BANK EMPLOYEES AND NON-COMPETE AGREEMENTS
There is an interesting process going on in the banking industry. The big banks (Wachovia, Bank of America, Suntrust, Wells Fargo, JP Morgan Chase, Citibank, etc.) keep getting bigger and bigger! They don’t appear interested in small towns or small businesses. Enter the old-timey, small, community bank. In my area those banks go by the name Valley Bank, Hometown Bank, National Bank of Blacksburg, MainStreet Bank, etc. The growth of small community banks is not what interests me…it’s what these start-up banks are doing to hire competent and experienced employees that interests me.
When a small bank wants to enter a new market – it typically opens a loan production office to start building business. The fastest way to get such an office up and running is to hire an experienced banker who has existing relationships with local businesses. Commercial borrowers tend to have much closer relationships with their loan officers than mortgage borrowers, and are much more likely to follow a banker to a new financial institution.
What do the big banks do to fight the loss of employees with commercial lending experience? Make those employees sign a non-compete agreement preventing them from working with another bank in the surrounding area for 1 to 2 years! If you work with one of those big banks…you better think twice before signing a non-compete agreement as you may be seriously limiting your future options. If you have already signed a non-compete agreement and are contemplating moving to a new start-up or community bank….you better speak with an attorney experienced in fighting non-compete contracts.