Hiring Lenders in a Challenging Environment

One of the biggest challenges faced by many community banks is attracting, growing and retaining lending talent especially as many experienced commercial lenders start to retire. As a result, many community banks are scrambling to hire the qualified lenders needed to meet growing loan demand as the economy continues picking up steam.

Training Dries Up

Traditionally, community banks have been able to recruit lenders from large commercial banks, where they received thorough in-house training and development. But fewer big banks today are providing this kind of training, which means that there are fewer qualified lenders available for community banks to hire. Community banks are now having to take on the responsibility of training commercial lenders themselves. This includes teaching young and inexperienced lenders fundamental skills such as financial and cash flow analysis, loan structure and problem loan identification.

The good news is that there are more lender training resources available today than ever before, including:

• Online and webinar-based programs such as those offered by state banking associations and the Risk Management Association.
• Computer-based training packages such as those offered by Shockproof! Training.
• State banking association commercial lending schools and community colleges.

Online or computer-based training is often more appropriate for teaching new lenders foundational basics, while in-person courses can take training to the next level by offering more application and interaction with other students.

Make the Commitment

If your bank plans to take on the responsibility of lender training, it will require a commitment of both time and energy on the part of senior management. A senior lender with credit training experience or a chief credit officer should usually be placed in charge of the training efforts and serve as the internal champion. You should also take advantage of opportunities for new lenders to attend industry conferences, trade shows and seminars such as those offered by the ABA and BAI. These are often a cost-effective way to expose new lenders to some of the latest trends in commercial lending, as well as allow them to meet informally with other lenders who can share their knowledge and experience. It may also be helpful to include new lenders in your loan committee meetings to give them first-hand exposure to the inner workings of underwriting and loan structure. Start them off underwriting smaller credits to help them gain confidence, and then increase their responsibility gradually based on their demonstrated aptitude.

What Attracts Talent

When it comes to recruiting and retaining lenders, talent is usually attracted by two main things: money and opportunity. While you might not be able to compete with big banks in the compensation area, there are other things you can do to level the hiring playing field. You may be able to offer lenders a better work-life balance than they are likely to experience at a big bank. The big compensation packages they offer usually come with a price, such as long hours and high levels of stress. Some, though certainly not all, lenders will be willing to accept less compensation in exchange for a higher quality of life.

Here are a few more tips for hiring and retaining talented new commercial lenders:

• Tap your network. The professional networks you and other senior managers have built over time should be the first place you turn in your search for qualified new lenders. Hiring lenders you’ve worked with in the past can eliminate a lot of the uncertainty involved in making new hires.
• Offer opportunities for early advancement. This is just as important as money to some new lenders. Demonstrate a clear career path with advancement opportunities for lenders who excel in their job.
• Empower young lenders. When they’re ready, give new lenders some real responsibility by letting them perform basic credit analysis, assess lending opportunities and make decisions.
• Structure your compensation package carefully. The ideal lender comp package includes some level of incentives so a portion of compensation is based on performance. Ideally, lender compensation should be based on such factors as business development, relationship management, profitability (at both the bank and portfolio levels), asset quality, and timely and accurate assignment of Asset Quality Ratings (AQRs).
• Create an internship program. This is a great way to identify young talent early on and give students some early exposure to your bank’s culture and environment. If things go well, your bank could have the early edge in hiring students once they graduate and enter the job market.
• Help repay student loans. This strategy is being utilized by businesses in many industries to attract talented young employees.

Young lenders need strong mentoring in order to reach their full potential. Each new lender should be assigned a more senior lender to serve as his or her mentor who can provide guidance, encouragement and advice.

Please contact us if you have more questions about attracting and growing lending talent 417-881-0145.