2019 Conference

Speaker 1:    … you all making it in for this session, which I think there's a lot of good stuff that'll come out of this. We had a call couple of weeks ago where we were kind of figuring out well, what's the list of questions we feel like we should cover? I got, I think, two in, and then they just kind of went back and forth debating stuff, and then I finally had to say, "Okay, we're 15 minutes over the call time, much less the presentation time." So, lots of good nuggets to come here.

Speaker 1:    So, what we're talking about is building a dream team of RMs, of Relationship Managers. As we got and talked to banks all over the world, there's a few universal truths out there of issues that people are struggling with. One is finding good RMs, good, productive RMs, and then the second one is really keeping them all rowing in the same direction. It really is herding cats sometimes.

Speaker 1:    Two of the best that we've come across in doing this have agreed to join us today, so thank you for joining us. So we have Dave Paulson, Stephanie Moline. I'll let you both introduce yourself here in just a second. The goal here is for this to be interactive. I think this is a decent- sized group where I'll get us kicked off with a conversation, but please jump in at any point where you all want to ask questions, or jump in, give your two cents. Again, since it's a universal truth, it's something we're all struggling with, all trying to figure out. So let's get a good conversation going.

Speaker 1:    So, with that, Stephanie, why don't we start with you?

Stephanie M.:    Okay.

Speaker 1:    A little background.

Stephanie M.:    I'm Stephanie Moline, I'm responsible for the corporate banking group at First National Bank of Omaha. First National Bank of Omaha is about a $23 billion bank. I think that we were customer 001 or 002 on PrecisionLender, but the thing that probably I'm most proud of or most infamous for is that First National Bank of Omaha is proud to have Andy Max as a person that really took this and really ran with it.

Stephanie M.:    And the one thing I would say about Andy, you've got the Ask Andi with an I, I thought they should put a heart over it, is that that's never been Andy's full-time job. This has always been sort of a baby of Andy's and mine in that when we wrote the framework and what the outline was, or where the goalposts were for some of the metrics, Andy has done this for the last 10 years because he loves it. And so, that's one of the things when we walk about Andy is that he is an incredible human being, and he's able to take something very complex and make it sound simple to everybody. So, I'm delighted to be here.

Speaker 1:    Thank you. Dave?

Dave Paulson:    Dave Paulson. I told you I would be really loud. United Bank, headquartered in Connecticut Community Bank. I too, like Stephanie, have been early in the PrecisionLender journey. We found that too often we live in a world of spreadsheets that are hardly accurate and often not kept in the fashion that they should be.

Dave Paulson:    So, I became a big fan of PrecisionLender. I've spent most of my career in either corporate or commercial banking mostly in the sort of trillion dollar club. It's different being in a smaller organization. If they ever gave me the ability to sort of grab the wheel at Wells Fargo I could spin it wildly and the boat would move like a degree. Now I'm at a community bank where if I spin the wheel I could probably capsize the boat three or four times, so it's been a shift.

Speaker 1:    One of the reasons that we wanted both of you here is exactly what you said, Dave, the business really and especially the piece of it that we do, there's a lot of math. There's a lot of modeling, assumption building and stuff. As we go to talk to banks a lot of times they want to stick us with Sparkly down in the basement, right? No offense to the Sparky's of the world, that's where I came from was in the basement.

Speaker 1:    But, the modeling crowd and that's as Carl puts it which I think is a powerful way of saying it is, "The math is necessary but not sufficient." It really is about being able to translate this pretty complex stuff like Andy does into a human conversation between a relationship manager and some of your very best customers and be able to take all those moving parts into what things are important to us as the bank and what things are important to you as the customer.

Speaker 1:    That's why we want to talk about this relationship managers. How do you find good ones that can plug into that process? Dave, let's start with you. Building an RM team, we'll definitely talk about sort of managing those RMs and growing them, but let's start with the building.

Speaker 1:    How do you go about hiring and recruiting relationship managers and finding really good people in such a competitive environment?

Dave Paulson:    I think every one of us who either runs commercial banking teams or are themselves, you with great vigor run a loan and a deposit pipeline. And yet it's fascinating that so many folks don't maintain a pipeline around talent. I aspire to interview somebody, it doesn't matter what level, it could be way down in the ranks. It could be somebody to replace me.

Dave Paulson:    I try to interview somebody once a week or every other week. Sometimes that's actually not somebody that's in commercial banking at all. I find it fascinating when I'm meeting with somebody that we've brought in and it's a leader in retail and I say, "Hey, so you're with Bank X across the street. Who's the best commercial banker in your shop today?"

Dave Paulson:    What's remarkable is that person's often a very different person than my commercial team leaders might be saying and who they square off with because there's a different skillset when you're asking that person with a diverse viewpoint. "This person partners really well with retail. This person partners really well with credit." Whereas, when you go, and we all do it, the rubber chicken dinners or the breakfast, all the commercial bankers instead of trying to find the person that they can actually make money on, they go talk to other commercial bankers and that's their only view of the commercial banking universe.

