When First Choice Bank in Cerritos was looking for a new chief executive, the search quickly turned up an embarrassment of riches.
Chairman Peter Hui had his pick of nearly a dozen candidates before settling on a former chief executive from one of the handful of local banks that have been acquired in the past few years. All those bank deals have led to a glut of top executives looking for work.
“We interviewed more than 10 candidates and all of them had resumes a mile long,” Hui said.
It’s simple arithmetic: There are 15 fewer banks headquartered in Los Angeles County today than there were just four years ago, meaning 15 fewer local chief executive positions.
That’s created a buyers’ market for banks on the lookout for new leadership. Within the past year, First Choice, Community Bank in Pasadena, Hanmi Financial Corp. in Koreatown and US Metro Bank in Garden Grove have all hired chief executives who came from recently acquired institutions.
Some replaced executives who left or retired, while others appear to have been hired to move their respective banks in new directions or to turn things around.
Other banks have been in the game, too, naming executives from acquired banks to their corporate boards.
That gives banks access to those executives’ know-how and experience, and also gives them a backup plan in case a current executive should leave, said Douglas McEachern, chairman of Community Bank.
“You have an opportunity not only for people to get a CEO, but to make sure they have a second in command,” McEachern said. “There’s an awful lot of opportunity to build your bench right now.”
On the flip side, a buyers’ market means tough times for sellers. While several former bank executives have found new gigs, others are still looking as they face a competitive job market.
With fewer C-suite jobs available and no new banks starting up, many former CEOs are sending resumes to headhunters and looking for gigs with banks outside of Southern California. Others are trying to go into bank consulting, said Manny Arce, recruitment director in the downtown L.A. office of Chicago financial consultancy Accretive Solutions.
“There are a lot of C-level executives pounding the pavement in the Los Angeles market,” he said. “The market is not that great for people at that level.”
New choice
When one bank buys another, the acquiring bank’s first priority is to keep the executives who bring in business – mainly commercial loan officers and relationship managers, said Ken Siegman, a director in the downtown Los Angeles office of Chicago financial consultancy West Monroe Partners.
Sometimes that list includes C-level executives, who typically have relationships with big clients, and banks will usually ask the chief executive of an acquired bank to stay on for a year or more after the deal closes.
But banks ultimately don’t need two CEOs, and top executives would often rather move on to lead a small, growing bank than work for someone else at a bigger one, Siegman said.
“There are men and women who enjoy building more than maintaining,” he said. “Banks will see if they can create a situation where the old CEO stays in the acquiring bank, but often they want to go back out on their own.”
That was the case for Robert Franko, now chief executive of First Choice. Franko was chief executive of Manhattan Beach lender Beach Business Bank until it was acquired by Irvine’s Banc of California.
He stayed with Banc of California for a bit more than a year before leaving for First Choice. He left Banc of California on Nov. 8 and started at First Choice on Nov. 12.
In hiring Franko, First Choice is signaling it wants to expand beyond its roots as an ethnic bank serving mostly Indian, Chinese and Korean emigrant business owners. The bank’s former chief executive, Neena Bansil, had a background in ethnic banking, having previously led downtown L.A.’s State Bank of India (California).
Bansil could not be reached for comment, and Hui said he could not discuss particular reasons for replacing Bansil. But he said Franko should help the bank expand and continue to grow.
“We’re expanding more into mainstream banking,” he said. “And we’re exploring future growth – maybe going public or doing some M&A. We wanted someone who’s been there, done that.”
Hanmi, too, brought in a new chief executive from outside of ethnic banking. C.G. Kum, Hanmi’s chief executive, was previously with First California Financial Group, a Westlake Village bank holding company acquired last year by Century City’s PacWest Bancorp.
From the start, Kum said he wanted to help shift Hanmi away from commercial real estate lending, a core business of Koreatown’s banks, and work to expand commercial and industrial lending, a business line that was bigger at First California.
Other executive moves seem less about new strategies and more about finding executives for sudden or hard-to-fill vacancies.
Struggling Garden Grove lender US Metro Bank brought back Dong Il Kim as its chief executive after his previous bank, Koreatown lender Saehan Bank, was acquired by rival Wilshire Bancorp.
US Metro had gone through a handful of chief executives over the past few years, and people familiar with the bank said the institution was having a hard time finding an executive who could get the approval of bank regulators. Kim was a founder of US Metro before working for Saehan.
Adding diversity
In January, Pasadena’s Community Bank hired David Misch as its chief executive, just a few months after appointing him to the bank’s board. The bank didn’t appoint Misch with the intention of making him CEO, but when top executive David Malone left the bank shortly after Misch’s board appointment, Misch was an obvious choice, as he had led Century City’s Private Bank of California before it was acquired by Banc of California last year.
Now Malone has been picked up, too. He was appointed last month to the board of BBCN Bancorp Inc.
Kevin Kim, BBCN’s chief executive, said Malone adds diversity to the bank’s board. Like Kum at Hanmi and Franko at First Choice, Malone brings community banking experience to an ethnic bank. That’s experience BBCN needs.
“We’ve placed a lot of emphasis on diversity of experience and expertise on our board,” Kim said. “He has a different background. He’ll be a new addition in terms of his experience and skill sets.”
The market for executive talent will likely stay deep for some time as bank consolidation continues. Just last week, Encino’s CU Bancorp announced plans to buy downtown L.A. lender 1st Enterprise Bank.
As that and other deals close, and as executives now temporarily tied to acquiring banks go back on the market, banks will continue to have an easy time finding talent, said Community Bank’s McEachern.
“There seem to be a lot of people in the market, and not just in Southern California,” he said. “And the talent pool is going to get deeper before it gets thinner.”
