Good trust officers are in demand but hard to find, according to a survey of community banking executives.
With the first wave of baby boomers turning 60 this year, many community banks are looking to add trust officers to help this generation with its retirement planning. But bankers say that demand is outpacing supply, and that trust officers have suddenly become the most difficult positions to fill.
In the American Bankers Association's 2006 Community Bank Competitiveness Survey, released Monday, nearly 94% of the 533 community bankers surveyed said it was either hard or very hard to find qualified trust officers in their markets. In the same survey a year ago, trust officers were the 10th-most difficult position to fill.
Steve Cocheo, the executive editor of the ABA Banking Journal, which conducted the survey in the fall along with the ABA's Community Bankers Council, said that demand for trust officers is high, in part, because many baby boomers have found they are not as financially prepared as they would like to be. At the same time, they are looking to their banks for help in sorting through the dizzying number of investment options, he said.
Baby boomers are "an attractive market, but in order to serve them, you are going to have to bring in the expertise of someone who knows trusts and investments," Mr. Cocheo said.
"There are more choices than ever as to what to do with the money, so you need folks who know what they are talking about," he said.
Business lenders, too, are in high demand but short supply. According to the survey, business lender was the second-most difficult position to fill; nearly 92% of the bankers surveyed reported that it was either hard or very hard to find a qualified candidate for the position.
Bankers surveyed last year said business lender was the third-most difficult position to fill.
Mr. Cocheo said that the consumer lending market has grown increasingly competitive, and that many banks are devoting more of their attention to higher-margin business lending.
But business lending requires a "Swiss army knife of a lender" - someone who can be a salesman, a credit analyst, and an expert on the borrower's markets, Mr. Cocheo said.
Bankers are not only trying to attract good employees, but also are trying to keep them. According to the survey, 70% said that they increased salary scales to retain employees, and 52% said they increased incentive opportunities.
With many banks still struggling to keep pace with their growing regulatory obligations, bankers are still finding it difficult to hire quality compliance officers.
In last year's survey, bankers said that compliance officer was the hardest position to fill. This year it ranked as the third-most difficult, with just over 91% of the bankers surveyed reported that it was either hard or very hard to find qualified candidates in their markets.
Bankers often cite the Sarbanes-Oxley Act as particularly burdensome, and the responsibilities for complying with the 2002 law fall largely on the chief financial officer. (In the survey, the law was one the three regulatory issues - along with Bank Secrecy Act compliance and privacy/data security - that give bank chief executives the most grief.)
Compliance issues could partly explain why the survey found the position of CFO - which had not even been included in past surveys - was the fourth-most difficult to fill. Ninety-one percent of the bankers surveyed said that it is either hard or very hard to find a qualified CFO.
The key provisions of Sarbanes-Oxley require publicly traded companies to undergo both internal and external audits, and top executives must sign off on the audits' accuracy. Mr. Cocheo said many accounting firms now tailor their services to meet Sarbanes-Oxley requirements and have put pressure on private community banks to establish controls that more closely resemble those of publicly traded companies. That pressure, in turn, has put added pressure on CFOs.
Also, more community banks are using brokered deposits and issuing trust-preferred securities to raise capital, he said. "The funding mix has grown more complex, and that demands more expertise."
Among the survey's other findings:
- Only 9% of bankers said they expect loan quality to get worse in 2006, while 70% said they expect it will be about the same as last year.
- Fifty-three percent said they expect the funding climate to be more challenging a year from now.
- Sixty percent said they consider their markets to be overbranched, though more than 75% of the bankers surveyed said that branch expansion would be their primary means of growth.
- Nine percent of the bankers said they have started offering health savings accounts in the last two years. Mr. Cocheo said that it would take an additional two years of data to determine if the use of HSAs is becoming more popular.
"Thus far it's not a barn burner," he said.
