More banks are poaching talent from competitors in the wake of mergers and acquisitions, hoping to attract top workers at a time when banks are flush with deposits and eager to put the excess money to work.
“There’s definitely disruption that we see because of M&A,” Matthew Reddin, Simmons First National’s chief banking officer, said in an interview. “Our hiring pipelines are strong, but it’s definitely a very competitive market. Everybody’s trying to put money into earning assets.”
Simmons First, of Pine Bluff, Arkansas, recently hired an 11-member team to develop its new equipment finance operation, which focuses largely on business aviation, over-the-road trucking, franchise finance and marine financing. The team also supports customers in the $23.2 billion-asset bank’s broader middle market and large corporate finance business.
“And we continue to recruit aggressively,” Reddin said.
Simmons is among a growing number of midsized and community banks that are capitalizing on market upheaval in the wake of M&A by luring away lending teams or buying branches from competitors.
Much of the new Simmons equipment finance team had worked at
After mergers the culture of some companies changes, and talented people decide it’s time to try something new.
When banks are sold, prominent bankers on both sides of the deal often reevaluate their career options and consider offers from competitors. This activity is accelerating along with the increasing pace of M&A this year, Reddin said. Through Oct. 15, there were 166 bank acquisitions announced this year — well exceeding the 111 deals in all of 2020.
“No question, really good teams of revenue generators are in high demand,” said Charles Wendel, president of Financial Institutions Consulting. “But it’s absolutely true that after mergers the culture of some companies changes, and talented people decide it’s time to try something new. So we are going to see more of this because of both the pace of M&A and the very real push to hire new in the aftermath of deals.”
NBT Bancorp in Norwich, New York, is actively recruiting in the wake of M&A deals across the $12 billion-asset company’s footprint, which spans its home state and New England.
“We have hired both customer-facing bankers and team members focused on operations and support,” John Watt Jr., NBT's president and CEO, said on the company’s October earnings call. “We have also started to convert customers and believe we are at the front end of a multiyear growth strategy.”
The bank is “hiring folks who perceive that they may not be part of a long-term combined strategy with one of those large acquisitions that's going on," he said. "There is a pipeline of folks that we'll continue to have dialogue with … and we'll be at this for months and years as we build on the opportunity that presents itself over time. As you know, in those large transactions, things happen in stages. And at each stage, the potential to meet a new partner or a new team member presents itself.”
Two of the largest deals pending this year came in NBT’s eastern markets: Buffalo, New York-based M&T Bank’s $7.6 billion
However, deal activity is robust across the country, creating widespread poaching opportunities.
CapStar Financial Holdings in Nashville, Tennessee, for example, announced in October it had hired a nine-member team of bankers to build up the company’s market share in Chattanooga, Tennessee.
The $3.1 billion-asset CapStar said the majority of that team joined from Pinnacle Financial Partners, which is also in Nashville. Pinnacle had closed a series of acquisitions of banks and other companies between 2015, when it merged with CapitalMark in Chattanooga, and 2019. Pinnacle has also hired teams away from larger competitors in recent years, said Joe Bass, a spokesman.
“We feel that this will have a meaningful impact on our financials over the next five years,” Timothy Schools, CapStar's president and CEO, said on the bank’s earnings call. “Of course, it comes with startup costs, but the level of work and risk compared to an acquisition is incomparable.”
CapStar is also hiring in the wake of more recent deals, he said.
"The response is very positive,” Schools said. “Highly skilled employees are looking for the next bank as theirs sell … CapStar's capabilities, size, responsiveness and flexibility are proving attractive. In the case of Chattanooga, they actually reached out to us earlier this summer as it's becoming a more frequent occurrence.”
In other cases, banks are able to pick up branches — and staff — from bank buyers as they sell acquired locations that are close to branches they already operate.
Highly skilled employees are looking for the next bank as theirs sell.
HarborOne Bancorp in Brockton, Massachusetts, said in September it agreed to acquire four former East Boston Savings Bank branches and hire the staff at each location. The transaction is expected to occur upon closure of Peabody, Massachusetts-based
The new locations will accelerate the HarborOne’s expansion strategy within Greater Boston, which began with the opening of a Boston loan production office in 2018 and several branches over the following two years. To date, the bank said, the Boston expansion has generated more than $370 million in loans.
The branch deal to close this year “will expand our Greater Boston regional presence at a time of substantial market disruption caused by the sale of several community banks,” said HarborOne Bank President and Chief Operating Officer Joe Casey.
Reddin of Simmons First, meanwhile, expects the hiring trend to continue into 2022. He said banks are already getting more creative with hiring, as well as looking outside of the industry to cultivate fresh talent and complement traditional recruiting efforts.
Simmons, for example, recently hired a former golf instructor to become a business development officer. Reddin said it will take time for the golfer to learn the banking industry, but he brought to the company years of “high-touch, customer service” experience via teaching that is already serving the bank well.
“I do think you’ll see more of that” across the industry, Reddin said, because of heated competition for traditional bankers that has begun to drive up compensation costs.
“We all want that expertise,” he said. But “there are some banks now that are just paying a lot of money. We’re starting to see some crazy salaries out there. So you need to be creative.”
