Under pressure to lend and facing stiff competition from large banks and other lenders, some West Coast community banks are luring loan officers with signing bonuses and higher than usual base salaries.
In California, where lending competition is particularly fierce, industry sources said signing bonuses range from $5,000 to $10,000-the equivalent of one to two months' salary-and even up to $20,000 in exceptional cases.
Meanwhile, average salaries for commercial loan officers have jumped 10% to 30% in California since 1996, these sources said.
"It's just wild out there right now," said Terry M. Purvis, who runs a Sacramento, Calif., financial services executive search firm. "Community banks are rolling out the red carpet and overpaying in most cases."
Redwood Empire Bancorp, Santa Rosa, and Greater Bay Bancorp, Palo Alto, both offer signing bonuses, though they declined to disclose the amounts. Some banks are even granting country club memberships and higher car allowances, recruiters said.
"They're doing just enough to sign you on board," commented Mike Bertoux of Wilcox, Bertoux & Miller, an executive search firm in Sacramento.
The race to hire top loan officers has become especially frenzied in the last few months as low interest rates have boosted loan demand and refinancings. At the same time, a tight labor market has made loan officers hard to come by.
To increase originations in its larger markets, Klamath First Bancorp, which has 32 branches in Oregon, Washington, and California, last week started a commission-based program for its loan officers.
The Klamath Falls, Ore.-based savings and loan, with $994 million of assets, had previously paid straight salary to its loan officers.
Under the new program, loan officers will get commissions worth 50 basis points of the loan amount; for example, a $100,000 residential real estate loan would yield a $500 commission.
"We are not getting the market share we want," said Frank X. Hernandez, Klamath's human resources director. "This is a real big step for us, and we'll see how it goes."
Others, such as $1.2 billion-asset Greater Bay, have used signing bonuses to hire seasoned bankers "who can bring in the business," said Steven C. Smith, the company's chief operating officer.
Still, community bank incentive packages often cannot match those of big banks and nonbank lenders, such as the Money Store.
Kelly Hinde, Redwood Empire's vice president of human resources, admitted that the $444 million-asset banking company had lost loan officers lately to other lenders offering bigger bonuses.
And Richard C. Emery, CEO of United Security Bancorp., Spokane, Wash.- who considers his $348 million-asset multibank holding company to be incentive-driven-said that when his company went fishing for loan officers at the region's big banks it didn't have the right bait. "They were making more in bonuses than the salaries of our bank presidents," Mr. Emery said.