March 2023 Market Update

March 2023 Market Update

The words caution, recession, and uncertainty are on everyone’s mind across the banking industry and beyond as we continue to struggle with poor economic indicators across the Globe. The ability or desire to change long standing economic definitions is beyond careless and in some cases could be viewed as a Hollywood block-buster movie production. It is FICTION.

The words shared this week from Powell paint a dark and ominous near term and long-term future. A few short years ago, if anyone would have predicted a near economic collapse, double digit unemployment or double-digit interest rates that would have been laughed at.

We continue to invest in talent, and technology to expand our deliverables from the historic perception of the search firm to a cutting-edge people & tech first philosophy. This translates into a data enrichment plan that creates Operational Efficiency only dreamed of by other search firms evidenced by our nearly 70% open rate on email communication among other things. We finished our move to our expanded HQ location in Wilmington, NC, which allows us room to further expand and grow to become the leading Bank Talent Management firm in America.

On to the good stuff!

THE COVID did not stop us, but the damage was deep and painful for many. A message that should continue to live beyond COVID is to take good care of your employees all the time. In this market recap we will review some of the changes as we head toward the end of Q1, and some suggestions on how you can weather the storm as a candidate, hiring manager, or executive leader.

There are some wildcards that could play havoc as we look to the end of Q1. Some things to keep our eye on as we surge toward the Q2: special assets, credit quality, loan production, talent demand, counteroffers, and the rising inflation risk we see exploding across nearly all sectors and lingering supply chain issues.

Most companies and many of our clients have managed to get back to a face-to-face environment with little impact to employee retention. There will always be a few in the crowd that demand to work from home, those opportunities will continue in some industries but to continue meaningful employee development and training programs we must do a better job of articulating the value to being seen and heard. Remote work, and education needs to be addressed and incorporated in your policy to promote flexibility.

A few updates ago we identified the cracks in the housing market and now they are coming true with a reduction in housing starts complicated by labor, materials, and price over-runs. The long-term mortgage professionals will find a way to stay in the business and be successful. The short term, quick hitters already left the business when they were forced to develop real business vs relying on call center leads.

The market slowdown is creating new opportunity much like new growth in a forest after a fire. The market slowdown is like a controlled burn to encourage new growth, although we do not have Economic Firefighters ready to stop the market collapse if it lingers deeper into 2023. This slowdown has generated a resurgence in SBA Lending, and expansion into SBA if not already a key product.

During early Q1 we experienced a threefold increase in commercial and SBA production positions with some clients opting to hire multiple lenders at the same time to streamline onboarding and increasing the likelihood of success. We expect this trend to continue as the demands for top talent heats up. We are involved in more SBA searches across lending and ops than any other time in our history.

The elephant in the room remains to be counteroffers, and the non-counteroffer, counteroffer. What is this, this is happening more and more. A passive candidate does not remain a passive candidate for very long. When a passive candidate understands there is a high degree of interest, the mindset shifts to active, meaning that there is a much greater chance for testing the waters if they see an opportunity to leverage this newfound interest. This happens very casually or with a determined interest to find if there are other suitors.  Whether you are working with a firm, or recruiting people via your own Talent team, everyone in the interview process should be talking to every candidate about the counteroffer and resignation long before any talk of an offer.

Our advice to candidate’s is DO NOT TAKE A COUNTEROFFER, ever. There is good reason you went on that interview and met with 4-6 people, submitted to a background check and perhaps a drug screen. This counteroffer dynamic will have a negative impact on your market value and your reputation if you cry wolf one too many times.

The demand for talent is expected to outpace candidate supply for the balance of the year. This is going to impact banks in all asset sizes and could spell trouble for those under $1 billion in assets with an outdated comp plan.  Top candidates in any market do not care about salary compression issues with your current team. If you have not completed a comprehensive salary review, this may be the time to get it done.

M&A will continue with a record number of deals and dollars, but a more pressing issue for all of banking is the completely unchecked, and under-regulated credit union-bank deals. These deals are top dollar, and in some cases defy logic. At some point it will be difficult for the deposit fund to insure consumer deposits. We will continue our advocacy to help stop this from further destroying the community banking industry.

We are nearing end of Q1 of our Topics Schedule to keep you better informed as a candidate and hiring manager.  As a reminder each month we share new or revised content tailored to a hiring manager and candidate perspective. We will share new articles and content on:

  • Diversity and Inclusion
  • Succession Planning
  • Fintech Career Management Tips
  • How to Return to the Office
  • Converting your Retail Talent to Lending Talent
  • Retention Strategies

In addition to recruiting for our clients, we made a couple key hires to help expand and grow our footprint in the Mid-Atlantic, and Southeast US. We welcomed Brian Miller to our team as SVP, Southeast Market Leader, Dylan Slotterback as Recruiter Development Rep, Brenna Greenhalgh as Research Specialist and Taylor Moore was promoted to Operations Director.

We will be attending several in person events over the next couple of months.  If there is content you would like us to address, or have feedback on any of the topics, please contact us.

Good luck in finishing out Q1!