Matt McCombs, Vibrant Credit Union (IL)

In this month's episode, we are joined by Matt McCombs, President and CEO of Vibrant Credit Union in Moline, Illinois. Matt discusses his early days of cutting the front lawn of his father’s credit union and spending 180 days a year on the road as a consultant before ultimately landing at Vibrant and leading that organization for the last 10+ years.

Matt also shares his experiences from seven mergers in the span of 20 months, perspectives on the commoditization and fragmentation occurring in the financial services industry today, and what the “balance sheet of the future” looks like.

Tune in to hear Matt discuss why the only way to drastically change the business model of an institution is to “run towards the storm” and be the force of change in an industry “running out of runway.”  

For more insights and ideas, visit DCG at DarlingConsulting.com or follow us on LinkedIn.

Transcript

On the Balance Sheet: S3 E10: Matt McCombs, Vibrant Credit Union (IL)

 [Zach, 00:12]

Welcome to On the Balance Sheet season 3 episode 10. We have a terrific guest today per usual, but I think Matt McCombs, who is the CEO and President of Vibrant Credit Union in Illinois is is definitely going to make some people think a little bit differently. And in this episode, we're going to dig, dig into a number of things, talking about the balance sheet for the future, talking about just reframing what they do as as a business and how really the overall banking credit union space is becoming a lot more commoditized and and how it's leading to a lot of fragmentation, and Matt gets some very interesting thoughts on that. So, you gonna want to listen and stay tuned. No Vin today, he's unfortunately under the weather, but we will be joined by my colleague Darnell Canada, a Managing Director here at DCG, and he is he works in primarily with with Matt as well, so without further ado, Matt McCombs. We are very pleased to be joined today by Matt McCombs, CEO and President of Vibrant Credit Union in Illinois. Matt, how you doing today?

[Matt, 01:21]

I'm doing great. Hey, thanks for having me aboard.

[Zach, 01:22]

First question, we usually like to start off for our listeners to give a little background. I know you're a young guy, you've been CEO at Vibrant for over 10 years now. Can you tell our audience how you got into the banking industry and how you found your way relatively quickly into that CEO chair?

[Matt, 01:36]

Yeah. So, I'm probably one of those unique guys that when you were a little kid, they asked what do you want to be when you grow up? I'm probably one of the few that said a banker. Grew up, actually, in a household where my father was a was a banker for his whole career, came out of the kind of the finance company model was one of those credit union CEO's in the early 90s, late 80s, early 90s that had made a move from finance companies over to kind of the credit union industry. And so, my entire upbringing in adolescence was how do you learn math at the kitchen table with balance sheets and income statements? And so, I probably was born into this like a lot of small credit unions, he took every free labor that he could get. And so I was at free labor and so not only outside cutting the lawn and doing things from there, but having to actually help him on month-end reconciliations and do things from scanning and eventually moved into kind of a loan officer by the time I was 19, going to college and ended up running branches as the credit union expanded early in the kind of after college. I moved on from there and went to a consulting firm, Radon Financial. One of those companies still out there, but has been acquired by Open Solutions and then since by Pfizer. So, I spent a number of years, actually, on that end, kind of traveling across the country and working with bank and credit union leaders from strategic planning to kind of revenue enhancement engagements and really kind of understanding that there are different models of success that were out there. Was on the road about 180 to 90 days a year. It was a really young guy then with an expanding family and had an opportunity to to make the jump over to the credit union and came in as our EVP of sales. So, I really was in charge of trying to grow the organization from a sales stand. Spent about 18 months in that role before I transitioned into the President role, and since the CEO after, and succeeded  a 40 plus year veteran in that seat and so really had an opportunity to spend about 18 months with him and then transition in and have been and, for the most part, I would say kind of in in charge of running the organization since kind of that 2012-2013 time frame.

[Darnell, 03:42]

Yeah, Matt, it's interesting. You've taken a path that's a lot different than your typical CEO who, generally speaking, comes up through the lending function has been with the, you know, the organization for some time, but you've woven in and out of the industry and and been able to look at it from a lot of different angles. So that is a large part of of why we invited you to to do the podcast and and thank you for coming to this. Can you share your view on the community banking space? And yeah, what you, you and I talk a lot about, you know, about some of the biggest threats out there to to smaller institutions.