Dave Paulson:    I try to get out there and create my own talent pipeline. I then create a talent pipeline from my leaders and say, "Tell me if I gave you the option to hire three people tomorrow, who would the 12 people that you would bring into the organization?" If they can't answer that question, then I failed as a leader to drive that same kind of pipeline behavior that I do in the loan or the deposit side of our business.

Speaker 1:    And Stephanie, is this something that you all spend time and resources on too of kind of constantly recruiting and thinking about who's next?

Stephanie M.:    We have four primary pillars on our bank and one of them we're focused all day every day is talent. I think that's probably my biggest job. We are a sixth generation largest privately-owned bank in the United States. Six generations of ownership is awesome, but you have 167 years of culture. If we bring somebody in from the outside, it takes them between 18 and 24 months to get acculturated into our culture before it really starts to connect and everything starts to work.

Stephanie M.:    I say this and I have one of our high potential RMs in the room and who was completely counterculture to that and did great right out of the gate. But, having said that, we usually bring people in that show a lot of potential, curiosity and have some of the same attributes that we have as a bank. And then we teach them the business or we teach them the way that we do business.

Stephanie M.:    This job used to be really a lot easier prior to 2007. Everybody likened being a commercial banker to being a jet fighter. Everybody wanted that job and then the great recession hit and banks got painted with the same brush that a bank on Wall Street versus Main Street had. People kind of had a negative connotation around banking.

Stephanie M.:    It's also about going back out and building reputations saying this is actually the coolest job you can imagine. If you're curious, you're going to learn a little bit about everything. You can be doing plastic extrusion one day and then looking at a distribution factory the next. How much more fun could that be? But it's all about looking for talent and when you recognize it you need to hire it and then continue to work with it to retain it.

Speaker 1:    There's bankers jokes just like there used to be lawyer jokes now, right?

Stephanie M.:    Yeah, they just substitute a banker for a lawyer about …

Speaker 1:    There used to be this nice consistent pool, a place to go get sort of the next generation of RMs when there was all these credit training programs. Now that a lot of those have gone by the wayside, where does the next generation of bankers come from?

Dave Paulson:    Go ahead, you first.

Stephanie M.:    Well, we have found that asking some of the deans of the business college about who their brightest and best are and then we start bringing them as interns in their sophomore year. We find that we keep moving that back because we did it in junior years and we were behind the curve with some of the large regional accounting firms.

Stephanie M.:    We still have the old traditional management trainee program, and we still probably pick two or three people out of that and then they go through formal training just kind of like the old days. We probably bring two or three in every year going through that track but it's not enough. We're going out and look for subject matter experts or … We teach them banking a little bit. With some of the tools today you can teach somebody to look at a financial statement.

Stephanie M.:    But being able to go and be customer facing part of the day and do analytics part of the day, you have to be wired that way. That's all about talking to them. Spotting talent. Seeing who would fit and what values they value the same way that you do.

Speaker 1:    Dave.

Dave Paulson:    I would say that we're still finding them. They still originate from the same place whether it's from the local college or from the bank across the street. That hasn't changed. I think what has changed and Stephanie touched on this is we became an industry that was out of favor. We became an ugly … I fly a lot and I remember being on the plane mortified when someone would ask me, "Well what do you do?" I'm like …

Speaker 1:    I'm a lawyer.

Dave Paulson:    In fact the worst was I sat down net to Chris Dodd one time flying to Washington D.C. right at bonus time. He's like, "What are you doing?" I'm like, "Not much." I was quiet as a church mouse. But I think is that we have to create a … We talked a lot about purpose. We have to remind people that this is not only a very noble and valuable job that we put our folks on there on. But, we also have to make sure that we know that the raw material that we're bringing in to the banks today, are very different than we started in our careers because I didn't have a computer on my desk for the first two years I was in school … I mean at work.

Dave Paulson:    People come in with this raw material that is technology savvy and have much higher expectation of their leaders. We didn't have a glass door thank god when I was in my first management job. Now they come in and they know more about our organization sometimes than many of my team leaders do. So, it's incumbent on us to find them in the same place, but the real work comes with us creating a platform why they want to join us.

Stephanie M.:    Can I add one thing? I'm going to preface this by saying I have two millennial children. But I think recruiting and retaining millennial workforce also has changed at least from a managerial standpoint how all of my group heads act and certainly I do because it has kind of gotten us back into say we're coaching probably as much time as we are going out and doing certain other activities because we need to provide constant feedback. Because that's an expectation of the new generation that we are bringing into the bank.

Stephanie M.:    "I want to know what I'm going to do in a year. Map out for me 1, 3, 5." Coaching around that is very different than being 100 and saying, "If I put my head down, I do my job and I do a really good job I'll get promoted and then I'm not going to ask somebody what I'm going to be doing in three years because they would have looked at me like I'd lost my mind.

