Andrew Sagliocca: [00:00:00] a company is kind of like raising a family, right? You’re not going to hand over the reins of raising your kids to to some third party for the most part. you’re going to stay involved. You’re going to let, you’re going to give them a lot of love, but a lot of tough love.

you’re going to go, he’s going to redirect them. At some point, you got to clip their wings when they’re, you know, out of elementary school and let them give them some independence, even though they’re probably, you know, stupid about what decisions they’re going to make, but you let them make stupid decisions and make mistakes.

​[00:01:00] ​

Josh DeTar: [00:02:00] Welcome to another episode of the digital banking podcast. My guest today is Andrew Sagliocca, vice chairman, CEO and president of Esquire Financial Holdings Inc and Esquire Bank. All right. Am I allowed to say this? I think with my guests today, at least about him, I can. Sometimes people fit the stereotype as someone from the West coast.

I guess I have a personality in mind when I think of a New Yorker from an Italian immigrant family. Intense, brutally honest, deeply passionate, hardworking, and most of all focused on family. And Andrew fits that to a T if you ask me. He [00:03:00] says if you have your faith, your health, and your family, and then focus on the company with a strong work ethic, you’re going to be doing great things. So here’s the funny part. Then if you ask me, Andrew bucks a different stereotype completely. Career banker. Andrew is an absolute ball of laughs. He takes his family and what he does very seriously, but he tries not to take himself too seriously. Heck, he even asked me if he could get one of my flat bill hats.

He also doesn’t want to just do the same thing. The banking industry has always done and do it in the same way. He wants to do something unique and serve niche segments with niche services and products. You see, his grandfather came to the U. S. without even the ability to speak English. His family then became successful in real estate due to those core values I mentioned earlier.

But when Andrew wanted to get into the family business, his dad said, Nope. After seven kids, I’m tired. I’m over it. Go find a new industry. [00:04:00] And as luck would have it, Andrew was brought to us into the financial services industry through some work at KPMG. Having been through the mortgage crisis and the growth and successful sale of a bank that grew from just over 1.

5 billion in assets to over 60 billion in assets through both organic and M& A activities, he can honestly say you learn more through the hard times than the easy ones. That upbringing and life experience pushes Andrew to always be more and to do more. And this desire to support family and community around him to work hard, to do something different, to give it all you have and to have fun while you’re doing it makes Andrew somebody you’re going to want to stick around and listen to today.

So Andrew, thank you so much for joining me on the podcast.

Andrew Sagliocca: Josh, thank you for having me and we appreciate you taking time out of your busy schedule to spend time with us.

Josh DeTar: I mean, I think yours absolutely, takes the cake over mine, but [00:05:00] thanks for the sentiment. No, you know, we, I always think it’s really cool, you know, through the years that we’ve been doing this podcast and over a hundred episodes. You know, there’s lots of different ways that kind of guests find their way to the show, from people that just, I know through, you know, my network in the industry to, you know, folks that I run into, or maybe I see someone else speaking or on a different podcast and then, you know, sometimes we have connections to our PR firms and things like that.

And you always get this just wide range of opportunities to talk to people that you may not have had, you know, the ability to have networked with. And Andrew, I think you’re definitely one of those folks, right? And it, but when we got connected, I mean it was like two minutes in where I was like, yeah, no, we’re, we’re done with this discovery call.

Like I need to have Andrew podcast. We’re going to have a ton of fun. And it was, I think for two big reasons, right? I mean, it very quickly picked up on your personality of just, there’s no BS. you’re going to give it to me straight the way it is, whether I like it or not. And I [00:06:00] think one of the things that our industry, like any industry, right, is, is in a time of needing to do is some of that harsh self reflection of, are we doing the right things to set ourselves up for the next kind of generation of success?

But then to I just, I really enjoyed kind of the, that conversation with you about, you know, how then you at the bank are approaching doing some things different. so I think that would be something that I’d really love to kind of start with is maybe tell us a little bit about the bank. and I don’t know if you want to, you know, give us the whole, Like, you know, medicine, the, the park, bench life story.

I think I kind of liked that the whole Genesis from start to finish. But, yeah, I tell us a little bit about the bank.

Andrew Sagliocca: Sure. I call it the elevator speech. I’ll give you the elevator speech. And I like to do it from end to, from the end to the beginning, maybe, maybe, maybe we go all the way back to the beginning. So fast forward to today, we’ve been around [00:07:00] 17 full years. We’re in our 18th year and the bank is, it’s, it’s pretty simple.

We are a nationwide branchless tech enabled bank that focuses on two unique national verticals or niches, unique niche, I don’t care what word we use. One is a litigation vertical, which is about a half a trillion dollars a year that settles through the banking industry, but bankers do not, including myself when I was a traditional banker 17 years ago, bankers do not, truly understand, that vertical and their needs.

And the second one is a payments vertical. And payments meaning debit and credit card processing. We all have debit and credit cards in our wallet or in our pocketbook, depending on who we are. we all swipe for payments, both at home and in the [00:08:00] stores. and at the end of the day, that’s arguably 10 plus trillion dollars processing through all the card brands and people like PayPal, well over 10 million small businesses that are traditionally called merchants.

and that’s underserved, because there’s only about 125 banks out of about 4, 000 that are merchant acquiring banks. so on the litigation side, it’s pretty simple. When I say underserved, these are primarily not only contingent fee plaintiff law firms that have very long duration inventories.

Unfortunately, those inventories are claimants. They’re people with injuries. They’re usually two to three years in duration, which basically means that they have very erratic cash flows, month to month, quarter to quarter, a lot of times year to year, and that becomes a vertical that’s hard to lend in, and lend [00:09:00] into because of that erratic cash flow.

so it really is simple, though. It’s commercial banking. Cash flow banking coupled with non traditional asset based underwriting. Put the two together and with any industry, if you can lend into it, you are in the right to attract those low cost core deposits that in this industry turn out to be, you know, almost two dollars in deposits for every dollar you advance on a loan.

So it’s banking on its head. In the payment industry, it’s even simpler. Somebody has to clear all these payments for the end, merchant or small business. We are not an issuing bank. We’re not the ones. You don’t have an Esquire bank credit card or an Esquire bank debit card, unless you’re a customer. in your wallet, you have a Bank of America, American Express, Citi, Chase.

someone has to clear for all those [00:10:00] banks. And again, there’s about a, or all those small businesses or merchants. And again, there’s about 125 banks out of 4, 000. So one’s balance sheet intensive, loans and deposits. The other is payment intensive, non balance sheet intensive, fee income.

Josh DeTar: this is why I think it’d be interesting to go back to the Genesis story part of this too, because as an outsider looking in, I mean, it literally feels like a couple of, You know, friends sitting around in the garage, you know, having beers on a Friday evening or something, throwing darts at a dartboard.

They’re like, ah, those are the two things we hit. Let’s start a bank doing those two things. So how did you get here? Yeah.

Andrew Sagliocca: of the bank, when I was at my previous bank, before we sold it in an M& A transaction, The founders of the bank were in the litigation industry in a different way, but they were in it. They were in it for almost 10 years prior to founding the [00:11:00] bank, just shy of 10 years. And they realized that it was a very underserved industry from the banking industry, although it was very deposit rich, a deposit rich industry.

with low cost core deposits. The solution was pretty easy. How do we solve for that? We can’t start another finance company, which is what they had a finance company where they were really lending to the consumer or the plaintiff, but they were doing that through the law firm. So their relationships were with the law firms.

The law firm’s relationships were with the consumers. So they built their business model with the law firms, one law firm at a time. Those created great relationships around the country. And the solution wasn’t another finance company. The solution was, hey, let’s start a bank because we need banking powers, a charter, and we [00:12:00] need FDIC insurance, at a minimum to go out into this industry and make them comfortable and earn their trust over time.

