It's the talk of Fort Worth: How did Compass Bank, less than a year after its purchase of the $1.8 billion-asset TexasBank, lose so many people?
The exodus from the subsidiary of Compass Bancshares, a Birmingham, Ala., regional banking company, includes the core of its lending team, according to sources in the market.
"It's a lot easier to count the folks who stayed than to count the folks who left," said Glenn Monroe, the former chief credit officer at TexasBank and now the president and chief executive officer of Meridian Bank Texas, which is set to open Feb. 20 in Fort Worth. "I bet there are only eight or nine lenders remaining from the original group."
Beyond Meridian, banks scooping up TexasBank managers include the $2.7 billion-asset Plains-Capital Bank in Lubbock, which hired 28 bankers last May, and the $437 million-asset Sovereign Bank in Dallas, which is hiring to expand its operations in Arlington.
Compass also lost Vernon Bryant, the TexasBank chief executive officer who became Compass' Fort Worth leader after the deal closed. Mr. Bryant has formed a bank holding company, First Texas, to buy banks, and it struck its first deal last week, for the $53 million-asset Community Bank of Texas in Grand Prairie.
Mr. Bryant said he had planned to stay at Compass for at least a year but decided to leave a few months after the April closing because so many of his employees had already gone.
"I just decided that, if they needed to build a new team, then they needed to build it around someone who was going to be there for a while," he said. "I figured it was time for me to get out of their way."
People, especially experienced lenders, are among a community bank's most valuable assets, and when the Compass-TexasBank deal was announced competitors began courting TexasBank employees with lucrative offers.
Compass did not use noncompete clauses, so the employees were free to move to the highest bidder.
Several sources cited another reason for the attrition: Lenders prefer locally made decisions, with less bureaucracy, paperwork, and layers of management.
Though it concedes that attrition was worse than expected, Compass said the $464-million acquisition added 22 well-placed branches in a hot market.
"While we might have lost a few more people than what we had originally planned in the merger, on the corporate banking side we are back up to full staff and have a good team in place with veterans from that market," said Edward Bilek, director of investor relations at the company. "Additionally, I would mention retail banking was not TexasBank's primary focus, and on that side we have added both people and products."
Mr. Bilek declined to say how many TexasBank employees had left. Some sources said the turnover has involved hundreds of employees.
The Fort Worth operation now is led by a former professional football kicker, Brian Happel, who moved to Compass from JPMorgan Chase & Co. after it bought Bank One in 2004.
Turnover frequently follows mergers but bankers and industry watchers in the Fort Worth market said this instance is remarkable for both the number and speed of the departures.
"It is certainly unusual to have this much turnover," said Christopher Marinac, a managing principal and research analyst who follows Compass for FIG Partners LLC in Atlanta. "It wasn't necessarily something that Compass did. They just bought a bank that was built to sell."
Dan Bass, the managing director of Carson Medlin Co. Investment Bankers in Houston, said the loss of people does not mean Compass made a bad deal. "The reason Compass did this deal was because of the retail," he said. "You can't say Compass is stupid. They got the branches and kept most of the deposits."
Analysts who follow Compass said they would be surprised, however, if it did not require noncompete clauses in future deals.
Announcing fourth-quarter earnings on Jan. 22, J. Paul Jones, the chairman, CEO, and president, said Compass was weighing changes to limit turnover.
"But I think that maybe the bigger lesson from that is that some banks are built to sell and the people who work there don't necessarily want to work for a large institution," Mr. Jones said. "I've heard some other CEOs make that same remark, and I think that that makes you doubly cautious about the type bank that you buy and the reasons for which you buy it."
Jeff Davis, a managing director at First Horizon National Corp.'s FTN Midwest Securities Corp. in Nashville, said the bigger the disparity in size between seller and buyer the more likely the seller's employees are to leave.
"Normally what will happen is, the key folks at the top that are scheduled to stay will be tied down with incentive to stay through employment contracts," Mr. Davis said. "Apparently at Compass, they didn't go far enough or the incentives weren't great enough."
