In a twist, bankers poaching credit union execs to fill voids

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Some community banks are recruiting talent from an unexpected place — credit unions.

Newburyport Five Cents Savings Bank in Massachusetts hired Lloyd Hamm Jr. away from Homefield Credit Union to become its president, while Boiling Springs Savings Bank in Rutherford, N.J., poached Elizabeth Miller, an executive at Affinity Federal Credit Union, to become its new retail chief.

The hiring goes beyond top executives.

The $14 billion-asset City National Bank in Miami last month hired Jose Tirador, a branch manager at Bright Star Credit Union, as a business market leader.

Such moves show how aggressive community banks must be to fill key roles at a time when national unemployment is low and the number of jobs at smaller institutions is declining. It also highlights how the distinction between banks and credit unions continues to blur.

For Miller, who is overseeing the retail growth strategy at the $1.7 billion-asset Boiling Springs, there isn't much difference between working at a small community bank and a credit union, given that both types of institutions prioritize customers and community involvement.

“If you were going from a credit union to a much larger bank, you might see some more differences,” Miller said.

Hamm, who was president and CEO of Homefield in Grafton, Mass., said the $879 million-asset Newburyport Savings viewed his time at a credit union as a strength.

“I think they wanted to bring in a different skill set,” Hamm said. “Part of what made me attracted to them was a strong background in technology … and a feeling that a credit union wasn’t necessarily a bad thing.”

While it is more common for credit unions to hire bankers, industry observers said they expect more banks to recruit credit union employees.

“With unemployment as low as it is today, the fight for talent is significant and organizations need to be smart and more creative about where they are attracting new talent,” said Susan Pardus, a partner with KL Search Group.

At the same time, there are fewer differences between credit unions and community banks.

Larger credit unions, in particular, have similar branch structures and offer comparable products and services. Many credit unions have boosted commercial lending in recent years by hiring bankers, Pardus said.

“The distinction between credit unions and banks is just waning — it’s a depository that provides multiple services and products,” said Arthur Warren, an executive board and compensation adviser. “You have to go where the talent is. If you can’t hire out of a pure bank, cooperative or mutual, then you go where the talent is to solve your business problem.”

Some key distinctions remain.

Banks and credit unions generally have different corporate governance structures; credit unions rarely pay board members. At the same time, banks tend to rely more on fee-income.

There are some barriers to entry, said Mike Juratovac, a senior client partner with Korn Ferry in Los Angeles. He added that he hasn't seen many instances of banks hiring credit union executives.

“Most banks probably don’t look at credit union leadership as necessarily aligned,” Juratovac said. “I think credit union executives have been challenged to make that transition, while the other way around is more common.”

There is also longstanding tension between the banking and credit union industries due to credit unions’ tax-exempt status.

“I tell people on both sides that we really need to stop fighting over tax situations,” Hamm said. “Our real challenge comes from national companies with low costs of funds — that’s where our competition comes from — not from each other.”

A credit union executive with banking experience could be an especially attractive candidate, said Robert Voth, head of the commercial and consumer financial services practice at the executive search firm Russell Reynolds Associates.

Credit union executives tend to place a high priority on customer service, recruiters said. Those employees face minimal challenges transitioning to retail, technology and finance roles at banks, they said.

“Bankers are more open to credit union professionals today than they were five years ago,” Pardus said.

Community banks have an opportunity to improve customer loyalty, an area of strength for credit unions, said Hamm, who spent 26 years at Eastern Bank in Boston before joining Homefield.

“I believe we would benefit as community banks if we could kindle that same connection to the community,” Hamm said. “Large institutions can outprice and outlocation us, but they can’t outpeople us. I think credit unions have an advantage in building a strong bond with their members.”

Miller, who once worked at Peapack-Gladstone Bank in Bedminster, N.J., and Pinnacle Federal Credit Union, said she appreciates how more community banks are making quicker decisions. Small banks can have a larger impact on their communities than credit unions with restrictive fields of membership, she added.

“Working in the banking environment, I feel a little bit more empowered to make decisions,” Miller said. “At credit unions, it’s a little bit harder to reach out and grow because of limitations on membership.”

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