That we’d be the right institution for them. The payment industry was a little different. That came along about five, six, seven years later. we had always talked about diversifying, let’s call it revenue streams and having a lot more fee income and rather than Service charging real great core customers and nickel and diming them on deposit accounts and 15 minimums and wire charges and all that.

Well, if the customers, the core commercial customers, are really good customers and their depository relationship is highly valuable, then why the hell do you want to nickel and dime them on fees? It doesn’t make any sense. So the payment vertical came out of the thought that we should be within the payment vertical, but [00:13:00] how to be within it.

And as luck would have it, as most things in life, you know, luck and skill combined, get you there. We ran into a gentleman through a commercial customer, who started a payment platform at another bank and was leaving that bank and wanted to start a new career. And that. genesis, which did come from a commercial lending customer.

It did come from a thought of we should be in the payment vertical. That genesis wound us in, wound us up in the merchant acquiring vertical, with him and small number of business partners on his side. And we built that from scratch about seven years later. The interesting thing is, and I’ll do this once when you combine in a.

You know, a balance sheet intensive national model for that’s that’s for an underserved community, that being litigation and your net interest margins can be really strong because it is a very stable, low [00:14:00] cost, depository base and you couple that with a good fee income business and then match it off with a branchless presence and a technology enabled platform.

You do get the benefit of, you know, I, I, don’t want to say it. I’ll knock on wood when I say it. you do get the benefit of a very high performing institution where, you know, our margin is 6, our fee income is 20%, our efficiency ratio is below 50, our returns on assets are 260, our returns on equity are 20%.

You know, we do trade at a high multiple in the public markets, and it’s the benefit of, you know, smart founders, really good management and employees, great clients, and, you know, and a dedication to doing it right and doing it differently than the way I was brought up in the [00:15:00] banking industry with brick and mortar and doing it more with a A tech, a national focus, which is highly unusual for a small community bank, because technically that’s what we are, and coupling it with technology.

Josh DeTar: got all these smart people around. How did you end up there then?

Andrew Sagliocca: Exactly.

Josh DeTar: No, but, yeah.

Andrew Sagliocca: You know what the answer is? You know what the Josh, this, my dad said he doesn’t want me in the, in the real estate

Josh DeTar: Yeah.

Andrew Sagliocca: and he doesn’t want train That’s the answer. You already said it.

Josh DeTar: the answer, yeah. No, you know, you were telling me though, it was kind of funny that, you were saying, you know, you kind of had to look at this opportunity with this bank when you were talking to the founders. You were talking about how, you know, your oldest was, I think, 13 at the time, right?

You’re like, well, I got five years and it’s kind of the perfect window of opportunity for me to start something totally radically new and different. Like this is the point in my life where I can, I can take a real big risk [00:16:00] like that. and, but I’ve got five years to make it pay off cause I got, you know, four kids to put through college.

So we’ve got to figure this out in some kind of time window. But I feel like there was kind of that almost just uniqueness of the timing in your life that this also fit right with. But what got you excited about this being something that you now have done for, you know, quite some time post that decision.

Andrew Sagliocca: I mean, it does come down to the starting point is where you start. All right. A little grace of God, little luck, little skill. a great run and great mentors, where I worked previously. They took care of me financially. My former boss, John Canis and Dan Healy, my CEO and CFO at North Fork really took care of their core group of, managers that made me.

financially secure in taking a big risk and you hit it on the head, right? The selling point wasn’t the founders. That was part of it. [00:17:00] But the selling point was the age of my Children and where I was in life and you put it all together and it was, it was a, it was a unique opportunity that I was willing to take at that point.

What keeps me excited is simple. It was always challenging. I mean, it’s that simple. It was a challenge before we formed the bank. It was a challenge the day we formed the bank. It was a huge uphill battle in 2007 and 2008, during the mortgage crisis where, you know, trust was out the window with bankers.

And that’s all banking is, is a game of trust. Your clients have to trust you, especially on the commercial banking side. it’s absolutely, a trust, proposition, especially with lawyers because they’re not even trusting you with their money, they’re trusting you with your client, with their client’s money.

but wildly challenging, wildly interesting, wildly different, and, you know, the excitement’s always been there and will [00:18:00] always be there and, you know, as my old boss used to say when, you know, we’re not. kicking ass and, and, and posting good returns. And, you know, our investors aren’t happy or our clients aren’t happy or we’re not happy, you know, then maybe it’s time to stop.

But, you know, all those things are still firing on all cylinders. So it really comes down to one word, challenging, which is, you know, and, and not easy, which, makes it fun to come here every day.

Josh DeTar: Well, and that, you know, leads me to one of the things that you were talking about when we were, kind of crafting your introduction is you were talking about how, You know, you learn at the worst of times too, right? So the mortgage crisis taught you a ton. what are some of the things that you’ve learned through the hard times that you kind of apply to the good times to try and keep you from going to the next hard times?

Andrew Sagliocca: Sure.you know, back in the late 80s and early 90s, we had a national commercial real estate [00:19:00] crisis that ran from, you know, California down through Texas and back up the East Coast. that was when I was at KPMG, in the financial institutions group. So I saw, The FDIC through the RTC Resolution Trust Company sees not only a lot of banks, but sees a lot of our clients at KPMG.

And I saw the infancy of, for me, what was M& A transactions or seizure and sales, both, not either or. so that was, that was a tough time. That was, that was five years. of a struggle, certainly for, for most institutions out there, because I don’t think anyone was left unaffected. That’s one. the growth at, my former bank, North Fork Bank, was incredible.

When I say that, you know, your day job was to run your area and run your department. It was, the finance and accounting area that myself and my dear [00:20:00] friend were kind of, I don’t want to say in charge of, but overseeing for, for, the CFO of the company, and your nighttime job as I like to kid around was vetting potential M& A transactions.

And, and we probably looked at several hundred to get to several dozen upwards of 50 or 60, where we either made an investment in, or did some level of diligence on. to close on 14 of them for about 30 billion worth of growth, which included beginning to end and included from the investment banking work on the front end, all the way through system conversions and cleanup on the back end and everything in the middle.

so a couple that day and night job that we didn’t have separate teams and that was wildly challenging.The mortgage crisis in set low seven was another one and the liquidity crisis we just had, but the bottom line is what I [00:21:00] said to you early and you you just repeated back to me. I honestly believe that the worst of times are the best of times to learn, you know, pick the MNA.

If we weren’t acquisitive at my former bank, I would know very little about retail, lending, lending ops, retail ops. operations, you know, wires, ACH, I could go on and on, you know, growing banks, traditionally, non traditionally, adding verticals. I mean, it was, it was a 14 year grad school education that someone paid me to attend every day.

So it was, that’s a, that’s a great example of diversifying your experience. You know, across the entire industry with a person who is focused on the client first and not the bank first and that being my former boss.

Josh DeTar: you know, I think [00:22:00] that is a, it, it’s one of those things that I think if you’ve gone through and you’ve kind of taken some of those lessons, you know, It feels pretty easy to look back on and say, Oh yeah, that’s the right way to approach that. but man, is it hard going into it? Right. And you know, especially, you know, if you’re somebody early on in your career, man, I, I can’t think of much better advice than just being open and receptive to when challenging times come, just being there digging in and getting work done because that is to your point like that is where you learn.

All of a sudden having to take up something that’s not on your job description a good thing. That’s what’s going to make you more well rounded. It’s going to make you more prepared for the next thing. And if you’re always sitting there just trying to chase a promotion or trying to chase that next buck versus just trying to chase that next opportunity to lend a hand and get a skill, I think you’re probably a lot more likely to be successful with the latter than the [00:23:00] former.

yeah, my, my, my former bosses always, it’s, it’s, it’s a negative, it’s not really negative. People hear it as a negative, it’s a negative way to say it, but it’s a very positive. They gave us a tremendous amount of runway to fail. What does that mean? They gave us a lot of room to take on new things and new experiences and fail at them and learn from them and become a lot wiser, right?

