Yarmouth & Choate Predictions For 2025

    1. Wait for the Netflix Series. Financial crimes, including anti-money laundering issues, will likely remain significant enforcement priorities. Far too many banks have had numerous egregious and preventable issues, and regulators should not allow them to continue performing poorly, if not incompetently, in BSA/AML areas. Recent high-visibility consent orders are evidence of this.
    2. Find The Middle Ground. M&A activity between banks in the mid-tier segment will increase. The homogeneity of institutions in the $10bn to $100bn asset size class cannot continue indefinitely. Many of these institutions have only marginally increased credit hold limits and may operate with dated technology or, worse, with anemic ancillary products. These factors do not contribute to a long shelf life for mid-sized bank peer group institutions. Some of those most likely to find an M&A partner (or, more accurately, be found by an acquirer) may be those who subscribe to the model of mass hiring of average-performing general commercial bankers focused on the under $50 or $75mm revenue company client segment. Mid-tier banks must be more prudent with their resources and diversify to remain independent.
    3. Don’t Call It A Comeback, I’ve Been Here For Years. Chief Financial Officer recruitment will continue to surpass almost all other C-suite recruitment in 2025. Banks and credit unions will continue to seek finance and strategy-intensive CFO talent that may, at some institutions, resemble corporate development roles to an extent. What’s being described as the next generation of CFOs (odd as forward thinking CFOs have always existed in financial services), will take the lead in proactively identifying growth opportunities for their leadership teams to consider and not simply reviewing prospects that are presented to them. Also, those institutions with compensation packages skewed towards prior incumbent CFOs and a more reactive accounting focus will face significant challenges in recruiting their next CFO.
    4. Self-Help. Credit unions will continue to further expand into the void created by banking industry consolidation, chiefly due to the decreasing population of community banks. Credit union advocacy in Washington is more robust than traditional banks. Therefore, the current blood feud between the two sides of this battle is unlikely to change dramatically. That is aside from credit unions continuing to be more active and visible competitors. Forward thinking community banks must carefully and critically evaluate their strategies to evolve and remain competitive. Executives must educate board members on these realities, as this is a topic that most board members are not sufficiently aware of.
    5. Who’s Next? When addressing CEO or President succession planning, many banks will gravitate progressively toward CFO and COO talent. Aside from smaller (to the smallest) institutions that may still be exceedingly dependent on lending, top bank executives and their boards increasingly see the value of finance and operational-intensive leadership experience. Being a proven competent lending leader, while highly valuable, is frequently viewed as too narrow of a skill set for an immediate transition into a President or CEO role, particularly without first being adequately exposed to the entire banking ecosystem. Not all banks possess the time required for this acclimation or are willing to expend these resources.Chief Credit Officers are increasingly losing visibility for President and CEO roles in all but troubled institutions. Once again, the challenge is the perception of the specialist skill set.

      Naturally, the wholesale sweeping generalizations some executive leadership teams have made regarding candidate profiles are not always accurate. There are steps lending leaders and credit officers can take to address these issues proactively ahead of searching for new career opportunities.

Have questions? Want to learn more or discuss? Please contact us:

Phone: 828.333.6300

Rob.ohalloran@ yarmouthchoate.com or info@yarmouthchoate.com.

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