One teller at Ohnward Bank & Trust began work the Wednesday before Christmas. On her second day, she received a $1,000 bonus.
Ohnward Bancshares, Maquoketa, Iowa, gave a “tax relief, holiday bonus” to each of its employees, no matter how long they had been on staff, hence that teller’s lucky break. The $1.13 billion institution decided to pass along some of the savings inherent to the reduced taxes in the recent reform long before it was actually signed into law.
“If this tax bill is going to have the impact that is being talked about, then you have to get it out there,” Chairman and CEO Al Tubbs said. “You have to share it.”
Seeing the difference in tax rates in every proposed form of the tax bill, the Ohnward board felt an obligation to do something aside from relishing the substantial tax savings coming in 2018.
“We almost felt like it was a moral responsibility when that kind of tax difference gets dropped in your lap, that you share it,” Tubbs said.
Ohnward announced the bonuses Dec. 21, before President Donald Trump had even signed the bill. He did so the next morning, just before Ohnward delivered the bonuses. A litany of banks joined Ohnward, including big names such as:
- U.S. Bank, which gave a $1,000 bonus to 60,000 employees.
- Bank of America, which gave a $1,000 bonus to employees earning less than $150,000, a total of 145,000 staffers.
- PNC, which gave a bonus of $1,000 to about 90 percent of its workforce, or 47,500 employees, and added $1,500 to the pensions of eligible employees.
Perhaps more notable, a handful of banks sized similarly to Ohnward also embraced the pay-it-forward tactic.
- The $2.07 billion Gate City Bank, Fargo, N.D., delivered a $1,000 bonus to all non-management employees and put $500,000 toward offering free appraisals on home remodels, purchases and refinances.
- The $1.64 billion First Farmers Bank & Trust, Converse, Ind., paid a $750 bonus to all full-time employees and raised its minimum wage by $2.50 per hour.
- Pinnacle Bancorp, Omaha, Neb., spread $2 million in bonuses across its entire workforce, starting with $1,000 to all full-time employees.
“We just felt like the right thing to do was to show our support for our government making a tax cut that was for all people to share the benefit immediately — to the great staff that we have across our company,” said Sid Dinsdale, chairman of the $10.1 billion Pinnacle and owner of Pinnacle Bank in Sioux City, Iowa, where its 13 employees also received bonuses. “I’ve never done anything that’s gotten this big of a positive reaction from our employees in my career.”
Tubbs and his board urged Ohnward’s employees to further the effect of the tax relief in a tangible manner by spending or donating their bonuses locally. Some staffers used it to cover existing expenses or necessities.
“You don’t realize how much a difference $1,000 can make in the lives of many people,” Tubbs said, specifically mentioning one employee who had just put tires on his car.
The response to the bonuses was so “rewarding,” remarked Abe Tubbs, one of Al’s two sons who work in the organization. Abe told his father it was the best day he’d ever had in community banking.
It’s unlikely any of these banks — and the list would need many more entries to be anywhere near complete — passed along to their employees the entirety of their savings from the double-digit percentage tax rate cut. Tubbs acknowledged as much in the email announcing the bonus to employees.
“Part of this reduction in tax expenses will need to be retained as capital to support future growth,” the message from Ohnward’s board of directors read. “Part of it will need to be used to respond to always fierce competition in our markets.”
In Tubbs’ opinion, diminished taxes are a step toward leveling the playing field with tax-exempt credit unions and the portion put toward capital certainly strengthens a bank’s foundation.
“It creates some substantial savings, really meaningful savings that can help capitalize a bank.”