[Matt, 04:15]

Yeah, I you know, I think they're, now, when I look at kind of my past and where I came from, the unique part is I I came into the organization 13 years ago, I believe very much like a aggressive sales role that would have come up through lending. And so, I I looked at this as a direct lending capability and that was kind of the belief that I had my first three or four years being here was how can we engage our members? How can we drive sales through direct origination? We've gotten out of indirect within my first year of being here and really doubled down on being a direct originator across retail and mortgage primarily and and had a lot of success the first three or four years. Like a lot of organizations, we really were trying to figure out what does growth look like in the business kind of in that 2015-16 time frame. And we did what a lot of places do, we started to look at assets as kind of knowing we needed to grow assets and you see the impact of what happens at scale. And so, we went through 7 mergers in about a 20-month period. So, we did a number of mergers over, kind of, a couple of year period and and really tried to figure out how do we expand both our footprint and kind of the asset base for opportunity? By 2020 or right before 2020, I kind of taken a step back and said, hey, we're like the dog that finally, you know, caught the tire. So, we were able to land mergers, we were able to expand kind of our footprint where we were going. But the challenge that came out of that was like, what do you do with it now and what we found was the sales culture we had built was really hard to replicate across six or seven different franchises, geographically dispersed, how do you navigate from there? And my concern point started at that point of saying, hey, there's no question that scale matters in our industry. I wholeheartedly believe that. I think in the traditional aspect of banking, if you aren't building assets, you're not giving yourself enough to runway to figure out where you need to go. And my belief on the industry is we are seeing this point in time in community banking, be it a credit union or a bank, and probably even more so on the credit union side because of the retail focus where the commoditization of the industry, the access point because of technology, the transparency from what's out there and rates have put the industry in a position where the consumer is naturally starting to fragment their business. And so, when we think about fragmentation entering banking, it's the one thing that community credit unions especially built their business on. I was the one stop shop to make it easy for everything that you needed to do. And for the most part, as long as I paid you a fair rate on your deposits, and a fair rate on your loans and over the, you know, last two decades that's shifted from what was the premium on deposits at one point to really being a premium on loans. But as long as I paid you a fair price on both sides, you were willing to bring all of your business to me. Well, when the industry starts to fragment, the issue that you have in that is consumers start to bring to you only the things that you're going to pay the premium price on and not other items. And we've built our business at any given time, being able to have part of our member base be willing to accept less than a premium price on one side of the balance sheet. And I think those days are are done. I think we're seeing the end of it as we move forward. And the concern point is, every aspect of our business model was set to run as your primary financial institution. For years we've preached PFI services per household, depth of wallet, and I I was on that bandwagon. You know, when I was at Radon, that was the measure of success was what was your services per household that you had and how well did you drive sales? But if the industry starts to move to more of a fragmented model, you have to rethink the entire business model. And I think that's the concern point I have for where community banking in general is going. I do think on the commercial side, you have a little longer runway. I don't think we're going to see it move as fast, which means most banks have a little easier protection period than I think most credit unions. And so, for us, when we hit that 2020, we really took a step back and said, gosh, what do we need to do different? If the industry is changing, how can we start to match our franchises’ business model to the reality of today? Which is really kind of the direction we've gone in the last three or four years.

[Darnell, 08:19]

Interesting. So, you took that 2020 period where most people were saying, OK, well, how do we survive? And you took that and said, hey, here's an opportunity to reinvent ourselves, to reimagine what we want to be, and how we want to get there. So, yeah, so if I take the other side of that first question and kind of go on the, the general hospice that where there are risks, there are also opportunities. Where did you conclude the opportunities do lie in the industry?

