By Ken McCarthy
Logic might dictate that consolidation in the banking industry would translate to a glut of executives available in the marketplace, but those involved in the business tell a different story.
"With acquisitions, I think people are misguided that there's all this ample supply of people," said Stacy Stevens, president and CEO of Park Avenue Group, an executive recruitment firm that focuses on the banking industry.
In Florida — where Stevens is based — the number of banks headquartered in the state fell from 255 10 years ago to 217 in 2012 and 168 in the second quarter of 2015, according to SNL data. Such figures lead many to believe an abundance of executive talent is available to companies in need. Not so, Stevens said. Even though there may be more ex-bankers looking for work, those who are available might not be the best and the brightest. "It's not necessarily a reflection of the talent available," she said. "That's a very big distinction."
She told SNL that when top candidates do hit the market they are often able to choose from a handful of offers. For example, Stevens talked to a bank president this week whose institution is being acquired. The buyer is doing everything that it can to keep him, but the president is unsure if he wants to stay or play the field.
Peter Wilder, an attorney with Godfrey & Kahn, told SNL the succession planning "puzzle" continues, and every M&A deal is different with respect to employee matters. Sometimes an acquirer goes out of market to find a target, and in those circumstances often there are very few layoffs because the seller essentially continues to operate independently in the new market, he said. That type of deal is less about cost saves and more about market expansion, and retaining certain employees is often key to the deal. "So much so, in fact, that often the acquirer gives a small group of the target's most critical employees employment agreements to ensure they stick around," he said. "So at least some of the consolidation we are seeing does not tend to produce a lot of new talent into the recruiting stream."
Alternatively, other deals are more about cost saves and/or bolstering market share in a bank's existing market, Wilder said. Those deals tend to lead to more layoffs and, therefore, more talent being made available for other banks to recruit. "That said, we've been involved in some in-market deals — especially in small communities — where the acquirer does not want to lay anyone off due to fear that people in the community may develop negative opinions about the acquiring bank. So these acquirers often keep all employees and simply don't replace them when they retire or leave employment," he said.
Acquirers, as part of due diligence, are often interviewing the seller's executives, looking for top performers and making an effort to retain the best after the deal is closed, Stevens said. The problem is that people like to pick their own career path. Oftentimes competitors will swoop in at the time of a deal and make an offer to those that might be seeking a change, she said.
The operational and support functions are among the areas where Stevens said there is the greatest opportunity for banks to find displaced bankers today. That is due mainly to duplication of positions brought about by M&A. But areas including leadership and production are still lacking qualified talent, she said.