Andrew Sagliocca: Smart is one thing. I may not be the smartest guy. I don’t think I am, but at the end of the day, maybe I’m a little bit wiser because I was willing to gravitate towards the things that made me uncomfortable, you know, rather than just stick with the things that make me comfortable and, and, Listen, if you, if you want to be a good manager, at any level, you should always leave the things that you find easy or rote or that, that, that, that are things that you’ve done Time and time again, you should be looking [00:24:00] to leave those behind, grow the people that work for you in those roles, and challenge yourself in the next role.

And allow yourself to fail because if you don’t, then you’re probably not really challenging yourself.

Josh DeTar: Man, I couldn’t agree more. That leads me to a really interesting point of one of the things I wanted to talk to you about today, though, actually, is, I feel like that conversation comes up a lot on the podcast, you know, this kind of ability to fail. And the banking industry is a really interesting one when you start to apply that kind of mentality to it.

Right? Because at the end of the day, there are some things that we simply cannot fail on. Or, I mean, we can fail at anything, right? But like, if we do, they’re catastrophic. Versus, there are some things that we can fail on. We can all have a good laugh about it. Say we learned something from it and, you know, Bob’s your uncle, you’re on your way.

And, you know, you start to layer in things like, hey, we’re talking about people’s real money. You were talking about even [00:25:00] within your customer base, it’s not even your customer’s money, it’s your customer’s customer’s money. and then we’re talking about regulation. We’re talking about the trust factor.

If you break the trust factor, know, you can break that in a day and it takes decades to rebuild. hashtag Wells Fargo. but. How do you then look at the ability to have lots of runway to fail within your business so that that does actually become a positive thing for your bank versus just a, I guess a challenge or, you know, a fear to your regulators maybe.

Yeah.

Andrew Sagliocca: so, so are, are people you hire and managers. So again, building the bank from nothing and having the experience of building a franchise from a billion and a half to 60 billion, unlike KPMG, which was a. You know, I’m old enough to remember Big Eight, and now I think [00:26:00] it’s Big Four, or who the hell knows how many left.

but, but really, when, when you bring in what you believe are good and talented people, good managers, I’ll use myself for an example, whether I am or not, good managers are going to work very closely with those managers. Pick one. I’ll pick one. I hired my CTO. Right? My CTO, Marty Korn, came from Oppenheimer, and Bank of America, and Credit Suisse.

Great background. His biggest concern when we interviewed, which wasn’t even an interview, it was more of a discussion like we’re having, was, you know what, I really liked him, I really thought he was the right person, and his biggest concern was, I’m not a banker. And I said, that’s what I love most about you.

You’re not a banker. How long now does it take him and I to develop that trust with one another to then be able to say, [00:27:00] Hey, you know what? I’m not crazy. He is not only talented. he’s a good manager of people. and he’s good at his job. So it takes time to develop that level of confidence, which turns into trust.

and God willing friendship, which it has. and then you can let go of the reins. But I think you know that the trick even when you let go of the reins is stay involved in in what’s going on strategically and tactically, right? Strategy is one thing tactically. How are we going to attack it? Stay involved up front.

you know, spot spot yourself along the way. If you have people. that you trust they’re going to come to you with problems and concerns and issues. If they’re really good, they’re going to come to you with problems and concerns and issues and one or two, usually at least two solutions to have a discussion.

and you know, knock on wood again, if you do it right, the big things don’t, [00:28:00] you don’t fail at the big critical items because you’re involved enough. and have people around you that you trust that are going to manage back to you that at the end of the day, God willing, the, the, the, the major items don’t blow up in your face because you’re involved in them along the way.

But, you know, again, I saw that with my family’s business personally. I saw that with a managing partner at KPMG who stayed involved, believe it or not. Yeah, I certainly saw that at my former bank with my former CEO. You know, so these are lessons I learned over my career first from some really good people along the way who have become friends.

and, you know, giving people the latitude to fail. To your point, you don’t need to give them the latitude to fail. It’s something that hurts the company. If it hurts management, if it hurts process and administration and God forbid, maybe, maybe it [00:29:00] hurts certain employees. I don’t mean personally, but professionally for a temporary moment in time.

It’s probably okay. The last is probably the one you don’t want to happen. But to your point, Josh, you don’t want it hurting your institution, your relationship with your investors or board members. God forbid your clients. God forbid. Those are the things you need to stay involved in. And size doesn’t matter.

As you keep growing, you can stay involved if you run a bank that has a very flat management group, that when decisions need to be made, the vice president doesn’t need to go to the SVP to go to the department head to go to the other department head to wind up on the other side of the umbrella or the pyramid to go right down.

If it’s a flat management group, then that VP will get their ass out of their chair and go talk to even the department head in the other department And quite honestly, if they can’t resolve [00:30:00] what they need to resolve, there’s always somebody who’s going to, to make the decision right up to myself.

Josh DeTar: Yeah, you know, those again, that’s one of those statements that I think is so interesting to me personally, as, you know, it’s just, I gain more experience in my professional life, you know, seeing more ways that companies operate and being a part of incredibly process driven hierarchical organizations versus very flat organizations. I mean, look, right, wrong or indifferent. Each company picks its own path. They have their pluses and minuses. I can tell you for me personally, I mean, just being a part of an organization that runs flat. Is so much more fun because you actually get stuff done right? And to your point, you know, the VP just gets their ass up out of their chair and just does the work, right?

It’s not, I’m here to oversee the work, right? And I sit up in some ivory tower on a pedestal and I don’t actually do work like, no, just across the board. We do work. We make decisions. We [00:31:00] trust each other along that line. And I know that, Hey, if Andrew makes a decision, You know what? He may get it wrong, but like I trust the man and I trust that he made that decision with the best information he had available at the time with the best experiences he had in my, you know, in his back pocket.

And he made that, that, you know, choice based on what he thought was going to be best for our organization, our customers, et cetera. Right. And if you fundamentally believe that you have that level of trust, I think it creates a very different conversation when you do fail. It’s not, Oh, there’s Andrew, the moron failing again, or goodness, I can’t believe we let that guy do that.

Like why is he even in a position of power or he didn’t check with me first or those kinds of things. Those all fall away. Right? And it’s like, okay, cool. Well, you know what? It’s awesome that he ran with it. What did we learn from it? Because a really smart guy made what he thought was the smartest decision and it didn’t work out.

So, [00:32:00] What do we learn? Where do we go from here? And how do we all pitch in to help? I just feel like that’s a very different type of organization that moves at a very different pace. But for whatever reason, a lot of times we, we, we human it and we screw it all up. I don’t know. We just, we put a lot of these processes in

Andrew Sagliocca: you know what? Running a company is kind of like raising a family, right? You’re not going to hand over the reins of raising your kids to to some third party for the most part. you’re going to stay involved. You’re going to let, you’re going to give them a lot of love, but a lot of tough love.

you’re going to go, he’s going to redirect them. At some point, you got to clip their wings when they’re, you know, out of elementary school and let them give them some independence, even though they’re probably, you know, stupid about what decisions they’re going to make, but you let them make stupid decisions and make mistakes.

At the end of the day, God willing, they wind up to be good people. It’s kind of the man. There’s a lot of parallels [00:33:00] between, you know, families. I’m fortunate. I come from a very large family, seven siblings, including me, you know, four is not a small number raising four kids that are about 18 months apart.

So there are a lot of similarities, but, but you hit it on the head. You don’t need people to come in and keep the lights on. You don’t need people to come in and say, well, we’re following policies and procedures when that’s what the policy says. You don’t need people that are unwilling to make decisions and constantly go in their manager’s office or in my office and say, Here’s the problem.