Stephanie M.:    We have to evolve better as manager too, I think, to retain that talent because they expect a whole different level of conversations on a very regular basis about where they're going.

Speaker 1:    Related to that and this doesn't just have to be generationally specific, but a lot of the strategy that we hear from banks that we talk to when we say how do you go about growing, what the plan for growth? They basically say, "We just steal everybody else's really good lenders. We steal their best relationship managers and they'll bring a book with them. They're senior, they're experienced. They don't take much training. We just have them switch uniforms basically and off they go."

Speaker 1:    Do you all fight that much? Stephanie, we'll start with you. Do you fight that much of feeling like you have to protect especially some of those top producers all the time?

Stephanie M.:    Oh, yeah. With our top producers you hope that they bank with the bank and not with the banker so that your assets go up and down the elevator every night. That's why we spend a lot of time having a couple of people on an account so that if one banker happens to leave for something else, we're not completely at their mercy.

Stephanie M.:    I will tell you it would be an anomaly for us to hire another banker from another bank. The only time that we would really do that is if they had a specific subject matter expertise because whatever is in their book may not fit whatever it is we're looking for. I spend a lot less time, although with Dave's analogy I think it's fair. I don't ask the bank across the street who the best calling officer they have is. I ask somebody that doesn't bank with us, because every banker's out calling on the same customers. I ask them who the best was that was the best prepared that came and talked to them. Who would they say was a great person they let in the door then I'd just go and chase them.

Speaker 1:    That's a good idea. Dave.

Dave Paulson:    Yeah, it is intensely competitive. I honestly believe that your best talent should always be interviewing. I know that sounds kind of odd but I think that it's incumbent on myself and our leaders to make our organization and make the place that they chose to work, the right place for them to be successful. We have to create an infrastructure that allows them to promote their personal brand because Stephanie and I may disagree slightly on this, but I don't believe, honestly to my core, do not believe unless you're maybe Goldman Sachs, that no one is buying the logo on the door.

Dave Paulson:    You're buying the person sitting in front of you. You're buying the intimacy of that relationship and you gosh well better be able to produce what you say you're going to do and that's where the infrastructure of the firm has to stand behind a banker. Bu that is how we compete and if we lose somebody because we didn't afford them an opportunity or as Stephanie said, we didn't have the discussion about where do you see yourself in three years, well, they're thinking that way.

Dave Paulson:    So, I would rather have the discussion where do you see yourself in three years and lose them to somebody in finance or in credit or somewhere else, but keep them in our organization because they're talented and still lose them to my team than lose them to the bank across the street. That competition is more about what we do versus how we generally have to always find those people. It's incumbent on us to win internally similar to what you talked about, versus a trick because I think tricks don't work.

Speaker 1:    I think that's interesting. It used to be the career pattern of the way you move to the next level or the way you got sort of a step change raise where you had to switch banks to make that happen. Because in my bank I get a three to 5% raise per year and promotions are hard to come by because people stick around for a while. I had to be leaving all the time.

Speaker 1:    I think you make a good point there about maybe somebody wants to do something slightly different. Maybe they want to do portfolio management or finance stuff and if we aren't open to that, they'll find a place that is. So, I think you have to all the time in your own organization make decisions around that person. If that's a 20% because they've earned it or if it's a promotion or if it's a totally different thing.

Speaker 1:    I think that somewhat is now more common generationally and people ask for that inside the walls and be okay expecting that. I think that's a good thing actually.

Stephanie M.:    It prompts the conversation. One of the things that we have been working hard on is that over the course of time as you moved up the organization your highest and best individual contributors, the way they got promoted was to start managing people. If they really value the deal, they're spending less time coaching the people and chasing the deal.

Stephanie M.:    You can always tell. Sometimes you can do it a little bit but you always see where people's passion is. Having a singular way to get promoted in the commercial area just doesn't work anymore. We have worked pretty hard over the last two years creating a leadership band that you get there by being an individual contributor which is completely different than we did the first 166 years.

Stephanie M.:    What does that look like? What attributes does that person have? What do they get to contribute? Basically, they sit on all the leadership teams and contribute strategically just as if you were a team leader or a group manager. On the one hand, they are held at a higher level for bringing in new business. This is a huge departure based on some of the fight for talent these days. You have to both for retaining the talent you have, give them a good coach. And to not keep shoving our best individual contributors into manager roles.

Speaker 1:    I think that's a universal issue that we deal with that a software company of you don't have to be a manager to have some seniority and some value and importance here and a paycheck that reflects it. Where do you all find the leaders then if it's not just taking your top producers and making them the sales leaders? Where do they come from? What's that person look like?

