Industry Experts Discuss Today's Existential Banking Challenges

Sonia Portwood (00:00:10): Hi everyone, and welcome back to Banking Out Loud. I'm Sonia Portwood, thanks so much for tuning in and being a part of our banking community today. If you're joining us, you know, community banking isn't for the faint of heart right now. Margins are tight, technology is evolving faster than ever. Regulation seems to change by the minute, and customers are expecting more with every interaction. (00:00:37): We get it, there's a lot on our plate, and sometimes it can feel overwhelming to sort out what matters most. That's why this episode is all about getting practical, unfiltered advice from people who are living these challenges every day. We'll dive into everything from capital planning and tech adoption to boardroom decisions and emerging threats,all with an eye on what can really move the needle for your bank. (00:01:07): I'm especially excited today because our CEO Curt Hecker is stepping in as our moderator Curt's experience and perspective on what really matters for community banks are second to none. He'll introduce our panelists and lead a discussion designed to leave you with insights you can put to work immediately. So without further ado, Curt, I'll hand it over to you to kick things off. Curt Hecker (00:01:31): Thank you, Sonia, and, , appreciate that. And I too am very, very excited to, , , to go through and have this podcast today. And, , to do a, a point counterpoint. , the three individuals, , that are on the call here today are, , very trusted advisors. , from my perspective, I've known them, for many years, and these are, , go-to people for myself, , as, , times are changing and, , when we're going through strategic planning and the budgeting, , processes, , these are individuals that I rely upon. (00:02:04): And, uh, so with that, I'd like to have each of them, , introduce themselveswe'll start with, , with Gary Findley, who has Findley Reports. And I'm gonna let him, expand on his professional, career, and a little bit about his background. And, and don't forget to mention Gary, your biggest customers that you have out there. I know that that's a good story. So, Gary? Gary Findley (00:02:32): Thank you, Curt. It's a pleasure to be here. It's always a great opportunity to talk with bankers and directors about what is happening in the industry at this time. Uh, this is my 46th year of practicing law. And, it has always been in the community banking space. and so we deal with regulatory matters. We do with strategic planning, we do with M&A, lots of different things inclusive of capital, plans. (00:03:00): , and we're really excited, basically, as to what we're seeing in the marketplace right now. In addition to being, a council, and I'm actually got the pleasure to be general counsel of Pacific Coast Bankers Bank. But, uh, in addition to that, we basically represent about 40 banking institutions, throughout the West United States. primarily this is working with boards and managements. (00:03:23): In addition to our law firm, I also have, the Findley Report course newsletter has been in publication for 60 years, I've been writing it for 35 on what is happening in the industry. So, one of the sections that we're always talking about is Director's Compass and, and giving boards and managements thoughts about how to set the direction of their company. I also have a final company, which is called the Findley Group, which does, management retreats. (00:03:52): I'm just starting, the strategic planning season, basically for a lot of our community banks. we've got eight, strategic plans, meetings set for the next, three months. And, , a lot of the topics that we're talking about today are on the agendas for boards and managements. This is in their strategic planning. So I'm, uh, really excited to hear what, uh, John has to say, what Aaron has to say. Uh, Curt, I'm always interested in what you have to say and looking forward to being part of this. Curt Hecker (00:04:24): Great, great. Thank you, Gary. And, uh, a little bit on, those big customers that are down in Texas (laughs). Gary Findley (00:04:33): You know, in addition to that, I'm, part of a, foundation that supports, elephants. down in Fredericksburg, Texas, uh, we have an elephant preserve and it's just not elephants. It's other animals like giraffes and other things, in fact, uh, in November, I'm going back to see them again. So I get to see them a couple times a year.Curt Hecker (00:05:14): Great. Great. Thank you, Gary. Okay. , we'll, , move on from Gary to, ,Aaron, Donaldson, who's, a principal and, and enterprise account leader, at RSM. So, Aaron, tell us a little bit about, your past, your career, and, then also I know you've got a real passion for theaters, personally. So, tell us a little bit about yourself, if you would. Aaron Donaldson (00:05:41): Sure, thanks Curt. And again, thank you for having me on today. I really appreciate the opportunity to, to share with this esteemed panel. Um, so as you mentioned, I'm a principal with RSM. I've, I've actually been with the firm, uh, going, coming up on 28 years. So not quite as long as career as Gary, uh, but, uh, have been my career, really started in the technology space, and then has pivoted more into the management consulting space in the last decade or so, and you mentioned enterprise account leader. (00:06:05): I've been an enterprise account leader with the firm for about six years, and that's really a fancy way of saying that I have both business development and business delivery responsibilities, which is quite unique. So not only do I get to kind of see, get the, take the pulse of what's going on in the community banking space, I get to stay throughout the process of delivery of our engagements, whether they be consulting projects, whether they be implementation projects, um, and, and really get to develop relationships with clients. (00:06:30): My longest standing client of mine Manufacturers Bank and Trust in Forest City, Iowa, home in the Winnebago Minnie Winnies, those types of things are still a client to this day. So we really do believe in clients for life, and I, in, in that role as enterprise account leader, I've really got to lean into that. Um, I also serve as our FI, our financial institution consulting leader around technology management consulting. And I just really wanna emphasize, while RSM does have a community banking, regional banking, and even a global banking practice, my passion and my time's really spent the community banking space. (00:07:03): Um, and you, you mentioned the theater, so, uh, My wife and I, bought our local single screen, the movie theater, uh, in our town about, about nine years ago, and with an idea to save it. And so far, we have been saving it, uh, uh, with great expense and time and sweat equity. (00:07:22): Uh, but we're act- we're actually right now in the process of converting that into a 501(c)(3), uh, so we can create a foundation and we can create a legacy that that will get to outlast me. It's been in existence since 1892, um, as a building. It was an Opera House in 1892, and a movie theater in 1935. Um, and I'd like it to get into the, you know, another 150 years beyond me. And so I appreciate you bringing that up, Curt. Curt Hecker (00:07:45): Nope, absolutely. Thank you very much, Aaron, uh, and, our third and final, panelist is, uh, John Pietrzak. And, he is the President and CEO of, DeVry Capital. And, , John, , if you can tell us about the, the same, a little bit, professionally and personally. John Pietrzak (00:08:06): Sure. Uh, thank you so much Curt, and, uh, very, uh, happy to be here with everyone, really enjoying, um, hearing the backgrounds again and, and looking forward to a great dialogue. Um, so as, as Curt mentioned, I'm the President and CEO of DeVry Capital. Uh, I've been investing in community banks for over 20 years, uh, of a 30 plus year career, and I found that that's kind of my home and my place. (00:08:29): Uh, I've been on, uh, eight boards ranging in size from under 400 million to