Solutions for talent retention and excess liquidity

Key talent retention

How would your bank fare if your top-performing lenders left tomorrow?

During these unprecedented times, retention of key talent, including mid-level officers, continues to be challenging. They value compensation and executive benefit plans differently than their older counterparts and are interested in more than just retirement plans.

For flexibility, boards could consider a deferred compensation plan (DCP) that allows for “in-service” distributions, which can be timed to coincide with certain life events, e.g., child entering college. In-service DCP payment schedules are customizable and can be made at any point, e.g., three, five or 10 years. Customizable plans that include equity, phantom equity, long-term incentives paid in cash and other nonqualified plans can also be designed as retention tools.

Liquidity and alternative investment challenges

Can you find an acceptable return for your excess liquidity?

Despite the low interest rate environment, some of the top insurance carriers currently offer products with tax equivalent yields in the 3.7% to 4.6% range assuming a 21% tax rate. The tax-advantaged interest generated by a fixed-income BOLI policy is typically substantially higher than what a bank can earn on other investments with a similar risk profile. BOLI holdings among Texas banks average 14% of regulatory capital.

NFP (executivebenefits.nfp.com) 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. Also, NFP provides a variety of other insurance products to help reduce and transfer risk. Visit NFP.com for more information.

Ken Derks
[email protected]
469-252-1037
Trey Deupree
[email protected]
972-672-8245
*Ken Derks and Trey Deupree are registered representatives with Kestra Investment Services, LLC, member FINRA/SIPC.