Vertical IQ has a longstanding relationship with the North Carolina Bankers Association, and we are proud to be Silver Sponsors of this great organization. In addition to its conferences and other educational and networking events, the North Carolina Bankers Association has created the North Carolina School of Banking (NCSB) program, a robust 4-year curriculum in which students can gain additional banking training.
Recently, I was honored to be asked to moderate a compelling panel discussion for juniors in the NCSB program, which was held at my alma mater, Appalachian State University. The panel featured three experienced bankers, who delved into the critical elements of lending.
- Zac Snyder, Regional Executive at Carter Bank and Trust, a $4.6 billion financial institution throughout Virginia and North Carolina
- Lacy Cross, Senior VP and Commercial Banker at Movement Bank, a $160 million community bank with branches in Virginia, North Carolina, and South Carolina
- Jason Capps, Vice President and Senior Commercial Portfolio Manager for HomeTrust Bank, a $4.7 billion bank based out of Asheville, North Carolina
Let’s explore the key insights shared by the panel and how these principles shape effective lending strategies
Crafting a win-win approach to lending
Many moons ago, I started my professional career as a bank calling officer. It goes without saying that a LOT has changed in the quarter century-plus since I was a banker — for instance, back then, the internet was still in its infancy! But there are some things that have remained fairly constant over the years, such as the core pillars of successful lending that these three panelists highlighted.
Prioritize safety and soundness, the cornerstones of lending
Carter Bank & Trust’s Zac Snyder underscored that safety and soundness are non-negotiable when developing a successful lending program. This principle revolves around avoiding bad loans, which are detrimental not only to the bank’s financial health but also to its reputation. For Snyder, ensuring wise lending practices involves:
- Hiring and training competent professionals who possess the necessary expertise and judgment to evaluate loan applications effectively.
- Implementing comprehensive risk management policies, procedures, and credit analysis frameworks.
- Regularly reassessing lending practices, policies, and operating systems, and making adjustments as needed to adapt to changing market conditions and regulatory requirements.
I agree that the importance of a well-rounded team cannot be overstated. Having skilled professionals is crucial to navigating the complexities of lending and maintaining a high standard of safety and soundness. And I also agree with Zac on another key point. Yes, lending is built on things like the bank’s risk management philosophy and operating systems, but also, as Zac noted, “It’s having access to good information, like Vertical IQ, so you really understand the industries you’re going to lend in.”
Business lending requires accurately weighing risk versus reward. In addition to understanding the unique aspects of a prospective borrower’s business, Industry Intelligence is essential to making good lending decisions. Knowing how a particular industry operates, benchmark data, common risks, as well as analytics on the local economy in which the business is operating enables bankers to structure loan deals that will benefit the client and the bank’s loan portfolio.
Build and foster relationships while adapting to market changes
Zac Snyder also shared his perspective on the value of strong relationships when it comes to lending. “I think relationships are huge because then you’re not having to necessarily compete on pricing or terms. … We all know that it’s more expensive to get a new than retain.”
Lacy Cross from Movement Bank concurred about the value of relationship-building but also emphasized the importance of adapting to changing market dynamics. For example, in Asheville, where Cross lives, he described how the market has evolved significantly over the past 15 years as new people and businesses have entered the scene. This influx can make it harder to maintain long-standing relationships and makes it crucial to be agile, adjusting to new business owners, new industries, and the latest trends.
Zac and Lacy are both right. Relationship-building is integral to a bank’s success, including their approach to lending. When you can successfully nurture a relationship to add additional products, services, or sound credit, it is not only good for the bank’s bottom line. A satisfied client is your bank’s best advertisement as they will share their satisfaction with other colleagues in their arena, enabling the bank to build a solid reputation within that particular industry.
Using Industry Intelligence makes lenders adept at nurturing existing relationships and capturing the best prospects in familiar markets. The actionable content on Vertical IQ is easy to share with business owners, making it a simple but highly effective way to build a reputation as a value-added advisor.
But just as important, Industry Intelligence makes it easier to navigate new industries and emerging markets. Bankers can quickly get up to speed on a prospect’s industry and ask salient, industry-focused questions by reviewing the Industry Profile prior to a call. And using Vertical IQ’s Localized Industry Data, as well as Local Economies, allows you to gain a better understanding of the landscape in which a business is operating. This level of industry and market expertise is crucial to competing beyond just price and terms, and helps ensure the bank is pursuing the right industries and loans.
Developing a comprehensive business acumen
There is another important aspect of successful lending that can’t be overlooked, and it goes beyond traditional relationship-building and banking knowledge, as Jason Capps from HomeTrust Bank emphasized. He pointed out that effective lending depends on both broad and deep knowledge.
For instance, a successful lender needs to build internal and external relationships with trusted vendors, appraisers, and other industry providers who can offer valuable insights that enhance the lending process and prevent costly mistakes. Lenders also need access to the right technology and processes, such as loan origination systems and appraisal methods, which assist with more efficient and accurate lending.
But as Jason noted, among the most essential elements of a successful lender’s business acumen is their ability to quickly understand new industries — their operations, their potential risks, their common equipment financing or lending needs. This knowledge helps in assessing the viability of loan applications and allows them to make more informed, risk-managed decisions.
I would underscore this point. Indeed, to be a good lender, you really need to be a good businessperson, and thus mastering the ability to quickly understand the nuances that make a particular industry unique is essential. And this is where effectively using Industry Intelligence is paramount in gaining a tactical and strategic advantage.
Whether you have several hours to prepare for a call with a business owner or just a few minutes, Vertical IQ provides you with the Industry Intelligence you need to quickly become an industry expert who can ask the right questions to inform their guidance on the right lending solutions. And that is what business owners are looking for when choosing a financial partner.
Related: Industry Intelligence from a Chief Credit Officer’s Perspective
Leveraging industry relationships and resources to your advantage
The panel discussion touched on many other helpful topics for the juniors in the NCSB program including credit policy administration, the impact of the current interest rate environment, and lenders’ stance on commercial real estate lending. The panelists also highlighted the strategic advantage of engaging with industry associations like the North Carolina Bankers Association for networking opportunities, access to valuable lending-related resources, and professional development.
Hopefully the students in attendance found the topics covered in our conversation useful, but if I had to choose one key takeaway that I believe is most crucial for their future success as financial professionals, it would be that staying informed and adaptable is key to thriving in this complex and dynamic field.
More than ever, lending is not one-size-fits-all. Each market, industry, and business is unique and ever-changing, and business owners expect their banker to understand that. When I started my career as a banker, to stay up to date on these nuances, I had to spend hours and hours doing research — studying up on how an industry operates, reading industry publications, and calling on more experienced bankers to share their industry knowledge with me.
Now, with Vertical IQ available 24/7, bankers can learn in just a few minutes what it took me hours to track down. Vertical IQ’s actionable, convenient, focused Industry Intelligence gives bankers the industry and economic expertise they need to offer sage advice to business owners and make informed lending decisions. Access to Vertical IQ is truly a sea change in the lending landscape, and every banker should be capitalizing on it to boost their success.
Want to give your credit team access to the most reliable, up-to-date Industry Intelligence available? Contact us today to learn how Vertical IQ can boost your bank’s lending success.