There Are No Bad Bankers
By Brad Hawley, Principal | 8 min read
A message for bank leaders: the problem is almost never the banker. It is the fit between the banker and the shop they are lending in.
For the most part, there are no bad commercial bankers. There are bankers working in the wrong environment, and the two look identical from the outside. A lender whose deals keep getting declined produces the same numbers as a lender who cannot find deals at all. One of them is a hiring problem. The other is a credit policy your last hire never had a chance against.
Most lenders are still hired on reputation and gut feel. “Everybody in town knows him.” Or: “She was a top producer at a nine billion dollar bank, so she will be fine here.” Both assume that a commercial banking seat is a commercial banking seat. It is not. The same person who books thirty million a year inside a bank with a two hundred percent CRE concentration and a three day turnaround can stall completely inside a bank with a church lending exclusion and a monthly loan committee.
At Talnted we look at 5 elements that define a banker’s profile. Matching those elements to your environment, rather than matching a résumé to a job description, is the difference between a hire who produces in year one and a hire who is gone in eighteen months.
Element 1: Segment
Who the borrowers actually are. C&I, investor CRE, owner-occupied, small business, private banking, public finance. A banker who has spent a decade on income-producing real estate has a different network, a different vocabulary and a different credit instinct than one who has spent it on operating companies.
Be careful about over-specifying here. Most community bank lenders call on a two million dollar contractor and a forty million dollar manufacturer in the same week, and that is the job, not a lack of focus. Forcing a specialty onto a generalist seat filters out exactly the people who would do it best.
Key evaluation questions:
• Historically, who have your borrowers been?
• Which kind of customer has produced your cleanest credits, and which has produced your workouts?
• What do you most enjoy lending against, and where have you had the most success?
Element 2: How the Book Gets Built
This is the hunter and gatherer question, and it is the one most often answered with a number instead of a method. A banker with a hundred and twenty million dollar portfolio may have originated all of it, or may have inherited it from a retiring lender and serviced it well. Both are real skills. They are not the same skill, and only one of them fills a new market for you.
It also matters that a book is a résumé, not a moving van. It tells you what this person has proven they can build. It is not revenue that arrives with them, and any banker who promises you it is should worry you more than reassure you.
Key evaluation questions:
• Where did your last five new relationships actually come from?
• How much of your current portfolio did you originate yourself, and how much did you inherit?
• Who are your centers of influence, and how long have you had them?
Element 3: Credit Depth
How much of the credit work this banker genuinely does, as opposed to hands off. Some lenders write their own memos, spread their own financials and walk their own deals through committee. Others are relationship people who rely entirely on a credit analyst and a credit officer. Both can be excellent. Which one you need depends on how much credit support you actually have to give them.
Ask for the unsecured lending authority specifically, not just “lending authority.” The secured number is usually double, and the two get used interchangeably in conversation in a way that flatters everyone involved.
Key evaluation questions:
• Do you write your own credit memos, or does an analyst?
• What is the most complex structure you have put together, and what made it complex?
• What is your unsecured lending authority today?
Element 4: The Approval Environment
This is the element almost nobody screens for, and it is the one that most often explains a failed hire. Every bank has an approval culture: how long a banker waits for an answer, how many people touch a credit before it is decided, and how much the lender can commit to on their own.
A banker coming out of a bank with one to three day decisions and almost no individual authority has learned to move fast and ask permission. A banker with a five million dollar unsecured authority and a monthly committee has learned the opposite. Drop either one into the other bank and the first six months look like underperformance when they are really a translation problem.
This cuts both ways, which is why it is worth being honest about your own process before you hire against it.
Key evaluation questions:
• How long does it take to get an answer on a deal at your bank today?
• How many people touch a credit before it is approved?
• When credit tells you no, what happens next?
Element 5: Drive
The simplest element to identify and arguably the most important. Most commercial bankers say they are motivated by production, but the preferred split between salary and incentive varies enormously, and in banking it is usually far more conservative than in any other revenue role. A banker who wants ninety percent of their pay guaranteed is not unambitious. They are telling you something accurate about how long a commercial credit takes to season.
Deferred compensation is the piece that gets skipped, and it is the piece that kills deals at the offer stage. A banker sitting on an unvested balance with eighteen months to run is not a candidate yet, however good the conversation was.
Key evaluation questions:
• How much of last year’s compensation was incentive rather than base?
• Do you have an unvested balance, and when does it vest?
• Tell me about a year you missed your goal, and what caused it.
The Right Banker in the Right Credit Shop
Once you have defined your own environment, and specifically the profile the open seat demands, you can recruit against that definition instead of against a job description. You stop asking who is available and start asking who fits, which are very different questions and produce very different lists.
It also changes what a decline means. A banker who is wrong for your credit box is not a bad banker, and saying so out loud keeps the market open to you. Community banking is small. The lender you pass on this year is the lender you want in three, or the one who tells four other lenders how they were treated.
The goal is not to hire good bankers. It is to hire the right bankers: the ones whose five elements line up with the shop they are walking into, so that year one is production rather than translation.
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