Chances are pretty good that if you're a seasoned commercial banker in the Twin Cities, Paul Bees or Mary Lydon have you in their Rolodex.
The duo has run Midwest Financial Search Inc. in St. Paul through the boom and crater of the 2000s, specializing in matchmaking banks of all sizes with commercial bankers.
Lydon is a former banker who worked at Marquette Bank and U.S. Bank. Bees recruited for staffing giant Robert Half for 15 years after working at U.S. Bank.
They're on the front lines of the bank battle to grow loan books in the face of sluggish demand and a painfully slow economic recovery. Banks are competing fiercely for good commercial, or business, loans.
Q: Whom does Midwest Financial primarily serve?
Bees: We're working with commercial banks primarily in the Twin Cities, occasionally outstate and out of state.
Q: How are you paid?
Bees: It's basically a finder's fee. We get paid when they hire someone that we made them aware of. The fee varies, but 30 percent of the first year's guaranteed compensation is typical. We're always paid by the banks.
Q: You've been in business 10 years now. What's the biggest change you have seen in your field?
Bees: The advent of social media. It's both added to our ability to find people, but it's also made it easier for some of the banks to find people. LinkedIn would be the primary one.
Q: How much of an uptick in activity have you seen as the economy slowly recovers?
Bees: It's increased steadily over the years since the crisis.
Lydon: In the last 18 to 24 months things have improved, not only the activity level but the types of deals. There's more emphasis on production and origination of new commercial loans vs. working out bad loans.
Q: What impact has the ongoing consolidation of the banks and bank charters in Minnesota had on the market for commercial bankers?
Bees: The consolidation hasn't consolidated the number of commercial relationships that banks deal with. It hasn't eliminated or decreased the need for front-line commercial bankers.
Lydon: There's a long-term dynamic of fewer training programs for bankers, so there still tends to be a shortage of trained commercial bankers, even with the downturn.
Q: Anyone fixing that?
Lydon: There are some external banking groups that provide some training. The large banks' internal training programs have been largely curtailed.
Q: Before the crisis you talked about a local of shortage of experienced commercial bankers. Is that still the case?
Bees: Yes. Those bankers who have both credit underwriting skills and business development skills.
Q: How is that affecting compensation and benefits?
Bees: The recession did have some effect on compensation. It's stayed steady and some benefits were reduced, including 401(k) matches and bonuses. Since then, things are getting better from that perspective. Base compensation trends are up.
Q: What's the going rate for a commercial banker with 10 years' experience?
Bees: $90,000 to $110,000 base salary going for 10 years' experience.
Q: What areas of commercial lending are you seeing the most activity in?
Lydon: Traditional C&I [commercial and industrial] lending and also some CRE [commercial real estate]. Banks are not financing dirt. They're not doing as much suburban and outer-ring land development as they had during the boom.
Bees: Although it's coming back.
Q: What trends are you seeing?
Lydon: A return to an emphasis on sales and production vs. workouts and stabilizing portfolios. It seems like some of the larger banks are moving their target market a little bit in terms of larger company sizes and size of the deal. It costs just as much to underwrite and monitor a $1 million deal as it does a $10 million deal.
Q: What's your biggest headache?
Bees: The hiring decision process seems to be elongated.
Lydon: It can be anywhere from two weeks to six months.
Q: I've heard that some banks want new employees to bring a book of loans with them. Is that a new thing?
Lydon: They always kind of have done that. It's difficult because of prepayment penalties on loans and whatnot. Banks like it if their new hires can bring this with them.