Loan Officers Raking in The Bucks: Survey

The fierce competition for quality loans may not be doing much for banks’ margins but it sure is fattening loan officers’ wallets.
 
According to a survey on bank compensation released Thursday, commercial loan officers’ total annual pay is up 17.3% this year over last, while salaries of other bank employees have climbed just 2.5%. For chief lending officers, total compensation is up 12.1% since 2011 and 25.5% over the past four years, according to a survey released by Crowe Horwath, a Chicago-based accounting and consulting firm.

Tim Reimink, a senior consultant in Crowe’s performance practice, attributes the salary disparity in part to soft loan demand.

“Financial institutions are experiencing slow loan growth and competing for lending talent who can help grow their portfolios, which is why these positions are seeing a more rapid compensation growth than other positions,” Reimink said in a news release.

The increases, which reflect pay levels at 405 financial institutions, closely match banks' own forecasts, according to the survey.

“During the downturn, poor bank performance caused compensation increases to be lower than what had been forecast,”, Reimink said. “The return to salary increases meeting forecasts shows banks have a better grip on their performance expectations and have established a new normal for the post-recession era.”

The survey also showed that compensation for chief executives climbed for the second straight year after falling 3.2% in 2010. CEO pay is up roughly 10% this year, down slightly from a nearly 12% increase a year earlier.

Customer service representatives saw their total compensation fall 6.2% from a year earlier, while operations specialists earned 1.3% less than last year and personal bankers earned 0.7% less in 2012.

The survey also shows a growing salary increase gap between above-average and average performers. Two-thirds of employees rated as average or meeting expectations saw their salaries rise 2.3% in 2012, compared with 2.7% a year earlier. The 27% of employees rated as above average or exceeding expectations saw their salaries rise 3.4%, compared with 3.3% in 2011.
“This gap between above average and average performers indicates that management might be doing a better job using pay to motivate performance compared to years past,” Reimink said.

The survey found that employee turnover has increased to levels last seen in 2007.
 
Overall, 10.4% of banks report paying more than 10% above market rate for candidates, down from roughly 13% the past two years, reflecting financial pressures on banks and larger numbers of candidates in the market.