What do you want to do? Well, you know what? You don’t, you don’t need order takers. You don’t need people who like, like a waiter are going to take orders and then carry those orders around and carry the dirty water around. So, but that’s why, listen, we’re very, we’re an odd duck. The company itself is a very odd duck.

We’re very different and unique. it takes time to get [00:34:00] acclimated to how we do things. Well, it takes time to get acclimated to who we are. And what we do and then how we do things. and then it takes time to, to kind of get comfortable and fit into the culture, which the culture is pretty damn simple, communicate, collaborate.

Across company lines, get off your chair, stop sending emails. The email doesn’t matter. Go have a discussion with somebody. you know, and at the end of the day, when you hire new people here, especially at the officer level and above. , it’s usually 15 months to 24 months of runway that I know I’m willing to give somebody to make mistakes and learn how to plug in here because again, very odd duck and, very different culture and, and, and, and demanding, which doesn’t bother me to say at all.

It’s, it’s, it’s a demanding place to work. And that’s part and parcel why, you know, our clients are happy and our performance is so good. [00:35:00] Yeah.

Josh DeTar: of things I want to touch on for me if you don’t mind, you know, one of them, just what you ended with that kind of demanding culture. I feel like that’s something else that I’ve had, kind of a different perspective on as I’ve gotten more experience in life and a demanding culture where it’s kind of what we were talking about earlier, right?

Like the negative side of a very hierarchical organization, where it’s like kind of commandments passed down onto thou, but not unto thee. That, that’s really difficult for people to get, you know, on board with me demanding and saying, well, you’ve got to put in the time this weekend to get it done.

Or I need you to do this to this level. but when you build kind of an organization where It’s, it’s very much so that team approach where it’s I know the person to the left of me and the person to the right of me is working just as hard and they’re demanding more of themselves than I could ever demand of them personally.

and you start to build that level of trust to [00:36:00] your point. It takes people a while to get into that culture, but I think it then creates the right type of culture where the right types of people stick around and quite frankly, the right to the wrong types of people don’t. And what you end up with is you end up with a culture who actually really aligns to that.

Like, no, I’m, I’m genuinely very passionate about having a demanding organization because I hold myself accountable to those standards and I’m, I’m glad that as an organization we’ve decided that everybody is going to be at those same standards. And I’m not sitting here working my butt off. While, you know, Susan and Tim are over here just, you know, playing on their phones on the couch, and making sure they milk every last minute out of the break.

Right. It just, I think it creates a different organization and that goes back to what you were talking about. Just then you, then you have the ability to have a team where you’re like, Hey, I can trust that they’re going to make the right decisions. So the types of things they’re going to fail fast on, are going to be the things where there’s a huge [00:37:00] upside and a low, you know, risk versus a huge risk for a very low upside.

Andrew Sagliocca: Agree. Agree. And listen, don’t, you know, my advice to anybody is don’t ask anybody to do what you’re not willing to do. If you’re not willing to work hard, then why the hell are you preaching working hard? You know, don’t, do as I, do as I say, not as I do, type crap. That doesn’t work. That doesn’t work. The end of the day, you know, the higher you are up in the organization, the more you’re there to support the people that work for you.

Period. End story. And that’s not me. Yes, that’s me, obviously. Put that aside, right? If you’re going to run, pick a common area at every bank, if you’re going to run the lending division, and you’re going to be the chief lending officer, then your primary role is to support the people in the lending department and the clients.

and resolve conflicts or problems or client concerns and consistently morph and change the [00:38:00] deposit, the department and the direction that hopefully you can take it for the benefit of the clients and the client’s needs, right? I mean, take policy. Policy is a living, breathing thing. It’s not, it’s not, it’s not a 10 commandment, right?

It’s not one of the 10. So the policy is written at a point in time. to fit the needs that we think the institution and the clients have, that the clients are definitively going to dictate change to that policy. And if you’re not at the top supporting those needs and wants of your clients and your employees, then you’re keeping the lights on and you’re at the wrong place.

But work somewhere where there’s standard products in the industry that every bank and non bank offers. And probably at that point you’re competing on either terms or [00:39:00] technology or both. Right? Take mortgages for instance. You’re competing on terms and technology. But quite honestly if you know the large mortgage providers out there that have the best technology that are non bank Quite honestly, if they’re not offering really competitive terms, I don’t care how good their technology is.

I’ll go fill out paperwork to get my mortgage if I get much better terms rather than sitting

Josh DeTar: Hell yeah.

Andrew Sagliocca: lazy, filling it out on a

Josh DeTar: tells me rocket mortgage takes two minutes to fill out and I’m going to be 7 percent or you know, the community bank down the street wants me to, you know, spend four days signing manual paperwork for 2%. You best believe my butt will be sitting at that community bank branch for four days.

Andrew Sagliocca: exactly. Why not? Why not, right? You’re going to live with that mortgage for 5, up to 30 years. Why the hell wouldn’t it be in the Times? So, you know, technology is great and it’s, and it’s a great, you know, catalyst for strong growth without a doubt, [00:40:00] without a doubt it is. But, you know, if you’re not matching technology with, with true client service, which is human interaction between, in our point, in our view, you know, or, or for our model, that commercial client on one end that has unique needs and wants.

And the banker on the other end, if you’re not matching those two together, you can have the best technology in the world and the greatest sales process. And when it comes time to have a conversation, if that conversation fails, cause it’s inevitably, you’re going to have a conversation and those people fail at that conversation.

You’re not going to have a client. It’s not going to happen.

Josh DeTar: You know, I’m glad you brought up that point. I think that is an interesting, point for this podcast, right? I mean, it’s called the digital banking podcast. I work for a digital banking company. you know, if I was being self serving, I’d tell you that digital was the only thing that mattered, but it’s not, it really isn’t.

It is absolutely [00:41:00] an enabler. Right. And don’t get me wrong. I mean, for a lot of institutions, obviously for you all, right. It is the single biggest

Andrew Sagliocca: our business.

Josh DeTar: your brand, right? It’s the only branch that your customers can go to. So it’s a huge piece of that. But at the end of the day, it has to be balanced, right?

Like you’ve got to have the technology to bring your speciality forward and front and center and your culture and your brand and your value proposition to your customers. And you need the technology to be able to do that. But if this stuff in the back sucks, the technology is not going to make up for that.

Andrew Sagliocca: No,

Josh DeTar: it really is just, it’s pieces of the puzzle. And I think, so that brings me to one of the things I really wanted to spend some time talking with you about, which is that kind of unique strategy for your bank, right? And you’ve talked about it a few times, how you’re really focused on a niche that very, very few people are actually solving for.

and I can definitely probably put these words in your mouth, [00:42:00] right? You’re not saying that every bank should start doing exactly what you’re doing because that’s actually

Andrew Sagliocca: they can.

Josh DeTar: Well,

Andrew Sagliocca: can. Competition is a good thing. I don’t mind competition.

Josh DeTar: no, but, but hear me out, hear me out. I think what the point I’m trying to make is that you’re not saying that everybody should come and do what you’re doing in the sense of exactly the products and services you’re doing.

But I feel like you’re trying to tell people you need to be doing what I’m doing, which is looking for things that are different and looking through things that are niche and are unique and special because yeah, once we get to the point where so many things are commoditized, which. Again, this is kind of what we started a little bit of the conversation around.

Like I feel like we need to have some of these uncomfortable conversations. and I’m going to give you an example of one here in a minute and get your take on it. But, if we’re just competing on rates and technology, how many places can I go get a checking account? It’s a lot of places.

Andrew Sagliocca: plus banks in [00:43:00] the country, because as you know, non banks will provide you with checking accounts because banks are standing behind them.

Josh DeTar: Yeah, so I got a lot of options and when the differentiators are pretty small, it’s okay. What are the things that you do around kind of those core services, right to your point, like for you guys being able to get deposits, you know, we’re trying to do this other stuff that just kind of comes with it. how do we build?

