January 6, 2009 / 4:53 PM / in 9 years

Big fish move to smaller banking ponds

<p>Alan Kaplan, president and CEO of Kaplan &amp; Associates Inc., a Philadelphia-based executive search firm specializing in work for regional banks is shown in this undated handout photo. REUTERS/Handout</p>

-- Deborah Cohen covers small business for Reuters.com. She can be reached at smallbusinessbigissues@yahoo.com --

By Deborah L. Cohen

The global credit crisis has ravaged large financial institutions such as Citicorp and Wachovia and put thousands of professionals on the street. Smaller banks are fairing relatively well, however, and that’s putting them in a position to go after a caliber of talent they might not have been able to attract in prior years.

“What we’re seeing in the area of recruiting is that it’s a tremendous time for them, better than any in their history,” says David Lewis, president of Operations Inc., a Stamford, Connecticut-based human resources consulting firm that specializes in small to mid-sized companies. “You really have a tremendous pool to pick from,” he says.

Lewis says several of his firm’s Northeast regional banking clients have been hiring. He has observed that candidates with pedigrees and substantial background from big national banks are sometimes willing to take cuts of as much as 40 percent in total compensation in order to secure a position at a regional or community bank. Most of the hiring is in sales-related positions. Few banks are hiring back office positions.

New York-based Sterling National Bank is among those that have been busy recruiting staff in recent months, scooping up top talent from one of the biggest pools of qualified labor in financial services history.

“By and large that’s where our personnel comes from,” says Sterling National President John Millman. “Indeed, we have found real opportunities.”

In an effort to expand its middle-market lending services, Sterling in October hired a team of top officers from Wachovia, the former commercial banking stalwart that was bought out by Wells Fargo in late December. Publicly traded Sterling has also tapped professionals from North Fork Bancorporation - now a division of Capital One - and from Commerce Bank.

From October 2008 through the end of the year, deposits at community and regional banks rose 6 percent, compared to the year-earlier period, according to the American Bankers Association, a national trade group, citing data from a weekly Federal Reserve survey. Deposits at the nation’s largest lending institutions were up just half a percent during the same time period, the association says.

“That is pretty significant,” says Doug Johnson, the ABA’s vice president of risk management policy. He notes that community banks, which largely steered clear of the risky mortgage-based financial derivative products that hurt bigger banks, are benefiting from a flight to safety by commercial and retail customers who see them as a safe harbor amid economic uncertainty and massive stock market losses.

CULTURAL CAVEATS

Although the talent may be out there in force now, comments from recruiters suggest there is also some reluctance to tap that pool. There is little data available to quantify recent hiring by regional and community banks but recruiters note that while there is interest in drawing from the higher degree of talent flooding the market, regional banks aren’t diving headlong into expansion mode when the economic outlook remains uncertain.

If the banking industry in general can be characterized as conservative, regional and community banks - often privately held and steadfast in their ways - are among the industry’s slowest to embrace reform or take advantage of favorable trends.

“Whether or not they’re using that growth to hire in relationship to (it) is another question,” says the ABA’s Johnson. “Community bankers are a conservative lot.”

Culture may be a hidden hurdle that is getting in the way. Smaller banks have finite resources, less sophisticated systems and technologies and sometimes require willingness from staff to roll up their sleeves and dig into responsibilities that fall outside the parameters of their official roles.

“The environment is totally different,” says Genevieve Ward, a senior consultant for Tampa, Florida-based Omnia Group, an HR assessment firm that helps banking clients screen pools of candidates they have identified for potential hire. “You’re going from a large corporation to a small business, so to speak. So you’ve got a tremendous amount of cultural difference.”

Alan Kaplan, president and CEO of Kaplan & Associates Inc., a Philadelphia-based executive search firm specializing in work for regional banks, says cultural fit is a leading concern for his clients when examining potential top-level hires with a background from larger banks. While they may look good on paper, these executives may not be cut out for a close-knit environment.

“The operative word in community banks is community,” he says. “They have to fit the culture; they have to click with the board. They have to have DNA that is wired for community.”

Even so, Kaplan says well-capitalized community banks should strike while the iron is hot.

“I don’t think enough banks are yet thinking strategically about those kinds of opportunities for upgrading talent,” he says.

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