In this special guest episode of the Believe in Banking podcast, Gina and Juliet welcome Al Dominick, Partner with Cornerstone Advisors, a consulting services firm powered by data to deliver customized results for banks and credit unions. In their lively conversation, Al, Gina, and Juliet discuss the current state of mergers and acquisitions (M&A) in the banking and credit union sectors, including factors driving the need for scale and the challenges and opportunities for change. They explore the importance of data-driven decision making, employee productivity, and brand development for M&A deal success. They also address Cornerstone’s approach to client engagement and discuss how to foster a culture of collaboration to support leaders making change for the better in the banking industry. Finally, they discuss strategies institutions can employ to stay relevant and resilient in a continually evolving environment.
Text Transcription
Intro: This is Believe in Banking, a podcast series for decision makers, influencers and leaders, featuring experts taking on the financial industry’s most pressing issues with insight and empathy. The podcast features information and conversations designed to enlighten and empower.
Gina Bleedorn (00:18): Welcome to the Believe in Banking podcast. I’m Gina Bleedorn, President and CEO of Adrenaline.
Juliet D’Ambrosio (00:24): And I’m Juliet D’Ambrosio, Chief Experience Officer at Adrenaline.
Today it’s not just Gina and myself on our podcast, but these are our favorite episodes when we invite smart, amazing, accomplished, interesting, insightful people who are helping to shape the industry. And today, Al Dominick, who is a partner at Cornerstone Advisors will be joining us. Hi Al!
Al Dominick (00:54): Hey ladies. That’s a very kind introduction. I am not sure all my professors or even high school teachers would agree with the “smart” comment, but I certainly will take it from the two of you. So, thank you.
Juliet D’Ambrosio (01:06): Well, you’re welcome. I really would love for you to introduce your own professional bio, but [first] just a few highlights. One of the reasons we are so excited to speak with you today is that you really serve as an advisor to execs and leaders across the financial services sector. In fact, my guess is that many of our listeners know who you are or have at least heard your name. You’ve worked with professional services firms, investors, and VCs, supporting FIs as they are looking to build strategic partnerships. So yeah, tell us a little bit about your role with Cornerstone Advisors and your path there.
Al Dominick (01:48): Yeah, and I’ve been lucky to be invited into those conversations by some really exceptional men and women across the country. So as you mentioned, I’m a partner at Cornerstone Advisors, a firm that’s been around for roughly 23 years and we’re focused entirely on the financial services sector really with a focus on helping banks, credit unions, fintechs, and others to stay relevant and competitive as our great industry continues to evolve in some expected ways and also some ways that are throwing us for a loop. You mentioned some of the different relationships that I have, and I’ve been lucky over my career to have opportunities to work in corporate boards with places like the NASDAQ and with the Economist group.
Most recently I was the CEO of Bank Director and FinTech Tech, which actually is technically the holding company, which is Director Core. So, for a number of years I was surrounded by a wonderful team that really cared about being a true information resource to the financial services community. We’ve done a lot over the years to grow that business and maybe two and a half years ago I stepped down as CEO. We have some incredible women who were doing some amazing work that were ready to take my spot. When that happened, I moved over to Cornerstone as a partner to help grow our consulting firm. And the way we do that is really to look at the banks and credit unions realistically between $1 and $100 billion dollars in asset size to say, where are you now and how do you think about your performance and how do you drive certain outcomes that are really important to staying, as I mentioned, relevant and competitive.
Gina Bleedorn (03:20): Al, I was excited to meet you when you were at Bank Director, when I attended my very first AOBA as I learned now is the correct cool way to call Acquire or Be Acquired.
Al Dominick (03:34): It gets called a few different things. AOBA, Acquire or Be Acquired, I mean you have all different license to call it what you want. It’s just a good event in January.
Gina Bleedorn (03:44): Thank you. I was told the in-crowd calls AOBA, but the acquired or Be Acquired conference is exceptional and you were not only the CEO of Bank Director but the host of that conference, and I was so impressed by certainly your stage presence. You’re obviously fantastic as a speaker and as a facilitator, but also your knowledge of the industry was overtly clear. We’ll be attending AOBA. Adrenaline has attended it I think every year since and will be attending it again this year in Phoenix and look forward to your continued presence there now with Cornerstone.
