Magazine article American Banker

Mutual Problem: No Stock, and So No Options

Magazine article American Banker

Mutual Problem: No Stock, and So No Options

Article excerpt

With the stock market surging, mutual thrifts are finding the inability to offer stock options an increasingly serious obstacle to hiring and keeping employees.

A hot stock can be used to steal mutuals' employees, said Charles J. Hamm, president of Independence Community Bank Corp., a $4 billion-asset mutual holding company in Brooklyn, N.Y. The movement of the market in the past two or three years "has exacerbated the problem," he said.

But since Independence's announcement last month that it would start selling stock by yearend, resumes have been coming in at a steady clip, Mr. Hamm said. "Today everybody would like to work here."

Die-hard mutual executives say working for them offers other benefits, so the lack of stock options is no problem. But some banking experts say mutuals may find it harder to hire promising new finance school graduates.

"The bank down the street could talk about stock options or ESOPs," said Richard Weiss, first vice president at Ryan Beck & Co. in Philadelphia. "If I were an accounting or finance grad going to work in the finance industry, I would probably go with a public company so I could get those benefits for myself."

Bankers and consultants say the personnel problem is particularly significant for larger mutuals that have been branching out into nontraditional activities and need specialists for commercial banking and trust services. Competition for experienced commercial lenders, investment advisers, and information technology specialists has been particularly fierce.

"You have to mitigate the damage" of not being able to offer stock options, said Stanley J. Lukowski, president and chief executive officer of Eastern Bank Corp., a mutual holding company in Lynn, Mass. "People who have come to us have had stock options at other companies. It's always on the table."

Mutuals have developed several ways to address the problem. …

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