Attracting and Retaining Commercial Bankers

The article below highlights the challenges that many of my clients are having attracting and retaining top commercial banking talent as they work hard to profitably grow the bank.  I thought it was worth sharing.

Thursday, May 12, 2016 12:54 PM ET
Commercial lending talent in short supply
By Kevin Dobbs

Kevin Dobbs is a senior reporter and columnist. The views expressed in this piece represent those of the author or his sources and not necessarily those of S&P Global Market Intelligence. Follow on Twitter @Kevin1Dobbs.

Four out of 10 bank executives say recruiting commercial lenders is among the most significant challenges they face this year, shining a spotlight on banks’ efforts to attract the talent needed to drive revenue growth in a highly competitive environment.

Such is a key finding of Bank Director‘s 2016 compensation survey of 262 bank executives and directors. Asked to identify pressing issues tied to attracting and retaining commercial lenders, 43% cited a dearth of available candidates, according to results released this week. An equal percentage said they would pay handsomely to recruit proven business lenders, indicating the challenge is not just a matter of compensation.

The survey’s results mirror what many recruiters see in the field. “It’s very difficult to recruit them,” Bruce Kershner, president of Kershner & Co, said in an interview. He based that assessment on the feedback he gets from the banks with which his executive search firm works. Kershner works hands-on to recruit chief lending officers, the executives who oversee commercial lenders, and he said at that level, too, it can prove trying to attract prized executives.

Kershner said there is not one single hurdle that stands before banks and coveted commercial loan officers. Rather, potential impediments are myriad.

In an era of low interest rates and stiff competition, banks in recent years have pushed hard to bolster interest income via higher loan volumes. With commercial-and-industrial lending a relative source of strength, many banks have set their sights on hiring proven commercial lenders to boost volume. Problem is, recruiters say, in a lot of markets there are not as many of these established revenue drivers as banks in search of them.

“Everybody is looking for them,” Kenny Steinbeck, a senior recruiter at Park Avenue Group focused on commercial lenders, said in an interview.

In other markets such as Florida, where Steinbeck focuses his efforts, it is less a matter of a talent drought and more an issue of luring successful lenders away from institutions that are working hard to retain top performers, he said. Steinbeck said banks that still provide pension plans, for example, have a strong motivator for talent to stay put. Others have upped the ante on signing bonuses in exchange for commitments from lenders to stay with the company not for just a year but for two or more in some cases. And still others have put in place special programs that pay out set amounts of cash, rather than less reliable stock options, for high performers, paid out over the course of years.

“To get these people to move, it can be hard,” Steinbeck said.

Key findings from Bank Director’s 2016 compensation survey of bank executives and directors:

* 40% say recruiting commercial lenders is among the most significant challenges they face this year.

* 43% blamed a shortage of available candidates.

Another issue, recruiters and bankers say, is that fewer business school graduates have gone into banking in recent years. The fallout from the financial crisis cast a cloud over the industry, bankers have complained for years, persuading young talent to pursue options in other industries first.

What’s more, in the aftermath of that last recession, many cost-conscious banks cut training programs that identified strong sales talents and developed them into commercial lenders. Diana Chase, managing partner of community bank consulting firm ChaseCompGroup LLC, said in an interview that this has contributed to a shortage of young commercial lenders.

“When you are trying to get the younger talent, you’ve got to be able to sell them on your culture and of course be competitive on compensation,” Chase said. “But that’s not where it ends. You really need to be able to mentor them and help them develop.”

The Bank Director survey found that 23% of respondents view recruiting young talent as a challenge this year; 34% said they are actively trying to attract millennial employees — those under roughly 35 — but are struggling to do so. Of these respondents, 60% said millennials simply are not interested in the banking industry, and 54% said young professionals view their bank’s culture as overly traditional.

And yet not everyone is wrestling with the talent shortage. There are avenues to pursue.

ConnectOne Bancorp Inc. Chairman, President and CEO Frank Sorrentino said in an interview that his bank has proven an exception to the picture that the survey paints. And he credits the bank’s agile and tech-savvy culture.