over 15 billion in assets, and truly enjoyed the experience of being part of communities all across the country. Um, other than that, educationally, I, uh, have an MBA from a Wharton School of Business and an undergraduate degree in accounting from Indiana. Um, and then I'm a CFA and my kind of little sideline is, sports collectibles. So I first started playing with baseball cards when I was six or seven years old, and my wife would tell you that I'm still playing with baseball cards today in my 50's. So that's, that's it. Curt Hecker (00:09:08): Yep. That's great. Great. Appreciate it, John. Okay. Well, let's go ahead and, and dive into, some questions and, points here to, have a discussion on, we've got different topics to discuss. and I, I think they're all interesting and, very relevant to present day (00:09:40): So I'd like to start with, capital planning and, not just capital planning, but capital planning in the age of compression. And, John, we'd like to, start with you with this one. and, with any margins and rising tech demands, community banks can't afford to function with light capital anymore. From your seat, what makes a bank's capital, plan compelling versus concerning right now? John Pietrzak (00:10:09): Sure. Um, great question. So, you know, a lesson that I learned, prior to actually coming into the community banking industry is that, a financial plan is an opportunity to be able to strategically and thoughtfully think about your future, or you can actually thoroughly fool yourself, um, because ultimately, it's just numbers on a page. And so what you really need to do to test yourself is to ask yourself if it tells a story that fits who you are as a bank, um, what environment you're operating in. (00:10:42): And obviously, that environment is evolving more rapidly than than usual these days. And that's both on the micro level in your market, and then more in the macro level of the world, and then what opportunities, uh, you have in front of you. And then if, if that whole story holds together with the numbers, then that, that is compelling. And it's, it's a test that we always look to do in understanding, how people are thinking about their future. Curt Hecker (00:11:09): Nope, that's fantastic. John is, uh, obviously even being in private equity, he knows capital inside and out, but he really knows not just the capital, but also, the cultural and personal side of, how to trust , and work with, management teams. And, Gary, from your perspective, where are the legal pitfalls when banks try to get creative in their capital raising or partnership strategies right now? Gary Findley (00:11:43): Well, , Curt, I'm gonna come at this both from an attorney and also as a management consultant. we all know the adage capitalist king. I sometimes wonder, talking with investment bankers, they say earnings is king because it says that drives value as compared to capital. But we know where the regulatory agencies are from the standpoint of their focus on, on the right capital levels. (00:12:04): We also see a lot of our financial institutions really, uh, aggressively managing their capital through the utilization of dividends and buybacks. Uh, the last couple of years, we've seen some significant increases in repurchases that have taken place by institutions as they try to manage their earnings per share, as well as the return on average equity. And with this, this is that we find our institutions having to be much more creative. it used to be that you could always look at basically the raise of common stock in today's marketplace because, that was, the best type of capital that could be brought in. (00:12:41): However, with where the market values of a lot of our banking institutions are at this time, raising common stock can sometimes be dilutive to the existing shareholders as well as to, impacting the business plan of the organization going forward. Uh, we're starting to see is as much more, uh, involvement in the utilization of debt and other types of instruments going forward. What's fascinated to me at this moment in time is that we do have a number of, sub debts that were basically placed a few years back. (00:13:15): It says that are gonna become due and are gonna reprice. And if you remember back several years ago, it says the interest rates were much more favorable than they were to today. And so that's gonna have an impact on our financial institutions, on how they basically replace this, uh, sub-debt or, uh, holding company loans within their organization. And what this impacts, uh, uh, their future strategic plan. (00:13:41): Um, you know, we, we also know that excess capital is good from a regulatory perspective, but also too much capital is wasted capital, and we wanna be certain this is that our boards and managements, when they look at their capital structure, are thinking about what is the right, right and best uses as of the capital structures going forward. Um, we always used to say, it says that we pay a multiple on an 8% leverage capital ratio and a dollar for dollar on everything over than that. (00:14:10): Um, and we think that boards and managements need to understand what that means to their organization. We suggest our boards and managements work closely with their councils as well as with their investment bankers or other, consultants assisted. We certainly have the right level of capital going forward. And, you know, we know that you want to have a strong capital base and it could, uh, allow you to get into mergers. It could protect you of against losses, changing your business plan and the like. But we need to be certain this is that, that you're raising capital or you're managing your capital for the right reasons. (00:14:50): Uh, we all see some more bank holding company loans and other, uh, types of investments and instruments being utilized going forward, uh, to protect the banking institutions in the changing market. I'm kind of encouraged in the sense that in the recent examinations that we've seen with the regulatory agencies, they're not so focused in on capital as they were a few years back. Uh, maybe that means something that says with what they see in the industry at this particular time. But, it is a, uh, something that is a major focus. (00:15:21): One last point I wanted to make on partnerships, because a lot of our institutions are looking to partner with fintechs or with other parties, and I would encourage you to take a look at these things, but you wanna be certain, it says that what is being offered? Uh, what is the impact in the organization? How does it impact the culture of the organization? (00:15:41): What is the potential on the return on investment going forward? And what are the expectations of the investors going forward? A lot of times, you know, the capital looks great going in, but a year from now, it looks terrible, uh, mainly because it says you didn't get what you, expected out of that. So we would encourage the boards to, look very carefully, it says when they're looking at capital structures as to what it means for the organization going forward. Curt Hecker (00:16:08): Thank you, Gary. That's very sage advice. we'll talk some more on these topics as well. Um, Aaron, from your standpoint, how are you helping banks balance, uh, capital needs with earnings expectations in this kind of interest rate environment that we've got right now? Aaron Donaldson (00:16:25): I appreciate you saving the easy one for me. Um, so yeah, obviously I think, you know, with the interest rate environment that we're in, it, it's, it's been fairly, you know, uh, uh, predictable over the last probably 18 months or so. I think it's less predictable in the next 18 months, and so that's gonna change things quite a bit. I think John and Gary touched on very succinctly kind of the capital expectations and whatnot. (00:16:47): What I would go back to is, is using data to understand how are we gonna best deploy capital? How are we gonna best make investments? Um, and you'll, I'll probably, we'll probably touch on some of this a little bit later, but