Where are all the 63-year-old bank CEOs going?

Earlier this month, 63-year-old Gary W. Douglass of Pulaski Bank in Missouri announced the sale of his bank. In October it was Astoria Bank. Over the past year, 63-year-old CEOs at Valley Bank in Virginia, Intervest Bank of New York, ESB Bank in Pennsylvania, City National Corp. of California, Oneida Financial of New York, Alliance Bank of Pennsylvania and Ameriana Bank in Illinois all sold banks.

Among 312 banks publicly traded banks I track, Pulaski Bank represents a pattern of banks announcing their sale this year. Although the most common age of CEOs who sell banks appears to be between 62 and 64, the data shows 63 to be the sweet spot. More than half the banks in my database with CEOs of this age have been sold during this year alone.

Who cares how old the CEO is when banks are sold?

Obviously investors care. But so should regulators, public policymakers and bank directors.

The pace of bank sales is now faster than at any time in 20 years and the trend is on a decidedly upward trajectory. The third quarter of 2015 saw a 4.84% annual reduction in banks, up from 4.26% in 2014 and 1.4% during the halcyon days of 2006. Expect to see the annual consolidation rate climb north of 5% perhaps as soon as the first quarter of 2016, a level not seen since the merger frenzy days of 1995.

Why is the pace of consolidation accelerating? Clearly one reason is because banks face increasing regulatory burden.

Important as that factor may be, the bigger reason may be the aging of baby boomer bankers. The vast majority of today's CEOs were trained 30 to 45 years ago in a traditional commercial bank management training program. Banks put an end to those programs about 20 years ago. The talent bench in banking has never been thinner than it is today. One big reason is because those training programs disappeared.

Could it be that the aging of the traditionally trained commercial banker is just now beginning to play out as seen in the rapid rise in bank mergers?

Roughly 25% of publicly traded U.S. banks are today led by a CEO who is 59 to 62 years of age. How many of these banks will sell as their CEOs reach the apparently all-important age of 63? The answer may well depend on how many have "ready now" successors?

In my conversations with bankers across the country, it is widely acknowledged that the industry is suffering from an acute shortage of highly skilled commercial and real estate lenders. But has the industry acknowledged its problem finding qualified successors for CEOs who are ready to move on?

Europe's troubled big banks have experienced a similar exodus of CEOs. They also clearly have a problem finding skilled talent for the top jobs. Pretty soon the big European banks will run out of former JPMorgan Chase executives to fill candidate slots. What will they do then?

Not long ago the FDIC forecast that the pace of bank consolidation would slow once banks returned to health. They could not have been more wrong.

Among the factors the FDIC probably miscalculated was the influence the aging workforce would have on industry consolidation. More and more bank directors recognize their inability to confidently replace CEOs and senior management teams who are retirement eligible. Selling the bank is the appropriate and responsible action.

Few banks are immune to these demographic trends. Ironically, the biggest banks with the most employees may be the most vulnerable. Why? As big banks have gotten bigger and far more complex, fewer big-bank employees in line for CEO jobs have direct training or hands-on experience managing a wide range of lending activities.

Just check out the recent leadership turmoil at Barclays, Deutsche Bank, Credit Suisse and Standard Chartered to see what happens when such banks cannot find qualified successors for the CEO. Does anyone really believe the biggest U.S. banks don't face the same problem?

While certainly some regulators may privately be overjoyed by the rapid pace of mergers, the question still should be asked: "What are we missing? What could go wrong?"

The record pace of consolidation and the disappearance of 63-year-old bank CEOs may be revealing an industry on the brink of a talent crisis. How this plays out and whether this is good or bad is yet to be seen.

Richard J. Parsons is the author of Broke: America's Banking System. He is writing a new book about long-term bank profitability and investor returns.

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