Strategies to keep your top talent

Key talent retention

In today’s competitive landscape, top talent is a valuable commodity. The loss of key players can be detrimental and costly to your business, weakening your performance and leaving the bank vulnerable. However, with the right benefit strategies, your bank can become a magnet for attracting top talent and retaining them for the long run.

In the interest of building a winning culture and investing in the growth of top performers, many banks have implemented two to four various benefit plans in addition to salary and bonus.

For example, a deferred incentive compensation plan (DICP) has the flexibility to customize benefits to best align the objectives of the bank with the goals of the employee. These types of plans can be a powerful tool for the bank to attract and retain top performers.

Plans such as a DICP offer a long-term financial incentive that goes beyond basic salary and short-term bonuses, demonstrating your commitment to employee success. Benefit payments can be designed to provide both distributions in retirement, as well as interim “in-service” distributions to align with an employee’s shorter-term financial objectives, e.g., home purchases or a child’s college tuition.

An increasingly popular approach is to link annual awards and/or plan crediting rates to objective performance measures. Common benchmarks used may include a bank’s ROA, ROE, or a combination. The annual award may be calculated as a percentage of the executive’s base compensation or as a portion of the bank’s profits generated above a specified level.

Specific performance measures can also be tailored to specific bank and individual employee objectives and goals.

Strategies for managing employee benefit costs

Valuable benefits come with a cost. While they attract and retain talent, boost morale and contribute to a productive workforce, they can also be a major cost-driver for banks. Striking the right balance between offering attractive benefits and keeping costs under control calls for effective financing strategies such as Bank-Owned Life Insurance (BOLI).

As of September 30, 2023, 63% of Texas banks have funded employee benefit plans with BOLI*. BOLI is an earning asset that currently generates a net return in the range of 3.20% to 5.22%, which translates to a tax equivalent yield of 4.32% to 7.07% (assuming a 26% tax bracket). (Source: FDIC Call Reports, Schedules RC & RC-F September 30, 2023)

With its ability to minimize earnings pressure — while balancing liquidity and risk factors, as well as hedging against rate sensitivity — BOLI continues to be a preferred financing vehicle for banks of all sizes.

NFP is endorsed by both the ABA and TBA and serves more than 1,250 banks. We help management implement and administer customized compensation and executive benefit plans, as well as provide BOLI products and services. NFP also provides a variety of other insurance products to help reduce and transfer risk. Visit for more information.

Ken Derks
[email protected]
469-252-1037
Trey Deupree
[email protected]
972-672-8245
executivebenefits.nfp.com

*Ken Derks and Trey Deupree are registered representatives with Kestra Investment Services, LLC, member FINRA/SIPC.