But the thing I’m extra excited about is that Cornerstone has been an ally of Adrenaline and a brand we very much respect for so many years because both Adrenaline and Cornerstone are trying to do, in many ways, the same thing for the financial services industry. We are both focused only on financial services, and we’re both focused on helping it grow from different angles and different ends. So, I’m doubly excited about you Al, and appreciate your background. Happy to have you here so we can pontificate on the future for all of our listeners.
Al Dominick (05:07): Yeah, let’s pontificate. Let’s put some creative hats on and talk about what’s happening and what might be coming up.
Juliet D’Ambrosio (05:12): What’s happening and what might be coming up?
Al Dominick (05:14): Well, you can take that in so many different ways, but since we’re talking Acquire or Be Acquired to get this podcast started, we should probably talk what’s happening in the M&A space at the moment. I was pulling some stats for the year, and we’ve seen over a hundred bank deals with an aggregate value of more than $14 billion announced in 2024. And this is all coming from our friends at S&P Global Market Intelligence. But you think about that $14 billion number in comparison to last year where it was just $4 billion worth of transactions announced. And that’s important to think about when you take a step back and consider how the financial and really the banking industry has been created over the last 20-25 years. It’s really product of consolidation, and so people talk about consolidation waves and when they are going to hit or when they’re going to maybe ebb out.
It strikes me that right now you’ve got a number of regional and community banks really thinking about whether it’s time to partner up to address some commercial real estate challenges – the constant drumbeat for tech investment. Again, how do you try to create some type of size and scale that allows you in some way, shape, or form to differentiate yourself from the mega banks like a JP Morgan, B of A, US bank that have been doing some pretty impressive investment in their own organizations. So, when I think about what’s taking place in the M&A sector, those are some numbers that come up. I know you all also work with credit unions as does Cornerstone. So, I took a quick look at this. It looks like assets sold and mergers between credit unions have nearly tripled in 2024. And so that growth stands to continue as we look at the credit union market consolidation trends for what we think is the next few years.
Gina Bleedorn (06:55): I’m especially interested, Al, on your take on the great credit union debate related to M&A, especially with banks, because of your now interesting move from Bank Director, which was very much banking focused into Cornerstone, which has quite a significant contingency of credit union clients as well. What is your perspective around the great debate around the frustrations and around what the future looks like there, specifically related to credit union M&A?
Al Dominick (07:30): It’s a tricky question for some people to really honestly answer. So, what I’m going to do is give you what I’ve picked up on over the last six months of travel. It’s not just my independent opinion, it’s really based on what banks, CEOs, their boards have shared and what a few CEO credit union CEOs have relayed. To me it comes back to that old adage that many investment bankers like to talk about, which is banks are sold, they’re not bought. So, depending on the size of your bank, talking to a credit union is just a non-starter. If you think about some of the deals that have been recently announced, geez, I think about Atlantic Union and Sandy Spring with their $1.6 billion stock transaction that brings together a $27 and a $5 billion bank with a $14.5 billion dollar bank. I would be hard pressed to think there was any conversation about selling to a credit union.
There’s only a handful, if not just maybe two or three that could financially even look at them and think they’re in the playing field. So, I think we have to first start by thinking credit unions buying banks is probably on the small end of the sector. Banks less than 500 million in asset size might be attractive in some cases to a credit union. And culturally that’s where it becomes so important to be honest, to figure out how long your future appears to be? Does it make sense to cash out because a credit union’s going to pay in cash? What’s your internal team look like? Do you have succession plans in? Do you feel like you have some type of compelling argument to stay relevant to the market that you’re serving? So, the bank might look and say, “I’m not super keen on some of the tax loopholes that credit unions are able to utilize, but I appreciate and respect maybe their retail banking focus, and it could complement our commercial side.”