[Matt, 08:43]

What we looked at as we said, if fragmentation is real, we've got to figure out where our niche ultimately lies. And I wholeheartedly believe that regardless of what size you are, if you're not a regional player, at some point you have to figure out what your niche is in this industry going forward. And as I said, I think assets are simply the runway and the larger you are, the longer the runway you might have, but eventually you still have to figure out how to get the plane off the ground. And so, for us, it was a matter of how do we really kind of dive into what our niche is going to be. We looked at it and said we believed wholeheartedly that the ultimate value proposition that we could have was the fact that we are an insured depository. And so, if we're an insured depository, we wanted to be really good at that side of the balance sheet. And so we we said our give back or our value proposition to the member owners of this business, you know, if you think of it like a bank or any other aspect for for profit, our shareholders are our members that have deposits with us, we want to be absolutely excellent on that side of the balance sheet. And so, in order to do that, we had to structure our entire model to basically provide wholly for those individuals that are looking for a strong return on their deposit. And for us that was a big transition, we've historically been a premium priced lender and a relatively low cost of funds institution. So, we took this and had to kind of flip the entire model over, and that meant repositioning what we did on the asset side of the balance sheet completely, in order to be able to afford long term the ability to be a premium provider on deposit.

[Darnell, 10:16]

Yeah. So, you know, as I as I listen to you talk and, you know, you and I have had a number of conversations on this topic. It's one thing when you're going through that exercise, but if you don't have buy-in from your people, if you don't have people that share your same thoughts, visions, and ideas, it's hard to make the changes that that you you feel are necessary. And I'll never forget the first time I walked through your your OPS center, I felt like I was going through what what I thought it would look like if I was to visit a Google shop or Google facility or any other tech company. And you know, it's scattered with open space that's available for fun, for free thinking, for just kind of a casual, relaxed kind of mindset. Can you tell our listeners a little bit about the reason why and how you've developed a culture of of innovation and imagination? 

[Matt, 11:03]

Yeah, so let me let me first, before I go in, I'll tell you what we've been able to do because of the culture. You think of the last four years or four and a half years that we've been in, really, I think in any career point in time you always have these milestone moments that end up impacting you, right, in COVID certainly I would say is that milestone impact for most leaders of the last decade of where we're at. And so, if you go back since COVID, we've gone from 19 offices to 2 offices. So, 19 physical traditional offices to 2 traditional offices in that time period. We've gone from being relatively a a low price deposit, I would say one of the more low priced depositories in the country, to now being one of the highest priced depositories in the country. We've gone from being a direct originator of mortgage and auto loan and credit card to where we actually have no direct origination to our community anymore, we do that through partnerships where it's not ever going to our balance sheet. We've leveraged the capital market desk and what we're doing, we have a nationwide lending program that we run in order to to generate loan opportunities as well. And at the same time, we've gone through that, we’ve had to look at how does the entire organization’s culture change and adapt to it? And and arguably I think done it at a time period where we are in one of the more turbulent economic conditions ever. And so it, I wouldn't say that every day is fun, but when you're walking through that, we've kind of taken that approach of we use this analogy of the difference between a bison or buffalo, and a cow is a cow tends to run from a storm, a buffalo tends to run into the storm to try to attack that faster and get through the storm faster, and we kind of taking that approach that we're going to run through there.  