Stephanie M.:    First of all I started this saying we did it differently the first 166 years. So, the value proposition for coaching is much different because how you get to feeling good is by having your people succeed and helping them in having a conversation about what can they do next and/or how you attain whatever goals.

Stephanie M.:    We're evolving through this. I'm not going to tell you we have this but that and you don't have to … There's a lot of things changing. We've encountered more change in the last three years than we did in probably 15 prior to that. So, you don't have to just say that Bob or Nancy, whoever's in front of you has to retire or get hired by somebody else or die, whatever it might be in order to get promoted.

Stephanie M.:    We kind of talk about the multiple pathways. To Dave's point, I'm never excited about losing anybody to credit, but I would rather keep the talent in the bank. Now we've had a lot of people be an RM in treasury and understand the role of some of the fee-based services at treasury and do full circle not just more lending oriented. We're trying to give them a little bit wider of training. Their vision of success may differ than what I think is.

Dave Paulson:    I think that when we're trying to figure out who our next leaders are, they might be from outside of the bank. They might be from outside of the industry. They might. It's more about us grooming them in the way we believe is conducive to fitting within our culture. Kelly and I were having this conversation over lunch today. I found that the folks that make the best coaches are actually those folks like myself who coach youth sports.

Dave Paulson:    Coaching a 10-year-old is remarkably similar to coaching a 50-year-old. That's not a pejorative statement about 50-year-olds. But, if you think about it, with a 10-year-old who's learning a sport, they need to be shown what to do. They need to then have a set of expectations. They need to be reoriented when they fall off the rails and bounce into guardrails. They need to be re-motivated in addition to being motivated. And then you have to do it all over again.

Dave Paulson:    People along a journey can be really good at something for a moment and then you move them into a new role whether it's into treasury or into leadership and they suddenly go from being very competent and very confident to being in some level incompetent and lacking confidence. So, you have to create this ability to see people that can look at somebody just like you did that kid on the field and say, "Hey, it's okay. Dust yourself and get back in there. You can do this."

Dave Paulson:    There's a lot of people that can't do that and that doesn't mean that there's people that are hugely valuable in your organization, but we've seen those athletes that don't survive on teams even though they are physical specimens that are spectacular but no one wants sort of a Dennis Rodman coaching their team. No one wants … maybe Alex Rodriguez, I know Yankees fans are going to yell at me or Texas Rangers fans for that matter.

Dave Paulson:    But, nobody wants that person leading others because you see that inherent selfishness. You can't just take those people sometimes that are your best sort of superstar folks because they may not have the empathy or the willingness to sit down and really work with people. So, it really takes a much broader perspective on where you find your leaders. And then you have to develop them.

Dave Paulson:    And then just in the same manner, you have to motivate, set expectations, hold them accountable because again, as we were talking earlier, if your individual contributors are not successful, more often than not it is not the individual contributor's fault. It's us. It's the leaders. We have failed if we haven't figured out either how to skill that person up, or move them out of the organization.

Speaker 1:    It reminded me, I'm a St. Louis Cardinals fan, they many years ago hired Bob Gibson to be their pitching coach, one of the greatest pitchers of all times. Surely he'll be a great pitching coach. He was awful at it. Just absolutely terrible. He would go out to the mount and he'd be like, "Why don't you just throw it a lot harder? Strike the guy out. It's not that hard."

Dave Paulson:    Kelly and I were laughing about this but it's that … We've all seen it. The coach yelling from the dugout or the parent from behind the dugout screaming at their child, "Hit the ball." Really? You don't think that kid with a bat in his hand and a helmet on the head doesn't know that that's their objective? That is not helpful at all and yet Bob Gibson was that guy.

Speaker 1:    And we yell, "Grow loans. Go get more business." How? We talked at dinner a little bit last night and Stephanie you can jump into this one too. Really how hard it is but how necessary it is to actually give honest, direct feedback to employees. Talk a little bit about how … It's one thing for you to be able to do it to your direct reports, but how do you make that an organizational expectation for your entire team to be able to coach and give feedback and just kind of get better at this as we go?

Dave Paulson:    Feedback is hard. It's not easy to provide feedback because feedback's real easy when you're like, "Hey, that was great. You did a awesome job today." Everybody loves to give that feedback. But when you walk away from a situation and you realize, "Wow, that was really not so good," and if you let that moment pass, you can't come back a week later and go, "Hey, by the way, I was thinking about how you screwed up that call a week ago or that presentation with your credit partner or the behavior that you exhibited with someone."

Dave Paulson:    It's too late. Coaching in the moment is a very precious, it's a valuable commodity. It starts with me and my folks being understanding that I want them to be very direct with me. I create that platform for people to basically go, "Hey, Dave, no disrespect but I'm giving the BS flag. I'm not seeing that." If they feel comfortable doing that with me and emulate that behavior, then I turn around and say, "You need [inaudible] with your people because they will give you feedback some of which you won't want to hear," but then they will have to be open-minded and receptive to taking feedback themselves. You create feedback loops that are so important because don't you want to know what people are saying about you when you're out of the room?

