College banking programs give industry, students important opportunities
After more than three decades of banking, Kent Belasco knew what he wanted to fix. He was an example of his own frustration. Far too many bankers landed in the profession as something of a port to safely harbor their careers. It was not their initial desire.
“Every banker I’ve talked to, I always ask them how they got into banking,” said Belasco, formerly the executive vice president at First Midwest Bank in the Chicago area. “They’re all the same, myself included. We all ‘ended up’ in banking. I want to change that dynamic.”
As of this spring, Belasco has his chance to do just that. Under Belasco’s leadership as director, Marquette University in Milwaukee has launched the Commercial Banking Program, an undergraduate major focused specifically on commercial and community banking.
While at First Midwest, Belasco also taught as an adjunct professor at Elmhurst College in Elmhurst, Ill., from 2003 until 2016, before departing for the challenge at Marquette. During the decade-plus of pulling double duty, Belasco could not help but see the possible solution to so many bankers ending up in banking.
“I was managing people for all that period of time. I always had it in the back of my mind, I would love it if the managers whom I hired had this level of experience in banking,” Belasco said. “Invariably, they just didn’t … Now I have that opportunity. I’m doing something about it.”
He has the opportunity in part because Midwestern bankers have noticed the same deficiencies. In a 2016 survey of 557 community bankers conducted by regulators from the Federal Reserve and state regulatory agencies, bankers in Illinois, Indiana, Missouri, Montana, North Dakota, South Dakota and Wyoming specifically commented on the difficulties they face finding young, qualified staff, let alone retaining such employees once they are found.
“The No. 1 thing we hear as an industry is talent,” said Brian Hoffman, vice president financial educational services at the Illinois Bankers Association. “It’s hard to find that talent.”
Naturally, these struggles lead to larger concerns regarding transition planning. Nearly 15 percent of the survey’s respondents cited real or perceived succession issues as the reason they seriously considered an acquisition offer. The same reasoning prompted 14 percent of the respondents to make an offer on another institution. Although the students enrolled in Belasco’s introductory course may be a decade or two away from filling those roles, that possibility is not lost on Belasco or members of his advisory board.
“I think that is what these programs are about,” said Doug Gordon, president and CEO of WaterStone Bank in Wauwatosa, Wis. “Right now the average age of a bank CEO is 63 or 64, and it continues to climb. A lot of it is there isn’t succession. Part of that, again, is because everybody is specialized.”
The curriculum Belasco has created — the curriculum may yet change as the program fills its classes in the coming years — looks to avoid such specialization. After introductory courses, it looks at financial management, then bank leadership along with investment analysis, and eventually gets to risk management and financial modeling. No graduate will know only the lending market or the retail approach, as Gordon laments many current bankers do.
“I encouraged these students,” he said, “be sure you are exposed to other areas of the bank if you want to move up the ladder. This was the first step in the training process that is kind of lacking because the industry doesn’t do it anymore.”
Industry’s attempt to educate
Gordon’s sentiments seem to be shared by many across the industry, at least based on their proactive attempts to find younger, educated staffers. A number of banks, along with Waterstone, in the Milwaukee and Chicago areas, have agreed to hire summer interns from the Marquette program as an attempt to give the students further practical experience.
In Ohio, Heartland Bank, Gahanna, joined with the Community Bankers Association of Ohio and Columbus State Community College to launch a one-year, 28-credit Certificate of Banking Fundamentals program.
South Dakota bankers decided a decade ago they wanted to join together to tackle the education of the next generation of community bankers. With their help, Northern State University, Aberdeen, launched a banking and financial services program in 2008. Assistant professor Robert Preston joined the faculty in 2012 after spending his career as a lawyer specializing in bank acquisitions and mergers.
At a presentation in front of many local bankers, the success of the Northern State program was reaffirmed right in front of Preston by a local banker encouraging his peers to realize how appreciative they should be of its results.
“One of our advisory board members stood up and said, ‘These guys are the real deal. You really need to start using this resource to get people trained and get people involved in the banking business to come back to the community,’” Preston recalled. “‘Because otherwise we won’t have anybody interested in coming back to a little town in South Dakota to staff our banks. What are we going to do?’”
Little research…for now
Commercial and community banking is not exactly a new field of employment. Why do so few colleges and universities offer programs geared toward filling those jobs? Preston points to a pillar of academia: research.
“There’s not enough research in the banking business to support a faculty to teach the banking program,” he said. “They may teach banking markets or financial markets or financial theory or even some bank management classes, but they don’t have a full-time program where you can get a degree in banking and financial services. They’re not interested in doing it, because there’s no research funding available.”
In addition to possibly diminishing educational opportunities and thus limiting future employment prospects, the lack of research hurts the banking industry today. Without an excess of research looking into markets, trends and other topics, legislation lags. The Conference of State Bank Supervisors partnered with the Federal Reserve to launch a conference with the exact purpose of garnering research papers.
“We have struggled from a public policy standpoint to get policy-makers to understand or appreciate community banks and the role that they play in the economy,” CSBS Senior Executive Vice President Mike Stevens said. “We formed the research conference to provide a venue for people who were studying issues around community banking. That, in turn, would encourage more research.”
In conjunction with a call for research papers, the CSBS initiated an undergraduate case study competition. In its own way, this led to more research, but it had some other, perhaps greater, unexpected consequences.
“A lot of students don’t even know the difference between a community bank and a large national bank,” said Nick Curott, an assistant professor in the Miller College of Business at Ball State University, Muncie, Ind. “That’s one of the good things of the competition, it just helps raise awareness about community banks, the things they do to support local businesses, help them gain access to credit, manage their balance sheet, the things they do in the local community.”
Five students per case study submission may seem like a small impression, but nearly everyone in Curott’s classes learns about the topic.
Stevens never anticipated the students would need to learn what a community bank is. He has two daughters about that age. They know all about community banks. Then again, they lived with Stevens.
“We stumbled on this benefit that I hadn’t thought about, people don’t even know,” he said. “You had these people who are studying business … that were missing an entire segment of the banking system.”
From research to employment
Some, like Tarez Cowsar, thought they knew about community banks, but had hardly scratched the surface. Cowsar was a part of the winning team in the 2016 case study competition and is set to graduate from Southeastern Louisiana University, Hammond, this summer. Even before putting together a team, Cowsar worked at First Guaranty Bank in Hammond but she needed to take a different viewpoint to really understand First Guaranty’s local impact.
“What I do, I’m in my own little box, my own little silo,” Cowsar said. “I punch numbers into my computer. I don’t really see the true impact that we’re having outside of the four walls that we sit in every day. During my case study, I was able to see that.”
She may not have seen the whole picture yet, but Cowsar’s awareness of community banks may have been the exception that proves the rule. Not everyone, especially not everyone of a certain age, is familiar with the differences between banks advertising during the Super Bowl and banks down the block.
In another respect, Cowsar may serve as the example which Marquette hopes to emulate. She showed an interest in commercial and community banking. She pursued it. Now she works in a community bank’s accounting department with hopes of soon moving into compliance and regulatory issues.
“What I like about the [Marquette] program is, as a subset of their business school or their finance degrees, some of these students are self-selecting as they have some interest in commercial banking,” said John Madden, CEO of FNBC Bank & Trust in LaGrange, Ill. “That’s fundamentally what is attractive to me about that curriculum and that program.”