But again, it starts with an honest assessment from the bank standpoint. Would you want to sell to a credit union? Then you have to take it to the flip side: would a credit union want to buy a bank? Because there’s cultural concerns that exist in a credit union, as well. If they’re thinking about serving their members, they’re not going to be driven in the same way that a bank that’s thinking about if its shareholders will be prepared to. So, it’s a slippery slope and it’s one that starts with the basic blocking and tackling of banks don’t like credit unions and credit unions don’t like banks, but when you strip away that easy narrative, you realize it becomes a far more nuanced conversation.
Juliet D’Ambrosio (09:46): Yeah, Al. You said something so important there, which is there’s this tension, that credit unions don’t like banks, banks don’t like credit unions. There is still an opportunity there to explore in like you said, a nuanced way. There is also nuance, I think, around when we were putting on our other hat and thinking about consumers and communities and all those that banks and credit unions serve, that there’s a lot of skepticism there too, just around M&A generally. And I would love to hear, now that we’ve talked about the elephant in the room, I’d love to hear your perspective on the positive benefits of these mergers and acquisitions, whether credit union -credit union, bank-credit union, and bank-bank, not just for the institution, but for the communities that they serve. What’s good?
Al Dominick (10:41): Yeah, I think we sometimes, if we’re so close to the action, forget that most Americans don’t live and breathe the business of banking, and so they may not appreciate where the regulatory expectation on a bank or a credit union actually benefits them. I look at some of the M&A conversations as really healthy and positive for small business owners for the high-net-worth individuals, for regular men and women who are looking for something stable that’s not speculative. There’s such an important role that banks play in our communities and in our economy. The idea that you’re going to see two good businesses come together to make an even better one should give people some comfort that people see the promise of healthier communities and healthier business cycles.
Gina Bleedorn (11:26): Tell us, Al, about scale. We see and feel the race for scale internally. We know inherently some of the benefits of what scaling can do, which is many of the things you just mentioned, but why is scale so important in our landscape today?
Al Dominick (11:48): Well, there are probably three factors that you could hang your hat on. One would be rising competition. The second would be technology demands on the organization. And the third really comes back to the economy and we still have economic uncertainty. And so, when you think about banks pursuing acquisitions to achieve scale for technology investments for geographic expansion, you can start to make sense of how that works. Now the flip side is size and scale are not a prerequisite for success. You can be a very healthy, smaller business that runs efficiently – that has a great team, that has incredible relationships with their customers and can be very profitable. I think sometimes there’s some challenges where people think it’s got to be size and scale above all else.
Yes, there’s a race in some parts of the market. I think that’s why we’re seeing some of these deals being announced like South State acquiring Independent down in Texas, that’s a stock deal valued at more than $2 billion, which stands as the most significant M&A deal announced in 2024. By value, you could make the case as South State continues to grow as an organization, size and scale certainly will be recognized as a competitive advantage, but you can see some $2 billion banks coming together in a smaller merger of equals to create something that has greater value and potential value over the next few years. I don’t know that size and scale necessarily drives that type of transaction.
Gina Bleedorn (13:15): As we think about what we have ahead of us now with everything you just talked about that that has occurred, what do we have to start thinking about now? What do you think the future holds? This is the big crystal ball moment, the crystal ball question. I waited like 10 minutes to give you this one.
Al Dominick (13:38): You suckered me into the conversation before you asked me for that one.
Gina Bleedorn (13:40): That’s how I wanted to do it. And now tell us the future and what banks and credit unions need to be thinking about and how they need to be thinking to embrace that future.
Al Dominick (13:54): To pick up on our conversation about scale… While scale continues to drive profitability and valuations for banks, it strikes me, and I know I speak for a number of my colleagues at Cornerstone that it’s all around execution. That’s going to continue to be the true differentiator on who’s doing really well. So, size doesn’t guarantee success in today’s market; i’s your ability to execute on whatever you’ve decided to do. You can start to make this specific to employees as organizations decide it’s time to merge. What are you realistically buying? It’s the teams. It’s the culture. It’s the identities that are there. So, thinking about your productivity improving and figuring out how to enhance that becomes a very meaningful conversation as part of the integration process.