Many community banks find themselves investing inordinate amounts of resources on compliance and other lingering challenges tied to the last downturn and the barrage of new regulations that emerged after the crisis, he said. And a majority of banks are indeed competing intensely for commercial business, particularly in growing markets such as New York and New Jersey, where ConnectOne operates.

“When a lot of people are chasing after the same assets, it does pose challenges,” Sorrentino said.

But ConnectOne, he said, focused early on developing a culture that could meet new compliance demands head-on while keeping lending talent free to pursue new business opportunities and to find innovative ways to deepen ties to existing customers, either through technology or new types of products and services. This has provided them competitive advantages and genuine senses of ownership of their own books of business, a cherished element that Sorrentino said many big banks do not provide.

Against that backdrop, ConnectOne has consistently grown and its commercial lenders’ careers and financial success along with it. The positive word-of-mouth that such growth generates has helped the bank attract talent away from competitors both big and small, Sorrentino said.

“It revolves around the strong culture here,” he said. “Good lenders want to satisfy their clients. … When you have existing employees speaking highly of their ability to do that, it’s infectious.”

Another important route to find commercial lending talent is of course M&A. Community bank consolidation has proven steady over the last few years, with many bank buyers citing talent among the critical reasons to pursue deals.

Chong Guk “C.G.” Kum, president and CEO of Los Angeles-based Hanmi Financial Corp., attests to that, having closed two bank deals in 2014. At the same time, he said in a recent interview, mergers also often cause some disruption, affecting lenders who work for the two banks that are coming together. If integrations are not handled well, he said, talented lenders tend to listen to offers from other banks.

“It creates dislocations and uncertainties and that creates opportunities for other institutions,” he said.

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Characteristics of High Emotional Intelligence

At KSB Consulting, we pay attention to Emotional Intelligence as a part of how we evaluate candidates in our recruiting process.  Our sister company, Ascend Profiles, uses personality profiling to assess each candidate’s Emotional Intelligence.  The article below provides 10 bullet points that highlight characteristics of people with high emotional intelligence. The article is highly relevant in today’s changing banking industry and we thought you would benefit from it.

Read article here.

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Leveraging the Dramatic Changes in the Regional Banking Landscape

The regional landscape in community banking is changing quite dramatically.  For evidence of this, look no farther than the three significant acquisitions that were announced in North Carolina in the past several months: Capital Bank acquiring CommunityOne Bank, Yadkin Bank acquiring NewBridge Bank, and Bank of North Carolina acquiring High Point Bank.  With regional and mid-sized banks continuing to look for asset growth and smaller banks looking for scale, 2016 is set up to be another strong year for bank mergers.

In these situations, good and talented people get displaced as a result of expense reduction and organizational restructuring. While the acquiring bank often retains talented producers, employees in redundant operational, credit, and management roles may be adversely impacted.

For banks looking to hire strong talent, this could create opportunities.  Banks that have current needs should be looking for these opportunities over the next several months.  Furthermore, even if banks do not have a current, budgeted need, they should consider looking at mid-to long-term goals and hiring opportunistically if the right people/situations arise.  For instance, does your bank have a market expansion plan over the next 2 years that could be accelerated if the right person or team was available in targeted markets in the short term?  Is there an opportunity to acquire strong talent for succession planning purposes?  Remember, just because good producers retain their jobs, that does not necessarily mean they want to stay at the new combined company.

For candidates/employees, my guidance is to start your search process NOW! Your effort and pace may depend on how much you know about timing and your job situation at the new, combined bank.  Perhaps that means reaching out quietly to those in your network or contacting a recruiting firm.  Or maybe you know that your position will be affected and need to consider all options.  The bottom line is this:  there will be numerous talented people available in the marketplace with a dwindling number of banks to hire them.  Be proactive, utilize your network, speak with a recruiting firm that you trust, look for opportunities online, consider complimentary industries, and make a list of potential employers. Don’t wait to get outrun by your competition.