how are we seeing the returns we're expecting on the investments? Now that's not just necessarily on our economic investments, our instruments there, but also on of our people, our processes and technology. (00:17:09): I think in today's world, the shotgun approach that's been taken in community banking for so many years doesn't work anymore. We've got to be much more focused on our expectations around our deposit strategies, our loan strategies to ensure that we're really driving the right adoption by our customers. I think, you know, we go back four years or five years, deposits, were pretty sticky. (00:17:30): Um, you know, when, when we didn't have an inverted yield curve today, that's not the case. They can, we can have deposit flight overnight, um, based on, uh, expectations and such. So we've gotta make sure that we're able to, you know, remain sticky and remain relevant so that, uh, we're able to see the long-term investments of M&A, of technology, investment of efficiency drivers because that's where we're really gonna see that, that return. Curt Hecker (00:17:53): No, no. Perfect. John Pietrzak (00:17:58): Aaron, if I, if I could on that, how, how do you, how do you get at that data? You know what I mean? Because I think, I think your point's a great one. I think the, the, the analysis would be, will be relatively straightforward, but it's like, how, how to collect it all? I mean, how, how do you approach that? Aaron Donaldson (00:18:09): Yeah, that's, that's a big question, John, but I'll take a, I'll take a stab at it. So the first and foremost is, is we've gotta be able to put our hands on it. And I think a lot of community banks struggle with that. They've got some of the best data in the world on their customers, on their transactions, on their buying patterns, on their spending patterns, on their treasury decisions, et cetera, they don't utilize it very well. (00:18:28): And so we've talked extensively in the community banking space of how to surface that data, how to get it out of our systems and make it into an actionable form. And really what that comes down to is putting it in a way that matters to the banker, whether it's the branch matter, whether it's commercial lenders, whether it's a specific area of the bank that's saying our re- on retail, what, what have you to say, where are the buying patterns? Where are the decisions? (00:18:52): And then using products like PCBB's profit, understand where profitability exists within the bank, so we should be leaning into or leaning out of based on what it's doing for us and whatnot. But, but John, it's, that, that is the million-dollar question, and we can probably dedicate an entire podcast to that. Uh, the, the data revolution that is going to occur pretty quickly in community banking over the next one to three years is going to separate, you know, kind of, you know, back to Gary's passion and, and the, in the animal kingdom, right, the, the herd. It just separates some of those winners and losers in the herd. Curt Hecker (00:19:25): Yeah, super. John Pietrzak (00:19:27): That, that makes sense. Curt Hecker (00:19:28): Yeah. Do you know, are, uh, banks moving in that direction? in large parts, or, uh, is it, small? Aaron Donaldson (00:19:46): They're tiptoeing. They're tiptoeing, they're, I, you know, one thing about community bankers, and I think we all love community bankers, is they really, they don't wanna see be seen as upfront and like setting bill- trailblazers, um, especially from a regulatory expectation. Um, but the reality is, is that this isn't realistic trailblazing. (00:20:02): This is really just taking advantage and tapping a resource that already exists within the institution. Um, so I would say that that snowball that I'm referring to earlier, it's just now kind of cresting and we are going to see it start to pick up, right? So I'd say right now, we're, the interest level is as high as it's ever been, adoption is still low, but that gap's gonna narrow here pretty quickly. Curt Hecker (00:20:25): Mm-hmm. Yep. Couldn't I, very much agree. Okay. Um, thank you for the, the comments there. I'm gonna move on to, uh, a second topic here, which is, artificial intelligence and tech adoption. It's, , you know, that's been, a main state, , talk here for several years here now, but is it worth the hype or is it a legal time bomb, uh, that's, uh, that's happening. (00:20:47): And, uh, Aaron, I'm gonna, kinda end it with you. I'm gonna start with you here, , on this. But, , you work with banks that are trying to modernize operations and, , customer experience, including, uh, my bank. , is AI delivering real, return on investment or are adoption risks, outpacing the value of the, at this stage? Aaron Donaldson (00:21:07): Yeah, it, it's a great question. I think, I think adoption risks are not outpacing, right? I think banks, because of their nature, um, are definitely going into it eyes wide open. They're making sure that they have the right policies and procedures in place. They're talking with their examiners, right? To get some guidance from them. Um, to be candid, the FDIC, the OCC, the NCUA does not have, you know, strict AI guidelines thus far. (00:21:35): They really are falling back to existing data, uh, guidelines, data policies, um, as well as, uh, access controls. And so it's a really, a refinement of those, right? So that's where, that's where it's not to say outpacing the risk. We do expect that we'll see some better regulatory oversight or direction, whether that's six months or 60 months is unsure, right? Um, but, but it, it's definitely gonna be coming. I do think though, the value proposition is real, um, with, with a, with maybe a, a hanging chat a little bit, right? (00:22:09): One of the things that we see as a concern with AI is a trust level. So as we deploy AI use cases that we identify them, are we trusting the results or are we going back and manually checking them and, and verifying them? And so we're not getting the return? And I think what that points to, I'm gonna go back to data. Are we comfortable in our data as our data, data cleanliness, our data governance in a position where we, garbage in, garbage out has never been truer in the, in the age of, in the age of AI, right? (00:22:42): Faster than ever before, we can come to a decision or come to a data point. Um, but if it was came from a polluted lake, data lake, um, then it's gonna be polluted in its response. And so that, that doubt that is crept in is hampering the value realization. So we, what we're spending a lot of time with organizations are, how are we going to ensure from a data cleanliness, data governance perspective that you're comfortable with where it's at? (00:23:10): Um, and so what we're, what we've seen in a couple institutions, they've done some parallel pathing, they've done some things in different ways with expectations of an AI agent, an AI use case kind of as, uh, if you remember the Goofus and Gallant from the highlight magazines. Like one is doing one route to try to get to the right answer and one is trying to get to the wrong answer, and they should be somewhat diametrically opposed. And if they're not, we probably have a data issue. (00:23:34): If they're, if they are at opposites of the spectrum, we probably have comfort and, and, and, uh, trust in our data, right? So that, that's where I think we're seeing it. But that the great thing is as AI usage increases, it is a multiplication effect. It's not just an additive effect. And we are now seeing AI being used to cleanse itself and improve itself. So it is only going to accelerate even faster. I know it's going so fast, no one can keep up with it already, but it's gonna go even faster. Curt Hecker (00:24:02): Yep. Yep. It is, uh, moving at an amazing pace, but, uh, the emphasis on data and data management is, uh, consistent throughout. So, okay. Uh, Gary, uh, from a, a legal standpoint, where does AI expose a bank? Uh, are regulators ready for these tools? Or are banks flying blind on the liability that exists there? Gary Findley (00:24:22): Well, first of all, let me, uh, give kudos to Aaron for his answer on AI. I thought it was, uh, spot on, and, and, uh, I appreciate that. Uh, I will tell you that AI is on the minds of boards and managements and part of strategic planning sessions for this year. Uh, and most of our community banking institutions, boards and managements are fascinated by AI, but at the same time, they're scared, uh, as to what is the impact in the organization. I, I use the term it says, "We even have some board members who don't even know how to spell AI." (00:24:56): Uh, it's just one of the challenges, this is that we have going forward. Aaron identified some of the main advantages that are being addressed. This is, of course, lowering expenses and being able to make decisions and serve clients faster. But at the same time, we have the risk of, uh, of fraud and failure and execution. And I liked, uh, what Aaron said, because I wrote it in my notes to garbage in, garbage out. (00:25:19): Uh, you have to be careful. This is on how you manage this as the inflow of information, because you're only good as, uh, as good as the information as this that you're going to be putting in there. I, I will tell you from the regulatory agencies, they want a clear policy as well as an expanded risk appetite statement on the use of AI. And also, uh, various different scenarios. We suggest the boards and managements, uh, look at their insurance protection. (00:25:45): While many AI tools are provided by third parties, it's better to be clear that you have vendor management liability. You know, the fact that you work with other parties doesn't necessarily give you a clean bill of health as the, the regulatory agencies are holding you accountable, not basically the third parties. Um, on the regulatory front, uh, they are becoming ready, uh, to move forward on this, but I don't think they're gonna move as fast as we would hope that they would be. (00:26:14): I don't think that they have the tools or support to properly manage or supervise this. Uh, so they will rely heavily on the boards managements and third parties assist, which means liability to the banks, uh, on a going forward basis. This thing is coming at us very fast. Uh, uh, you know, I, it's amazing, basically, having practiced basically 46 plus years, we've seen so many changes that have taken place in the industry. (00:26:40): This one is coming at us much faster than, uh, anything that we've seen. And I think that the regulatory agencies, as well as your, uh, your shareholders assisting your customers have high expectations that boards and managements on how you're gonna manage this going forward. Curt Hecker (00:26:57): Mm-hmm. Nope. No. John Pietrzak (00:26:59): Jerry, I would just add to that, that, you know, again, it's, it's, you know, Aaron talked about the garbage in, garbage out, but then the other piece is, you know, what's inside that plant, uh, that's, that's getting fed in and coming out. And I, I keep using the phrase that I remember Ronald Reagan saying, right? Which is trust and then verify. Curt Hecker (00:27:16): Mm-hmm. John Pietrzak (00:27:17): And, you know, the, the, the scale of what we have to verify going forward is going to grow. And so again, having a handle on that data and then having a handle on the vendors, which we're gonna be exposed to is, is kind of the challenge at hand. Curt Hecker (00:27:31): Yep. Yep. Totally agree with you, John. So, John, does AI adoption change how you value or evaluate a bank as an investment target? John Pietrzak (00:27:44): Y- y- you know, we're early on in this, in early innings, but it is something that needs to be considered. because, you know, as, as Gary said, it's coming at us really, really fast. Um, and that doesn't mean that it's gonna make or break an investment, but it's something that needs to be thought of in terms of how does it fit into what you're trying to do. (00:28:04): If, if you are looking to sell in the next three years or five years, you, you have a different tack than if you say, we wanna be around 10 years from now in terms of how, how far you have to go and how engaged you have to be. Um, the other piece of it is, what are your competitors doing? And that's, that's your competitors in market, that are other community banks. (00:28:24): It's, you know, JP Morgan Chase, and then, you know, and then it's somebody that we don't even know yet that's going to decide that they can do something in the financial space as well. And so, you know, giving one example on JPMorgan Chase, um, that I use a lot lately from a wealth management standpoint, when there was the, the tariff tantrum, their wealth management people were able to call their largest clients and prepare in 95% less time, taking only 5% to prepare to make a phone call because they used AI. (00:28:55): And so that idea that you have a relationship and you are tight with your folks and you know their story, and there's no way that the advisor at JPMorgan can, well, they're, they may not be all the way there, but they're getting closer, and it, they're using it in a way that that will make it more difficult for you to wrest away their clients, and they may wrest away your clients. (00:29:15): So, you know, again, it's definitely something, uh, that needs to be thought about. And then the other, I think, key factor is just understanding where people's mindsets are. You know, again, if, if someone says it's just a fad, then that's probably a, a bit of a, a red flag because I think it's, it's gone beyond that. Is it all the way over to, you know, trillion dollars of spending by the top five, you know, in the next few years? Then maybe that's a little hot, but it's, uh, it's definitely something that needs to, to be considered as an investor. Curt Hecker (00:29:42): Mm-hmm. Nope, nope. Thank you for that. So, to all three of you, u can, uh, failing to pursue or mishandling AI adoption determine which bank survived this, era of upheaval? Aaron Donaldson (00:29:58): Y- yeah, I, I'll take that one first. Um, I, I guess I have two different perspectives on it. From a mishandling perspective, you know, if we start to use it for decision-making, especially in some of the areas of lending and fair lending rules, we could certainly end up in hot water, right? So there's certainly risk there. I think that's the obvious one and whatnot, but what I will tell you is, failure to adopt probably has a bigger risk. (00:30:22): And I'm gonna steal, I don't know who coined this. I, someone should trademark it because I, I think everyone's gonna use it. AI's not gonna replace your job, but those that use AI will replace those that don't. And I think that's gonna be true in the banking space as well, right? The banks that understand how to use AI to really accelerate, back to John's point, whether it's JPMorgan being able to get to their customers, their high net, net worth individuals, 95% faster than they could have otherwise, to make sure they settle them down. (00:30:49): Whether it's, we have another PPP event and we need to be able to get funds, uh, through SBA lending programs or whatnot, quickly, those institutions that are able to react quickly to external market forces that are unknown are gonna win, and AI is going to be the catalyst that gets them there. So that, that would be my perspective. Curt Hecker (00:31:09): Mm-hmm. Gary Findley (00:31:12): Let me add onto that, um, a couple of points. Uh, those who can move quickly but smartly are gonna be in the best position. We have some entities that move quickly, assist, but not smartly, and that's gonna tr- detract value. I also think it says that those who do not embrace this over the next couple of years are basically gonna be losing value. And that's one of the reasons this is, I look at, uh, uh, some increase in merger and ac- uh, acquisition activity that has taken place. (00:31:40): I, I will tell you that you can just look around at some of the boards, uh, in the age of those institutions, and there's pressure of, uh, internally it says, among those board members to basically