I’ll give you an example. We ran an efficiency ratio report for average performing banks to figure out what’s their employee productivity look like and what should it look like. We thought if you’re a bank that’s a decent performer, we’ll put the efficiency ratio around maybe 63-64%. Your employees are probably generating about $249,000 on an annual basis for higher performing banks. We find that revenue number increases to about $287,000. One of the things that I start to think about with that crystal ball out in front of me is for banks between that one in a hundred billion dollars size, if they’re thinking about growth, if they’re thinking about how to be more competitive and more relevant, they should set a target of around $400,000 of revenue per employee by 2030.
That may sound ambitious to some, but I think it’s achievable. And I’ve talked to various CFOs who’ve taken pencil to paper and said, “Yeah, I can see where that math lines up.” So for listeners, I’m not asking you to go through that academic exercise. It’s more to think about whether you can have that big deal announced and you can think about all the different opportunities to do really great things, but are you thinking about the potential outcomes two, three years down the road that you want to manage two and measure against? And I think productivity and performance has to be embedded into those conversations from day one.
Juliet D’Ambrosio (15:51): Yeah, the productivity and performance piece is critical, as is your very wise comment around thinking about getting beyond the immediate into what the implications are and really what the North Star is that you’re heading towards. Part of the answers, and especially around measurement, come from the data. Cornerstone is a big proponent of data-driven decision-making just like Adrenaline is. But I’d love to hear you talk about the role of research and how FIs that are going through a merger or an acquisition are using data and insights to identify those opportunities to scale. And if they’re not, why should they?
Al Dominick (16:35): Yeah, well, let’s make it kind of near and dear to the two of your hearts. Think about an acquisition where a merger [is] about brand and brand development and how do you have that right identity going forward? I’ve been at various companies. I’ve led three corporate rebrands, and so I’ve learned the hard way that if you’re not using data to drive your decisions, you’re just aggregating a series of individual opinions. When I think about how does an organization benchmark who they are, what they are, what they want to be seen as, their values, their visions, how do they become the magnet for talent that everyone talks about, but far fewer actually able to deliver upon? Brand becomes really a big part. And so, on the M&A integration end, a deal gets announced. You have legal day one, you’ve got to look ahead to legal day 100 if you will.
There’s a lot of data that underpins what goes on during that period of time, whether it’s around the contracts that you’ve had that need to be negotiated or systems that might be redundant. There’s a lot of hard data that can start to show up, but then you also have to tease out what’s your identity, what’s your brand, what are you known for as a new organization? And not just an amalgamation of two former businesses. I’ll flip it around to you. How do you feel data drives some of these conversations around brand development and identity that a new organization needs to consider?
Juliet D’Ambrosio (17:54): It’s a great question. Thanks for flipping it around. It is something we believe very, very deeply in. And if there is one thing that I have learned in my career and working with bankers, and I’m saying the word bankers to be inclusive of credit unions, is that brand feels ephemeral. It feels a little soft, and the data is what will drive decision-making and confidence in that decision. So, the data that we recommend and seek to accomplish when we are undergoing any kind of brand change is threefold. We really want to understand the market. Generally speaking, we want to look at not just the brand in isolation, not just the competitors and the financial landscape, but to understand that consumers are at the heart of brand change and will be impacted by it. We want to know what’s on their mind, what moves them. We look at cultural trends. We look at economic trends. We look at societal trends. We look at consumer trends overall.
Then we also want to get a little closer in to the data around the bank’s own customers or the credit union’s own members. How do they feel about change? What perceptions do they have? What are they seeking from a financial relationship? So, it’s very important to understand what consumers are feeling and what the customers themselves or the members that have already drunk your Kool-Aid, what they understand. And finally, and maybe I should have even mentioned this first, employees, your staff. You mentioned that M&A really comes down to what are you buying? You’re buying teams, you’re buying talent, and you’re buying their own unique brilliance and patterns of working. So, we want to understand the data around employee experience, employee perception, and what will move the needle to create a magnet for talent that is sticky, that will ultimately provide a competitive advantage.
It’s a no stone unturned approach to data that looks at surveys, focus groups, ethnographic research, all of which is critical to shaping the brand and then to selling it through all the way up through the board level to understand where there are opportunities, where there are gaps, and how this new brand will help build success.
