A small bank in central Virginia is making a big bet on education to determine its future.
Virginia National Bankshares in Charlottesville, Va., has been developing in-house training programs to fill key voids. The $627 million-asset company started offering classes last year to local business leaders, intending to prepare them for joining community bank boards.
The company, pleased with the results of that effort, is putting the final touches on a financial literacy program for high school students and young adults that, over time, could create a new generation of commercial lenders and credit analysts. The financial literacy program is on pace to debut in December with about 20 students, most high school seniors.
The moves make sense, given community banks' struggles recruiting directors and getting young people excited about banking, said Rod Taylor, CEO of Taylor Mead, an executive recruiting and employment law firm in Atlanta. The financial crisis in particular gave banks a black eye from the perspective of younger generations.
“Banks are experiencing a shortage of credit skills on both sides, lending and analysis," Taylor said. "It’s everywhere, not just this bank, or Virginia. The war for credit skills has been raging for 10 years.”
Virginia National's training effort initially focused on up-and-coming business leaders in their 30s and 40s, with the aim of teaching them skills they could use on corporate and advisory boards across Virginia. The experience was positive enough for the company to launch a second session earlier this year.
Glenn Rust, Virginia National's CEO, said he would like to eventually add one of the program's graduates to his board. The nine directors at Virginia National have an average age of 66, so some age diversity would be welcome, he added.
In the meantime, the effort has generated more interest in the bank, which has led to referrals from several of the program's participants.
"Some, when they learned what the bank was about, brought in loan business and referred other business,'' Rust said. "From our view, it's already a win."
Rust decided to pursue a multifaceted plan to train future lenders after concluding that there had to be a better way to recruit than luring other banks’ lenders. Poaching talent has also become more difficult due to a shrinking pool of candidates.
“Across the industry, we’ve lost nine lenders in this market,” Rust said in an interview. “There’s a shortage of commercial lenders. The supply is low, and it’s not being replenished. ... We can’t keep stealing from the same shrinking pool."
Rust's concerns grew after an “informal poll” of local students and parents found zero interest in banking careers.
"We went to talk a lot of high school and college kids and ... not one said that they saw career in banking," Rust said during a recent roundtable discussion hosted by OTC Markets. "Banking is just not popular. ... It’s not that we’re thought of negatively. We’re just not thought of.”
Rust hired John Acchione, a former financial planner and equities trader who made a mid-career switch to become a high school math teacher in Pennsylvania, to create a comprehensive financial literacy course. Acchione, who had chaired his school's math department, joined Virginia National in April and has since drafted a 268-page curriculum for the program.
While he was able to inject some personal finance into his school's math curriculum, Acchione said that the overall presentation in his old school system was "kind of weak." So he was eager to translate Rust’s vision into a rigorous course of study.
“In the schools, there’s a struggle between what experts believe kids need and what we [teachers] see they need,” Acchione said. “There were a lot of things I wanted to change. Glenn had this program as an idea and I said, 'if anybody can do this, I can.’”
Rust and Acchione purposely decided to run their program — the Finance Career and Leadership Academy — independent of area school systems. Financial literacy students will attend classes twice a week in the computer lab at Virginia National’s headquarters.
The program works out to 40 to 50 hours of classroom time. Students will be tested frequently, and the grading scale — at Rust’s insistence — is tough. An 'A' requires a 94 or better; scores below 75 are failing. Every student who passes will receive a certificate from the bank and a letter of reference from Rust.
“We want class rankings and valedictorians,” Rust said. “We want to gain that back.”
High performers, perhaps the top three or four graduates, will be offered a chance to enter a 45-credit college-level banking program and, if they excel there too, a job at Virginia National. The college courses will be offered at a nearby community college or online through the Center for Financial Training.
With qualified older adults interested in switching careers, Virginia National will dispense with the financial literacy component and let them start with the college-level classes.
To make the program more attractive, Virginia National will pay 100% of tuition and fees, and provide a stipend to qualified and accepted students enrolled in the college coursework.
Even with those expenses, the program should cost half as much as hiring existing loan officers, Rust said. Virginia National estimates it would spend more than $760,000 over 16 months to hire three loan officers. Over roughly the same time, the company believes it could train five new ones for about $310,000.
While the financial literacy program is prepping to start, two college-level students began classes last week.
Taylor, who has specialized in banker recruiting for 35 years, said he was impressed with the concept.
“The idea of catching kids out of high school and paying for their training is a good one,” Taylor said. “I’m not aware of any other banks that are doing it.”
Rust is optimistic that he could eventually franchise the concept to other community banks. Still, ultimate success will come if the bank is able to train and hire some of the students.
“We want to hire the best,” Rust said.