Products and services that say, Hey, we’re not just going to be relegated to doing what we’ve always done because that is getting so commoditized. It’s getting so incredibly just operationalized and transactional through technology, which again, you know, park this to the side, but keep it in the back of your mind.

I mean, From my perspective, that’s a good thing, right? Like humans, I don’t want to waste my time doing banking. No offense. Like I don’t want to spend time in digital banking. I don’t want to be doing my banking. I don’t want to be chasing my toddler around the park, right? That’s what I want to do. I have to do my [00:44:00] banking needs.

So yes, if we can make a lot of those kind of quote unquote transactional things, very operationally efficient. Then, but again, that’s just, that’s condensing your ability for differentiation. Okay. When everybody says I can help you do the common things you do with your finances in a month, all within two minutes digitally, when everybody does that and says we all offer a checking account, a savings account and a credit card and a loan for your car and a loan for your house, what are you competing on?

So I guess, again, sorry, long winded way of getting to, I think what you’re trying to tell folks is that you’ve got to start thinking outside the box and we have to think less traditional. All

Andrew Sagliocca: So typically, not always, the more consumer focused, the more commoditized, the more technology Beginning to end soup to nuts works. So for you Josh for a checking account, you [00:45:00] shouldn’t have to leave your seat at home after hours to open up a bank account and immediately get approved and get service.

No different than you with a, with a mortgage, which is, can be a little bit more cumbersome, but still a good example. Probably a better one is a, is a credit card application, right? You should be able to get a credit card and X amount of minutes as long as you’re creditworthy and be approved and that’s it.

Be done and go back to eating dinner or watching tv. The more commercial things are, the more humans really good people need to be involved in it. Technology is the driver without a doubt.you know, use a commoditized platform, an investment brokerage account. If you want real service, and I’m a career banker, so I know what I want.

I want real service. I want [00:46:00] to, I want to get real feedback from somebody. Well, then finding a really good banker at a Morgan Stanley or a Chase or wherever you’re going to go, it doesn’t matter, might be difficult. Or if you just want to trade, then go open up, Morgan Stanley. TD Bank, you know, type,electronic brokerage account and go trade.

but at the end of the day, if, if you’re not, and I, and I still honestly believe that the old fashioned type community banking outside the major metropolitan areas is still, a great service. If you’re upstate in New York and, Catskills or up at Lake Placid. You know, the needs of those communities might be unique where, guess what, that community bank and those facilities they may have around that area, along with technology is is a great service.

But if you’re gonna be in the major metropolitan areas, And you’re not going to focus on [00:47:00] either something unique and different or something that you can do in a unique or different way. And you’re not going to couple that with technology and people. I don’t know what you’re doing. And at the end of the day, I’m not the only one.

There’s a bank out there called Triumph that’s been designed for the trucking industry, personally. I think they do a great job, great job from everything I see and read. And their CEO Aaron is, is, and I’m sure the whole management group is laser focused on that vertical and what they can do well, which is tremendous.

Live Oak down in North Carolina, SBA shop. You’d say, well, SBAs are typical, not the way they do it. You know, when they first started the platform, they focused on, I think it was the veterinarian industry and hired experts in the vet industry. And then did that well nationally with technology and the like.

So I don’t know if it has to be [00:48:00] something that is something that we found, like litigation, where it was just completely underserved. Because payments isn’t underserved. I mean, it might be 125 banks, but it’s not underserved. Right. Everybody. At this point, I can’t think of a business that doesn’t take a debit and credit card no matter how small, no matter how small.

I can’t think of a business that doesn’t take a debit or credit card, which we all know if there was adoption to happen, it all happened during the COVID phase that we went through.but there’s another one. So that’s a very commoditized industry. So not a lot of banks in it, but very commoditized. So, you know, how can you be different?

How are we different? It’s not technology in that one, although it is on the back office side, but we’re not marketing on the front end. So it’s back office technology that really streamlines our processing, which is great for our [00:49:00] customers, gets them their money quicker. But at the end of the day, what’s the real service we’re providing?

When someone picks up a phone, they get a human body from Esquire, and within the same phone call, we’ll get a decision maker on the phone right up to the person who runs the area, my COO, Eric Bader, or myself, and they’ll get a decision. Even if they don’t like it, they’ll get a decision. so, you know, the technology is crucial.

Because without it, you’re being left in the dust, quite honestly. But coupling that with good people on the banking side, and it doesn’t have to be private bankers, it doesn’t have to be relationship managers, it doesn’t have to be business development officers. Some of my best people are sitting in the wire room right behind me, and they’ll spend more time dealing with our clients than the business development people on the front end.

[00:50:00] Yep,

Josh DeTar: not only is kind of. How, how you have to think about your business changing as a lot of what we’ve talked about of the commoditization of some of the different products and services happens. The world around us is also changing and it’s really interesting to see how we as an industry, have, have looked at that change.

So I’ll give you a sneak peek. I have a guest that, I recently had the discovery call with, we’re booked to record here, I think in like a month or two. but I, I remember it was one of those, I can’t even remember how it came into my inbox and I almost deleted it as spam because it seemed a little kind of like wonky.

And then I looked into it and I was like, ah, there might be something here. And I get on the phone with this guy. And I was like, Oh my gosh, this is a topic I want to talk about. It’s totally like out to left field. But, [00:51:00] but he, I want to say, where was he calling in from Dubai or one of the, like, UAE countries.

So he, he is, one of the founders of a company that is focused on niche loan products for people. in the like online content and streaming space. And he was talking to me about it and he said, he started giving me examples and this is where I was like, Oh my gosh, yeah, I’ve never thought about this cause it’s just not in my, my daily purview.

But he was like, think about it this way. There’s a kid out there. Well, we’ll say they’re 18, right? But they’re far younger ones too. But let’s say we have an 18 year old kid. Who plays video games from home, which as parents, we told all our kids, like, don’t ever do that. It’s completely useless. Right? And he’s playing video games on Twitch and somebody pays [00:52:00] him 30, 000 one time, 30 grand just to watch him play a video game.

Right? That kid now goes to a financial institution and says, I’d like a loan for a house. They’re like, screw you, dude. Like, no way, right? Your income is so unpredictable. It’s not a real job and no one pays you 30, 000 to watch you play a video game. And they’re sitting there going, no, actually, that was a small tip.

I’ve had somebody paying me 50, 000, 100, 000. Like that’s real, that’s really happening.

Andrew Sagliocca: absolutely

Josh DeTar: And so our world is changing so much around us. And instead of saying that’s not happening or that’s not how we do it, that should be a huge green light to us of that’s a new opportunity. And that’s a space. I’m not, I’m using that one as one specific example, but I’m just saying kind of, you know, holy, we should be [00:53:00] looking for those types of examples to say, great, I’m going to keep doing my checking savings, credit cards, auto loans, the way I’ve always done them, but I’m going to look for other areas where I can set myself up as, as somebody who understands a very specific market and has a very specific need.

Again, to your point, right? Like your litigation lawyers, that’s a very specific market. So going to them and saying, Hi, I’m a bank and I offer banking services. They’re like, good, good for you. But if you go in and you’re like, Hey, I have a bank who serves you and I understand you and I can speak your lingo and I know what challenges you face when you’ve got, you know, a litigation is going to be three years out and all of the nuances that go.

I understand that. I actually know what you’re talking about. So when you tell me, Hey, this is where we’re at in this. I go, yeah, that makes sense to me as opposed to now. Sorry, that’s that’s foreign,

Andrew Sagliocca: And that’s your warm, that’s your warm open door, right? If there’s, pick a number, [00:54:00] 100, 000 law firms in the country, because that’s what our data tells us, just, just over 100, 000 of all different walks in life, not just plaintiff. It’s not a law firm out there that doesn’t have a banking relationship. They all have to have at a minimum a checking account at a minimum, right?