The way we've really been able to manage it is I think most leaders, anytime someone starts talking about business change, we tend to have, you know, like three big worries overall. One, the first question I almost always hear is like, well, what's the regulator going to say? Right, we we use the big bad regulator always as kind of our excuse not to do things to position something in there. The reality is the regulator for the most part is going to make sure you have safety and soundness. They're going to look at things from there, they're going to challenge you, but they don't get to dictate where your business goes. That's, you know, clear in the way that I've been in multiple organizations from the consulting standpoint. The reality is you can run a model that's very unique and different, just have just reasons for it. The second thing most people worry about is how do you get your board there? And I think we're always, especially in credit union land, tend to be very concerned of of where our board is. And, you know, it's not an overnight process, but you have to start to really paint the picture for where you think the industry is going and how do you find your niche in that. The third ends up being ultimately what's going to happen from a community standpoint between your members and your employees. And Darnell, I've told you this multiple times, I think it's really challenging for leaders to look in the mirror and understand that they're going to have to make decisions that aren't going to be popular. And I think it is one of the more challenging things that when you are in a leadership position, you have to recognize that you ultimately are there as kind of the protector of the collective good. And we say collective good a lot here at Vibrant with that meaning of my ultimate role is to make sure that when we look at the decisions we've made and where we're going, that we're putting our organization, our employees, our community, and our members, all in a position to benefit in the end. And if we're not doing that, then we're failing in it. And as a leader, you have to make those decisions that - sometimes that means sacrificing one of those groups to put it in the betterment for the long term. So, you know, when I think about our culture, there's a lot of intentional that we've done and certainly the last four years I would tell you I think has been a lot of learning and growing even in who we are as a company in good times it's always good. It's easy to be able to manage a culture you know, I think in times when you're not running into storms or headwinds. And for us, we we probably took advantage of how the good times, I would say, of the 2000 you know 10s, in that whole decade, we're relatively easy as a leader. There weren’t overly complicated challenges, and we really found a way to engage with our staff, and that probably came somewhat with the fact of you made a comment right away of I'm still relatively young guy. Well, I probably resonated in my first four or five, six years here with more of of the entire staff level of the organization than I did leaders. It was easier for me to go out and take a knee next to us anyone working in a department and connect quicker based on just demographics. Sometimes we were in the same stages of life, we were doing a lot of the same things. And so we started to build this mindset that there's no hierarchy in value and in overall opportunity to have input into the model. Hierarchy needs to exist in decision making. I wholeheartedly believe that. I think that you have to have an ultimate decision maker and where things are, but hierarchy doesn't exist in vantage point. The vantage point of what comes from your teller to what comes from one of your folks that are working in, you know, in capital markets, or what the vantage point of your senior leaders, all give you insight into where things are and you need to be able to look at that. Now, you have to still make decisions and where things go, but I think we really built our culture first off of that. One of the things I would tell you that I think is it was at the existing building when I came here that I relished. I spent a lot of years consulting and traveling in and I used to joke when you walked into a business that had multiple levels, there was always a third floor off limits. Even if you don't mean for it to be off limit. If you have multiple levels, it's really challenging for your staff to feel like they're allowed to come into the area of leaders. And so for us, we've kind of doubled down on the fact that our leaders sit in the middle of the building. We engage all the time within our organization and it's an expectation that it should be one of those points where you feel like you're all rowing together, not that you're sitting on the front of the boat trying to tell people where to go.

