7 Points About Banking That Investors Need to Know

[P]ositive operating leverage should be rule No. 1 for everybody. You should grow revenue faster than expenses.

The second piece [is that] you need to be very compliant. ... I think "compliance" is now the watchword for success. All of your performance financially doesn't get credit unless you're compliant, when you're doing things perfectly all the time.

And then thirdly, we haven't made any of our core earnings from reserve releases, but I think that's going to be an issue for the industry. I think that's coming to an end, if it hasn't already.

[Y]ou don't want us to have any surprises, but you kind of do. And we're not going to have any.

We don't have the chance to save our efficiency and improve it and bring somebody in and tell us how to cut cost, because we will never do that. And we don't have the ability to fix our loan losses because they weren't broken in the first place.

But I'll tell you, what, we don't -- we're not riding on anything artificial. Everything we have is core and repeatable. And what I do like about most of you is that long-term investors really value that. And while it's more interesting to talk about a big deal or something that sounds good on the day of the announcement, we will pass on those again and again to give you a sustainable kind of predictable outcome.

We are organic, organic, organic.

As long as you, as a CEO, are of the mind that [there is] no rush to get a deal done because rates are about to go up, because you've been told that there will be 6.5% unemployment until 2016 ... you simply have no catalyst.

Oh, my God. For a long, long, long time.

The average commercial asset is probably two to 2.5 years old. The average consumer asset is 3.5 to four years. This recession is so long that we haven't originated any risky loans, and the other ones have been either charged off or paid down. So you are at your most pristine. I mean, credit quality is so 2009, right?

You could be talking half a generation until companies get back to the same kind of credit position that they were before this recession. And so I just think it's not an area to worry about.

It's -- we love the retail side. And I'll tell you right now, it is not the most attractive part of the business. But when rates start to move up again, I will -- we are not closing branches, and we are not spendthrifts either, but we believe the branches are going to be very important distinctions for core deposit growth when rates start to move up again.

I think that if you're at $50 billion, you're at a scale enough. You're already being -- participating now in the CCAR and some of the other activities that you're probably -- already hit hurdle No. 1. And so I don't see a bunch of 50s getting with 60s to become 110s. I don't see any of that, actually. You might see a 10 and 10, trying to get to 20, or a 10 and a 15, thinking about 25. You'll see a lot of 4s and 2s getting to 6.

I'm not surprised there hasn't been consolidation, because in the old days it was about credit risk and uncertainty about who you would acquir.e as it relates to long-term systemic credit surprises. But it's all about compliance now. And as you've seen in this environment, you will be held accountable from day one for the company you buy and you can be held accountable for things up to 10 years in the past.

Even if they were approved back in the old rule, the rules have changed. So anybody who's going to do a deal needs to be very careful that they're not bringing in -- kind of like a virus into a healthy room. ... So you have to really, really want it. And if you can't see revenue growth from the synergies, don't do it for expenses and don't do it for scale, because you're going to end up being shortsighted.