Dave Paulson:    Somebody will say something about all of us when we leave a room. Wouldn't you rather get that in a digestible and kind, compassionate way?

Stephanie M.:    Constructive criticism is difficult. One of the things that we have been coaching around is if you give all of your feedback either way post-call or even after the call, you maybe need to re-think how you're doing it. This was a little bit about expectations and wanting a new group of RMs that really want coaching and really deserve it to get a lot more of it.

Stephanie M.:    So, we put all of our RMs through a sales training called Impacts. I told these guys last night that we all, even though some of us had been doing it for decades, think we know all of those things about it, we all had to sit in the same chair and do the same preparation and get critiqued by the same people we hired to tell us how we could do it better.

Stephanie M.:    But what we did that I think was different, that I think was probably meaningful, is that we did a lot of the pre-call coaching to say, "This is what I expect. When you go in let's get prepared. Let's do our homework." But these are the things, if I'm sitting with them or if their manager's sitting with them, these are the things that we want to make sure that we accomplish by the time we leave.

Stephanie M.:    After the call if you've already told them on the front end what you're going to expect and what you're going to talk about after the call, somewhere in the back of RMs mind I want to make sure I accomplished it. And then you just want it to be something that they just do as muscle memory and just do it each and every time. But the consistency of it is the big thing.

Stephanie M.:    If I say after the call, "You did really a good job in the intro, but we kind of were having a little trouble about visiting a little bit about how are they doing. What are they looking at doing the next three years? Are they going to keep the same piece of real estate, identify opportunities or where there might be some risk."

Stephanie M.:    If you talk about it on the front end, talking about what we could improve upon on the back end doesn't sound quite so harsh or draconian. Or, you can praise them for it, but it actually makes them think better, I think, beforehand before they go out and make the call because then they know after it you're going to tell them kind of how you thought they did so they're expecting to be graded.

Stephanie M.:    The only way that we get, and some people are a lot more comfortable about giving constructive criticism. Most people are a lot more … there's a whole bunch of people all over the board about receiving it. But if it's something that you do just as part of every call you make, it just becomes expected. I'm not going to tell you we're perfect at it, but consistency is the piece that we work on all the time so that each of those managers tells their people. And I will tell you, their RMs or those RMs are really good about telling most of us about who's doing a better job than the other ones.

Stephanie M.:    Feedback is good and they'll say, "I want to be coached more. I want more feedback. I want more opportunity to get better at this." And so it causes us to kind of evolve too.

Dave Paulson:    You can't miss that moment when you're asked. It's such a great point. When someone asks you for feedback, I wouldn't swear so I'll interject a word that begins with F with box. So, box, remember that. When that banker or even a client comes to you and they're, "So, what should I be doing better," you should not grin box them. You should not grin box them. You should tell them what you honestly believe is what they need to work on.

Dave Paulson:    In the old days they used to say you have to wrap a compliment with the hard feedback and then exit with a compliment. Perhaps. But, I think if you're just outright honest and transparent with people, it goes so much further but you have to do it either when they're asking for it in that moment or that moment is lost and somehow diluted.

Speaker 1:    So, a key ingredient that you both mentioned there is that you're both actively out in the field going on calls with some of your bankers. How much time do you spend doing that? Is it something you do regular on a weekly basis with someone or is it a rare thing?

Stephanie M.:    Actually, that's the fun part of the job. If I can do it 20% of the time, I think that it's a win. I'd like to do it more. I get a lot better idea about two things. Kind of how the customer's perceiving us too, as well as what the rapport is between the RM and the customer. I also get an idea of some of the things that are maybe on the horizon from a risk standpoint that I don't see.

Stephanie M.:    But, I get a chance to see if some of the coaching and the opportunities if they've grown from the last time that I saw them out there. That's a great time for me to say, "Hey, I know that you've been working on this," in whatever it is. But, probably 20% I'd say.

Dave Paulson:    I agree with Stephanie. It's my favorite part of the job. I think it's because as Stephanie said earlier, you get to see all these great business models and it satiates my ADD. I love the fact that there's just so many things that we can learn and I have that sort of curious mind. But what I found is at my level now, I always hated it when I was a banker and they're like, "Hey, the senior guy wants to call in your market," and you'd have to manufacture these calls. They'd be calling clients to say, "Hey, can you do me a favor? This guy Paulson, he's coming into the market." Total waste. One, they're always going to the best clients.

Dave Paulson:    So, what I've done is I've said to my bankers and my team leaders. "I want you to bring me on the call that's the worst call. I want you to bring me on the call that they're about to leave the bank. I want you to bring me on the call that we're going to lose the business because we were uncompetitive or we were slow. I want you to bring me on the call so that I can give the mea culpa and I can take ownership for the bank's failure not you."

