CEOs' Worlds Crumble as Mergers Thin Ranks

When David W. Campbell leaves his office at Ameribanc Savings Bank for the last time on Friday, he will join the growing ranks of preretirement- age chief executives merged out of a job.

"There's no place here for a 48-year-old thrift executive," said Mr. Campbell, whose $1.1 billion-asset thrift in the Virginia suburbs of Washington is being bought by First Union Corp. "I'll probably take some time this spring to let the mind recharge a bit. I have not yet determined the route for me individually."

If Mr. Campbell chooses to stay in the banking industry, he could be in for a rude awakening - and he won't be alone.

With merger mania sweeping the country, the total number of banks is shrinking much faster than is the supply of top executives. In the past 10 years, the number of banks fell by 27%, down to 10,595 today, and industry experts predict this trend will accelerate.

The crunch is being felt most acutely at community banks - the country is losing its smallest banks at a rate of eight a week. Once a virtual lifetime position, the community bank's chief executive today is being sacrificed in the interest of consolidation.

A recent survey conducted by KPMG Peat Marwick, for example, showed that bank and thrift CEOs believe that by the year 2000 the total number of banks and thrifts - about 13,000 - will fall to between 6,000 and 9,000.

Yet three out of four CEOs interviewed say they believe their institutions will be among the survivors.

Bankers should be optimistic, observers said, but they also need to be realistic: There are more CEOs than there are jobs, and the surplus is growing.

"The street is packed with professional bankers and CEOs who are very qualified," said Thad Woodard, president of the Community Bankers Association of North Carolina, whose membership has been nearly halved in the last 12 years by consolidation. "But they simply have to stand in line, and that line is a long one."

Many executives negotiating the sale of their bank are near retirement age and can secure favorable retirement packages. But what about those in their late 40s or early 50s, considered to be in the prime of their working lives?

Consultants and executive headhunters interviewed said these executives have to change with the times or look for another profession.

"At a conference with a group of CEOs I asked them to write their name with their opposite hand," said Robert J. Gallivan, who heads a consulting firm called Bank Compensation Strategies Group in Rancho Santa Fe, Calif. "It took them two minutes and 12 seconds. They looked up, and I told them, 'That's the change you're facing in your field in the '90s.' "

Mr. Gallivan said many of today's CEOs acquired their experience during a time that has very little to do with the banking environment of today and of the future. Those who can combine skills in marketing, technology, interpersonal relationships, and perhaps most importantly, operate within some sort of niche, will be the ones who prosper, Mr. Gallivan said.

But even those who follow this advice are finding an intensely competitive job market.

"The failures that happened in the '80s shook out a lot of the poor managers," said Michael D. Edwards, former banking supervisor in the state of Washington and now president of Prairie Security Bank in Yelm. "But the CEOs of the small banks today are quite intelligent and knowledgeable. This a pretty lean and mean group that are running these banks."

The talent pool of today is larger and vastly more qualified than the one of just several years ago, observers said.

"Five years ago we were dealing with the ones who had run their banks into the ground, but not today," said Parker L. Harrell Jr., managing director of financial services of Korn/Ferry International, an executive search firm. "If we're conducting a search for a bank, we normally feel very good with three crackerjack candidates. But we just helped a bank in Maryland that had eight or nine."

That bank is $340 million-asset First Federal Savings Bank of Western Maryland in Cumberland, and the job-winner was Patrick J. Coyne, 52, who found himself out of a job last summer when his Pennsylvania bank was acquired.

Despite the tight job market, Mr. Coyne said it's in everyone's interest for the CEO of the acquired institution to move on.

"My philosophy is it's a lot easier for the acquiree to mesh cultures if the CEO of the disappearing institution does not stay on," Mr. Coyne said. "I chose right up front to move on, without giving them the opportunity to make an offer. If you don't do that you can get into problems, such as having cross loyalties among the employees."

Some don't get the choice.

Fifty-two-year-old John N. McGrath, for example, to his surprise was fired two months ago on the very day his bank, Sacramento First National in California, closed a deal to be acquired. He had been led to believe he had a future with the bank, which he had helped start 10 years ago.

"When they say one thing up front, and you think you're moving toward a common goal, and then they tell you this, that's sort of tough," Mr. McGrath said.

Some chief executives stay on in lower positions in the newly merged bank. A national association executive said he knows of one former community bank CEO who became a loan officer after a merger. Others shift into related areas, such as real estate, investment services, or, more commonly, bank consulting - a catchword that seems to cover just about everything.

Some determined CEOs start their own banks from scratch, a trend that is picking up again after a lull in the early-90s.

R. Steve Aaron, 48, of Hickory, N.C., began organizing a bank start-up two days after he left his job as a senior vice president at Southern National Corp. of Lumberton. Mr. Aaron, formerly a CEO of a thrift acquired by Southern National two years ago, saw his responsibilities shrinking, even more so with Southern National now set to merge with BB&T Corp.

"I went from a place where I was making a lot of decisions on a daily basis to one where I was not," he said.

Mr. Aaron hopes to open his new bank, Catawba Valley Bank, with $11 million of capital next fall.

Generally risk averse, former bankers who leave the industry tend to wind up in stable institutions: schools - as teachers and administrators - churches, hospitals, and other nonprofits, experts said. One became the chief budget officer for the state of North Carolina.

"It's few and far between where an ex-CEO becomes the next inventor of a Microsoft," said Mr. Harrell, the headhunter.

Some go further afield. After losing his job four years ago as president of a $1.1 billion-asset bank in Nashua, N.H., following an acquisition by Fleet Financial Group, Bruce N. Johnstone spent a 18 months looking for other banking opportunities.

He now owns and operates a wholesale plumbing, heating, and electrical supplies company in Lebanon, N.H.

"When it became reasonably evident that good positions in banking were few and far between, I started looking for something else to do," he said.

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