In the 2014 survey, it was projected that officers would receive 2.8 percent raises in 2015, but their pay increased 3.05 percent in 2015. Nonofficers’ pay was predicted to increase 2.75 percent, but it increased 2.89 percent. According to Tim Reimink, a director in Crowe Performance Consulting, as the economy improved and banks became more concerned about their talent, they rewarded their employees with better-than-projected salary increases.
"Several of this year’s survey results indicate a shift regarding what banks need to do to retain and reward their employees. Talent is becoming a higher priority once again," said Reimink.
For the first time in recent years, developing employees was a top-three concern among human resource professionals. Also, for the third year in a row, finding and hiring the right employees was the most significant concern, with more than 98 percent of survey participants placing it as their top concern. Containing costs fell to sixth on the list for the first time since 2010. Reimink noted that the shifting of priorities from containing costs to developing employees is evidence that the industry has recovered sufficiently and now is focused on becoming more effective and competitive.
Other key survey findings include:
Since last year, bank CEOs received only a 0.13 percent increase in total compensation, comprised of both base salary and discretionary pay, such as bonuses. According to Reimink, this is directly tied to the banks’ overall performance. "2014 wasn’t a major year for growth in the banking sector; in fact, not much has changed since 2013, so it’s not surprising that CEO pay was in line with last year’s," he said.
Chief Internal Auditors had the largest one-year decrease in base salary at slightly more than 13 percent and the largest one-year decrease in total compensation at almost 14.5 percent. Reimink noted that this may be due to banks being focused more on other areas of risk management, such as compliance, anti-money laundering and information security.
The role of Personal Banker I, an entry-level position, saw a decrease of approximately 6 percent in total compensation since last year and slightly more than a 10 percent decrease in total compensation over the five-year period. "There are fewer people visiting bank branches, so fewer entry-level positions are needed to serve customers. If banks are hiring personal bankers, they’re doing so at the more experienced level," Reimink said.
Licensed Investment Representatives had the largest growth in total compensation over the five-year period at almost 60 percent, but their total compensation since last year actually decreased by about 1 percent. According to Reimink, five years ago, coming out of the recession, investment activity greatly declined and as a result, so did representatives’ pay. As market activity increased in the years that followed, representatives’ pay increased as well. However, there wasn’t a large increase in investment activity this year, which is why one-year compensation remains flat.
The position with the largest one-year growth rate in base salary was Residential Mortgage Loan Officer II, with an average increase of nearly 53 percent. This is partially due to regulatory changes in how mortgage originators can be compensated. Furthermore, Reimink added, "Banks want to offer mortgages to their customers that are in the customers’ best interest. Moving toward a higher base salary allows banks to retain top talent in this area, regardless of market fluctuations," he said.
Many traditionally exempt classified positions, such as branch manager, credit analyst and internal auditor, are paid below the proposed salary threshold of $50,440, announced by the Department of Labor in its pending Fair Labor Standards Act overtime exemption rule. Reimink noted that the outcome of this proposal will impact compensation decisions for many banks in the near future.
Nonofficer turnover for banks with more than $1 billion in assets declined 3.2 percent in the past year, and nonofficer turnover at banks with less than $1 billion declined 1.8 percent. "As employees were rewarded with higher pay and better training, they were less likely to look for jobs elsewhere. People are feeling more comfortable in their positions than they did during the recession,’ said Reimink.
In addition to compensation trends, the survey also looked at employee benefit costs. Total benefit costs as a percentage of base salary increased 8 percent in the past year to a total cost of 26.8 percent. Increases in healthcare and retirement benefit costs led to the increase. Health insurance benefit costs increased by nearly 4 percent to 16.5 percent, and retirement costs increased by 3.5 percentage points to 8.5 percent.