[Darnell, 16:48]

Yeah, that's that's that's very interesting because it's it's very, what I'll call anti banking. Which is very traditional, very structural kind of boxy, and I wouldn't define Vibrant, you know, at all as an inside the box kind of organization, though none of it surprises me. It gives me a little bit better insight into why I view Vibrant as one of the more impressive organizations from an outlook and a and an expectation standpoint. What's interesting here, though, is that amongst all of that, what we haven't talked about yet is is some of the newer things that you've done with the business. And across that you decided to redirect your attention from from the traditional and and focus a lot of energies on this idea of a coffee house and kitchen. Can you tell us a little bit about that concept? 

[Matt, 17:32]

Yeah, so it's interesting when I tend to think about innovation, I probably tend to think of our coffeehouse division of our business as like the least innovative. And I think it's the one that probably garners the most like, well, that's really different and it is different from a financial institution perspective. But from an actual operational standpoint, there's a coffee shop on nearly every corner. We don't look that different from what I would say, your coffee shop approach of where we're trying to go, just unique in how we're utilizing it to our advantage. Which to me the really unique and innovative aspect of our business is probably how we've constructed the balance sheet, for the future is night and day different than what any other financial institution that I know of is really doing. And so, I'll talk about the coffee shop and then we can go in more even On the Balance Sheet because I think that's where the innovation is, but what what we looked at a handful of years ago. So, when we got back to 2020, and we started to say, where is our niche going to go? And we made the decision that we needed to be a really high price or high value ad depositor if that was our goal, we were going to reward the deposit aspect of our business. And it was going to move us into more of a digital approach and where we are going, the aspect of that that we said was moving from a traditional community organization competing against your local banks and credit unions, which Darnell, you know, in our market we talk about a lot. The only national presence in our market to speak of is Wells Fargo, with less than a 10% market share. So when we say we compete against local banks and credit unions, we generally compete against local banks and credit unions. So, we couldn't use this aspect of hey, we're more local than you, right, everyone in our market was a local institution, and so what we said is if we're going to move from trying to compete on locality only, and we're going to move to an aspect where we're running certainly more of a digital model, going from competing against local to going and competing against the Fintech, or the online bank, is just jumping from one red ocean to one red ocean. Yeah, it's different, but it's not, certainly less competitive, it's just a different type of competitiveness that was there. So, what we looked at for the long-term outlook of that was if we're going to go more digital, we want to try to find a way to create this sweet spot in the middle where we can give the entire aspect of being local in our community, but not doing it by competing against them in traditional branches. So, we had to figure out how to have rates as competitive as those that are at the nationwide aspect, but do it in a way that we could still be local to your community. And the only way we found out to be local to the community is we started to look for other businesses that could be a net neutral profit. And what I mean by that is not, oh, I'm assigning deposits to a branch because I have a branch in an area and people live near it, but they never walk into the branch, right? That that to me is kind of where we've always been, as we say well, I have the building, people are there. We wanted to find a net neutral profit model, so where we could still be in the community, but have offsetting revenue against that business. And so, we looked for retail businesses that we thought would have a low barrier to entry and a high repeatability. So where do people have a willingness to try something out, but are willing to come back to it over and over so we could drive brand but drive brand in a way that is cost neutral, instead of putting up 25 billboards or 50 billboards and think you're driving brand that way. So, we ended up coming up with this concept that we were going to move down a path of creating, kind of, our own coffee shop division. So, we have today 3 restaurants that run across two different markets. Those are our own owned in our own company. We utilize the data that comes from that to know who's actually walking in and interacting at our organization. We build brand that way. So, we have across those those 3 locations, we really look at how many folks interact with us on a given day. Is there brand recognition in the market? And so, we run these coffee shops as what I would say, a very traditional coffee shop. You walk in, it is going to have the same aspect of what you would get from food and beverage that you would see from a lot of traditional coffee shops that are out there, but we have a loyalty program where we collect the data. And we run that under the same brand with the aspect of how can we get individuals to know who we are on that end. I am under the mindset that if you denoble a branch into a market today, no one cares, no one's gonna stop in, no one's gonna interact with you. We found that we have, you know, over 300 individuals per location a day that walk in and interact with our brand. And that really is kind of our driver over time of not an immediate return from the banking aspect, but a long- term aspect of brand that allows us to leverage that deposit pricing and not have to do it in a way where we're just throwing up billboards or digital ads.

[Darnell, 22:06]

So being local isn't the same thing as engaging local. You know which is kind of an interesting way to go about it. You mentioned earlier that you shrunk your your branch network and the the retail business coupled with the banking model, there's a different level of technology that you need to have to to operate those two together - a lot different than than what the typical community bank thinks of when they think about technological innovation and and digital transformation and things like that. I often wonder if it's for you folks if this has been a helper in the speed at which you've kind of been able to adopt some of these things. You think that with the people that you have that clearly are out-of-the-box thinkers, do you think that they would have migrated down this road or this path at the same speed if you didn't kind of change in this way?

[Matt, 22:58]

I think it goes hand in hand. I think if you're going to change the business model, you start to get people aligned with that direction of where you're headed. And so, for years, I think we've been on the bandwagon of like we need to improve our digital performance, right? We need to improve our digital performance. We got to find a better way to onboard and do things from there. But when you start to actually say that, you're going to not have channels available that you historically are, it's kind of the burn the boat moment, right? You have to, you no longer have it, you got to find another way to be able to generate opportunities. And so, I think the digital approach of where we're going across both the deposit aspect of our business and what we do in kind of our nationwide lending program, we have really found ways to leverage technology to improve those. Now are we, what I would/can say, a leader in technology? I don't think at all. I think we are very much, I think we were a laggard for a long time. I think we are better than than the average today. But I think there are still a number of credit unions that actually operate better on that end than us. We continue to improve it, and I think we're looking for ways to continue to get better and better, but I think that's one of those chicken and egg conundrums that most leaders fall into of like, well, when we get better at digital, we'll do more digitally. Well, at some point, you have to just start doing more digitally and understand that you have to build your systems. I use Rocket Mortgage as an example of that all the way through. You know, if we think of Rocket Mortgage, everyone thinks of that being a streamlined approach. If you've ever gone through the rocket mortgage experience, the push button mortgage is not really how this operates overall and certainly wasn't how it operated 10, 12 years ago. And so, I think at some point you have to start going forward and you might have to have some of the manual processes in the background, until you can force yourself into understanding how to improve those.

