Pa. Community Bank Is No Scrooge,Gives Yearend Bonuses of Up to 64%

Employees at Firstrust Savings Bank in Philadelphia have a lot to be merry about.

They learned at a holiday party last week that they will be getting bonuses of up to 64% of their salaries-1% for each of the thrift's 64 years in business.

It is the payoff of an employee incentive and retention plan created in 1993, a reward for hitting growth and profitability targets.

Firstrust, a family-controlled institution with $1.6 billion of assets, is also trying to send an employee-friendly message at a time when other bank workers may face harder times-like those at Philadelphia-based CoreStates Financial Corp., which is being acquired by First Union Corp.

"It is a priority to foster lifetime careers at Firstrust," said president Richard J. Green, who claims an annual employee retention rate of 85%. "Our customers tell us they cherish their long-term relationships with our employees. That is something very few Philadelphia banks can claim right now."

People on staff since 1993-about half Firstrust's work force of 278-are entitled to the full 64%. More recent hires get pro-rated bonuses.

With profit-sharing and performance bonuses, some workers could get twice their base salaries.

"It was just an incredible, electric feeling to be on the receiving end," said Peter A. Nolan, vice president of finance at Firstrust. "I have had that sort of experience at sporting events, but never at work."

"I have never heard of a reward this size at a bank," said Dennis W. Burnette, executive recruiter with Sanford Rose Associates, Roswell, Ga. "It sounds like a great way to motivate and retain employees."

While incentive compensation is all the rage-financial institutions large and small have tried to stay competitive in a tight job market with higher salaries, benefits, and stock options-Firstrust's 64% seems a bit off the charts.

Douglas Austin, president and chief executive officer of Austin Financial Services, Toledo, said banking bonuses are more typically 10% to 20%, which pale next to the 100% or even more that securities industry employees earn in good years.

In contrast to Firstrust, publicly traded banking companies have shareholders who might frown on huge bonuses. But public companies can pay stock.

Norwest Corp. of Minneapolis, for example, offered more than 50,000 employees options to buy up to 500 shares in the past two years.

The plan was seen as a way for Norwest and employees to align their interests, said Paula Roe, senior vice president and director of compensation and benefits. About 45% of employees who received up to 100 shares last year and 400 in September have held on to them, even though the shares acquired last year vested when Norwest's share price hit $60 in July.

"There's a terrific demand for good people," said Robert J. Gallivan Jr., principal of Bank Compensation Strategies Group, San Diego. "The banks are having to pay up."

But the standard at Firstrust, which will be setting new four-year goals in January, may not be followed locally.

"Firstrust is unusual in the sense that ownership is concentrated," said Lee E. Tabas, president of Royal Bank of Pennsylvania, which has a bonus program for managers and officers.

Armond F. Gentile, president of $1.4 billion-asset Beneficial Savings Bank in Philadelphia, said it and most other community banks in the area do not give companywide bonuses. Beneficial, he said, also has an 85% retention rate.

"We put the money in the paychecks," Mr. Gentile said. "We think our salary structure is competitive in the marketplace. At least we were before Firstrust."

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