intellectual curiosity trait. I think are really come to the fore because nobody knew how to handle a pandemic when it came upon us, you know, the decisions you had to make as far as staffing. Do we work from home, how do we make that work, the work from home and when do we start asking people to try to come back. I think a lot of that is written, you know that that empathy factor and just that like that, like you said that intellectual curiosity factor of. Oh, boy, you know, you may have been in the business for 30 years, but nobody was ever ready for what we’ve had in the last year.

Al Dominick: No, no, in fact, somebody was talking to me about, they’ve gotten their MBA and they’re really proud of that diploma hanging on their wall. Last year was like a second MBA that actually counts. When you think about some of the takeaways of the last year, year, and a half. It’s going to I think manifest itself in the strategic planning discussions that are taking place, I think. But again, anecdotally, some people have said, I haven’t really approached strategic planning, as I need to go forward, and it can’t just be a one-off exercise in the fall. It can’t be a glorified budgeting process, where I worry more about what is spending than what I could be potentially earning. And I think that whole concept of, you know, how do I stay creative How do I stay, ambitious, and not being constrained by the asset size of the institution I’m a part of, is becoming more of a discussion topic.

Caleb Stevens: I love that list Al because when you were talking to CEOs that I know personally came to mind. One is very extroverted, full of energy knows everybody in town, and one is very very reserved. Very logical doesn’t really want a lot of attention, and yet they’re both lifelong learners very curious always taking notes, always asking questions more than they’re speaking and so I think that’s interesting, that’s not necessarily for lack of charisma or personality as much as those characters characteristics you mentioned so that’s a great, great list.

Al Dominick: When you think about it, you can juxtapose all these different kinds of leadership icons that are we have in front of us right now. There’s a great book by Robert Iger who was the head of Disney, you know, it’s called the Ride of a Lifetime. And if you, but this is super-fast cliff notes version, it’s, you know, be ambitious take chances, but also be open to surround yourself with really smart, creative people that will push you beyond what you think is possible. And I think you start to see people who want to not just read but they want to share, and they’re willing again to help, and communicate what they think is important and I think we’ve seen Bryan Mortigan has said this before and people love to see what Jamie Dimon is writing and his shareholder letters and what he has to say on the economy and basic parts of the US society. And then we all have opportunities to do that though, it’s just a matter of do you have the conviction and do you have the temerity to say I’m going to stand up and take a position.

Tom Fitzgerald: Now, Well, you sit really unique position because you get to interact with 1000s of bankers all over the country on a monthly basis, what are some just general broad strokes and trends you’ve seen and community banking specifically over the past five years or so. Anything you’ve noticed that stood out to you?

Al Dominick: You know, I think this might be crashing through an open door, but the need for scale is really obvious at the moment, you know, for the last few years, earnings and efficiency, have been, you know topics that will be discussed at the senior-most level. But you see these institutions trying to merge together and because they realize they’ve got to become more agile in their approach to their customers. They see technology as a delivery channel that they can take advantage of. I think smart businesses are not looking at technology as an expense, they’re seeing it as something that can help differentiate the experience that they’re creating, that’s a really hard thing to do, especially as you get larger as an organization, but you, I see the mindset, shifting pretty fast, where I think a big theme at the moment is how do you differentiate your business. And by extension, how do you diversify and that could be something as simple as your assets, or your earnings streams but also like how do you diversify your ideas. So you’re not just doing what everyone else thinks is just as smart.

Tom Fitzgerald: I can remember back you talked about scale, not too many years ago there were over 8000 banks in this country. Now we’re down to about 5000 and change probably, and probably going down every day. You know the de novo activity really coming out of the financial crisis, you know, just really wasn’t much to know those, even now, you did this day, where the M&A activity is starting to pick up again. Do you what role do you see for community banks let’s say like a billion and under as far as assets go. Do you see a role for them in this type of environment where the M&A is just continuing to kind of swallow up the, you know, the smaller players?