They need to pay their bills. You start a business, right? I started a business from zero. What’s the first thing we did? Pay our bills and pay our employees. The first thing we did was not bring in client number one and make revenue. First thing we did was pay.yeah, I wish, right? But, but at the end of the day, you know, Every business is going to have some sort of banking relationship.

So what’s going to make you different? And, you know, we didn’t just create this out of thin air. We did, before we created the bank, what we do today and we will continue to do tomorrow. Shut our goddamn mouth, listen to our clients, to their [00:55:00] wants and needs. Maybe we can’t fulfill every one of them. But how do we design what the banking industry calls products and services, which is really, you know, banks sell two things on the loan side and two things on the deposit side.

They sell term loans and lines of credit on the lending side, and they sell transactions accounts and time accounts on the core banking side. I’m not talking about investment banking or, you know, insurance services. So we don’t necessarily create products. Per se, we find solutions for client needs and in some cases, as we’re talking about, sometimes solutions are just expediting the needs.

I’m a consumer, I want to sit at my dinner table and I want to open up a checking account. Interestingly enough, the lessons we’re learning from the litigation side probably are good potential solutions on the payment [00:56:00] side, and without a doubt, the payment side. is good solutions for any vertical and any business model, because payments are what drive the world and at the end of the day that’s what we do as bankers, right?

No, you don’t. You originate loans. Well, what do I do the day after I originate a loan? I process payments. No, you don’t. You open up checking and money market accounts and depository accounts. What do I do the second after I open that up? Now you open up investment brokerage accounts. What do we do? In every instance, at some point, you’re clearing transactions, right?

The payment vertical is always something that is, is, is visible across all these verticals. but listening, like I said, shutting your mouth and listening to your clients, or better yet, your prospective clients. is the best solution, that that’s out there. [00:57:00] And, you know, somebody like the guys down at Live Oak are continuing to literally kick ass on their platform because they, they listen and move on to the next thing.

And, you know, they’re doing a great job down there. on, on a product SBA that, you know, any bank can do.

Josh DeTar: yeah.

Andrew Sagliocca: How are they doing it? Well, they’re shutting their mouth and listening. Yeah.

Josh DeTar: I went back and looked at my notes from the first time you and I talked, Andrew, because I remember you’d said something and I couldn’t remember kind of how you said it. But in my notes I put that you were talking about how a lot of times we use this example in a lot of ways.

But. You know, we’re a hammer looking for a nail. But how do you define success? And ultimately, you as a financial institution need to understand that if you don’t understand kind of how do you define success, then you are, you’re just going to be a hammer running around looking for nails. And [00:58:00] especially as kind of we were talking about, the world is changing.

Right? If our definition of success is that we do what we’ve always done the way we do it and we do it well, you will only be successful for a finite time. I’m sorry to say it, right? But things change and it’s just what’s the time horizon that’s going to be. Yeah, maybe that would be a couple hundred years and maybe it will be someone else’s problem.

Sure. Or it may be tomorrow, right? It may be tomorrow’s problem and maybe your problem, right? And so as we look at things like, you know, again, just using, you know, your example or the example of, you know, the, the gamer kid, playing Twitch and getting paid, we can either say, well, I don’t understand that.

So I’m just not going to deal with it. Or it’s not real or it’s not happening, or it’s not even that special or different. And I’m just going to keep doing my traditional products and services. Or we can understand like what does success look like for us? Well, success, obviously. you know, for you and Esquire bank looks [00:59:00] like, no, we’re going to look at our very specific customer base.

We’re going to ask them what a success look like for them. And then we will mold ourselves around creating, yeah, products and services that will help them get that success. And then, Oh, funny enough, that’s made you pretty successful. Like.

Andrew Sagliocca: And it’s true. And at the end of the day, you know, the technology we invested in over the last five, six years, maybe even a little longer, we don’t need to have, you know, a custom CRM that we built. We don’t need to go out and first acquire data. But that gets you nowhere in the litigation space because you gotta, you have to enrich that data.

and when I say enrich it on a daily basis and the best data to enrich it is on the lawyer’s website. Well, that’s pretty tough to get that data off their website. It’s not like you’re getting it from D& B or, Zoom info. That’s where you start. and investing then in, you know, a digital [01:00:00] marketing cloud and, and investing in content and A.

1. And you and I could be sitting here talking about a high performing bank that grows a lot because we are, you know, listen, we’re a billion seven, a billion eight. I could run around and hire a bunch of people and do it as you’ve heard me say, with bubble gums and band aids and shaking hands and kissing babies.

Not a problem. It can continue to get done. And at some point you got to make a decision to say, well, let’s invest now for the future. And when we say the future, we don’t mean a year from now. We’re investing now for when we, when we purchased the CRM platform from Salesforce, the goal was to be where we are today in five years.

Josh DeTar: mm hmm. Mm,

Andrew Sagliocca: God we’re pretty damn close. I missed the window by a little bit, but that was the goal. It doesn’t mean that that’s a, you know, [01:01:00] again, grace of God, luck and some skill we got there. And, you know, you meander your way there with the goal in mind. But we didn’t have to do that. We didn’t even really need to do that at that point.

but we made a decision, a very thoughtful one, to invest in a technology platform that we knew we’d have to stage it. Right? Let’s get the CRM. Let’s get the data. Let’s enrich the data, which never stops. So let’s always do that. Let’s enrich the data. Let’s invest in a digital marketing cloud. Let’s couple that all together.

Let’s start to create content. The content is basic. Now the content becomes what we call thought leadership, which is very simple. Hey, we understand your business. Look at our content. How can we not? Right? It’s a simple way of saying it. You know, and now, well, let’s start morphing into AI. Why? Because we want to, because if Josh goes out to Amazon, I’ll use Kyle’s example and goes looking for fishing gear.

Well, you want fishing [01:02:00] gear being pushed out to Josh, continuously from Amazon, if that’s his, his hobby, right? He’s out there looking for it to have the AI content generator push it to him. So now let’s morph to AI and all these things don’t produce the immediate result. They’re all investing today for what should and probably will happen in the future.

And I get the question all the time from our investors. You know, your efficiency ratio is excellent. Could it be better? And my answer is simple. Sure, it could be better. It could be a lot better. You want me to stop investing in the future of the company? Does that make sense? Sure, I’ll have a couple years, God willing, worth of good returns, and then you’ll wonder why, you know, something is dropping off from a performance perspective.

And I’ll say, well, we stopped investing in the future, which is the dumbest thing ever, would never happen. You know, I love my [01:03:00] investors, but they’re not running the company. But that’s a perfect example of we don’t have to, we don’t even probably need to when we did it. But we better stay in front of the curve because that’s the way the world is heading and we got to get ahead of where we need to be now because this stuff takes time.

Josh DeTar: Yeah. It’s a lot harder to catch up than to stay in the pack.

Andrew Sagliocca: Yep.

Josh DeTar: you know, the other point about that too, though, is that, you know, For you, it is about kind of continually doing that investing in the future. and you’ve kind of alluded to this a few times that it’s, there’s no such thing as like the project is over and we’re done.

Andrew Sagliocca: We did the thing like check, mark the box. when, it’s over when I’m dead, I get fired, or I resign.

Josh DeTar: could do this huge five year Salesforce project. And then in a couple of years realize, Hey, you know what? That was the right decision in the moment. And that was the right tool in the moment. And now it’s

Andrew Sagliocca: we didn’t, [01:04:00] and we didn’t know it was the right

Josh DeTar: doing it again.