Dave Paulson:    What that's done, one, is it's reduced the number of calls that I'm on which is kind of a bummer. But it's also proven to them that failure is okay and we do fail. People will come out with transactions that we just didn't execute as well as we could of. Or, we missed the mark. Or, we just, we spent too much time focusing on stuff that's patently obvious and not about the value that a client is looking for from us.

Dave Paulson:    I always articulate especially with my young bankers, banking since the beginning of time, since the rug bazaars back at the beginning of trade, lending money has always been a game of a primary and secondary source for payment, right? We all learned that. It doesn't matter whether it's a car loan or the biggest corporate finance deal. It's car loan. It's your paycheck and when your paycheck doesn't work out, then I come and put a boot on your car. Secondary source for payment.

Dave Paulson:    Here's what our customers really want from us, is they want to know, yeah, you understand the primary source of payment and everything that goes into that and all the manifestations of how that can go good or bad. The secondary source of payment and all the stuff around collateral and our exit path. Really good bankers know their way around what's the, oh, shit moment … I did swear, I'm sorry. I promised I wouldn't.

Speaker 1:    Now you can just go with it.

Stephanie M.:    I just heard box.

Dave Paulson:    Your box, yeah. The old box moment. But, what is that oh, box moment and did we structure a deal that mostly mitigates, not avoids because we don't make money if we avoid loans. Just remind your credit folks that every once in a awhile is that hey, nobody gets to come to work tomorrow if we don't do loans. But, that's where I think we really … when we call that's what we hope to provide our folks is a vision for what we're trying to accomplish for the benefit of our customers and part of that is looking around corners for them.

Dave Paulson:    Just like you're trying to look around corners for us by everything you do in PrecisionLender. I love the way Carl explained that is I'm not telling you the answer. What I'm doing is liberating you from parts of the decision that you don't need to be worried about.

Speaker 1:    Yeah. Just out of curiosity, how many of you at your banks have executives that spend 20-ish percent of the time going on calls out in the field? A couple of hands. We meet a fair amount of executives responsible for production who haven't been in the field in years.

Dave Paulson:    Tragic.

Speaker 1:    It blows my mind. It's easy to happen, right? Your day fills up with meetings and there's just things but I think it's something you have to consciously do. Even at our software company we grew by a lot of people over the last couple of years and Catherine and I sort of had this realization late last year. We listened in on the recordings of a couple of sales meetings. We kind of looked at each other like, "That was a train wreck. How did this happen?"

Speaker 1:    Neither one of us had been on a call in months and hadn't been paying attention to them. We used to be a part of those. So, it just took getting back to, like you said, Dave, sort of the basics but ask the question in a room and that was maybe, it was less than a third of people that have the executives responsible for that spending a meaningful amount of time out there. So, it surprises me.

Dave Paulson:    The one thing I do worry about when calling or making myself available. You hand out your business card, "Call me anytime," is then you have to be very, very thoughtful about the fact that you do not want to erode the credibility of your bankers because the ego that sort of lands in the CFO or the CEO of a company is, "Well, I'll just blow right by the banker. I'll just get my answer from Paulson because he'll, he can make whatever happen."

Dave Paulson:    And generally when that call comes in, I'll say, "Well, what did Tom say? What did Sally say?" "Well, I'm calling you." "But, I trust their decision. If they tell me we should do this deal, then we should do this deal. And if we shouldn't do this deal then I'm trusting them. Did they give you the wrong answer?" If you do that, then you restore the credibility of that banker and then you make them challenge why they disagree. And then if we get a different answer, then there's this moment where there's a duel coaching. I can coach the client or the prospect as well as my banker. That's almost more effective sort of customer calling than is, again, the bring the guy out because this customer loves the bank. It's nice but it's a mutual admiration society call and that's not that helpful.

Speaker 1:    I'll take slight pause. Any questions or thoughts from out there that anyone would like to ask? Yeah, go ahead. You may just have to shout. I don't think we prepared for this at all. I'm winging it here.

Speaker 4:    A couple of things [inaudible]

Stephanie M.:    So, as part of … since she referenced the hundred I'm assuming that's coming to me. As part of our budgeting process, we take a look at either the growth goals or how many relationships per RM we already have and say we're probably going to need, and I hate to refer to as it, but one newer RM, a junior lender to come into the program. And then we do budget for that.

Stephanie M.:    On occasion because things happen that drive that the market dictates to that we maybe need another one. I've never, the one good thing is having being privately held if I need another RM because we are so busy we need another set of hands, I have never had a problem getting that FTE approved. But if it's coming through credit and they've been identified a somebody that we believe will make a fine RM and they value the work that's going to come with that, and we did attributes.

Stephanie M.:    We said these are the five attributes of someone that is going to be very attracted to credit as a career path and these are the five attributes of someone that wants to be a relationship manager. To be very honest with you the top five attributes on both there's no overlap. Until you get to the next five do you start to get some overlap on the two.

