Commercial lenders in Massachusetts endured salary slumps in 2009, with two in five not receiving raises. According to a survey, most commercial lenders earned between $80,000 to $200,000 in base salary, excluding bonuses. While compensation was down industry-wide due to tight budgets, commercial lenders are seen as underpaid given the valuable role they play in facilitating capital flows. The highest paid lenders produced over $50 million in loans and earned a total compensation of $200,000 or more.

1. Established 1872 Reprinted from the issue of January 18, 2010 www.BankerandTradesman.com
THE FINANCIAL SERVICES AND REAL ESTATE WEEKLY FOR MASSACHUSETTS
A Publication of The Warren Group
COMMERCIAL COMPENSATION
State’s Commercial Lenders Endure 2009 Salary Slump
Analyst: ‘Underpaid’ Group More Valuable Than Ever
BY LAURA SCHREIER
BANKER & TRADESMAN STAFF WRITER
L
ast year was a rough one for commercial lend-
ers: Business and government railed against
lenders for not lending, while they argued
back that good loan prospects just weren’t out
there. And in Massachusetts, two in five did not
get raises.
Many, according to a recent survey of 177 Massa-
chusetts financial institutions conducted by Maine-
based Executive Search Group, had 2008 annual
bonuses to tide them over. About 22 percent got bo- City/Region Avg. Median Compensation
Source: Executive Search Group
nuses ranging from $10,000 to $20,000, with 5 per-
cent hauling in more than $50,000 for their annual Worcester $132,000
reward. But a full 24 percent got no bonus at all. Springfield $126,000
It’s unclear whether 2009 annual bonuses will South Shore $129,000
sweeten the deal, but at least 74 percent of those for- North Shore $132,000
tunate enough to earn a base salary raise were will- Cape & Islands $95,000
ing to bet their salaries would go up again in 2010. Boston $181,000
Commercial lenders are a major moneymaking
engine for commercial banks and credit unions,
and tough economic times put their employers in a
bind. As institutions try – or are forced – to rein in “These commercial bankers … are fundamentally
compensation allocations, they still have to make
sure their lenders are compensated well enough to providing a very valuable service – they allow for the
stay happy, and therefore less likely or willing to
be poached by competition. free flow of capital. You could make a case for them
It’s the first time Executive Search Group has
launched such a survey, said Managing Director
being underpaid.”
Carll Wilkinson. The group took in responses in
fall 2009 concerning 2009 salaries and bonuses Carll Wilkinson
from 2008, which were paid out in 2009 – as such,
there are no 2008 salary figures with which to
make a comparison. But based on conversations money they’re bringing in. That makes for a power- quality borrowers.
with the lenders themselves, Wilkinson concludes ful argument for them snatching up whatever merit Dedham Institution for Savings has done little
that 2009 compensation increases were mostly pay is available to dole out. commercial lending, but is looking to change that,
cost-of-living increases, with relatively scant The Executive Search Group’s numbers show a said Peter Brown, who took the reigns as CEO in
awards for merit. powerful correlation between top loan producers May 2009. In his first few months on the job, he’s
and top earners, Wilkinson said. Those who made made two commercial lending hires and is look-
Tight Budgets more than $50 million in loan volume got $200,000 ing to make another, aiming to cash in on bigger
Mean Slim Raises or more in total compensation, while those who banks’ current timidity in making new loans.
Most commercial lenders in the state made be- made $20 million to $30 million in loans hovered at Brown acknowledges that expanding commer-
tween $80,000 and $200,000 in base salary last year, $144,000 total. cial lending is complicated and far different than
not including bonuses. The survey’s information Good work is rewarded, Wilkinson said, al- making residential mortgage loans. Commercial
on total compensation shows that top-producing though he believes such lenders are underpaid as loans require constant maintenance, so it’s impor-
lenders made a median of $210,000, while lower- a group. tant to make the right hires.
producing lenders made about $95,000. “These commercial bankers, whether or not they The survey brought up some other interesting
Compensation is down for many institutions’ work at Bank of America or the $200 million ABC demographic trends. Compensation amounts were
ranks overall, said Susan O’Donnell, managing banks, are fundamentally providing a very valuable relatively even throughout much of the state, with
director of Southborough-based Pearl Meyer & service – they allow for the free flow of capital,” he lenders in Worcester, the South and North Shores
Partners, a major compensation researcher and said. “You could make a case for them being un- and Springfield areas making in the $125,000-
consultant. derpaid.” $135,000 range. Commercial lenders on the Cape
Pearl Meyer & Partners releases broad com- Interestingly, the largest banks didn’t post the and Islands were more likely to be in the $95,000
pensation studies annually, and has noted that bo- highest total compensation numbers: Banks in range.
nuses and salaries have been down in the past two the $5 billion to $10 billion asset range offered Boston-area banks, however, towered above the
years, although the company’s data doesn’t specify $184,000, while banks with more than $100 billion rest, with a median of $181,000 in total compensa-
compensation for commercial lenders. in assets were only at $166,000. tion, which is a detail Wilkinson and O’Donnell at-
“Budgets are tighter because banks have earn- tributed to the fiercer competition for talent in the
ings pressures,” she said, adding that banking was Gunning For The Best bank-heavy city.
still a “challenged industry.” “Salaries [for 2009] are Arthur Warren, of Walpole’s Arthur Warren One downbeat tidbit: more than 44 percent of
still maybe looking a little better than last year but Assoc., said the past year saw mid-tier banks in respondents have more than 20 years experience,
not much, still hunkering around that 3 percent-ish Massachusetts gunning for big banks’ commercial while only 11 percent had five years experience or
kind of raise,” she said. business, and backing it up with hefty compensa- less. That betrays a dearth of young people in the
Still, O’Donnell said she’d expect commercial tion for the lenders who can make that growth hap- trade, Wilkinson said, and it indicates banks should
lenders to be rewarded more generously than other pen. Some of that isn’t reflected in surveys such as concern themselves with recruiting fresh talent, as
bank employees. It’s a key job for these banks, she the one by Executive Search Group, but it includes well as top-producing veterans. ■
said, and if lenders are producing, they can clearly front-end signing bonuses and deferred compen-
point to a dollar amount that proves how much sation based on the lenders’ success in reeling in E-mail: lschreier@thewarrengroup.com
Reprinted with permission of Banker & Tradesman. This document may constitute advertising under the rules of the Supreme Judicial Court of Massachusetts.