After rolling out hazard pay bonuses earlier this year for essential staff members, many credit unions are now confronting whether they need to offer those perks again as the pandemic’s second wave worsens.
That question comes as COVID-19 diagnoses continue to rise and new data from the National Credit Union Administration shows
Among the latest to embrace hazard pay is Pinnacle Credit Union in Atlanta, which last week announced plans to provide bonuses to front-line workers who have been with the company throughout 2020, spreading about $6,000 among 18 full- and part-time employees.
CEO Matt Selke said the $82 million-asset shop didn’t have time to put together a program in April or May when many other institutions began rolling out hazard pay, and was hesitant to set a precedent until it became clear how much longer the pandemic could continue. But he isn’t predicting any additional payouts as the pandemic worsens, in part out of a belief that the current environment will likely be the “new normal” for the foreseeable future, and credit unions are an essential business.
“It’s a little dicey giving bonuses when we will not be profitable for the year due to the loss of fee income and a separate COVID provision, but we felt it was important to do something for the front-line staff,” Selke said. “We are operationally profitable now and should be fine next year, as long as the economy doesn't crater.”
The credit union's third-quarter financials show a loss of about $130,000, compared with earnings of nearly $575,000 during the same period last year, with staffing costs up 14% year over year.
Truliant Federal Credit Union in Winston-Salem, N.C. in May dedicated more than $655,000 to hazard pay for staff working through the coronavirus. The payment averaged $1,000 for full-time associates.
Todd Hall, president and CEO of the $3.2 billion-asset company, stopped short of saying no additional bonuses would be forthcoming. “We have not announced another stipend,” he said. “We continue to offer a number of financial-relief options for employees.”
But Hall said the initial round of payments had the desired effect. Truliant’s turnover through November was 25% lower than last year at the same time, and the company believes the stipend made a positive impact.
“And it was the right thing to do,” he said. But Hall added the bonuses were only a single piece of the retention puzzle, along with its $15 an hour starting wage. Truliant also committed to not reducing its workforce or wages during the pandemic. It's earnings are up 22% year over year, according to third-quarter call report data, while staffing costs rose a little less than 6%.
Some banks scaling back
The problem isn’t unique to credit unions. Other sectors of the financial services industry took similar measures earlier in the year to compensate workers who were at additional risk of contracting the virus due to their role at the branch.
Bank of America recently
Similarly, JPMorgan Chase gave $1,000 bonuses to branch and call center staff, while
Still, some banks continue to provide bonuses related to the pandemic, such as TD Bank’s
Tim Scholten, president of the bank consultancy Visible Progress in Columbus, Ohio, said many community banks have not felt the need to provide bonuses in the wake of increased flexibility they have offered employees since the pandemic began.
Instead, many simply reassigned at-risk employees at their request, he said.
"Due to branch traffic being down, there were lots of opportunities to reassign people to areas that were busy, with most of the work being able to be done remotely," Scholten said. "Most community banks just gave employees options, and therefore I just haven’t seen hazard pay being an issue."
Credit Union of Southern California already paid out more than $360,000 in bonuses this year, along with providing enhanced time-off benefits for individuals who were infected with COVID-19 or suspected they may have been exposed to the virus. It is also paying out holiday bonuses, but no decision has been made on whether another round of COVID bonuses is in the cards.
“It is a difficult question to answer as it depends on a number of factors including how long we will be in the current COVID situation and our financial position,” said Michelle Hunter, chief communications and experience officer at the $2 billion-asset credit union. Third-quarter earnings at CU SoCal were down about 6.2% from the same period last year, according to call report data from the National Credit Union Administration, while expenses related to employee compensation and benefits were up by about 13%, to a little more than $26 million.
Many credit unions remain committed to keeping as much of their staff working remotely as possible, though in some instances even those workers who weren’t in-branch could see bonus pay.
Nutmeg State Financial Credit Union in Rocky Hill, Conn., is considering year-end payouts for all employees in order to recognize their work in keeping morale up and continuing to serve members of the $493 million-asset institution.
Those awards likely wouldn’t be paid out until next month, and would be awarded in conjunction with Nutmeg’s year-end review process, said President and CEO John Holt. Those funds aren’t expected to have a substantial impact on the bottom line because they’ve already been accounted for.
Nutmeg State lost a little less than $900,000 during the first three quarters of the year, compared with earnings of close to $3 million during the same period last year, with staffing costs up more than 9% to a little less than $8 million.
“We did give some bonuses to keep personnel for retention purposes and hazard pay,” Holt said. “As we do each year, we plan for bonuses for various reasons including performance, motivation, goal attainment, etc. So bonuses and pay raises are factored into our financials already.”