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Merger of Equals: NORTH – South Pole Bank

Given all of the activity lately, it is bound to be an interesting 2016!  Thank you for your support throughout the year.   Have a safe and happy holiday season.

KSB Holiday Humor 2015

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What is 360-Degree Feedback? Why is it important?

In human resources or industrial/organizational psychology, 360-degree feedback, also known as multi-rater feedback, multisource feedback, or multisource assessment, is feedback that comes from all around an employee. “360” refers to the 360 degrees in a circle, with an individual figuratively in the center of the circle. Feedback is provided by subordinates, peers, and supervisors but can also be extended to external sources such as customers and suppliers or other interested stakeholders with a unique working relationship and involvement with that person. It also includes a self-assessment and, in some cases, feedback may be contrasted with “upward feedback,” where managers are given feedback by their direct reports, or a “traditional performance appraisal,” where the employees are most often reviewed only by their managers.

The premise behind 360-degree feedback is that a person contributes to an organization’s success in complex ways and that this is best observed through the perspectives of the various people interacting with that person, rather than through only one person’s eyes (typically the employee’s manager).

Although 360-degree feedback offers a powerful tool for gaining insight into strengths and weaknesses of the feedback recipient, the real return on investment comes from its ability to bring about positive changes in someone’s behavior.

It is recommended to use 360-degree feedback primarily for development purposes.  The results from 360-degree feedback are often used by the person receiving the feedback to plan training and development.  This feedback facilitates an environment that encourages self- development, which leads to job satisfaction. This minimizes turnover and the costs associated with replacing employees.

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Retaining Top Employees – Ask good questions … then listen!

The banking industry is going through a period of significant change right now.  The last 12 months have seen increased consolidation and noticeable movement of bankers from one bank to another (a number of times in groups).  I attend a number of events every January where I see many bankers from numerous banks, and the #1 comment this year has been something along the lines of, “Wow, there sure are a lot of people moving around out there.”

This is true, and I don’t anticipate any let up in 2015 – not in people movement nor consolidation.  While there are positive aspects of this, it also creates turmoil, angst and uncertainty among your employees.

So, while this “movement” is generally good for those in my business, as leaders it is cause to step back and be sure that you are taking care of your people.  We are in a cycle where growth is king, and that puts a lot of stress on the organization — line, credit, operations…everyone.  It is not uncommon for bankers to joke with me about finding a job outside of banking because it is “just not fun anymore.”  Another comment I get more than you would think is, “I just don’t enjoy coming to work here anymore.”

My point is this:  You have to grow and you have to compete.  Everyone understands that.  But, as leaders, what are you doing to differentiate yourselves INTERNALLY, not just to the customer? Why do good people want to work there and stay there?  Not just financially, but otherwise.  I sometimes fear that, as an industry, we are giving up positive corporate culture for the sake of growth.  Your good people ARE being recruited… I guarantee that.  So, as you read the article below, perhaps it sparks an idea that will help you keep someone who you might be losing, and you just don’t know it.

Read article here.

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North Pole Adopts Bank of the Future Strategy

Thank you for your support throughout the year. Have a safe and happy holiday season.

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Behavior-Based Interviewing: A View from the Other Side

Behavior-based interviewing is founded on solid research in the behavioral sciences, and its effectiveness has been validated repeatedly in a wide variety of corporate environments.  The author of the article referenced below encourages those being interviewed to prepare for interviews by identifying specific situations from their work experience that highlight the attributes and behaviors that the company is looking for (based on the candidate’s research about the company and position).  Sounds like good preparation for a behavior-based interview!

See article here.

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Quantifying Achievements on your Resume

As an executive recruiter in the financial services industry, I review many resumes.  I wholeheartedly agree with this author’s approach to quantifying achievements.

Take a look.

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Leadership Lessons On and Off The Course

This blog post was inspired by the recent U.S. Open golf championship.  Analogies abound from the sports world to the corporate world, and I thought this one was worth sharing.  This article highlights Steve Williams, caddie to the winners of 14 major golf championships.  Click on the link below for some lessons in leadership from Steve Williams.

Read article here.

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