look at M&A activity rather than basically the, the experiences of having to adopt, uh, AI and all of the technology platforms going forward. So a lot of them are gonna say, "Hey, listen, I don't want the headache. I'd rather it be somebody else, uh, be responsible for that." John Pietrzak (00:32:13): I, I, I would add that, you know, again, I, I, I don't, I think you need to be thinking about it and understanding it, but if you are rushing to do it, that's a much, much greater risk than being a little slower. And, and what does that mean? Well, ask yourself, how many different, um, AI agents do you have on your phone right now? If, if you're seeing zero, then the, you know, you need to, you need to take a good hard look. And all that is, whether it's ChatGPT, Perplexity, or any of Gemini or any, there's five others. But just put a search in there and, and see what happens, and start a dialogue with it. (00:32:48): Get, get on maybe one newsletter that tells you about what's going on. I'll tell you I'm on many, and a lot of them are about design and, you know, video and those things. You can skip all that unless that's what you're into. Um, or you have clients that are, you know, you're trying to underwrite a, a new, uh, video design company and, you know, AI is going to eat them up, but just get, get some exposure to it, and then think about, you know, how you can kind of expand on what's going on, because it's, it's certainly, um, what, it's certainly coming. (00:33:18): And then, and part of it is leverage the folks in your organization who are more, I'll, I'll call them. There, there, there's a phrase called AI native in organizations, but there's also AI native people, and those are people that don't know any different, but AI. And so engaging them within your organization can be very powerful in helping you kind of work your way through this. Curt Hecker (00:33:41): Yep. Yep. Very good. I've definitely seen that in our organization as well, too. We've, uh, had, you know, very early adopters that, really pushed and, are continuing to push. And as we see the adoption,take place, , throughout the company. so really, very, very important. Um, okay. I wanna turn over to board accountability for digital strategy. (00:34:04): And Gary, you hit a little bit on this already in terms of, what's in the boardroom and understanding of, technology, digital strategies, AI, et cetera. But there's increasing pressure on boards, not just to oversee bank strategy, but to drive it, particularly when it comes to tech. should boards be held accountable for sluggish digital transformation overall? Gary Findley (00:34:27): Um, I do believe that they should have some accountability, but the real question here is what's the difference between overseeing and managing? Uh, and we think that the board needs to be overseeing this as the digital transformation and the strategies going forward, but managing the day-to-day situation, that gets out of the corporate governance aspect, uh, a little bit. Um, you know, I, I, I will tell you that most of our boards are looking to, to add some tech expertise on the board. (00:34:55): And right now I'm aware of five, uh, uh, board director searches focused in on technology and also risk. Uh, what's also fascinating to me is that, you know, what was tech, technology expertise assist 10 years ago is not tech, technology expertise today. And we encourage this as our boards of management to be looking forward and not in the rearview mirror from a standpoint of that type of expertise. the main issue here is that most boards of community banks are still behind in technology and do not have the expertise to evaluate and drive this particular platform. (00:35:33): So that's why it's so important. This is to bring in consultants like RSM and other parties like PCBB into the conversation assist to assist boards in the over overseeing the implementation, it assist by management of the tech, uh, the tech platform. Uh, most technology at banks is underutilized. Um, you know, Aaron, when you were talking earlier, this is a little bit about AI. (00:35:58): our experience is that, um, you're only using this as a certain portion. It says, of the tools that are available to you, this is in your tech platform, and that boards and managements don't fully understand. It says that it's underutilized. and they could be better performers. This is if they more effectively utilize the tools that they had in there. So they're overpaying for it. (00:36:22): but I can tell you that sluggish, uh, digital transformation is going to be a problem for a lot of our institutions. And those who do not move, uh, in an appropriate course of action are gonna be, on the outside looking in, uh, going forward. And again, all I'm looking at is how do I see this in five years from now? because, you have to try to be ahead of the game as compared to being reactive as, as to what you've seen in the past. (00:36:51): So I think it's gonna be, uh, uh, responsibility of boards and managements to oversee and push this and that if they have management or people within the organization that are reluctant to assist to embrace this particular change, it says, then frankly, you gotta have another conversation about the direction of the company and the leadership. Curt Hecker (00:37:11): Yeah. Yep. Absolutely. thanks Gary. Aaron, you sit in boardrooms, what's the most common barrier that you see to digital progress and, and, uh, is it coming from the top? Aaron Donaldson (00:37:24): Yeah, so, uh, first of all, I, I mean, Gary and I must have gotten to the, some of the same seminars and read some newsletters that he, he has a lot of shared opinions with me around, around expectations, around board, what role and whatnot. The, the first thing I would say, it's rarely the, the tone from the top, from the board is rarely at fault. However, I think back to Gary's point, there does need to be a heightened expectation or accountability to board level to say, "Hey, we, we do need to see these investments start to pro- produce for us because it is getting to be a larger and larger part of our operating and capital expenditure." (00:37:56): You know, it used to be when technology spend was largely capital, we were buying big iron, uh, servers and hardware that sat in our data centers and such, you know, it was easier to maybe justify. Now as it's moving to an operating expense and where it continues to go up and up and up every month, uh, from a subscription basis, that expectation has to change, right? So one of the things that I think that we see though, is it's not the technology itself that's usually at fault. It's the adoption, and Gary hit on it briefly there. (00:38:25): The detractors, right? The resistors in an organization, the who Moved My Cheese People, right? Those are the ones that usually hold back an organization and it, and what, and we are all guilty of it, right? I'm, I'm gonna raise my hand too. We try to go get them on board. We try to find out, "Well, why is it you're resisting? Why is it about this change that you're not on board with?" (00:38:45): We need to probably start to think about it differently and say, "Who are our champions and our cheerleaders? Let's go spend time with them. How can we move faster for you? How can we get this more value out of this investment we've got?" And those that are resistors, they're unfortunately are gonna get left behind because this world is moving by and they're, and it's probably gonna leave them behind. And, and, and they'll, they'll see that at some point, right? Some will see that and they'll get on board. (00:39:12): What I would also say is, um, a lot of organizations can probably benefit from going back and looking at their last and set of investments, whether it's 12 months or 18 months, and say, "What was the original value proposition? Did we achieve it?" And this would be a great experience with the board. We authorized the $1.5 million spend for X, and the value prop was Y. Did we achieve it? And if we didn't achieve it, why not? And dig at that a little