Al Dominick: You know, I get it. That’s a great question. I have a good friend who started a bank here in the DC marketplace, and I’m super proud of what he’s been able to do in a short period of time, so you know he’s been able to get over 100 million in assets during the pandemic. And if you’re an analyst if you’re an investment say that’s a minuscule amount, but when you think about the amount of time and effort it takes to just create some relationships, especially when everyone’s wearing a mask and walk in their house like that’s impressive. You can look at your bank up in New York grasshopper that just announced, Mike Butler, joining them. Mike ran Radius bank, in a way that inspired a lot of people’s performance in investment philosophy. I think there’s always a place for a well-run back and it starts with the leadership team, it’s not just one person you’ve got, again it comes back to, are you surrounding yourself with ambitious creative people. That says I’m not going to do with the way everyone else has done.

So, you know these banks that are under a billion-asset size, they’re the ones who are starting to really think about banking as a service and what they can do. They’re the ones who are saying you know I don’t have that many swings at the pinata when it comes to working with FinTech, but I’m going to do what I can to make this, you know, relevant and meaningful for my customer base. Some of the advantages they have because they’re not as large as they’re much closer to their consumers and small business customers, you know, the trade-off of scale is you start to lose some of that familiarity and I think that’s where the smaller players can come in and if they’re really well run and they understand the business that they’re in, they have a future.

Now is it going to be the next JP Morgan, no of course not, isn’t going to be the next pinnacle in Nashville, it could be. It’s going to take time though, I think people are so desperate for the immediate gratification of high performing bank in year one, or year three, year five, you know, you get to define what success looks like. And again if I’m a banking stock investor. I’m probably not looking at the nova as the best place to be. If I’m a local entrepreneur who is saying, I see all this development taking place and nobody’s really backing it the way it could be, but I can see why they would put some cash in.

Tom Fitzgerald: Yes, you say. Do you have the vision to pick out your crystal ball for a second and say, what is that successful community bank looks like 10 years from now, is that sort of the trends we’re seeing developing now just continuing to their logical conclusions.

Al Dominick: I think it’s, they’re hyper-focused. They have a really, I think their cultural DNA has to be grown in the digital, and people get sideways when they think digital, and technology are the same and they’re not. And so that digital mindset, you hear about digital natives, and you think about other industries where it’s a little bit more accepted that you’re going to find pressures coming from new concepts and ideas for some reason the banking space thinks that there have immune from that. That’s not the case at all but having a digital-first mindset and saying on the crypto front, I’m not going to be afraid of theory in Bitcoin and you know what’s going on at least explore it, it’s like on the marketing front, I don’t know that there’s a banker you could meet that would be on Tic Toc, other than to monitor their daughters or sons or grandchildren’s activity.

But you think about the network effect of a Tic Toc, and how that creates overnight success stories and how business has been able to take advantage of it, you think about embedded finance, like what Peloton has done. You know, I look at Netflix, when I turn it on, I’m embarrassed that they can give me all these different suggestions of shows that I actually like, it would be one thing if they just said here’s a show that sucks you know just go watch that because it’s putting money in our pocket instead, they’re saying hey you like watching Chef’s Table, then you’re really going to like watching, like the Taco Chronicles or whatever they call it. I think banks can do stuff like that better. If they’re set up from the start to be able to adapt. You have a legacy mindset that you know I think a lot of people are struggling with right now.

It’s hard because people talk legacy modernization, and it naturally takes you into a technical realm. And you might say well you know my core, that’s what I need to upgrade. That’s not what I think about legacy modernization or improvement is how do you take your cultural mindset and shift it to a place you are comfortable being uncomfortable, and where your team can say, look change is really hard and I have to own that. If we go back just a year, you know, and you have the Triple P rolled out, nobody knew what that was all about. And so those companies that were using pencil and paper to help their customers, not the smartest approach but they did the job for their customer. What did they learn from that and then how did they, you know, on the second way around, do something smarter, and are they willing to then take that mindset and apply it for the next opportunity. Not the next challenge that comes at them. That’s the legacy mindset that needs to be brought into the current role.