Stephanie M.:    We have started some of our own recruiting of people that will go through credit training and be competent and take them out on calls, give them some exposure to being part of the deal team as you sit down with a relationship whether it's new or a renewal. And then we kind of, we try and asses if they're 12 months out, 18 months out. Then we create that FTE within the budget to accommodate whoever's coming out.

Speaker 4:    [inaudible]

Dave Paulson:    I'll go back to two things. One was yeah, when the markets are tight it is tougher. But it's no different than if you're competing in a road race. Everybody is running in the same mud at the same time so you have to be better. So, you have to be recruiting all the time when you don't have openings. You have to build those relationships because people are going to join you because of the relationship you have and they're not going to join based on your time when you have the open box. They're going to join because you've had an extensive relationship.

Dave Paulson:    So, I joke with a lot of my folks that we are constantly if you think of, for any of you that fish, we're playing catch and release all the time. You're creating opportunities to meet with bankers in your market even when you don't have openings so that you have that relationship so that when you do have a need, you can say in a very tight market, "I know that I've got a relationship with 10 or 12 or 15 bankers and I know who the three or four best ones are, and I pray in that moment that the three or four best ones that available that they might actually say yes."

Dave Paulson:    But if you start that and go, "Oh my god, I just lost Sue," and you start looking then and you haven't built those relationships, then you're subject to the same tightness in the market that everyone is facing and you failed. So, it is a process no different than if your banker suddenly goes, "Ooh, somebody told me I need to grow my portfolio this month." That's not when you start looking for loans. You've been looking for loans the whole year and the year before that and the year before that.

Dave Paulson:    So, that's one. And then in terms of what you're doing when you're trying to attract talent, just put it in the context of what you think you would want if you were going to go an employer. Believe it or not, when our people come to work they actually want to get stuff … see I didn't, stuff done.

Speaker 1:    Get box done.

Dave Paulson:    They actually want to do work. It's fascinating, right? The problem is often we get in their way. What you need to do is be able to articulate to that person especially in a tight market, "I'm working really, really hard at my organization as imperfect as it may be because every business model has its level of imperfection. I'm trying to make this an environment where you can be successful and that I'm going to build an infrastructure that's going to support your personal brand as a banker." When you start to talk to somebody that way, then it's not, "Geez, my bank is so frigging good and we pay top dollar." Peanuts. That's nothing.

Dave Paulson:    When you're identifying with them where they're going to be valuable and they're going to be successful in the confines of your infrastructure and your firm and your culture, now they're like, "Okay, wait a minute. I think I could be successful there," and they may choose to join your firm. Does that kind of answer your question?

Speaker 4:    Yes. [inaudible]

Stephanie M.:    Well, just the good ones. So, I preface this by saying I have two millennial children and it is very important to them, I listen to some of the somewhat interesting conversations that they have about what's very important to them. The next bigger paycheck is important but it's not number one like it probably was to probably my generation 100 years ago. The work/life balance thing is a big thing in being able to not hear it from me because to Dave's point the wawawa thing happens is that I need to have ambassadors out there that are in the role they'll say yeah.

Stephanie M.:    There's weeks that I'm working 60 hours, but if I want to take my child to the doctor or I want to go to the little league game, there's things that are hotter buttons right now. If the job doesn't match that, you have to kind of think about it because you're not going to attract the talent that's valuing work/life balance if you're Goldman Sachs, if you're running 80 hours a week and there is no time to even spend the money you make.

Stephanie M.:    We've kind of looked at that. I will tell you that I am grateful every day that I work for a closely owned organization because having six generations of ownership, they will tell you what's really important at the end of the day is family. And while they don't offer stock options to the employees, I will tell you every day you see some act from ownership that says that they value family and if there's something you need to do, that's what comes first.

Stephanie M.:    I will tell then you become identified, we're in seven states. The further you get away from headquarters, the less you feel sometimes the shadow of all the leadership things. So, one of our biggest jobs is to make sure that we export to the other six states that where the headquarters is located because it feels a lot different being in Frisco, Texas than it does in Omaha, Nebraska. You're far enough away from those two things.

Stephanie M.:    So, it's incumbent upon the leaders to make sure that whatever happens at headquarters, you find a way to make sure culturally if they're just chasing dollars, that's maybe not your best bet. But you want if they're out having a beer with their friends to say, "I got to take, Bob had an ear infection and they let me go do that." In fact, one of the things that we have encouraged as one of our benefits is that we give a certain amount of hours every month for people to be involved in an outside board.

Stephanie M.:    That's one and there is a monetary piece to it, but to be very honest with you, it's minuscule compared to what it costs to go out and find talent just to retain it. We tweak a little here. We tweak a little there. I won't tell you there will be forever a credit training program although we're a pretty big believer in it. But, going out and finding somebody that's a senior lender is just so hard because, boy, you just got to hope they're going to fit in your culture.