Andrew Sagliocca: And we didn’t know. The CTO, Marty and myself and my COO, Eric Bader, we sat around and talked about it and went back and forth on decisions that that for systems that needed to sit above the core and what those decisions were and and more importantly where are we going what do we want to do where do we want to be what is our clientele looking for and you know what’s the long term if anyone tells you what’s the 10 year plan i my answer is they’re you know what’s your what’s your five year plan maybe maybe When you start thinking longer than that, I’m not sure that anyone knows what their plan is seven and 10 years out.

but we made a strategic decision to invest in a Salesforce based platform. and whether Salesforce was right or not, and it was, but whether it was right or not, it was the right decision to make, to [01:05:00] invest in, in, in this type of technology platform. Because the, the, the brand awareness at a minimum, at a minimum, the brand awareness today is marketably better in the litigation vertical than it was two years ago.

Forget five years ago, seven years ago. Two years ago, we are,head and shoulders above where we were back then. and we know it because we hear it. We hear it. We hear. No, we’re aware of you. We don’t have to see you. You don’t have to talk to us about it. We’re aware of your, your content out there in the market.

Maybe, maybe we’re killing them with it. Maybe we’re not. You know, maybe it’s a little much. Maybe it’s not enough. It’s definitely a lot, definitely a lot out there in the market. And people like FinTechs and people who provide banking as a service type services. and other technology [01:06:00] providers away from your core.

and in our world, non bank finance companies that will finance deals different than us. They are all business partners. They are all business partners. And when you see them as competition, you’re actually, you know, probably being defeated before you even get started. Because they’re not, they’re not competition, they’re business partners.

Josh DeTar: you know, that kind of sets me up to one of the other things that I’d be remiss if I didn’t ask you your, your thoughts on, given your experience, what do you think of kind of the state of M and a activity these days?

Andrew Sagliocca: Oh, it’s, it’s going to heat up. you know, when you have banks unfortunately out there that are trading where they’re trading and just use book value as an example, or as a metric, you know, if, if generally people are trading around one, obviously some people below, obviously some people above. and whether [01:07:00] they deserve it or not, it’s probably lower than it should be because of the state of the market.

and you can blame it on interest rates, but there’s a multitude of reasons why. and then you couple that with, you know, what your investors want or demand, which is growth and performance. and you couple that with technology and where people are. There’s, you know, no doubt in my mind and probably the entire investment banking community’s mind that, you know, the end of this year and certainly next year is probably, I, not even probably, I’m pretty sure M& A activity is going to heat up.

you know, we’re trading at 2. 3, 2. 2 of book, who cares, it doesn’t matter to me, all I can do is perform. The market’s got to decide what they think we’re worth. I know what we’re worth, which is more than 2 3. That’s an easy one. but, you know, if I’m trading above 2 and someone’s trading closer to 1, and they want [01:08:00] to sell their company because nobody buys anything, people sell things, and they want to sell out of their company because of whatever reason, then on paper those deals are going to work, always.

And I don’t use that word lightly, Josh, those deals on paper are going to work always. So it’s a matter of, is it the right fit strategically, geographically, product and service wise, blah, blah, blah. So, but at the end of the day, you know, if we model a comparable size institution out there, and the difference in the multiple is that great.

100 out of 100 times, it’s going to model excellent. So it’s not a matter of if it’s a matter of a, do they want to sell? Cause we can’t buy them unless they want to sell. And B, is it the right use one phrase, strategic fit for a multitude of reasons that’s [01:09:00] out there in the environment, you know, things haven’t normalized yet with this hyper increase in rates and where they are today.

So. You know, banks are still getting punished more than they should. Maybe others are getting rewarded. I don’t think the ones that are rewarded are being rewarded more than they should. I actually think they’re getting dragged down a little bit by, you know, the poor performing institutions, but that’s, that’s a ripe environment for M& A.

Yeah.

Josh DeTar: that up is, is one, you’ve had some, you know, significant, experience in that space, but, you know, we were talking about kind of having some of the uncomfortable conversations. so we hired, oh gosh, a while ago now. a gentleman, Ken, onto our marketing team for a lot of our thought leadership content.

And he’s a former American banker writer. And, and the reason that we really wanted Ken was we wanted to almost park him on his own island and let him just be. [01:10:00] Report. Like, again, I’m gonna use the stereotype. Like, I want that gritty, quintessential, like, New Yorker reporter who’s, like, gonna fight the story to the death to find the real truth of it and won’t let anyone influence what he writes.

Like, it’s gonna be what it’s gonna be, right? There’s no, like, hidden agenda behind it. We wanted that. Like, I wanted somebody to really write that way. And so Ken has been doing a lot of,different industry article pieces recently, and he released one not too long ago that sparked a little LinkedIn debate and, and yes, the title of that one was a little bit more click baity than usual, and it was focused more on the credit union space, Andrew, but, it was basically, there’s no joy for credit unions under 10 billion in assets.

And he was interviewing. this wasn’t his opinion, right? It was just, it was an interview with an M&A expert who for, some contractual reasons had to stay, anonymous. And I think that kind of compounded this whole story, like getting some feathers ruffled. Right. and, and basically [01:11:00] the gist of the story was look like it’s challenging to be a credit union under 10 billion in assets and therefore we are seeing a significant increase in M& A.

Those are just facts, plain and simple. This is not the touchy feely side of things. These are just the straight facts, right? And so it started this whole debate of like, Oh, you know, the saying there’s no love and no joy and no, that’s not it at all. I’m not saying you can’t be having a lot of joy as an institution under 10 billion.

As you pointed out, right? Sometimes like the best learning and the most fun you can have is in the challenging times. So there’s absolutely joy. It’s, this is a challenging environment and to your point, for whatever reason, right? You may be having all the love in the world, fighting really hard to keep your, 300 million in asset size credit union kicking ass taking names doing the things you set out to do And there may be a billion dollar credit union down the street whose ceo is just done doesn’t want a succession plan The business isn’t doing great, but it’s just kind of chugging along And they [01:12:00] see a credit union That’s a little bit larger or similar size that is looking to grow through m& a and to your point a lot of times on paper You’re like, yep.

I hate to break it to you. But this thing pencils the math maths like we’re doing this deal You Right. And so we’re just, I think we are seeing a lot of that and, and my point of the comment is it is about us trying to find exactly this whole conversation we’ve had, right? Like, what are the things that we can do different?

How can we support through all the pieces of the puzzle like technology? making it so that institutions like you at 1. 7 1. 8 billion are having a ton of fun and there’s a lot of joy in it. And yeah, I think you would probably echo the sentiment that there’s probably some days that there isn’t a ton because you’re, you’re having to work really hard to fight for it.

Right. but you know that you’re making an impact and you’re able to at your size because you’re intelligent about how you do it.

Andrew Sagliocca: yeah, we are definitely, definitely making an impact in the, in the [01:13:00] litigation vertical, which doesn’t just include the law firms, it includes a lot of businesses that support those law firms, which we have a lot of inroads in and we do business with them too, so it’s not just plain of law firms.

The payment industry, the same thing, it may be a lot more commoditized. But there’s a lot of differentiators built in there. and at the end of the day, if you’re not coupling that with technology, and for us in the New York market, some local business here in the New York area, then, then you’re not growing, and you’re not pumping out good returns.

And yeah, if you want to be a, you know, credit union or a community bank that services a, you know, a regional, area, or some sort of local, what credit unions were founded for, you know, union niche, or the like, and you’re happy with where you are, and most likely you don’t have public investors because most [01:14:00] likely credit unions don’t,

Josh DeTar: Don’t. Yeah.

Andrew Sagliocca: and your depositors aren’t screaming at you who really own the company, which they wouldn’t be.

Then great, then run your company and service that, that community, whatever that community is, by definition, and you’re off and running. but if you, you know, and if that works and people are happy, great. You know, I know for us, if there is a lot of needs and wants and a lot of growth potential, Then why aren’t we doing both?

and if my biggest frustration, I’m not concerned. Concern would be always credit and compliance always. But if my biggest frustration is scalability, you know, you get and see opportunities that you can’t, I’ll use the word bank that you can’t bank because [01:15:00] of who you are and where you are in this cycle in your life, then yeah, that’s frustrating.

