1. When Personality Reigns, Succession Fails
Without mentioning specific names, 2025 saw more than a few banks that simply gave up — meaning they were “sold, not purchased” by an acquirer. One notable bank did so despite having incessantly over-promoted their culture of placing a strong emphasis on making employees feel valued, involved, and invested in the firm’s mission. Yet its CEO did little to ensure the bank’s continued independence, including grooming a successor.
If you think about healthy institutions, leadership is a relay race: authority is held temporarily, then passed deliberately to the next runner. Yet in many banks, CEO succession planning remains conspicuously absent or underdeveloped. The result is not merely a governance gap, but something more disappointing — a cult of personality centered on the incumbent chief executive.
This dynamic elevates the leader from steward to singular figure. Strategy, relationships, and institutional memory become tightly bound to one individual rather than embedded in systems. Boards grow accustomed to equating stability with continuity of a single face at the top, mistaking familiarity for resilience. Over time, the organization internalizes the idea that the bank is the CEO, rather than the CEO serving the bank.
The warning signs are familiar. Potential successors are underexposed or quietly sidelined. Internal debate narrows as senior executives defer to the leader’s instincts. External stakeholders—investors, regulators, and even employees—are reassured not by process but by personality: “As long as they are there, everything is fine.” This mirrors the logic of cliques, where faith in the leader substitutes for institutional checks, shared doctrine, or succession logic.
The danger, of course, is what happens when the leader stumbles or departs. Illness, scandal, burnout, or abrupt retirement can leave the organization scrambling, revealing how little depth was built beneath the apex. Markets react sharply to uncertainty, regulators intensify scrutiny, and internal power struggles emerge— not because the financial institution lacks talent, but because it failed to legitimize and prepare that talent in advance.
True succession planning is an act of humility. It acknowledges that no CEO, however capable, is indispensable. In banking—an industry built on trust, continuity, and risk management—this humility is not optional. Without it, the institution quietly drifts from governance to reverence, from leadership to dependency.
A bank that cannot imagine itself without its CEO is not well led. It is merely well accustomed — and that is a fragile foundation on which to build the future.
2. When Advisory Breaks Down: The Risks of Poorly Screened Hires in Financial Services
We all know (or should) that the financial services talent pool is shrinking every year. This due to several reasons including lack of training programs, retirement of experienced professionals, and it being an industry with public relations challenges (many college graduates are unaware of the career opportunities). Due to acute need, financial institutions are increasingly turning to any and all available resources to assist with recruitment needs.
These consultants vary from Strategy and Management focused, Risk, Compliance and Regulatory advisors, Efficiency and Process Improvement Consultants, to Legal & specialized niche consultants.
Banks and credit unions routinely rely on external consultants to provide expertise and strategic guidance. A byproduct of this is often unofficial leadership recommendations. However, when those consultants recommend executives who are not properly vetted or candidates they are emotionally biased towards, the consequences can ripple far and wide, undermining trust, stability, and customer confidence. Our firm frequently witnesses banks and credit unions alike engage external consultants that are subpar at best.
The outcome can be devastating.
Last year, Evolve Bank & Trust—an institution deeply involved in fintech partnerships—brought in veteran banker Bob Hartheimer to help steer the institution through regulatory and operational challenges. The board selected Hartheimer, a former FDIC official and seasoned consultant, to take over as CEO in August 2025, after a period of turmoil linked to the collapse of a key fintech partner and regulatory scrutiny.
Just months later, that decision unraveled dramatically. In October 2025, federal authorities arrested Hartheimer on serious criminal charges unrelated to his professional duties, prompting his immediate termination. The abrupt fallout placed the bank in yet another crisis only weeks after his appointment.
We are seeing a significant increase in alleged moral turpitude among candidates both inside and outside of the work environment.
This episode underscores three important risks inherent in screening hires:
1. Reputational Vulnerability
A leader’s personal conduct—even when unrelated to the institution’s operations—can cast a shadow over the institution’s reputation. Banks and credit unions depend on public trust; any association with scandal can erode confidence among customers, partners, and regulators.
2. Strategic Disruption
Leadership transitions are inherently delicate. Bringing a new leader on board to address complex issues requires continuity and credibility. When a hire fails to meet basic character and integrity standards, it disrupts operations and diverts attention from the strategic work at hand. In Evolve’s case, what was meant to be a stabilizing appointment instead contributed to leadership instability during an already challenging period.
3. Assess The Pedigree and Track Record of the Consultant Making the Referral.
This includes evaluating their seniority, domain expertise, credibility with regulators or stakeholders, and historical success in delivering comparable outcomes. Referrals carry the implicit endorsement of the consultant’s judgment; therefore, insufficient scrutiny of their background and prior results can materially increase execution, reputational, and governance risk.
Banks and their boards must treat executive recruiting with the same rigor as they do risk management or compliance and also preparation for the rigor of an audit or exam. Consultants can add significant value—but only when their recommendations are backed by robust due diligence that goes beyond resumes and industry accolades. Not merely personal familiarity with a candidate.
In an industry predicated on trust and oversight, one misstep at the top can quickly infect confidence throughout the organization. You must avoid being a cautionary tale: institutions must demand excellence not just in expertise, but in character, screening, and vetting— when turning to external advisors, of any type, to guide their leadership decisions.
