As Bank of America Corp.
Total employment at depositories has actually grown by almost 4%, or about 80,000 jobs, since the first quarter of 2010, to about 2.1 million at June 30, according to the Federal Deposit Insurance Corp.
That rebound followed deep cuts during the recession that lowered employment by almost 10%, or about 200,000 jobs, from the first quarter of 2007 through the first quarter of 2010 (see charts).
But those reductions were largely echoed by a contraction in balance sheets. For most of the past decade the ratio of assets to staff climbed, from about $4 million per employee at the end of 2001 to about $6.4 million at the end of 2008. That level has held roughly steady since.
Ratios of salaries and benefits to revenues have also settled at levels substantially higher than those that prevailed before the downturn.
Compensation during the 12 months through the third quarter of 2007 was equal to 66% of pretax, pre-provision earnings (excluding gains and losses on securities outside of trading portfolios) during the same period.
The ratio spiked to as much as 81% during the year that ended in the first quarter of 2009, reflecting a crater in earnings. Removing loan-loss provision expenses helps to isolate violent cyclical swings in credit quality, and highlight the underlying revenue-generating power of the industry, but banks have also been whipsawed by erratic gains and losses in trading accounts.
Now, pretax, pre-provision earnings have rebounded, but were up only 3% from the year that ended in the third quarter of 2007 — the last full period before the recession officially began — to about $250 billion in the year that ended June 30. Meanwhile, compensation expenses increased 9%, to $175 billion.
Still, while the ratio of compensation to earnings was higher at 69% in the second quarter than it was before the recession, the growth only extends a trend that prevailed in the first half of the past decade. In the year that ended during the third quarter of 2002, compensation expenses were equal to 57% of earnings.
Moreover, B of A looks lean compared to Citigroup Inc., another giant, and the industry as a whole — the company generally posts higher ratios of assets to employees and lower ratios of compensation to earnings.
The comparison may have much to do with B of A's business model, which is designed to achieve scale efficiencies in commoditylike consumer businesses. Nonetheless, the fact that B of A's problems are rooted in its bubble-era mortgage liabilities has prompted analysts to argue that cuts on the scale floated in news reports would