[Zach, 24:35]

Hey. Hey, Matt, it's Zach. I got, I got about 100 questions and follow-ups here, but I'm going to limit myself to one and then I know D probably has one more to wrap up, but can you just give a little more, I guess, the the balance sheet of the future you mentioned a little while ago, which it gets me thinking I think for our listeners, too. What does it look like for the member or if you're a bank for the customer, banking with you from the lending side with with your partnerships like can you give a a short summary of what that might look?

[Matt, 25:01]

Yeah, so if you come to us from the direct side and you're looking for a mortgage, we actually have a partner that we work with where we refer that business directly to, they're going to end up operating, it gave us an opportunity to really kind of look in the marketplace for who do we think provides outstanding rates and service across those channels. So we have that across the credit card side, we have it on the mortgage side, we are trying to still find a couple of partners on the auto side that one gets a little bit tougher just with the way the industry has gone more towards indirect, but we're going to end up utilizing our partners to handle every aspect of that. So, we have no direct lenders in our business. If you come in, we're not having a Vibrant employee that's interacting with you to take the mortgage, originate or take the mortgage application, or an equity application or an auto or a credit card we'll pass that on to another provider. We won't ever bring that back onto our balance sheet unless there is like some in transit. We might use an in transit line with our mortgage partner, but we're not going to keep that long term on our balance sheet as we go through. So, everything we do on the lending side of the business is very much geared towards how do we manage long term concentration risk?. How do we manage interest rate risk? And how do we maximize profitability? So instead of thinking about how I'm giving back to the consumer on that side, I'm going to let our partners who are really good at that end of the business manage that for give back, and I'm going to use my balance sheet to maximize profitability, to be able to reward it back to the deposit side of the business. So, it's really where we're going of, I would say very much a bifurcated balance sheet. You know, whereas you think historically you come in and you've got $25,000 that you keep in liquid cash, you want a $400,000 mortgage, and so I'm going to try to find someone else who has a 300,000 in CD's and maybe only a $10,000 credit card. I'm not interested in that anymore. I'm interested in finding those on the deposit side that really want to be rewarded there. And I'm going to go out and leverage the other side of the balance sheet to maximize profitability.

[Darnell, 26:55]

Interesting. So, we've talked about a lot here, Matt. All I think very valuable to our listeners, particularly those that are are thinking about some of the things that that you've already gone through and considering you know, just kind of going through the exercise of how do I actually execute, what are the things that I need to to do to to affect change? You know, what would you say to to colleagues or or other bankers that that want to follow in the footsteps of Vibrant, maybe not with the same kinds of concepts exactly like you've you've kind of articulated here, but are going to go through that exercise?

[Matt, 27:32]

Yeah, I think, a great question. And and I think the first thing that I would look at, the common theme I used to hear all the time when I consulted was, anytime there was something that dealt with change and significant change, call it a core system was probably the most common that I think most leaders used to think about and what they did was, that's the next person's problem. That was the the same feedback I get most of the time. Well, we'll do that, but that's the next person's problem, especially when you get towards the back end of your career, right? It's easy to start to punt big decisions on where you go. And the point that I would make is if you are looking at your business model and if you have a strong belief that the way you've done things the last 10 or 20 years is monumentally needing to change and so not just incremental change, not just I'm going to add a new product or add a digital channel, but you genuinely believe that the business model is broken and you need to change. You have to accept the fact that the next two to five years is going to be painful, right? You can't break apart a business model and a balance sheet and not expect that it gets worse before it gets better. And it's the thing that we really had to prep ourselves for going into this is most decisions as leaders that we want to make, we like to get patted on the back for being really, really smart in the short run, and we tend to look at those decisions when they are challenging or painful and especially when they are financially painful as something that we want to avoid at all costs because we've been so geared into quarter by quarter performance or year by year performance instead of understanding the ultimate role is to make sure the organization survives in the long run. So, for us, that was the first thing we had to gear everyone up for from our board, to our employees, to recognizing, even in the regulator space, that this is a wholesale change and we're still going to have to pay for the sins of what we did On the Balance Sheet the last five to ten years. That exist that I can't make that go away. Many of us out there are in the same boat as we have a lot of sins from the past that are there and we want to not have to address that from a business model change, we want to just try to bury our heads in the sand. I think the first thing you have to do is you have to gear everybody up for it, and you have to recognize that for the next two or three years you're going to be dealing more with painful decisions than you are going to be exciting decisions. Now the winds come, but it's it's a major impact. The last thing I would say is, it takes a lot of trust and faith. In the end, here's the one comment that I looked at and and, I'll I won't forget this all the way through. When we finally hit the point where we said we are going all the way in on actually changing our business, the comment that came from my board and a couple of board members were, ok f that's the case, what's the safety net if it fails, right? Because the reality is anytime we go through, everyone can forecast your existing business and and if you stay on path, you can see that line of inflection when maybe it isn't going to work anymore and you can kind of prepare yourself for the slow death of the business. If you go through a wholesale change, the reality is you have to recognize that there is a chance that it doesn't work. That that's a reality in any business change if you are monumentally changing the business from from a whole. And that comment of what's the safety net, you eventually have to put trust and faith in and say, hey, the reality in our business is organizations are merging every day because they're doing nothing. I'd rather be a business than if I have to merge the in the end, it went out with us trying to figure out a way to make the business survive. So, do I think that we're going to have to merge the business? I don't. I think we are in a position over the long run to take our organization and make it really a a thriving successful business in the end. But, I have to know that I have enough belief in faith that we're going to put everything towards it instead of just kind of putting your toes in the water to see where it is. Once you decide to make a change, you have to go all in on it, or you're bound for failure in the beginning.

