In the wake of last year’s sweeping tax legislation, multiple large banks operating in Maryland have made commitments to increase salaries or pay out bonuses to employees.
Five of Maryland’s largest banks accounting for more than half of the market share in the state have announced plans to increase worker pay as they anticipate a share reduction in corporate tax rates coming out of the tax law.
The federal legislation, the Tax Cuts and Jobs Act, cut the corporate income tax from 35 percent to 21 percent.
In a memo to employees, Bank of America CEO Brian Moynihan said the company should see benefits from the lower corporate rate and that it would pass that along to employees in the form of $1,000 year-end bonuses.
Those bonuses were paid to employees making up to $150,000, about 145,000 employees according to the American Banking Association.
“Beginning in 2018, we will see benefits from the tax reform, too, in the form of lower corporate tax rates,” Moynihan wrote. “In the spirit of shared success, we intend to pass some of those benefits along immediately.”
Bank of America controls the largest share of Maryland banking deposits, more than 22 percent.
Some other big banks operating in Maryland also committed to more pay for employees. The American Banking Association has collected these announcements under a page titled, “Tax Reform Allows Banks to Invest in Employees and Communities.”
“The first major overhaul of the tax code in three decades includes a long list of major change like reductions in business tax rates,” the association wrote. “Banks previously paid one of the highest effective tax rates of any industry, so the reform represents a significant change for many institutions. Even before the President signed the tax bill into law, banks of all sizes announced plans to invest in their most important asset — their people — by boosting wages and other compensation. Many banks are taking additional steps to energize the economy.”
Among the other leading banks in Maryland:
- BB&T Bank committed to paying $1,200 year-end bonuses to about three-fourths of its workforce. It also committed to increasing its starting wage to $15 an hour and contributing $100 million to BB&T’s philanthropic fund.
- PNC Bank said it would provide employees an additional $1,500 to their existing pension accounts; make $1,000 bonus payments to 47,500 employees in the first quarter of 2018; increase the company’s minimum wage to $15 per hour by the end of 2018; and contribute more to the PNC Foundation.
- SunTrust Bank said it would provide $50 million for ‘financial well-being efforts;’ increase the company minimum wage to $15 per hour; give merit-based raises to other hourly employees; and make a 1 percent 401(k) contribution to retirement savings for all employees.
- WellsFargo said it would increase the company minimum wage to $15 an hour and make $400 million in philanthropic donations this year.
“The tax reform law creates an opportunity to reward our employees who are working hard each day to serve our customers, build strong relationships in our communities and create long-term value for our shareholders,” William S. Demchak, PNC’s chairman, president and chief executive officer, said in a statement. “The Board’s decision to recognize our employees and support our communities is reflective of our commitment to PNC’s success.”
Maryland’s second-largest bank by deposits, M&T Bank, has not announced any decisions yet, but said that it would be finalizing plans soon.
“At M&T we have a long tradition of working to be the best bank we can be for our employees, customers and communities,” said a Phil Hosmer, a spokesperson for the bank. “Recent tax reform will enhance our ability to continue that tradition. We are finalizing details on steps we’ll be taking in 2018 and beyond to strengthen our commitment to our employees — and to the customers and communities we serve.”