Tom Fitzgerald: And that’s it. We’ve talked to a few consultants and that’s one thing they said that the successful bank is the one that doesn’t just think of it as a bolt-on app, and says I’m done. They cooperate that in their culture, and then it becomes just a part of how they do their banking. And so I think that’s very important that the culture has to kind of be woven into the applications themselves.

Al Dominick: When you look around, there is a growing appreciation from the C suite that fintech comes, whether you work with them or not, bring so much intellectual capital that you could never afford to hire, or invest in on your own. To their organization. And if the mindset is, the door is open, you know, I may not know what you’re doing. But I know you’re investing time and energy and effort to solve a specific problem they can focus on one thing, whereas the event has focused on many things. Why would you not welcome that opportunity to at least have a conversation.

I think that’s a big, a bigger opportunity for a number of banks across the country, because there are so many tech companies, they’re saying, we can help, you know, we just need to start a conversation. The best relationships aren’t a push, you know they’re walking, it’s like you’re taking a walk outside and having a conversation about this is what I’m doing this is how I’m doing it. And I’m doing it because I’ve noticed something about up in your peer group, that leads me to believe I can create a business. So it’s, not a hobby, it’s something that they should be able to monetize they should be able to grow. If you’re the bank you should be thrilled. That’s like going to your doctor’s office and seeing them driving a porch. Like nobody wants to go to the doctor and see them with like an old beat-up Camry. Because what does that say about the doctor.

Caleb Stevens: Well I love your quote, there’s always going to be a place for a well-run bank. I mean, that right there, kind of brings it home to be intentional. Invest in your culture invest in your people surround yourself with a great leadership team. And they’re always going to be a place for that kind of institution. For the listeners who have never gotten involved with the bank director and don’t know what you do. Tell us, what are some of the resources out there that you guys provide community bankers. And how can they maybe take the first step in getting more involved with you?

Al Dominick: some of the things we’ve done, are just a reflection of the conversations we’ve had over the last 30 years and for me, I’ve been in this role for about eight years, and I’ve been with the company since September 2010. What we found early on was a number of outside directors were struggling to get their arms around the issues that the leadership team, so we have to focus on, we need to deal with this. And that’s our I mean it could be everything from, what am I worth, so your valuation. To whom are my competitors to what are the risks that are emerging, you know, and that’s cybersecurity, reputation, there is credit risk and, I mean there’s so many different flavors of risk. What we did was we put together a membership program that allows banks to get a little bit smarter, just a lot faster at the board level. So that when you’re meeting, you’re not wasting time going on with one on one and then you’re not having to educate people around something that is material to the institution that they’re a part of. Because when you think outside directors role and responsibilities really important, it’s really fundamental to the long-term success.

So I think that’s one place where there’s value, that could be meaning in preparing for the bank. We’re excited in the fall and we’ll be able to welcome people back in person. We’ve intentionally structured our kind of return to the event world. As committee focused, so we’re going to help audit in risk committees. So you can get smarter about certain things, compensation is a big issue right now, so we’ll have a company teleconference down in Dallas, in November. We’re going to have something for boards, which we’ll call a board training Forum, which again will help bring people up to speed quickly around the opportunities that they have, and this is introducing some of the newer technologies that, again, might strategically position you for growth. And then of course you got the acquired be acquired. So there are ways you can see your peers, and you can learn other artists and experience and just as ambitious as you are.

Caleb Stevens: Well I know our listeners are looking forward to getting back into the mix with these live events. So folks go check those out. Is it bank direct dot com?

Al Dominick: It can be bank director dot com. Make it simple, come over and check us out.

Caleb Stevens: Fantastic. We appreciate your time and thanks for joining us today. We’ll see you soon.

Al Dominick: My pleasure, thanks, guys.

 

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