[Darnell, 31:21]

Right, so there's there's three takeaways there to me. You know, 1 is, you know, having the tolerance for, for pain, you know, being able to withstand the bad times because there will be bad times. Being disciplined to your decision and committed to it, and doing so with with a lot of convinction.

[Matt, 31:35]

Yeah, I think I think you're exactly right.

[Darnell, 31:37]

That's what I, that's what I've heard you say. And Matt, you've heard me say this before, I think you're one of the pioneers in our industry. I've got a lot of respect for you and and the Vibrant model. And I do believe wholeheartedly that there are some seismic changes that need to happen within the community banking space and how we do our business. So let's hope that that more banks and credit unions do follow in the footsteps of Vibrant, and start to think about these bigger picture challenges ahead. So thank you for your time, thank you for your insights. Is anything that you want to say Zach?

[Zach, 32:07] 

Matt, that was terrific. Thanks, thanks so much. We really appreciate it, and we really love listening to this as well.

[Matt, 32:11]

Yeah, thanks guys.

[Zach, 32:22]

And we are back on On the Balance Sheet. Really want to thank Matt for his time and and Darnell as well. I thought that was a tremendous interview and and Darnell did give a couple takeaways, you know, towards the end of that interview from his side, and just just to kind of stick with the theme here, the one I I really was was taken aback by or or or really thought was interesting was his buffalo or the cow analogy. And I think that just really illustrates how they're thinking and he's looking here saying, hey, things are changing in this industry, and I'd rather be a force of change and and change with it. And if things work, we hope they do, but obviously if they don’t, you know, we'd much rather be out there trying to be viable and do things with the cutting edge here for our members and and be able to, you know, with what he thinks the model will do. You'll be able to manage their risks better, but also be more profitable so they can then give money back to their members on the funding side, I think makes a lot of sense. And I just like that the kind of that Buffalo or cow and they're they're gonna run through the storm and try to get through it as as fast as they can here versus, kind of wait for it to to dissipate, cause it may not dissipate. Because I think a lot of things are changing, most bankers who listen to this will certainly agree with that. And I think what Matt said today may not work for everybody, but to me it was very thought-provoking and really an interesting, you know, take on, you know, centuries old type of of business. So we want to thank everybody for listening today, and we look forward to listening next month.

[Dana, 33:49]

On the Balance Sheet is a podcast produced by Darling Consulting Group (DCG). All views and opinions expressed by the hosts and guests are solely their own and may not represent those at DCG. All third parties are independent entities and are not affiliated with DCG. This podcast is intended for informational and educational purposes only and is not considered as advice. All views and its opinions expressed are based on the information available at the time and may have changed based on the current market and other conditions. For more information about DCG, please visit  www.com.darlingconsulting.com or e-mail us at info@darlingconsulting.com. Today's background music is provided by John Sid, the Common-Media and can be found on pixabay.com.

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