I was attracted to the banking profession, largely, because of family stories and memories I had of my great grandfather, who was a banker during the Great Depression. He passed away at the age of 90, when I was 11. I grew up in the Bay Area, he lived in Fresno, CA and my family would visit a half dozen or so times a year. My great-grandfather had retired in 1946 after a 35-year career with Bank of America. He had immigrated from Denmark in the late 19th century, the first of his family to shun the tradition of becoming a sea captain, and left his small village to pursue the American dream.
My earliest memories of my visits always included jobs… Climbing the grapefruit and orange trees to pick the ripe fruit and the “morning ritual”. You see, my great grandfather had lost his leg in the late 1950’s and my job was to go into his room in the morning, open his closet, help him pull out the sock to protect his stub, put on the wooden leg that had no hinge and visible tree knots, cinch it up, help him into his wheel chair and roll him out to the card table. During the course of the day I recall many visits where his former customers (and their sons) would come by the house to play cards. Imagine this young boy sitting by the side of the card table watching the old guys, with more hair growing out of their ears than their heads, chewing on cigars and truly enjoying their time together. I would hear stories of when my great grandfather had extended a loan during the Depression and helped keep the family business solvent during very difficult times. After 20 years into retirement, bound to a wheel chair, these card-playing friends wanted me to know how my great grandfather saved their business and how they were so very grateful.
There is more to the story of how I ended up in banking, but at the core was a desire to make a positive impact like my great grandfather. I loved, admired and wanted to emulate him. He helped me find “the passion” or “the why” and while I believe that people can be successful at many different professions I do believe we all need to find the “why”. Work environment, compensation and quality of life are important factors to drive satisfaction but, in my opinion, true satisfaction, and great performance as a top contributor to a business, requires each of us to feel that we are doing good. Whether it’s a bad streak in athletics, a disappointing grade in a class, a rough patch in a marriage or a work environment that is stressed we all will have moments in time where we will need to dig deep and this is where knowing why you do what you do will pay off.
So now for my perspective on a career in banking.
I believe that there are very good opportunities over the long term for young people to enter the profession. There has been tremendous consolidation over the past 30 years. Over three decades regional banks were acquired by what now are the four largest banks, JP Morgan, Bank of America, Wells Fargo, Citibank and the super regionals. As part of that consolidation, the experienced bankers left the business as the acquiring bank looked to reduce costs by eliminating positions. These experienced bankers either retired or, in many cases, went to start up new banks. The industry now faces a very big talent cliff in a few short years when those experienced bankers look to retire.
The consequence of significant consolidation over the past three decades as jobs were eliminated was a reduction in training programs. Many of the small banks that were started 10-20 years ago by mid and senior level bankers during the consolidation phase are near retirement. During the financial crises many banks failed and were sold due to inadequate capital levels. Today, capital levels have been by and large restored and, in many cases, are higher than at any time in the past 60 years. As a consequence, barring an unforeseen financial crises greater than the recent Great Recession, a lack of capital will not force consolidation rather it will be the lack of talent.
Small banks, started by experienced bankers 10-20 years ago, don’t have the pool of talent from large regional bank consolidation as existed in the earlier phase of roll ups. Regulators, rightly concerned with the quality of managers to manage risk, will not tolerate a talent gap and will put increasing pressure on management and boards to sell if they can’t keep the talent level high.
If I were looking at a long-term career in banking I would look for a company that has experienced bankers and where the organization is looking to invest in developing talent. Once in, I would do everything possible to learn as much as you can from those who are experienced before they leave the business. Much of what I am saying is that you need to take the initiative, to go beyond doing the job at hand and look for any way to learn. The “math of banking” is not complex but what takes a long time to master is the art of the business.
What do I mean “art”? A commercial banker who works with privately held businesses is responsible to understand the business model and to bring ideas and solutions that will help the owners achieve their financial goals while helping the business grow and operate more efficiently. Many businesses will need to obtain loans to fund growth or to achieve the proper capital structure for a more mature business. Of all the services that a bank provides, business owners will often select the bank based on their belief that the banker and the bank is most likely to extend credit under reasonable terms when they really need it…that last part is important, “when they really need it”.
The most valuable banker to a bank and a business owner alike is someone who has credibility and who can see why taking risk is acceptable when others may not be able to see the opportunity. A less talented banker may not take the time to see the opportunity or may not have the internal credibility to convince decision makers that extending the loan is prudent.
I’ll tie this back to my great grandfather who earned the respect of those customers when he supported their businesses. By taking the time to learn the business, supporting credit requests when others may question them, and gaining credibility to convince decision makers at the bank you will become a great banker who will be valued by the bank and the customer alike. Thinking about a career in banking? If so, get out there and learn as much as possible.