Turnover in the banking industry: We know what’s happened. But where are we headed?
REGION – Three to five years ago, the banking industry was booming. Consolidation activity from acquisitions was big business.
"Banks, three to four years ago, were profitable," says Mark Angott. "Mergers were for positive purposes." Angott is the owner of Angott Search Group based in Rochester, Mich. His firm has provided search services nationally for middle-to-senior management positions in the banking industry since 1982.
How does merger/acquisition activity like this affect employee turnover?
"Consolidations create a fairly high level of turnover," says John Paul, president and CEO of The Bank of Northern Michigan in Traverse City. Some employees of the acquired bank usually end up seeking employment elsewhere due to elimination of certain positions. But, it's not all bad news.
"The opportunities created by growth [through consolidations] caused some of that turnover as well," he adds. During that last boom, there was a significant demand for commercial bankers, says Paul.
But all that changed when the subprime mortgage crisis hit and the industry went into a tailspin 20 months ago. The rate of turnover dropped noticeably as acquisition activity dried up. Also, the challenges of the economy and hits to loan portfolios minimized opportunities for adding staff, explains Paul.
During that time, lending positions slowed to a crawl and there has been minimal uptick, according to Angott. He adds that bank acquisitions in today's market are because the institutions can't survive on their own and troubled banks are either facing closure or a FDIC-forced sale.
Late last month, FDIC regulators shut down seven banks in Illinois, including four in Chicago. This latest wave puts the number of U.S. bank failures this year at 57.
"The industry is under such great pressure," adds Angott. "There are a number of banks on the bubble in Michigan."
While there are pockets of lending activity today, it still isn't enough to translate into much hiring, says Angott.
He is, however, seeing some banks hiring special assets officers and a little activity in the mortgage and retail banking areas.
From Paul's standpoint, while the higher rate of turnover was even more pronounced in large markets, the northern Michigan market is not immune and the impact turnover has on clients is very real and contributes to a higher level of anxiety among bank customers.
"We do hear from our new clients, that turnover is a factor," says Paul.
Looking ahead? Angott predicts seeing more stability among community banks. As far as regional and national banks, he believes there could still be some changes in ownership. The most recent sign of that locally was PNC's purchase of National City. BN