bit, and let's keep asking Y till we get at the heart of it and saying, "Is there an opportunity for us to hit pause on the, on the forward-looking stuff and go back and achieve that value proposition?" Because it's probably there. (00:39:48): We didn't invent it out of thin air. There was something it was solving for us. And so I would say for a lot of boards, that might be a really good exercise as opposed to trying to have a crystal ball and not having the technical aptitude to say, "Is this gonna meet? Or, or, or make our expectations." It's pretty easy to say, "This was the return, or this was what was supposed to do, did it? And if it didn't, let's start to dig in a little bit." That'd be a good exercise for boards, I think. Curt Hecker (00:40:12): I think that's fantastic. It makes a lot of sense. I've seen on many occasions people really questioning, , what is the ROI of these investments upfront? Uh, and you have to ask that question. And a lot of people, I get answers, from them back that you can't quantify that, right? And, uh, and I would say, "No, that's not the case. it can be quantified. It has to be quantified." Aaron Donaldson (00:40:34): Yep. Curt Hecker (00:40:35): And, uh, and then to back test it after the fact is absolutely. Aaron Donaldson (00:40:38): Yep. Curt Hecker (00:40:38): Where you're gonna get credibility or not, uh, within it. Aaron Donaldson (00:40:41): Even if it's directionally ROI, you don't have to be spot-on, but directionally correct is is usually good enough. Curt Hecker (00:40:47): Yep. Yep. Gary Findley (00:40:49): You know, Curt, let me add something to Aaron. A lot of times we find that the, the failure assist to, to fully implement is, is not with regard to the quality of a product, it's human related. Curt Hecker (00:41:00): Mm-hmm. Gary Findley (00:41:00): And so that's a tough conversation. This is that you have saying, "Okay, you know, for us really to get the return on investment or to make this happen, I have to seriously look at the capabilities of the people within the organization for them to implement it." And that's, that's an important exercise. Curt Hecker (00:41:19): Mm-hmm. John Pietrzak (00:41:19): Is, is there any, is there, have you all seen any ways that folks have tried to bring those people along? Like, for example, taking more of the cheerleaders and, and having them kind of try to lead it so it's maybe more lateral or, you know, even junior kind of to senior? Or as both of you, kind of, with all the clients you have, is anything successful that you've seen with that? Gary Findley (00:41:42): I think that the mentoring process is important, but I also think that that's one of the reasons that we have someone, any of these bank boards are looking for somebody with technology has been in the real world, because most of the people on the board have not been in this, in the technology and, and hoping this is that the quality of the individual on the board will help them implement going forward. So it starts basically with the board assist, but also mentoring within the organization and utilizing third parties like RSM and PCBB and other players out there that says to make it happen, but you gotta understand the weakness before you can address what you have to do. John Pietrzak (00:42:19): Yeah. So it, it is funny, it's almost like from, from a board level, what you, what you're talking about, that is a little bit like what Aaron said, right? And except you have to bring in a cheerleader because a lot of the boards that you all work with just don't have that person that's really excited and driving forward on, on AI and using it, you know, in their daily life. Gary Findley (00:42:37): And John, they don't understand what they're cheering for, right? You gotta have somebody who understands (laughs) what they're, what the important element is. John Pietrzak (00:42:45): (laughs). Curt Hecker (00:42:45): Mm-hmm. Aaron Donaldson (00:42:46): Yeah. O- one thing that I would add to that, John, is, is that it, believe it or not, a lot of this is soft skills. It's, well, tech is the focus. Um, I'm meeting with a financial institution out in, in the Boston area next month, and we're leading a strategy session. And while digital adoption and digital transformation is what they wanted it to be, we're moving into about trust. (00:43:06): Is there trust in the organization? Because without it, right? We're not gonna bring those people along that are the detractors, the resistors, they're gonna stay where they're at. It's only when trust exists. And, and to your point, we can use those cheerleaders or we can use those that are neutral that can help get those on board. Um, but it, it's gotta, it's gotta be all directions, right? (00:43:24): We've gotta have that trust in all levels of the organization. So that's, I think the really interesting thing is, you know, when I got into this career, I thought, "Well, I get to work with technology and this is fun." And my, I've certainly transformed where I've definitely developed more of my soft skills in the last decade than I have my technical skills. Curt Hecker (00:43:39): Mm-hmm. John Pietrzak (00:43:40): Yeah. Well, it's, it's, there's that, that Harvard Business School, uh, a Harvard Business Review article, right? The difference between managers and leaders, and if I'm, I'm paraphrasing right, but, but essentially, leaders help people get through change, right? And, and what we're talking about here is, is a pretty significant one that could impact a lot of different layers in the organization. And so it's a real leadership test for management teams and boards. Curt Hecker (00:44:05): Yeah. Yeah. Aaron Donaldson (00:44:06): I, I was it Covey, the quote that says, "'Nobody cares how much you know till, they know how much you care?" Right? If they don't think that you're actually not empathetic, but compassionate about what is going on, they're just gonna sit back and put their arms across and say, "I'm gonna do it the old way." Curt Hecker (00:44:22): Yep. Yeah. Yep. John Pietrzak (00:44:23): Good point. Curt Hecker (00:44:24): Yep. Very well said. Uh, so John, uh, what, what happens post-investment, if a board isn't aligned on the pace of change? Uh, does that kill deals, for you? John Pietrzak (00:44:35): Yeah, well, it, it, um, if you've made the investment, it, it's certainly gonna probably lead you to have to go back and rethink your, uh, your numbers, right? Um, but at that point, you've probably, uh, violated the rule earlier where you, told yourself a story that wasn't true. Curt Hecker (00:44:50): Mm-hmm. John Pietrzak (00:44:51): In your numbers. And so optimally from an investment standpoint, you want to be aligned going in with management and the board. And, you know, again, I, I, I want to be very clear on this, just on who they are and what they're going to be. And that doesn't mean that they are the best and they're gonna be even better than that or anything like that, it's just who are they? And then that's the way that, that I like to look at making an investment and whether to partner, because, you know, again, it, all the meetings and dinners and everything else are fun, but when you get into the, you know, seeing each other every month and having to talk through strategy and AI and cyber security, I mean, we don't even talk about cyber anymore now, right? Because we're worried about ai, but the, the, the cyber people are using AI. (00:45:35): So, you know, again, it's you, you, you wanna be with people that you, you enjoy and, and feel good about. And so that, that's kind of, um, job one. And then the other piece is, you know, if, regardless of whether they're ready or not, it's making sure you're pacing it correctly based on who your team is both from a leadership standpoint and an organizational standpoint because again, if you, if you end up trying to rush that pace of change to try to catch up or to feel like you're ahead, um, there's just gonna be so many different gaps and issues that, that are gonna come back and, and bite you in, in the long run. (00:46:09): So