But you know what? That’s a good frustration and a motivation, to continue to push because, listen, scalability is simple. It’s size, which for banks is usually capital, because things like our legal lending limit are governed by capital. If I want to lend more than 30 odd million dollars, I need more capital, period.

End of story by regulation. I can’t just say, ah, forget the OCC and everybody else. Let’s just lend 50 million dollars. That just doesn’t happen.so at the end of the day, size, and resources, which is people and technology. So, size, and some people like to say asset. Okay, size, assets, and capital, great.

Who cares? It’s really capital. And resources are, you know, people and technology. So if my biggest frustration, which it is every day, is being able to scale these business models, at a more [01:16:00] expedited pace than we are already, which we’re already, you know, five or six times the industry average growing at 20 plus percent a year.

if my frustration is scaling, that’s a great frustration because that just comes full circle and feeds the engine for what do we need to do this and how do we need to do this and how do we grow in. Listen, M&A makes sense for two major reasons. It’s, it’s, it’s scale, problem we’re just talking about, and it’s diversity, which there’s nothing wrong with diversity as you continue to grow, being more diversified.

Josh DeTar: Yeah. Well, and I think it kind of brings you all the way back around to what you were talking about earlier of just how do you define success too, right? So kind of, what’s your definition for success? What are you looking to get out of the business that you have and the impact that that business makes and the return that that brings by making that impact?

And

Andrew Sagliocca: Happy clients, happy employees, happy investors, right? In that [01:17:00] order. If I don’t have happy clients, then I’m going to limit my employees or my employees are going to be better here are going to be pissed off because at the end of the day, if I don’t have happy clients, who’s going to get to the brunt of it?

Yeah, I’ll get some of it, but my, my line employees are going to get more of it. So happy clients, happy prospective clients, happy clients, happy employees, happy investors, happy regulators, without a doubt. But that’s kind of, that’s the umbrella that covers it all because if my regulators aren’t content with what we’re doing, Then none of it

Josh DeTar: it.

Andrew Sagliocca: So, you know, they are my ultimate business partner. Why? They’re the ones who gave us the charter. And they’re the ones who gave us the FDIC insurance. Without two of those, we’re not doing anything. So, they are my business partner without a doubt. but, you know, the mission of the bank is simple.

There’s so much growth, both, in, in, in size and in, Which I always [01:18:00] do up and down so much growth vertically and so much growth horizontally with technology and plugging in different components into things like lending and deposit taking because there’s so much more we can do.there’s so much growth potential that the need for technology is just that it’s an absolute need, not a want, and it’s not something we think is cool.

The need for quality people is, is without a doubt, paramount. and sometimes the way you get there, is through M& A. And, you know, my old boss used to say, Hey, if we can get somewhere, if we can get somewhere in five years and we can shave two years off of it, or more, but two years off because of an M& A transaction, why wouldn’t we do that trade?

Bullshit. The metrics are right and the deal makes sense.

Josh DeTar: man, what a great way to kind of sum it up though. I usually kind of wrap us up, [01:19:00] but you kind of did that for me, so I’ll leave it at that. but before I let you go, I, I’d love to ask two final questions of you, Andrew. So where do you go to get information about what’s happening in the industry?

Andrew Sagliocca: Sure, without a doubt, the banking publications, whether it’s, you know, the American Banker, blogs and the like, quite honestly, I’m inundated with banking information. Mainly because I’ve been in it so long. So, you know, the name, the email address and all that and, and the stupid title that goes along with it drives a lot of email content my way.

on the litigation side, there is just as much trade publications out there. You know, without name dropping, there’s a publication called Law 360. That’s excellent. But there’s so many more out there. and on the payment side, it’s like it is absolutely like drinking from a firehose. it’s, it’s amazing how much payment, information is out there and technology.

[01:20:00] So life’s simple. I get to work early, I read in the morning, take about anywhere from as little as 15 and 20 minutes up to maybe an hour of making sure I stay on top of what’s going on. You know, throughout the day I’ll stay on top of it as best as possible.obviously make sure I don’t miss anything.

You know, things like the Wall Street Journal and the New York Times and the Washington Post are always good. there’s nothing wrong with them. But at the end of the day, staying on top of what we do as, financial service providers that, you know, embrace technology in unique verticals. I always say to anyone who asks me, you know, I will read a publication like Law 360 as much as I read a publication like the American Banker.

They are, they are as important on certain days, one’s more important than the other.

Josh DeTar: I

Andrew Sagliocca: how do you make anyone comfortable that you understand [01:21:00] their business model if you don’t know what’s going on in that business model? It makes no sense. And you know what? I care. It means a lot. This, this, you know, I have four kids, this, this company, if they’re healthy and my wife’s healthy, then this company’s like, it’s not another child, but it’s like another child.

We built it from nothing. So I’m passionate about it. you know, I’m, I’m very happy and fortunate to be here. and at the end of the day, if we’re not going to stay on top of. What’s going on in the industry and we’re not going to always strive to be better Tomorrow as compared to yesterday then quite honestly, what the hell are we doing here?

Josh DeTar: Yeah. it’s definitely obvious that you’re passionate, sir. No, you know, and I was going to say, cause I love that you answered, you know, [01:22:00] right away with one of the things that you focus on is actually what are your customers reading so that you’re aware of their industry. I think that’s such a big key to that.

Yeah. Folks want to connect with you or if they want to learn a little bit more about the bank and what you’re doing there at Esquire, how can they connect with you or learn more about the bank?

Andrew Sagliocca: Sure, I mean, you know the website Esquirebank. com but with me personally, you know My first and last name with a period in the middle is Andrew.Sagliocca@ESQBank. com. you know, they can call. The numbers are out there. We actually pick up the phone. You’re not going to get somebody from a foreign country answering the phone from a call center.

We actually pick up the phones and talk to our potential anything. So fill in the blank with stakeholders, which pretty much encompasses everything. But, but specific to the litigation industry, lawyer IQs out there, which is powered by us, but a separate website, [01:23:00] we sell not a single product or service on that.

It is what we call thought leadership, which I know, you know, is really content to let people know. Not only do we understand your industry, but from a business and finance perspective, we think we can be helpful, informative, directionally. You know, we have our website out there, but you know, people should feel free to email me or call me directly.

Like I said, we will pick up the phone and talk to him.

Josh DeTar: doesn’t turn into a bunch of sales calls that you end up taking, but,

Andrew Sagliocca: If it does, I’ll thank you.

Josh DeTar: yeah,

Andrew Sagliocca: does, I’ll thank you. I promise.

Josh DeTar: I always warn, I always warn vendors if they’re listening to the podcast and, you know, a bank CEO or credit union CEOs on the podcast and they give out their info. I’m like, I, it better not come around that you’re like cold calling a home, my podcast guests. Cause they decided to be kind enough to share their information for people to network with them.

But

Andrew Sagliocca: I [01:24:00] hear you.

Josh DeTar: seriously, Andrew, this has been an absolute blast. I really do appreciate the opportunity to talk to you. It’s really cool to see that folks are, are trying to find new and unique ways to do something in a very traditional environment. so it’s been a blast just to get to know you and learn a little bit more about what you’re doing.

Thanks for taking the time and thanks for coming to be in a guest on the

Andrew Sagliocca: Absolutely. It was a lot of fun, Josh, and it was unique and different. It really was. This process with you was, was very different than the others and I can’t give you a better compliment than that, than telling you it’s been a different experience rather than it’s wrote like everybody else. So it’s been an absolute pleasure.

And I said it at the beginning and I’ll say it again. Thank you for taking valuable time from your busy schedule.

Josh DeTar: Ah, thank you as well. Thanks,

Andrew Sagliocca: All right, Josh, take care.