10 Who Had a Good Year

January 5, 2017 10:00 AM

2016 was very good to these financial services executives, who succeeded where others failed, sold their businesses for large sums, felt the love of regulators or could finally breathe a sigh of relief.

Michael Corbat, CEO of Citigroup

Citigroup, under Corbat's methodical leadership, deftly moved in and out of the spotlight at exactly the right moments in 2016. Granted, the year opened with concerns about the global bank's exposure to energy borrowers and various international contagions, and it was hit with the usual assortment of fines during the year, such as a $425 million settlement with the U.S. Commodity Futures Trading Commission.

But Citi's overall fortunes began to change in the spring. It passed federal regulators' living-will tests while JPMorgan Chase, Bank of America and Wells Fargo flunked. Shortly afterward Corbat & Co. easily held off a shareholder proposal to hire experts to study whether it should break itself up. Meanwhile, the company continued to make bold business moves, exiting its retail operations in Brazil, Argentina and Colombia. As the year wore on, the results of several years of streamlining and refocusing seemed to be paying off. Citi beat analysts' earnings-per-share expectations in each of the first three quarters; its "bad bank" Citi Holdings kept shrinking; and it added its 1 millionth new Costco credit cardholder in December. While Wells Fargo battled scandal, Citigroup stuck to its knitting, announcing a revamped investment-advisory strategy and a series of new mobile-banking services.

"Citi has become a simpler, smaller, safer and stronger institution since the financial crisis," Corbat said at one point. The words seemed to have more weight than in years past.

Mike Cagney, CEO of SoFi

Competitors' pain was SoFi's gain in 2016. While Lending Club and Prosper Marketplace stumbled, San Francisco-based Social Finance emerged as the most formidable U.S. online lender. The privately held firm, which Cagney launched in 2011 to refinance student loans, now aims to become a full-service financial services provider for a relatively young customer base that figures to build its wealth substantially. The company began offering life insurance in 2016 after having added personal loans, mortgages and investment products.

Although SoFi was not immune from the funding problems that hit the entire online lending sector this year, it avoided some of the harsh scrutiny that its publicly traded peers received. And the company was helped by the huge war chest it built in 2015. Near the end of 2016, Cagney was back on offense, talking about international expansion plans, touting the potential benefits of the proposed new fintech charter, and renewing his long-discussed promise to launch a SoFi deposit product.

Credit Union Executives

Credit unions executives received good news in 2016 concerning two items high on their wish lists. In February, the National Credit Union Administration approved rules to expand member business lending. Then in October, the NCUA liberalized field of membership regulations, which could help credit unions add millions of new customers. The banking lobby has challenged both decisions in court, however, and a judge has indicated that a ruling on the business-lending lawsuit will come early in 2017.

Beth Mooney, Chairman and CEO, KeyCorp

Beth Mooney appears to be proving the doubters wrong. This time last year, KeyCorp's CEO was facing relentless criticism from the investment community over the Cleveland bank's decision to acquire First Niagara Financial Group in Buffalo, N.Y. From the time the deal was announced in October 2015 until even after it closed in July, analysts and investors griped about the deal price $4.1 billion, or nearly 1.7 times First Niagara's book value and questioned Mooney's timetable for earning back the dilution to stock its price. Integration problems that surfaced shortly after the deal closed seemed to further bolster arguments that Key had bitten off more than it could chew.

Then KeyCorp reported its third-quarter results and the criticism, at least for the time being, stopped. Mooney said she now expects annual cost savings to exceed the $400 million initially forecast. Meanwhile, Mooney said the deal has the potential to generate $300 million in additional revenue over in the next three to five years by providing more services to newly added customers in areas such as payments, treasury management and commercial mortgage banking.

"We've already seen some early wins, and our confidence continues to grow in achieving our revenue plans," Mooney said.