It is critical to recognize that not all consultants offer the same level of value or expertise. If you want an unbiased sounding board in terms of screening a consultant you are considering engaging or want a pro-bono referral, please contact our firm. We know the best in the industry.
3. Banks Shift Hiring to Q4 — Sweetening Offers With Bonuses and Guarantees
In financial services, the traditional late third and fourth quarter hiring calendar has long been tied to the bonus cycle: most institutions historically wait until the first quarter of the new year to finalize and pay annual performance bonuses earned in the prior year. Annual bonus awards are almost always tied to end-of-year review of twelve-month results and aren’t distributed until late January, February or often March.
But in recent hiring cycles — especially in 2025, amid rising performance demands at many institutions— a notable trend has been developing. Our firm witnessed unusually high fourth quarter hiring activity, breaking with the traditional year-end slowdown. Banks have been eager to bring in talent before year end to ensure they have revenue-generating professionals in place for the new year’s pipeline.
To compete effectively and attract top performers who might otherwise wait to collect their full year-end bonuses at their current employer, banks increasingly offer “make-whole” cash or equity sign-on arrangements that equalize what a candidate would have earned if they’d stayed through bonus season. We also saw many cases of bonus guarantees for 2025 incentives payouts delivered in 2026. This means new hires effectively receive compensation for bonuses they would have earned at their old firm — an effective strategy designed to reduce switching barriers in a tight talent market.
Compensation consultants and recruiting specialists note that this trend is a departure from the historically slower Q4 hiring pace, where firms conserved budget and waited for bonus outcomes before ramping up staffing plans in January. Instead, with deal volume picking up and bonus pools forecasted to be among the highest in years in many types of fee and income producing roles due, early recruitment with enhanced compensation packages has become a tactical priority.
While this accelerated hiring helps banks secure experienced professionals — particularly commercial, middle market or credit/deposit driven private banking relationship roles — it also raises questions about long-term compensation discipline. Making employees whole on expected bonuses before they’ve delivered a full year of results introduces financial risk if business conditions soften. Nonetheless, for many institutions, the potential upside of capturing market share and expanding or preserving institutional knowledge outweighs the short-term cost.
In sum, the increasing practice of late-year hiring with bonus guarantees highlights how competitive pressures and stronger fee income have reshaped compensation and talent strategies — moving banks away from the conventional pause between quarters and toward a more continuous, opportunistic approach to building revenue-producing teams.
While aggressive trends ebb and flow depending on economic conditions, this is one we’ll likely see continue.
4. Rising Pay in Banking: What’s Driving Compensation Higher?
Over the past five years, compensation has trended upward across the banking and financial services industry from community institutions to money center banks. Reflecting a mix of talent competition, regulatory shifts, and evolving business models.
As mentioned earlier in this newsletter, increasing retirements of experienced, veteran talent has only intensified upward trends in compensation expense. Salary survey data show that annual pay budget increases in banking outpaced typical pre-pandemic levels in recent years, with many roles seeing increases above historical norms. This competition has pushed many institutions to increase not just base pay and bonuses, but also long-term incentives, retention packages, and sign-on guarantees to attract and retain talent.
Executive pay, in particular, has moved above broader market trends: analyses indicate that banking CEOs and CFOs enjoyed pay increases of around 9–11 % in the early 2020s, even while CEO compensation in the broader market declined.
Overall, while the banking industry’s compensation increases vary significantly by role and institution, the broad trend over the last several years has been upward, driven by performance, competition for talent, and evolving institutional priorities.
Over the past four to five years, compensation across commercial and middle-market banking in particular has increased meaningfully. We believe these drivers have been structural rather than speculative; rooted in talent scarcity, balance-sheet growth, and a renewed focus on fee and relationship-based revenue. Especially among mid-tier institutions.
The talent scarcity in core banking roles has been most acute in roles that blend credit judgment, relationship management, and business development—skills that are difficult to develop. Since 2020, most commercial banks have implemented annual base-salary increases averaging 4–7 %, well above the pre-pandemic norm of 2–3 %. For revenue-producing roles—particularly commercial relationship managers, specialty lenders, treasury management officers, and equipment finance professionals—total compensation has risen 15–30 % cumulatively over the period, depending on factors such as income production, calling market and portfolio size.
Also, as net interest margins have fluctuated with rapid rate changes, banks have placed greater strategic emphasis on stable fee income, including treasury management, capital markets, payments, and wealth management. Compensation structures have evolved accordingly. Many banks have redesigned incentive plans to better reward total relationship profitability rather than pure loan growth. Banks and credit unions are also increasingly focusing on retention over replacement: unlike past cycles, banks have increasingly chosen to pay up to retain proven performers rather than risk disruption from turnover. Retention bonuses, mid-cycle equity awards and proactive market adjustments have become more common, especially for top-quartile relationship managers and specialty bankers.
Again, Yarmouth & Choate believes compensation growth in banking reflects a structural reset rather than a temporary spike. Banks are acknowledging that stable growth, prudent risk management, and fee diversification depend heavily on experienced professionals—and that those professionals now have more bargaining power than at any point in the past decade.
Have questions? Want to learn more or discuss? Please contact us:
Phone: 828.333.6300
Rob.ohalloran@yarmouthchoate.com
or info@yarmouthchoate.com
221 Peachtree Road NE
Suite D #4521
Atlanta, Georgia 30309-1106