A merger of two banks can be a gift that keeps giving to other financial institutions.
Any time there is a market disruption, such as an acquisition, employees can become anxious about job security, making them more open to entertaining offers from other banks. Poaching talent is a common practice, but aspiring hirers are seeing more opportunity as consolidation accelerates.
Banks looking to hire executives and lenders must be ready to offer more than money, industry experts say. These hires also want job stability and career growth.
"Change creates a lot of anxiety and uncertainty," says Cory Gunderson, a managing director at Protiviti. "If you're at a bank being acquired, there are a lot of moments when no one knows who will be in the board room, who your boss will be tomorrow, how will the culture of the two organizations work. That anxiety starts to facilitate people looking and being open to ideas."
Banking is a "small community and bankers all know" each other, says David Powell, president of Vitex. "There is constant communication about what's going on."
Bankers are often aware of opportunities to steal talent. They are especially interested in chances to hire commercial lenders with strong pipelines. Those looking to poach employees because of market disruptions must have a plan before embarking on hiring campaign, experts say.
This means knowing how a lending team will fit in with the organization's overall strategic direction, Gunderson says.
The $3.8 billion-asset Eagle Bancorp (EGBN), which wants to grow in northern Virginia, hired three executives from Virginia Commerce after it was bought by United Bankshares (UBSI) in Charleston, W.Va. Eagle was not looking to undermine that deal, though the hires allowed the Bethesda, Md., company to bring on talent to help with its goal, says Chairman and Chief Executive Ronald Paul.
"We were extremely respectful of the merger process [for Virginia Commerce and United]," Paul says. "We are continuing to build our franchise and with our rapid growth we're always looking ... for quality people. It just happened that this worked out and that these individuals fit the bill."
Executives must be prepared to possibly pay a premium for highly successful executives or lenders because those employees may be recruited by multiple banks. More importantly, recruiters need to show potential hires the opportunities they will have at a new institution, Gunderson says.
Executives are increasingly looking to hire an entire team from a rival for targeted market expansion, says Alan Kaplan, CEO of executive search firm Kaplan & Associates. This is usually cheaper and more efficient than an acquisition.
"Lift outs aren't always easy to do," Kaplan says. "You have to feel good about the individuals."
The process usually begins by meeting a team leader and developing a strong sense that the employees would be a good fit, Kaplan says. The recruiting bank then needs to meet the individuals to make sure they fit culturally.
Banks hiring talent often neglect to validate that recruits have a proven track record of generating revenue. Instead, they tend to rely on a prospect's reputation, Powell says.
If a recruiting bank is entering a new market or expanding an existing business, it might be appealing to prospects to play a key part in that process. But they may also need reassurances that the bank is fully committed to the expansion, Kaplan says.
Park Sterling (PSTB) in Charlotte, N.C., built a presence in Virginia this year by hiring eight people, including wealth management, mortgage and commercial bankers, who worked at StellarOne Bank or Union First Market Bankshares (UBSH) in Richmond, Va. Union First recently bought StellarOne.
Some of the hires were displaced by the merger; others simply decided to make a change, says James Cherry, Park Sterling's CEO. These hires were highly sought after, he adds. The $1.9 billion-asset Park Sterling was able to snag the bankers because it could offer a "unique opportunity for them to broaden their capabilities beyond what they were already doing," Cherry says.
"Clearly there's a disruption in the market place that creates the opportunity for people to look around," Cherry says. "We're attuned to anything that goes on ... that would allow us to hire good talent. We are committed to loan growth and you need good bankers to do that."