Eugene Ludwig, founder and CEO, Promontory

Ludwig capped off the year by selling Promontory Financial Group, the consulting firm he founded in 2001, to IBM for undisclosed terms. The deal cements Ludwig's status as one of the most important players in the future of banking as IBM wants to combine Promontory's muscle as the banking industry's "shadow regulator" with its own prowess in artificial intelligence. The hundreds of consultants who work for Ludwig's Promontory will be at the forefront of automating the sometimes-repetitive tasks of bank compliance.

Mike Sha, co-founder and CEO, SigFig

SigFig may be the poster child for the rising prominence of bank-fintech partnerships. The San Francisco robo-advisory startup this year made a splash in retail banking, striking deals to provide automated investment services for some of the industry's biggest names: Wells Fargo, UBS and Citizens Financial Group. It also raised $40 million along the way. The moves affirmed CEO Mike Sha's growth strategy of giving banks access to cutting-edge technology and getting thousands of new users in return. Through its new partnerships, SigFig will have access to close half of all U.S. retail banking customers, according to Sha.

Bryan Jordan, Chairman and CEO, First Horizon National

Everything seems to be clicking for First Horizon and its CEO, Bryan Jordan, these days. Quarter after quarter, the Memphis, Tenn., company has been reporting strong growth across all business lines and continued improvement in efficiency and asset quality. Profits have been at or near record levels and its stock price climbed 38% in 2016, closing out the year at $20.01. Its recent success has been fueled by a surge in lending to mortgage companies and an expansion in specialty finance. It made its biggest splash over the summer when it bought a chunk of GE Capital's restaurant franchise loan business, instantly adding nearly $540 million of high-yielding loans to its portfolio.

The $28.3 billion-asset company has also added teams of bankers to lead its expansion in structured-equipment, health care and music-industry finance. Apart from overseeing all this growth, Jordan is emerging as a key industry ambassador. A strong supporter of financial education, Jordan in 2016 joined the board of Operation Hope, a nonprofit that provides financial counseling inside bank branches. He was also recently named chairman of the American Bankers Council, a wing of the American Bankers Association that advises the trade group's leadership on policy matters of special concern to midsize banks.

Organizers of New Banks

For years bankers opted against applying for new bank charters for a host of reasons. The operating environment was too challenging, some said. Regulators, particularly the Federal Deposit Insurance Corp., didn't seem supportive, others claimed. As a result, only three new banks were approved from 2009 to 2015.

There are indications that things are changing. Five groups have filed applications to form banks in states such as California, Oklahoma and Tennessee. The most notable application, however, may be the one from Pacific Metro Bank in Johns Creek, Ga. That's because the institution is planned in Georgia, where more than 90 banks failed in the last decade.

Another encouraging sign came from the FDIC, which recently issued a handbook for de novo bank organizers. The handbook provides guidance on three stages for establishing a new institution: prefiling procedures, the application process and pre-opening.

Terry Zink, President and CEO, Cascade Bancorp

Coaxed out of retirement four years ago, Terry Zink used private-equity funding to build Cascade into a $3 billion-asset bank in the Pacific Northwest. Those efforts paid off handsomely this year when the Bend, Ore., company agreed to sell itself to First Interstate BancSystem in Billings, Mont., for $588 million. That transaction the seventh-biggest bank deal of 2016 values Cascade at a healthy 215% of its tangible book value.

Zink, meanwhile, is planning to retire again after the transaction closes in mid-2017. He intends to spend more time with his grandchildren and building his classic car collection.

Simone Lagomarsino, president and CEO of Heritage Oaks Bancorp

It was a productive 2016 for Simone Lagomarsino, president and CEO of Heritage Oaks Bancorp in Paso Robles, Calif. First, Lagomarsino led the $2 billion-asset company through the successful exit of a regulatory consent order tied to Bank Secrecy Act compliance. Then she sold the company to the $3.8 billion-asset Pacific Premier Bancorp in Irvine, Calif., for about $406 million, a 214.2% premium to its tangible book value. Lagomarsino, one of American Banker's Community Bankers of the Year in 2013, will also join Pacific Premier's board after the deal closes. Talk about making efficient use of your time.