Banks of all sizes go head to head for customers, talent in red hot Dallas-Fort Worth financial
Prosperity Bank president Kevin Hanigan passes eight banks each day on his half-mile drive to work in Frisco.
“There’s a lot of banks trying to get here,” said Hanigan, whose bank operates 65 locations in Dallas-Fort Worth. “And if they’re already here, they’re trying to get bigger as fast as they can. Maybe the first question we should think about is, ‘Why?’ ”
The great bank migration into Dallas-Fort Worth is directly tied to the general influx of people to the area, bank executives say. D-FW had the largest population increase in the last decade of any metro area in the U.S., with a 19% increase that added 1.2 million people, according to the U.S. Census Bureau.
And people typically follow business and job growth. In the past year, the Dallas Regional Chamber has tracked more than 50 corporate relocations or expansions into D-FW in spite of the pandemic.
“The banking business is only as good as the economy it operates in so everybody wants to be where the action is and the action is where everybody is moving and where the jobs are being created,” Hanigan said. “The influx of people is creating an influx of banks.”
In the last year, First Foundation and Charles Schwab moved corporate headquarters from California to D-FW, joining established financial players like JPMorgan Chase, Bank of America, Wells Fargo and Fidelity Investments. Vanguard, which manages $7.5 trillion in global assets, announced in May that it selected Dallas for its fifth U.S. office.
Besides the pool of talent and businesses, Texas is a draw because of its perception as a pro-business state in terms of regulation and taxes; it’s one of nine states with no income tax.
“A lot of the move had to do with politically some of the things that are affecting many companies in California,” First Foundation CEO Scott Kavanaugh said. “It led to us thinking about where would we geographically want to be, and when you look at the landscape, in my mind, the clear winners are Florida and Texas.”
In total, Texas has 491 banks totaling over $1 trillion in assets, according to the Texas Bankers Association. Many are small to mid-sized. The state has more community banks than any other at about 380, according to FDIC data compiled by bankingstrategist.com.
“Relational banking is true to Texas and how things are done here,” said Independent Bankers Association of Texas CEO Christopher L. Williston.
But the “big four” U.S. banks — Bank of America, JPMorgan Chase & Co., Citibank and Wells Fargo — are aware of the hot market and are spreading tentacles throughout North Texas to protect their sizeable shares. Wells Fargo said it plans to open a new location in Prosper this summer.
For smaller banks that can’t compete, their best bet is to be acquired by a mid-to-large bank.
“The general pool of business in Texas has increased dramatically in the last 10 years so it’s not the same pie being divided between banks,” said Texas Department of Banking Regional Director Larry Walker. “But there will always be competition for the best business clients.”
Walker said banks are getting bigger and bigger in the state, growing annually over the last five years because it’s easier to control overhead costs. Since 1992, the total assets of D-FW headquartered banks have grown from $96 billion to $612 billion, according to data from the FDIC.
“Some banks spent more on infrastructure and technology in past years and are surviving a whole lot better,” Walker said.
The talent up for grabs
A bank is only as good as its talent. D-FW was top in the nation for net migration of degree holders from 2016 to 2019, according to the Census Bureau’s American Community Survey. It gained about 70,000 degree holders, while cities like Los Angeles, Chicago and New York had net losses.
Despite consistent growth in financial jobs in D-FW, demand is even higher. Employment in financial activities has grown 39% to 329,000 since 2011 for the area, according to Bureau of Labor Statistics data.
“One of the biggest concerns for the D-FW area is talent,” said Williston of the independent bankers group. “This is what I hear most often from community bankers is if you want to put together a lending team, there’s just tremendous competition for a limited pool of talent in D-FW.”
Bigger banks can afford to pay a premium to ensure they attract the best talent, making it harder for smaller banks to compete on the same scale.
“Banks come in and bid up the cost of talent. It’s not unique,” said Prosperity’s Hanigan.
Bank of America announced in May that it will lead the big four banks in raising its minimum wage to $25 by 2025. Bank of America also recently was rated as one of the top three workplaces for parents due to its 16 weeks of paid gender-neutral leave and sick child care. It offers reimbursement of up to $100 a day for back-up child or adult care, something the bank said was particularly useful for employees in the pandemic.
But more and more, banks feel like their salaries and benefits packages need to compete with big tech companies. That’s because banks are going increasingly digital to keep up with how consumers want to do their banking, which means they need a high volume of software engineers and other tech employees.
“Especially with the increase in remote work this year, tech companies are coming in to compete for the talent here,” said Jeff Wallace, the new CFO of San Antonio-based USAA.
JPMorgan Chase & Co. has 24,500 employees in Texas, with the largest concentration of 6,500 workers at its Plano campus. It plans to hire 1,000 new tech employees by the end of the year, including roles for software engineering, cybersecurity and artificial intelligence.
Bank of America’s technology budget per year is about $10 billion, helping it land the title of the financial services institution with the most U.S. patents. It has more than 4,400 patents with just over 500 related to online and mobile banking. An Addison resident holds the title for having the bank’s most patents — more than 130 patents.
“It helps attract tech experts because of the large platform we can give them,” said Jennifer Chandler, Bank of America’s Dallas market president.
Texas Capital Bank CEO Rob Holmes, who recently completed his first 100 days at the Dallas-based bank in January after 31 years at JPMorgan, said the talent war goes beyond the banking industry.
“The first and second-quarter GDP this year will likely be the best back-to-back growth in our careers so when you have that backdrop, there’s going to be a war for talent across all industries,” he said.
Boston-based Fidelity is taking advantage of the negatives of the pandemic and reaching out to people with customer service skills who were laid off in the retail and hospitality industries, said Westlake-based Kristen Kuykendoll, head of associate experience at Fidelity Investments. North Texas is Fidelity’s largest regional site with 6,200 employees. It added 475 roles for the area in April, mostly for its Westlake campus.
“DFW is filled with educated, talented, go-getters with a passion for helping people,” Kuykendoll said.
Talent is especially important for new banks to D-FW because the right leaders can leverage their relationships to jump-start its growth story in the region.
First Foundation has only been in Dallas for 10 weeks after moving its headquarters out of Irvine, but it’s already got an office at Uptown Dallas’ landmark Crescent complex and has a small team forming.
“The people we’re hiring are very seasoned bankers that are already in this marketplace that may have worked for a bank that either got acquired or is rumored to be acquired,” CEO Kavanaugh said. “That’s given us the ability to talk to some seasoned bankers so we’re having decent success in terms of talking to people.”
First Foundation listed similar open positions in California and Texas this year, but has been able to fill more of the Texas positions so far, Kavanaugh said.
“The talent pool is very strong here and more accessible than in California,” he said.
Cincinnati-based Fifth Third Bank created a North Texas market executive role earlier this year to increase its presence. The bank’s strategy is to make big investments in select markets, said Ron Harrison, who filled the role. He’s hired four people and is looking to have a team of 10 to 12 employees by the end of the year.
“I’m looking for folks in the market who are long-tenured with lots of relationships in the Dallas market,” Harrison said. “Institutions that invest two to three people in an area tend not to succeed. You have to be committed to a market.”
McKinney-based Independent Financial CEO David Brooks said he’s seen banks make the mistake of moving into D-FW and thinking its robust economy will do the work for them. But Texas clients like to work with banks that have been calling on them and investing in the community, he said.
“Some banks come and do okay and some come and don’t do as well,” Brooks said. “We like our position very much compared to someone coming in starting from scratch.”
Pennsylvania-based Customer’s Bank added an office in The Crescent this year. It’s trying to adapt to the relationship-minded state by starting off with a small team of three people, said Jake Danelski, senior vice…
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