Each year, small-medium size business owners (“SMBs” – companies with annual revenues of $25 million or below) are surveyed and asked that question. With little deviation, year in and year out, here are the top five answers:
- Loan Officer Turnover
- Don’t Understand My Business
- Never Calls on Me
- Asks Me for Too Much Stuff
- Price
Let’s unpack each of these.
Loan Officer Turnover: In a good economy banks vie for the best talent. This trend is only exaggerated when there is M&A activity in the banking sector. Both of these exist across Florida, currently. Also, particularly in larger banks, a natural career path for commercial bankers is to begin their career working with smaller companies then, as they gain experience, be promoted to work with larger sized companies. In fact 50% of SMB owners report only having 1 account officer in the past year; 30% had two; 13% had three or more and 7% had none.2
Don’t Understand My Business: DUMB is primarily driven by two factors: years ago banks ran intensive training programs that lasted several years, where new hires built a strong foundation of credit skills, before being asked to make calls on prospective clients. These programs are rare today. Many banks have adopted a “hunter – skinner” model, where a banker with modest credit skills is tasked with developing business and turning over any opportunities to a dedicated internal underwriter, with the decision often being made by a credit officer who isn’t in the local market. In this scenario the “hunter” is seldom equipped to provide sound financial advice.
Never Calls on Me: For companies with annual revenues of $10 million and under the numbers are shocking – 76% say they are never called on by another bank and 60% say they are never called on by their own bank.3 The take away here is simple – it’s important for your banker to know you and your business, and that means staying in touch through regular visits.
Asks Me for Too Much Stuff: Here all we, as bankers, can do is apologize. If we are going to lend you money, we have to have your stuff … all your stuff. However, a distinction I would make is that often a prospective borrower can provide a “short stack” which will allow the banker to make an informed decision on whether there is potential for a deal. If so, the remainder of the information can be collected for full underwriting. An experienced banker will respect both the customer’s time and their own. It has been said that the second best answer a lender can give a borrower is a quick no.
Price: What this survey of SMB owners shows is that while price is important, it’s not the most important component of a banking relationship. We must be competitive, and within a very narrow band, when it comes to the rates and fees. But we don’t have to walk in the door on day one with a new prospect and announce “I have the lowest rates in town”. When evaluating pricing a good banker will take the entire relationship into consideration, as opposed to simply quoting on a transaction. Studies show that the profitability of a SMB relationship can double when the bank has both the loan and deposit pieces of the relationship; yet only 30% of the time does a SMB owner have their personal business with the bank who lends to their company.4
Does this list make you think of your bank? If so, I recommend you make it a priority to seek out a bank who is committed to the commercial and professional space, who strives to employ experienced bankers and who is serious about getting to know you and your business. In other words, find a banker who will be your advocate.
1 Graduate School of Banking at University of Colorado
2 ICBA’s Small Business Success Seminar
3 Sheshunoff Management Services
Gregory W. Bryant is the CEO – Southwest Florida – with ServisFirst Bank. ServisFirst is an $8 Billion bank focused on business-owners and professionals (NASDAQ: SFBS). For 15 years Bryant was the President and CEO of Bay Cities Bank, before its sale in 2015. He has over 30 years of commercial banking experience and in 2012 had the privilege of serving as the Chairman of the Florida Banker’s Association.
