Now that the tax bill has passed Congress and will soon be signed by the president, some banks are beginning to outline what they will do with the extra money they will have once a reduction in the corporate tax rate takes effect.
Fifth Third Bancorp said Wednesday that it plans to give many employees a raise and bonus check. The Cincinnati-based company said it will hike its minimum hourly wage to $15 and pay a one-time bonus of $1,000 to more than 13,500 employees. That would cover roughly three-quarters of the bank's employees, the $142 billion-asset company said.
“We want to invest in our most important asset — our people,” Fifth Third President and CEO Greg Carmichael said in a news release.
Wells Fargo made a similar move, announcing it would also raise its minimum hourly wage to $15 once the president signs the tax bill into law.
The increase is Wells’ second minimum-wage hike this year. The San Francisco company in January increased wages for entry-level workers to $13.50 from $12. Other big banks — including JPMorgan Chase and Bank of America — increased hourly wages to $15 last year.
Additionally, Wells said in its announcement that it plans to donate $400 million to nonprofit organizations next year. Beginning in 2019, it will set a target of donating 2% of its after-tax profits to corporate philanthropy. A portion of those donations will go toward programs that help support small businesses and homeownership, according to the company.
“We believe tax reform is good for our U.S. economy and are pleased to take these immediate steps to invest in our team members, communities, small businesses, and homeowners,” Wells Fargo CEO Tim Sloan said in a press release.
Community banks are also passing some of the savings along.
Washington Federal in Seattle announced on Wednesday that it plans to hike wages for most employees by 5% and add 25 people to its information-technology staff. The $15.3 billion-asset company also said it plans to contribute $5 million over the next five years to its charitable foundation.
Aquesta Financial Holdings in Cornelius, N.C., said it had approved a $1,000 cash bonus for all of its employees while increasing its minimum wage to $15 an hour. The bonuses will be paid during the first week of January; the hourly rate increase is effective on Jan. 1.
Other businesses also announced plans to offer raises and bonuses. AT&T, which is trying to persuade the government to approve its agreement to buy Time Warner, said on Wednesday it will pay a $1,000 bonus to about 200,000 workers.
When the tax legislation was still being debated, bankers mused how they would use the extra money flowing into their coffers. Some bankers said they would pay higher dividends to shareholders, or accelerate share-buyback programs. Others said they might hire extra workers or reinvest the money in the bank.
Fifth Third’s pay raise will take effect immediately upon the bill being signed into law. It's not clear when that will happen, however. President Trump held a ceremony at the White House on Wednesday to celebrate congressional passage of the bill, but did not actually sign it. Some media reports are suggesting he may wait until early in the new year to sign it, which would likely delay any raises and bonuses until the first quarter of next year.