June 13, 2013

More commercial lenders making switch among banks

Since March, at least 10 area commercial bankers have switched or are switching from one bank or organization to another.

Since March, at least 10 area commercial bankers have switched or are switching from one bank or organization to another.

Bank executives said it’s the most movement they have seen among that highly desired group of bankers in nearly a decade.

“We’ve not see this kind of movement, particularly in this short period of time,” said David Harris, chairman and CEO of RelianzBank.

Commercial lenders and bank executives said the moves are more than coincidence; they are a reflection of banks’ efforts to ramp up their commercial lending business and to fill gaps that will emerge as older commercial lenders prepare to retire.

The problem is, bank executives said, the ranks of experienced commercial lenders who still have some years left in their careers is extraordinarily thin.

“The number of new commercial bankers being minted is less than in the past,” said Jim Faith, senior vice president and Wichita commercial manager at Emprise Bank, who moved to Emprise earlier this year.

Faith is not the newest commercial lender at Emprise. Last week, former Sunflower Bank commercial lender Marc Ward started work there. Ward joins Faith, Sunflower’s former Wichita president. And next week, Emprise expects to add another former Wichita commercial banker, David Hodge, to its commercial banking team. Hodge will be returning to the local commercial lending business from the Kansas City area, where he had been an executive at the Midwestern Baptist Theological Seminary. During his time in Wichita, Hodge had worked in commercial banking roles at the former NationsBank, Commerce Bank and Central Bank & Trust, where he was president.

At Equity Bank, former holding company president Drayton Alldritt – whose 30-year career in banking includes commercial lending – has left to take a position at Bank of America.

Wells Fargo, in a bid to establish a local commercial banking operation, announced in March that it had hired two former Bank of America commercial lending staff members, Scott Ochs and Sueanna Budde. Wells also hired Monica Towns, who previously was at Emprise and, before that, Bank of America, and Rich Trease, a GE Capital commercial lender based in Wichita.

And Simmons First National Bank has hired Joshua Smith as a commercial lender. Smith came to Simmons in March from Emprise.

For him, Faith said, the move to Emprise “was just a fantastic opportunity with a fantastic company.”

“This was just a much better opportunity for me to be a commercial banker than what I had before,” he said. “I had a great experience at Sunflower Bank, but this was the right opportunity at the right time.”

A little more confident

Tom Page, Emprise CEO, said a number of factors are stirring up the commercial banking churn.

Banks are feeling a bit better about the economy and their balance sheets – and they are focusing more on their loan portfolios.

“As you get out of the hard times, banks are out there a little bit more, feeling a little bit more confident,” he said.

And banks need to generate more loan activity to earn revenue in a low interest rate environment that’s putting the squeeze on their margins, he said.

“Everybody is trying to put themselves in the best position they possibly can to sustain and grow their commercial loan portfolios,” Page said. “So as you look around, there’s a pretty limited supply of lenders who have a combination of some youth – a significant part of their career ahead of them – but also have some valuable experience and the ability to move around the market successfully.

“When you put those … filters on, there aren’t a lot of them. As you get the opportunity to pick those folks up, you do.”

Andrea Scarpelli, Simmons’ Wichita president who also forged a career in commercial banking, said she thinks a wave of pending retirements among commercial bankers also plays a part in the latest lender shuffle.

“I think it’s healthy for us as a community and it’s healthy for us as an industry because we are not losing talent, we’re shuffling talent,” she said. “Both our banks and our clients are going to benefit from this.”

Commercial loan clients will benefit because lenders will try to lure them to a different bank and may offer better deals. In some instances, Scarpelli said, commercial clients will be offered more choices and options, especially if lenders are working for an institution that’s new to the market.

“It’s going to make all of us more competitive,” she said. “It demands us to be the best we can and to make sure we are never taking anything for granted.”

RelianzBank’s Harris said the movement also could create uncertainty among commercial loan clients, who may wonder if their lender who just left Bank A for Bank B will carry the same clout in the new institution and be able to advocate for their clients the same way.

“From my vantage point, volatility like this creates opportunity,” Harris said, referring to his bank’s ability to capitalize on that uncertainty and potentially win that commercial loan client from the lender who just left one bank to join another.

Lender gap?

The current commercial lender shuffle may not be replicated anytime soon, executives said, because they think there is a gap in commercial lenders who are in their 30s and 40s.

“What was happening in banking was there was a lot of consolidation, a decade where no one was getting into banking,” Harris said.

Scarpelli and Emprise’s Faith also said most commercial lending training programs run by banks have gone the way of paper checks.

“It’s been curtailed from what it was 10 or 15 years ago,” Faith said.

“There is a gap. and I think the answer is not a formal bank training program all over again, because I don’t think anybody can afford it,” Scarpelli said. “I think we have to find the right entry-level person and grow them into a lender.”

She said a bank can “grow” commercial lenders by having them start as credit analysts and, after a period of time, partner them with senior commercial lenders, eventually allowing them to take on more decision-making.

Harris, whose bank focuses primarily on commercial customers, said that is the approach he is taking.

“I’ve got two young lenders in their late 20s, and absolutely I’m grooming them every day, every hour,” he said.

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