again, I, I prefer to have know who the folks are, and ultimately, generally they're, they're more thoughtful and gonna take their time, and that's okay. It, it just impacts what the structure of the, the investment looks like, you know, in terms of pricing and those sorts of things. Curt Hecker (00:46:25): Yeah. Very well said. you don't want to be in that position of already making that investment and see that happen to you after the fact. So. Okay. I'd like to, to move into, a point counterpoint, and the topic is, what's the bigger threat? Is it the regulators or is it our customers? some argue the true existential threat isn't regulation, but evolving customer expectations. So John, from your perspective, which do you see as more disruptive for community banks? compliance drag or failure to meet digital demands? John Pietrzak (00:47:05): Uh, for me, personally, it is, not meeting your customer's expectations. because ultimately there's an ebb and a flow to the regulatory environment,, whether it's the, the examiners you have or the administration in place, or what have you. But it's, it's generally within a, a range found area. (00:47:27): And, you know, ultimately they're always gonna come back and they're gonna check on you and talk, and they're not going away. But if, if you don't meet your customer's needs, um, they'll go away and it, it's gonna be very, very difficult to, to get them back. And it's gonna cost you a lot of time and effort. And, and ultimately I think you may then forget about your other customers that stuck around. And so it becomes this vicious cycle. I, I last saw it, really closely in, in, uh, kind of the oh 5, 6, 7, when folks weren't raising their rates on deposits. (00:47:59): And, and I'm a huge fan of low cost deposits, but if you, they didn't raise them quickly enough, and those deposits went away, and, they were never be seen again, because now you've gotta try to overpay to get them to move over. And, and at that point, if it's a business, you know, the cash management side of everything is gonna be, you know, kind of wired up. So I, I definitely think, um, you need to take care of those customers, obviously, while maintaining the safety and service of the institution. Curt Hecker (00:48:25): Right, right. well said. Um, from Gary, where you sit, uh, do banks still underestimate regulatory landmines, especially with AI and, uh, merger and acquisitions and, uh, digital lending? Gary Findley (00:48:40): Uh, the quick answer is yes, uh, they do. Uh, but, uh, this is an important reason to have ongoing dialogue with the regulatory agencies, uh, about, uh, what is happening strategically within your organization so you can, identify those particular landmines and, actually effectively manage. I, I won't want to add something to what John had to say, because I agree with him completely. (00:49:04): We can manage through regulatory landmines, it says, but if we lose customers and, we lose employees, this is, which I think are extremely valuable to the organization. That is more of a driver on value than basically having to manage through the regulatory agencies. I will tell you that I have seen some positive movement with the regulatory agencies, and, and Curt knows I'm very proactive in, encouraging ongoing conversations. (00:49:32): And, you know, over the last 46 years, I've probably had thousands of conversations with, FDIC, OCC, FRB, DFPI for the name, and just letting them know what is happening within the organization so that it isn't a surprise. One thing we all know from a regulatory agencies, they do not like surprises. So we always encourage you, if you see something going on, it says, whether it's AI, M&A, digital lending, that you are gonna get into those particular areas, have that conversation so that you identify what the issues are going to be so that you don't go down a path that could be, uh, negatively impacting the organization going forward. (00:50:12): Um, as I mentioned, we've seen some positive movement by the regulatory agencies. Uh, and in fact, even today I saw something come out with the FDIC that said that, uh, in looking at removal of consent orders, uh, that they going to be looking at other factors, and a partial compliance assist may be satisfactory assist for the elimination of an enforcement action. Well, five years ago or 10 years ago, that wasn't the case. Curt Hecker (00:50:39): Mm-hmm. Gary Findley (00:50:39): You had to be in full compliance with every particular element. Um, we always believe in transparency with the regulatory agencies, and, uh, I, I love the idea says under-promising and over-delivery, so that, uh, they know what is happening with your organization, but each of these topics are of concern. And, uh, and I will tell you that over the last several years, we have seen a change in the leadership of the various regulatory agencies. And with that, the institutional memory is not there. (00:51:14): So that's why it's still important is to reach out to your case managers, to your, portfolio managers, to your, ARDs, your, other parties, basically, to really let them know strategically what you're doing. And they may have some suggestions going forward. I know tomorrow there is a regulatory panel that is taken place by CCBN on these particular topics. (00:51:40): And also later this, uh, year, we do have, uh, for CCBN, this is, we have a, a panel from the regulatory agencies just on the current issues that are affecting them and how they need to be communicated to our banking institutions because again, uh, the, just think about the changes that have taken, not only place in the banking institutions, but within the regulatory agencies. And, uh, uh, a lot of times when you're making these calls, you don't even know who you're talking to any longer. So you gotta build that trust back up. John Pietrzak (00:52:12): Mm-hmm. If I can just build on that from, from, you know, the times have been fairly normal now, but going, back to the, crisis. one of the questions I would always ask a bank early on in meeting them was, how often are you talking to your regulators? And, you know, if, if they looked a little confused, that that generally didn't bode well for that bank, and the record was daily, and it was a bank that, that, quite frankly, on many levels should have failed, uh, but did not, and turned into a, a reasonably thriving organization, uh, going forward. So, you know, again, it hammered it home for me at least, the, the importance of that communication and transparency and dialogue. Gary Findley (00:52:54): John, just one add, it's better to pick up the phone rather than answer the phone. John Pietrzak (00:53:00): There you go. Aaron Donaldson (00:53:02): Well said. Curt Hecker (00:53:03): Yep. totally agree. Now, thanks. Gary, um, Aaron, as someone who's shaping, customer strategy in ops, do you think, , most banks are aligning with what, modern customers actually are expecting right now? Aaron Donaldson (00:53:20): Yeah, I think, uh, for the large part, no. I, you know, and I don't like to put too fine a point on it, but we think about the, think about you and your daily life and the way you want to interact with services, right? And you think about the Amazon effect or tap to pay. Um, even if something as basic as, you know, getting a parking ticket or paying, with your car tag being scanned and not having to touch anything. (00:53:40): Think about how easy all of that's become, and then think about that same experience with your bank. A lot of them still are operating under the old adage, I'm from Iowa, so I have to throw in the field of dreams reference. You know, if they build it, they will come. Um, but if you look at the growth that's occurred in the non-bank financial institutions, NBFIs, uh, you know, we we're seeing, uh, I've got some data data points here. (00:54:01): You know, 25% compounding growth rate since 2012. Um, Q1 loans were 1.2 trillion. That's up 20% year over year, compared to 1.5% growth in traditional commercial lending space. And then the CAGR for neo banking, your