Al Dominick (20:18): And this is where what you just described I think is so valuable for so many financial institutions, because most bankers are not necessarily marketers. And sometimes marketing is given a kind of shrug of the shoulders as an expense to be managed. It’s so valuable. It’s so important to be able to bring people to the door and then let your teams walk them through. So that’s part of the reason when we’re talking about data, I think there’s different types of data sets that are available.
You did talk about something really important though, which is a great, is someone who’s thinking about really trying to create high performing teams capable of navigating complex business challenges. How does your bank, does your credit union show that? How do you start to create messaging around that so that you’re attracting the right types of people? Because this is an industry that is doing such great work, but sometimes it can feel commoditized if you’re not careful. And again, I think having data that lets you really dig into what’s possible, not just what you’re trying to protect becomes important.
Gina Bleedorn (21:17): Al, you’re so good. You’re a host, of course, of your podcast at Cornerstone Plugged In, and you are podcast hosting us right now. I’m turning it back around on you. You have said that Cornerstone calls its bank and credit union clients a band of trailblazers, to the point you just made, the fear or the danger of commoditization and also certainly banking in general does not have a reputation for being on the bleeding edge of innovation. Tell us about that band of trailblazers that are your clients.
Juliet D’Ambrosio (21:56): Let me add on to what Gina said that you describe your culture as a “Gonzo Culture.” There’s grit to your approach, there’s a Gonzo culture and you are serving and are trailblazers. So, pull this all together. What is the perspective there?
Al Dominick (22:13): You guys have to go down the Gonzo Trail, huh? I mean, heck, I had to figure this one out when I first showed up at Cornerstone because you walk into our offices and there’s all these different bands that are used to name our corporate space. So, whether it’s Beatles or Nirvana, you find your offices decorated with different nods to musicians. We have trailblazers, we have troublemakers, we have Gonzo bankers that are looking to be a little bit more provocative in how they do things. And because of that, we have to be a little bit more prescriptive.
The Gonzo reference that you talked about is something that Hunter Thompson, who was the editor at Rolling Stone, had kind of coined in the 1960s and 1970s. Some of my partners just have a big affinity for certain bands in that time span. So, they created this Gonzo banker idea to say, “Hey, we don’t have to be the same as every other firm that’s coming out to give you advice.” It’s just Cornerstone wants to get grittier in how we do things. We look for banks and credit unions that are looking to agitate for some type of change. How we started this whole conversation, it gives more than just me. It gives a lot of people confidence that this is an industry that’s going to change in ways and you want to be a part of it.
Juliet D’Ambrosio (23:22): Al, that’s so well put and really linking together a lot of themes we have to ask. We ask every guest on our podcast, and I feel like some of your answers to this question were buried in what you’ve [already] said, but you believe in banking, you believe in it as an industry, and you believe in its vitality and its importance. And you even used the word, I’m going to quote you ”fun” when describing it. So, tell us why you believe in banking.
Al Dominick (23:52): I look at what’s taking place right now as just the most interesting time to be a part of the industry. There’s all these different forces that are impacting how people can perform. And that impacts you individually. It impacts you as a team. It impacts you as an organization. You can look at everything that you’ve learned and say: how do I use this in a different way, in a different capacity? I recently wrote a Gonzo Banker article about the next person up in an organization. What I kept coming back to is the next person up has to combine some type of digital fluency with traditional banking expertise. And then they also have to show great leadership skills. I think right now digital fluency is still being developed.
People have the opportunity to leverage their digital talents and digital curiosity against what they already know from the business of banking to be able to say, “Hey, we can blend these things together to be a little bit more compelling.” You don’t do this on your own. You have to be around really smart, curious people. And the more you can build out that community where you don’t have to be best friends, but you can certainly respect the people that are in that tribe, gives you the opportunity to start to think, what’s the next type of team that I’d want to build? And there’s so many people that really want the banking space to be successful. I just think it’s an awesome time to be a part of it.
Gina Bleedorn (25:08): You’ve had a lot of really money quotes, you’re very quotable.