Stephanie M.:    I would rather take off of some of my best people, try and take some of their portfolio load and give that opportunity to somebody that works well with them and bring a junior lender up a little bit just because that seems to work better at least in our organization. That doesn't mean everybody, but it gives them an opportunity.

Speaker 1:    Go ahead. Got time for just a couple more and then Stephanie and Dave are really great about talking shop whenever you want to so I'm going to volunteer them to … You can find them later. Go ahead.

Speaker 5:    This is in regards to the conversation. I'm assuming you've been involved in creating [inaudible] incentive plans. What have you found to be [inaudible 00:51:10]?

Dave Paulson:    The question for those of you that can't hear was incentive plans, compensation. I'll go with incentive plan because I think that's a much harder topic quite frankly than compensation.

Dave Paulson:    Transparency and goal alignment. What I mean by goal alignment is if what the bank is looking to do, I'm speaking from a publicly-traded company but I think it's whatever profit venture you're in. If the top of the house goals are misaligned with those goals of the individual contributors, you have done yourself a disservice because you're either tricking your bankers or they're not accomplishing what you need the results to roll up for the entirety of the bank to be successful.

Dave Paulson:    For example, we don't have in our organization an intense focus on production. It is a component but we have a profitability goal that's very much assisted by PrecisionLender in terms of ROI. We look at year over year growth in balances so that there is both retaining of clients, both their deposits and their loans. I joke your question in the back there about credit training programs. Just be clear. We shouldn't be having lenders anymore. I know that's an anathema.

Dave Paulson:    We have commercial bankers. We have to honor both sides of the balance sheet. Deposits right now are more important to most of us in this room other than maybe the top five or six banks, than our loans. I will high five bankers five ways to Tuesday for a million-dollar deposit than I will for a $10 million loan. I know that sounds funny, but that's like saying to a carpenter, "You've got no raw materials to build the house. Now go build a house."

Dave Paulson:    Transparency is really important and making sure that there is goal alignment from the top of the house and what you are telling the street you're going to produce, versus what you're sending your folks out into the field to do. Because otherwise, if they just all do loans, you're in trouble. If they all do deposits, you're in trouble. It's got to be what you need to deliver as a firm.

Stephanie M.:    Incentive plans are like gravity. They work. This is my favorite and you'd better be really able to look what your ripple effect is about what you're incenting. What behaviors are you saying? Is it a one-year goal? Are you looking out, what do you want your bank to be? You should be looking out more than one year. So, when you put these together you say, "What is it we want? What are we aspiring to be?"

Stephanie M.:    Also, for my one semester that I taught, I grade stuff on a bell curve. I have a bell curve and I am a big believer that these are not entitlements. That if you don't make a distinction between your top performers and that they're out there working really hard to the people that show up every day, it's called a paycheck and the in-between most of the people fall.

Stephanie M.:    But, I make a pretty big distinction. There's a target we have for incentive that is profitability. You mix risk in a little bit and PrecisionLender has been great in feeding score cards by developing what it is you want to score. But, you just need to know that as you look out whatever it is you're doing is going to work and people are going to be able to figure out how it is that they maximize whatever it is that you have set out as goals. You need to look out … didn't you say something about looking around corners?

Stephanie M.:    You have to make sure you really know what your consequences more than when you will be at whatever program you're putting out there because it'll work.

Dave Paulson:    The right term is consequences because you will have intended consequences. It's the unintended consequences that will kill you.

Stephanie M.:    No question. Dave's right. We landed a large depository customer that they'd been working on for a year. The sale cycle's long on some of these customers. I promised them that I would run through our fountain in front of the headquarters if they got the client that had been with a large bank for 50 years. They had told me through both Salesforce it would be somewhere between May and August which is optimal if you're going to run through a fountain.

Speaker 1:    Optimal fountain run.

Stephanie M.:    It was late October and just so you know-

Dave Paulson:    And we can find this where on-

Stephanie M.:    And under full transparency, those jets are a lot stronger than you would assume and it was cold. But, I will tell you it was kind of a fun moment because as a group we celebrated too because part of it is compensation. But the other thing that motivates people is recognition and saying, "Hey, you guys did something moving a large deposit, yay," and then the next group's going, "Maybe they'll run through something stupid like the fountain." So, maybe not a fountain again just having learned that lesson once. That was cold.

Speaker 1:    But I like that. Paycheck or not, it's kind of like ringing the gong for the good things and celebrating some of the wins.

Stephanie M.:    Yeah, recognition's huge with RMs.

Speaker 1:    I think we are past our time so to keep us on schedule we're going to wrap up. Thank you, Dave. Thank you, Stephanie, for taking the time. This is much appreciated. Like I said, find them afterwards. They're like this all the time. Thank you.