digital first or digital only frontiers, uh, that's expected to be 50% through 20, or grow 50% CAGR through 2032 and be 3.4 trillion up from 345 billion today. Now, do we think that's because they're opening up more branches, right? (00:54:34): I mean, it's obvious where it's coming from. It's the nimbleness, it's the responsiveness. So ultimately, in order for community banks to remain relevant, while Gary and John did a great job of talking about kind of navigating the regulatory minefield or landscape, which I think bankers have somewhat of a, of a good idea of how to do that most do, right? This is much more difficult for them. And so they're going to have to partner with someone like an RSM or a PCBB and some fintechs to help navigate that. (00:55:03): Um, they're gonna have to get comfortable with things around the concept of like human centered design, buying patterns, right? And, and that's a much more nimble environment. Regulatory changes are a little bit more telegraphed, you got a little bit more lead time on those, some of the buying changes. Think about how fast COVID accelerated the e, e, e-commerce. Um, we saw three years of e-commerce adoption compressed to three weeks. (00:55:26): You know, if you look at the yield curves on Amazon and dix.com and, Shopify adoption and such, it just was through the roof. Um, and, and so that's something where community banks are really gonna have to lean into and understand how their partners, both their legacy partners, their cores, and some of the ancillary products, and then some of the, the newer partners are gonna help them navigate that and really get in front of customers where they want to be. Curt Hecker (00:55:53): Yep. very well said. Thank you, Um, Aaron gonna, we're gonna move on, to, uh, consolidation and, M&A more specifically is mergers and acquisitions as a lifeline or long-term harm. Uh, and, uh, we're seeing a wave of community bank consolidation right now. Uh, you've helped clients, uh, through these deals. Do you see mergers and acquisitions more as a, uh, str- strategic necessity? Or is it ultimately eroding what makes community bank banking valuable overall? Aaron Donaldson (00:56:32): Well, so maybe I'm a flip personality. I'm gonna take point and counterpoint. I'm gonna say both, right? I, I, um, I think first and foremost, right? I, I just did this data. I was doing a presentation earlier. We've just got shy of 4,000 charters in the country right now. Um, half of those are under 300 million in deposits. So the reality is, do we think that those institutions are gonna be able to survive with today's regulatory and technology expectations? (00:56:57): Or are they gonna have to be able to merge and consolidate with their brothers and sisters in in order to compete? The answer is probably yes, they're gonna have to. Now, that can certainly be accretive. You know, many of the community banks that we work with every day have very similar values. Usually what they, what's different about them sometimes is as basic as geography. You know, they might be serving the same type of markets, the same type of customers. (00:57:19): They just did some different zip codes. And so consolidation in that space usually is accretive. Now they've got to be compassionate about it. They've gotta understand that in order to truly thrive, they're gonna have to make some tough choices, right? They're gonna have to let attrition occur, or maybe force attrition to some levels. Um, because that's where they're gonna get some of that efficiency gains. But from a values and a cultural perspective, they certainly can be very intentional about making sure that's who they're going, they're deciding to get into bed with. (00:57:48): Um, you know, I've worked with a number of institutions that, uh, you know, in the past few years have been a little less picky, maybe just going after deposits. And it's been a really tough adoption, right? Getting integration and getting cultural alignment just isn't there. Uh, and so that's something where it's certainly eroding some of that value proposition because they're spending a lot of time working internally and not focusing on customers and members. And that's where we need to be spending time. So, apologize if I took both sides of that response, but I, I think it is a little bit of both. Curt Hecker (00:58:20): I totally agree with you. it's not necessarily a straightforward question. It's a very complicated one. Aaron Donaldson (00:58:29): Yeah. Yep. Curt Hecker (00:58:30): Gary, from a legal standpoint, what are the red flags in these deals that could, derail integrations or invite regulatory backlash? We expect more activity in '26 and '27, . So what's your thoughts there? Gary Findley (00:58:47): Yeah, we do anticipate more, M&A activity going forward, but let me, as the old person on this panel, let me tell you, when I started practicing, we had in the, just the state of California 450 charters, state chartered banks, not to mention ILCs and savings and loans at the time. And over the last 40 plus years, we've also organized another 250 banking institutions. This is during that time period. And right now, we have less than a hundred, charters in the state of California. (00:59:18): So, M&A activity has always been with us. Uh, it's been also part of the community banking model for a period of time. But, uh, when looking at M&A, we are encouraging our boards and managements to think like a regulator. and, uh, you have to focus in on the issues that are a concern. The fortunate part is that the regulators over the past several months have been much more cooperative and, uh, working with our banking institutions with regard to the M&A platform and, and have actually accelerated the timeframe for processing of applications. (00:59:55): So we think that's, uh, that's relatively good, but the focus from the regulators continues to be capital earnings, personnel, asset quality, the risk systems within the organization, overall liquidity technology capacity, and the ability to execute. Interesting, CRA is not as big of an issue as it used to be. And then also, BSA, AML at least the recent deals, has not become that big of an issue, uh, uh, because most of the institutions that have the BSA, AML issues are basically under some type of enforcement action, and an acquisition, to a certain extent, solves the problem from a standpoint, it says of getting them out. (01:00:34): Uh, but, uh, the regulators are concentrating on those particular issues. And then the ability to execute. Uh, we've long stated that the success of a deal is not the day you announce it, it's not the day you close it, but you gotta look at it one year afterwards and say, "Did we get what we needed, out of the transaction?" You kind of alluded to that, John, earlier. It says in how you look at some of these, did we get the return? It says that we anticipated as part of this? (01:01:04): And we think that boards and managements need to be thinking about this, very closely. I do anticipate more activity. We are still seeing some, credit union acquisitions, continue to take place. so that's kind of added, uh, some, a little bit of drama into the community banking space, but, uh, uh, you know, we've told some of our, our banking institutions, "If you don't have a pathway out, uh, we know the value of cash and let the credit union buy up." Curt Hecker (01:01:33): Mm-hmm. Yep. John Pietrzak (01:01:34): Yeah. And, and Gary, I, I would add to that, that the looking back, whether it worked or it didn't work, or, you know, it's kind of still undecided. Those are important factors to understand so that it improves your process going forward, um, whether do more the better, do less of the, the things that didn't work. But, but if you're not asking those questions and, and following up, then, each time is almost kind of like the first time. Gary Findley (01:02:02): Let me add one additional point. And my father used to have a term he used to call the FEG syndrome, which is fudge, ego and greed. And he says, in having, looking at merger and acquisition