TD Bank, PNC Financial focus on succession planning in 2024

Banks refocus on succession planning and strategy in 2024

December 31, 2024 4:00 PM

Amid regulatory, economic and political uncertainty, many banks used 2024 as a time to restructure their leadership teams.

While banks were lasered in on handling liquidity and interest-rate risks last year after a flurry of failures put the industry on edge, many have re-focused on succession planning and strategy shifts this year, said Rob O'Halloran, a managing partner at recruiting firm BDS Yarmouth & Choate.

The last 12 months have seen a number of financial institutions make major changes to their executive teams after a relatively slow 2023, when executive compensation also declined at most banks. O'Halloran said regulators had been telling financial institutions that succession planning was a top priority, but the crisis in March 2023 put some of that strategic work on pause.

"I think [after the crisis] the regulators were maybe taking it easier on banks … and maybe not pushing them as much for strategic planning and succession planning-type improvements," O'Halloran said. "As this year has progressed … and the world hasn't ended, it seems like bank activity has picked up."

Additionally, some banks have had to shuffle their leadership amid legal woes, regulatory challenges, earnings struggles or strategy shifts.

Here are some of the biggest executive bank moves of 2024.

Flagstar Financial

Flagstar, formerly known as New York Community Bancorp, has seen C-suite musical chairs in 2024, after a tumultuous start to the year that led to its stock price falling some 80%. A $1 billion lifeline from a group of investors that included former Treasury Secretary Steven Mnuchin came with a fresh executive team, led by former Comptroller of the Currency Joseph Otting.

Since the spring, the $114 billion-asset bank has put in place more than a dozen new leaders, many of whom came from Otting's old stomping grounds at the Office of the Comptroller of the Currency, or U.S. Bancorp and OneWest Bank, where he previously held top positions.

In December, the bank surprised analysts with the announcement that Craig Gifford, who was tapped as chief financial officer eight months ago, would step down. Lee Smith, who joined legacy Flagstar in 2013 and now serves as president of mortgage at the bank, will assume the role.

TD Bank Group

Shortly before TD pleaded guilty to historic money-laundering-related crimes, CEO Bharat Masrani said he would pass the torch at the helm of the Canadian company to current COO Raymond Chun in April.

Chun was named chief operating officer in September and will take on the CEO title from Masrani, who's been in the top position for the last decade.

Masrani has taken "full responsibility" for the compliance failures at the company, which will cost more than $3 billion in penalties, plus investments in fixing its systems. Chun, who joined TD in 1992, most recently served on the Canadian side of business and remained relatively insulated from the American retail operations that landed the bank in hot water.

Ally Financial

Ally's CEO Michael Rhodes joined the company in April after a brief stint at Discover Financial Services, preceded by more than a decade as the head of Canadian banking at TD Bank Group.

The Detroit-based company tapped Rhodes after a six-month search following the departure of Jeffrey Brown, who had been at the helm since 2015.

Since Rhodes jumped in, Ally has shuffled its top executives, including chief risk officer, chief legal officer, chief audit officer, chief financial planning and investor relations officer and head of the deposits and investments units.

Rhodes recently said Ally "can do better," as the $193 billion-asset company faces earnings challenges due to consumers struggling to pay back their auto loans.

"I want to acknowledge the next few quarters will be choppy," Rhodes said on the company's third-quarter earnings call. "I remain confident in our franchise and our ability to deliver compelling returns."

First Foundation

The Dallas bank said in November that longtime CEO Scott Kavanaugh would retire and pass the reins to an industry veteran coming out of retirement for the job.

Thomas Shafer will take over the position at First Foundation as the bank overhauls its strategy after a $228 million capital infusion this summer. The $13.4 billion-asset bank has said it would shrink its commercial real estate exposure, rebalance its investments and build up core deposits in efforts to relieve the pressure on earnings and instill more confidence in the markets.

Shafer spent the last decade of his career seeing banks through acquisitions from the C-suite until 2022, when he left the business.

Kavanaugh has held leadership positions at First Foundation since he helped found the bank nearly 20 years ago but said in a prepared statement when his departure was announced that he thought Shafer would help the company "thrive."

PNC Financial Services Group

The Pittsburgh-based company said in February that Chairman and CEO Bill Demchak would pass on his president title to longtime PNC insider Michael Lyons.

Analysts said the move could signal that Demchak is setting Lyons up to succeed him in the top position at PNC. Demchak said in an interview at the time that he didn't have near-term retirement plans but added that, "we wouldn't have put Mike in the seat if we didn't have high hopes."

Since joining the bank as head of corporate and institutional banking in 2011, Lyons has helped lead PNC through its major acquisitions of RBC Bank in 2012 and BBVA USA in 2021. During his tenure, he's also driven the national expansion of the bank's corporate and treasury management businesses.

In the president role, Lyons oversees the $562 billion-asset company's primary operating lines of business and the regional presidents.

Simmons First National Corp.

Simmons First CEO Bob Fehlman said in November that he would retire at the start of 2025 to "focus on personal interests and family medical issues," and former CEO George Makris Jr. would return to the position.

Fehlman, 60, took the top role at the Pine Bluff, Arkansas-based bank in 2023 when Makris retired from leading day-to-day operations. Makris has been serving as executive chairman since then but will become chairman and CEO of the holding company and its subsidiary, Simmons Bank, on Jan. 1.

Makris picks the baton up again after his previous eight-year tenure grew the now $27.3 billion-asset bank's presence in regions like Texas and Tennessee through acquisitions.

With the CEO switch-out, Simmons First will also bring on Chris Van Steenberg as its new chief operating officer. Van Steenberg joins the bank after leading digital and product strategy at First Horizon Bank in Memphis.

U.S. Bancorp

U.S. Bancorp restructured its leadership organization across several lines of business and took steps that may signal to its succession plan in 2024.

In the spring, the company named Gunjan Kedia as president, a title previously held by Chairman and CEO Andy Cecere. Kedia continues to lead wealth, corporate, commercial and investment banking, but tacked on the bank's payments and consumer and business banking lines to her purview. The Minneapolis-based company's two most recent CEOs served as presidents before taking on the CEO title.

After her promotion, several leaders, including Shailesh Kotwal, vice chair of Payment Services and Tim Welsh, vice chair of Consumer and Business Banking, said they would leave the $686 billion-asset bank. U.S. Bank also said in the fall that CFO John Stern would begin reporting to Cecere, instead of the bank's chief administration officer.

The bank has also spent the year reorganizing its payments business. Kristy Carstensen, a previous American Banker Most Influential Women in Payments honoree, took over leading the global treasury management and prepaid cards businesses in the fall.

HSBC Holdings

HSBC said in December that Lisa McGeough would take over as CEO of U.S. operations and aim to expand the bank's corporate and institutional business stateside.

McGeough, an American, takes over from Michael Roberts, who will become the global head of corporate and institutional banking at the company. She previously served as co-head of global banking from London. The company said in a release that she would be "driving our next phase of growth as a super-connector between the U.S. and the rest of the world."

The London-based bank has been in cost-cutting mode recently, led by CEO Georges Elhedery, who took on the top role at HSBC earlier this year. Elhedery has restructured parts of the company, including combining its global banking and markets business with its commercial banking outside of the United Kingdom and Hong Kong.

HSBC sold its American retail operations in 2022, leaving the U.S. unit to focus on wealth management and corporate and institutional banking.