Nearly three-fourths of BB&T Corp.’s employees will get a one-time $1,200 bonus in January as part of the bank’s response to the controversial corporate tax rate cut signed into law Friday by President Donald Trump.
The tax cut reduces corporate rates from 35 percent to 21 percent.
About 27,000 BB&T employees will receive the bonus. Most of them are not eligible for incentives or commissions, BB&T said. The bank had 37,189 employees as of Sept. 30, according to a regulatory filing.
The bank also will raise its minimum hourly wage to $15 from $12 on Jan. 1, as well as provide $100 million to the bank’s philanthropic fund.
The bank will spend $152 million altogether on the three initiatives — $37 million on the one-time bonus and $15 million on the wage increase.
By comparison, BB&T had record net income of $2.26 billion, up 16.7 percent, in fiscal 2016. That means the cost of the three tax-cut initiatives equals 6.7 percent of the bank’s profit for 2016.
BB&T confirmed the expenditures are “made possible through the tax reform package recently signed into law and in light of the new corporate tax rate deductions.”
But analysts and critics say many corporations, particularly banks, reached levels of profitability the past two years that would have allowed them to pay the bonuses and increase wages without the tax cut.
Kelly King, BB&T’s chairman and chief executive, said in a statement the pay initiatives reflect the bank’s recognition of employees’ hard work.
“BB&T’s mission is to make the world a better place to live, so it makes perfect sense to share these benefits and continue making a positive difference in the communities we serve,” King said. “We’re pleased this legislation makes that possible.”
Bank of America Corp. and PNC Financial Services Group Inc. made similar financial pledges Friday.
For Bank of America, it committed to pay a $1,000 bonus to 145,000 employees, nearly 70 percent of its U.S. workforce. According to the memo sent to employees by Chief Executive Brian Moynihan, employees with total compensation up to $150,000 are eligible. The total cost would be about $145 million.
PNC has a multifaceted strategy: a $1,000 cash payment to 47,500 employees in the first quarter, affecting 90 percent of its employees; raising its minimum hourly wage to $15 an hour by the end of 2018; placing $1,500 in employees’ defined benefit pension plan; and make a $200 million contribution to the PNC Foundation.
William Demchak, PNC’s president and chief executive, said in a statement that the “tax reform law creates an opportunity to reward our employees who are working hard each day to serve our customers, build strong relationships in our communities and create long-term value for our shareholders.”
First Horizon National Corp. will provide a one-time $1,000 bonus in January, primarily to employees who do not participate in company-sponsored bonus plans.
The Memphis, Tenn., bank completed Nov. 30 its $2.2 billion purchase of Capital Bank Financial Corp., which has 22 Triad branches.
Neither BB&T, PNC or First Horizon have pending acquisitions before federal regulators, although BB&T and First Horizon would benefit from a potential bipartisan bill in Congress that would raise the asset criteria from $50 billion to $250 billion for enhanced regulatory standards that are accompanied by expensive compliance costs.
On Wednesday, Wells Fargo pledged to raise its minimum hourly wage from $13.50 to $15 in March and increase its community philanthropic efforts by at least $400 million.
Wells Fargo’s tax-cut initiative come as it is still trying to restore public and employee trust in the aftermath of its customer fraudulent account scandals.
“We believe tax reform is good for our U.S. economy and are pleased to take these immediate steps to invest in our team members, communities, small businesses and homeowners,” Tim Sloan, the bank’s bank and chief executive, said in a statement.
However, to put Wells Fargo’s tax-cut related initiatives into perspective, it had $21.94 billion in net income for fiscal 2016.
Some critics say Wells Fargo, as well as AT&T, Comcast and other corporations will similar tax-cut related announcements, may be trying to curry favor with the Trump administration for regulatory and acquisition considerations.
Trump said earlier in the month that federal regulators should not ease sanctions and penalties against Wells Fargo related to its consumer-account fraud scandal.
It’s not just national and super-regional banks providing employees with benefits from the corporate tax rate cut.
Aquesta Financial Holdings Inc., based in Concord, said its board has approved a cash bonus of $1,000 to all employees, to be paid the first week of January, and raising its hourly minimum wage to $15 on Jan. 1.
“We are very happy to share with our valuable team members some portion of the benefits Aquesta will realize by the enactment of Tax Reform,” Jim Engel, the bank’s president and chief executive, said in a statement.
“Decreased tax rates will allow Aquesta Bank to continue to grow by accelerating lending to small businesses and hiring additional team members to help with that growth”
Aquesta has branches in Charlotte, Cornelius, Davidson, Huntersville, Mooresville and Wilmington.