Bank Watch

How Trump could affect bank hiring in Charlotte

More banking jobs in lending. Potential job cuts in mortgage positions and in roles that help banks comply with regulations.

Those are some of the effects that industry-watchers expect to see in Charlotte’s financial services sector under the administration of President-elect Donald Trump.

The Republican administration’s goal of boosting economic growth through new federal spending and tax cuts has banks hoping for a boost in borrowing. As a result, some staffing firms say they are expecting financial services companies to ramp up hiring for lending roles.

On the flip side, industry officials predict a hiring slowdown of personnel responsible for ensuring banks comply with regulations. Such jobs have been red-hot in Charlotte and elsewhere due in part to new rules on financial institutions from 2010’s Dodd-Frank law, which Trump has vowed to “dismantle.”

Mortgage workers are also facing elevated risk for layoffs amid declines in refinancing activity from interest rates that have surged since Trump’s election. Economists are forecasting more increases in rates for next year, upping the odds of mortgage personnel cuts.

Bankers say they expect Charlotte’s economy and financial sector to benefit overall from Trump, who has tapped people with deep Wall Street roots for key seats in his administration. Bank stocks have soared, reflecting investors’ bullish views on the industry since the election.

“We are hopeful and optimistic that banking and the economy as a whole will fare well in the upcoming Trump administration,” said Peter Gwaltney, president of the North Carolina Bankers Association. “What I’m hearing from bankers that I’m talking to is a more business-friendly environment.”

Employment trends in Charlotte’s banking sector have an outsized effect on the region’s economy. The finance and insurance sector represented more than 10 percent of total average wages in the second quarter of this year, the latest data from the North Carolina Commerce Department show.

Even under Trump, bankers say they expect pressures that have driven years of industry consolidations, which often result in job losses, to continue.

In addition, Trump policies might not do much to prevent new closures of branches and accompanying job cuts, industry officials say. That’s because banks have been shedding branches as more customers rely on other transaction methods, such as smartphones, a trend that’s expected to continue.

Banks also could slash more jobs to meet cost-cutting plans as they contend with slow revenue growth amid interest rates kept low by the Federal Reserve.

Bank of America CEO Brian Moynihan, in an Observer interview this month, noted the Charlotte-based bank is reducing its employment levels in part through automation as it seeks “to keep fine-tuning” costs.

“There’s nothing that I see that would necessarily encourage banks to hire more people,” said Guy Cecala, publisher of Inside Mortgage Finance. “The trend overall has been to reduce headcount.”

Where banks will hire

Blaine Jackson, CEO of Charlotte-based NewDominion Bank, said the community bank plans to ramp up hiring of staff who help it acquire commercial and consumer clients.

“On one hand, you could say it’s directly related to potential regulatory reform,” Jackson said, adding that overall the driver is expectations for an improving economy.

“I see banks hiring for sure. I think there’s going to be a pretty big uptick in hiring,” he said.

Lauren Cassidy, senior regional Carolinas manager for staffing firm Robert Half, said the financial sector has a positive outlook for future loan demand in 2017. A pickup in lending would “certainly yield” hiring growth in that area, she said.

“The banks, from the conversation we’ve been having ... I think overall there’s some optimism there’s going to be some additional lending opportunities,” Cassidy said.

Compliance hiring might slow

In Charlotte’s banking sector, compliance jobs have been among the most in-demand roles, as banks seek to comply with the 2,300-page Dodd-Frank law among other regulations.

Bankers say they expect less hiring in compliance if Trump pushes to scrap the law.

“Compliance (jobs) at a minimum will grow at a slower pace,” said Jim Cherry, CEO of Charlotte-based Park Sterling Bank. He estimates hundreds of compliance jobs have been added in Charlotte’s financial services sector because of Dodd-Frank.

“And we’ve been adding them,” Cherry said.

Trump criticized Dodd-Frank on the campaign trail, arguing among other things that it stifles business.

Melissa McGuire, a managing director for Charlotte-based staffing firm Sherpa, said overhauling Dodd-Frank likely won’t happen overnight. But a decrease in regulations might free up banks to spend more money on hiring in other areas, such as lending roles, she said.

Even if the pace of compliance hiring declines, banks will still need such personnel, industry-watchers say.

“I don’t see them ever shedding a great deal of those people,” McGuire said. “There is a talent shortage.”

Mortgage jobs at higher risk

Since Trump’s election, mortgage rates have soared to their highest levels in more than two years. Those rates can rise when investors think inflation will increase, a scenario some expect under Trump’s economic proposals.

Higher mortgage rates can discourage some homeowners from refinancing, creating less need at banks for personnel who work with such borrowers. It’s possible in the near term that higher rates will drive some homeowners to quickly finance before rates climb more, industry officials say.

“But give it six months and all of a sudden that’s going to drop like a rock,” said Jim Engel, CEO of Aquesta Bank, a community bank headquartered in Cornelius.

“If rates go up enough and refinancing all of a sudden stops, (lenders) have no choice – they will have to let people go,” he said.

Fresh cuts of mortgage jobs would add to hundreds of similar layoffs that Bank of America, Wells Fargo and other companies combined have announced in Charlotte in recent years, as falling mortgage rates have depressed refinancing demand.

The Mortgage Bankers Association expects refinance activity to drop 47 percent next year, to $479 billion. The Washington, D.C.-based industry group also expects refinances to continue falling at least through 2019.

Industry officials say the outlook for the industry remains in some ways murky under Trump, who has not provided many details on his planned banking policies – and who blasted Wall Street on the campaign trail.

“Until he’s in office and begins to conduct business,” said Gwaltney, president of the North Carolina Bankers Association, “we’re just speculating.”

Deon Roberts: 704-358-5248, @DeonERoberts