Al Dominick (25:14): I can send you my Venmo account later, but I appreciate this.
Gina Bleedorn (25:17): If you’re not using data, you’re just aggregating a series of individual opinions, which I think is brilliant and a good way to look at things in a wake up call way. So, thank you for that. What haven’t we talked about that you think is a message the industry needs to hear?
Al Dominick (25:37): I think we just need to be helping each other out a lot more than we are. I am somebody who is competitive to a point, but the older I get, the more I realize there’s so much to learn. And so, if you’re not showing curiosity on a daily basis, then you’re really missing out. And it’s not to say we don’t want to win. I mean people want to succeed. People want to do a great job. But I think when we look at 2025-2026, we think about the roles that we’re in, the companies that we’re a part of the industry that we’re lucky to be calling ours, I think we have to appreciate other successes and we have to look at them and say, “Hey, that’s really cool to see you do something I hadn’t thought of.” And instead of getting jealous that you weren’t the one that had the idea, I think drawing inspiration from the creative process that helped that person or that team to execute on something should be applauded.
When I look at even on the deal side, some of the things that are being announced, I bring it back to M&A. I mean, there’s some great organizations that are coming together, like in my hometown of Washington, DC, United Bank announced its plans to acquire Piedmont, which is down in Georgia. And I think the deal just received its final regulatory approval. So I’m comfortable that the organization will have some $30 billion in assets. Guess what’s going to happen? More creativity is going to come out of that. Instead of being on the outside saying, “Mman, I wish I was a bank that bought at Piedmont, or Wouldn’t it be nice to be a 30 billion bank?” Why not look at that and say, “What cool things can I learn and are there things that I can do to contribute to their growth?” So, when you start to put other success ahead of your own, good things typically tend to happen.
Gina Bleedorn (27:07): That is a beautiful sentiment and especially the curiosity. We believe in that so much too. And that United example, also a great one. United is our client. We will be converting their branches of Piedmont to the new United brand.
Al Dominick (27:24): Well, there you go.
Gina Bleedorn (27:25): For their last several acquisitions, and they are very much a serial acquirer. I think after CresCom and this one, I think they’re [at] over 20 acquisitions.
Al Dominick (27:40): They’re a strong, strong bank. I will disclose that I have my mortgage with the bank. I have my checking account with them. I’m super happy with the team that’s there. When I see deal announcements, it becomes personal. When you think they’re growing and expanding, it gives you confidence in the leadership team, you just look at how everything shakes out. So, I hope you guys continue to brand them well because that’s an example of a regional bank that I think is doing some really wonderful work on behalf of its communities, commercial customers and individual folks.
Gina Bleedorn (28:10): That’s great to especially hear your perspective as a customer or as even a consumer in the market of that makes me feel like I have confidence, even more confidence in them. And it supports really one of our first questions from the beginning of what good is in M&A. So, thank you so, so much. Al. We are big fans of yours. We are big fans of Cornerstone, and we appreciate the continued partnership. Juliet, any final words for Al?
Juliet D’Ambrosio (28:42): My only final words are Al are, thank you. It has always been my intention to work with and be around people that I can learn from. And I was messaging Gina that I’ve learned so much in the last 45 minutes. So yeah, mission accomplished. Thank you.
Al Dominick (28:58): This has been a lot of fun. I look forward to getting out to Arizona for Acquire or Be Acquired and catching up in person there. And obviously we’ve got a lot of overlap in terms of who we talk to and what we’re trying to do. So if we can continue to fight the good fight and make sure people understand that we don’t need just three or four big banks. So, here’s to the strong, healthy community and regional bank system that we both support.
Gina Bleedorn (29:17): Here, here. Let’s hold hands and walk all around Phoenix together to the industry and preach the good word.
Al Dominick (29:24): We will preach that. Good word. I appreciate the time. Thanks for having me on.
Gina Bleedorn (29:29): Thank you.
Juliet D’Ambrosio (29:30): Thanks, Al.
Outro: You’ve been listening to Believe in Banking, a podcast series created to empower decision makers, influencers, and industry leaders in financial services. Be sure to also join us on our flagship site, believeinbanking.com.