Last year was a rough one for commercial lenders: Business and government railed against lenders for not lending, while they argued back that good loan prospects just weren’t out there. And in Massachusetts, two in five did not get raises.

Many, according to a recent survey of 177 Massachusetts financial institutions conducted by Maine-based Executive Search Group, had 2008 annual bonuses to tide them over. About 22 percent got bonuses ranging from $10,000 to $20,000, with 5 percent hauling in more than $50,000 for their annual reward. But a full 24 percent got no bonus at all.

It’s unclear whether 2009 annual bonuses will sweeten the deal, but at least 74 percent of those fortunate enough to earn a base salary raise were willing to bet their salaries would go up again in 2010.

Commercial lenders are a major moneymaking engine for commercial banks and credit unions, and tough economic times put their employers in a bind. As institutions try – or are forced – to rein in compensation allocations, they still have to make sure their lenders are compensated well enough to stay happy, and therefore less likely or willing to be poached by competition.

It’s the first time Executive Search Group has launched such a survey, said Managing Director Carll Wilkinson. The group took in responses in fall 2009 concerning 2009 salaries and bonuses from 2008, which were paid out in 2009 – as such, there are no 2008 salary figures with which to make a comparison. But based on conversations with the lenders themselves, Wilkinson concludes that 2009 compensation increases were mostly cost-of-living increases, with relatively scant awards for merit.

Tight Budgets Mean Slim Raises

Most commercial lenders in the state made between $80,000 and $200,000 in base salary last year, not including bonuses. The survey’s information on total compensation shows that top-producing lenders made a median of $210,000, while lower-producing lenders made about $95,000.

Compensation is down for many institutions’ ranks overall, said Susan O’Donnell, managing director of Southborough-based Pearl Meyer & Partners, a major compensation researcher and consultant.

Pearl Meyer & Partners releases broad compensation studies annually, and has noted that bonuses and salaries have been down in the past two years, although the company’s data doesn’t specify compensation for commercial lenders.

“Budgets are tighter because banks have earnings pressures,” she said, adding that banking was still a “challenged industry.” “Salaries [for 2009] are still maybe looking a little better than last year but not much, still hunkering around that 3 percent-ish kind of raise,” she said.

Still, O’Donnell said she’d expect commercial lenders to be rewarded more generously than other bank employees. It’s a key job for these banks, she said, and if lenders are producing, they can clearly point to a dollar amount that proves how much money they’re bringing in. That makes for a powerful argument for them snatching up whatever merit pay is available to dole out.

The Executive Search Group’s numbers show a powerful correlation between top loan producers and top earners, Wilkinson said. Those who made more than $50 million in loan volume got $200,000 or more in total compensation, while those who made $20 million to $30 million in loans hovered at $144,000 total.

Good work is rewarded, Wilkinson said, although he believes such lenders are underpaid as a group.

“These commercial bankers, whether or not they work at Bank of America or the $200 million ABC banks, are fundamentally providing a very valuable service – they allow for the free flow of capital,” he said. “You could make a case for them being underpaid.”

Interestingly, the largest banks didn’t post the highest total compensation numbers: Banks in the $5 billion to $10 billion asset range offered $184,000, while banks with more than $100 billion in assets were only at $166,000.

Gunning For The Best

Arthur Warren, of Walpole’s Arthur Warren Assoc., said the past year saw mid-tier banks in Massachusetts gunning for big banks’ commercial business, and backing it up with hefty compensation for the lenders who can make that growth happen. Some of that isn’t reflected in surveys such as the one by Executive Search Group, but it includes front-end signing bonuses and deferred compensation based on the lenders’ success in reeling in quality borrowers.

Dedham Institution for Savings has done little commercial lending, but is looking to change that, said Peter Brown, who took the reigns as CEO in May 2009. In his first few months on the job, he’s made two commercial lending hires and is looking to make another, aiming to cash in on bigger banks’ current timidity in making new loans.

Brown acknowledges that expanding commercial lending is complicated and far different than making residential mortgage loans. Commercial loans require constant maintenance, so it’s important to make the right hires.

The survey brought up some other interesting demographic trends. Compensation amounts were relatively even throughout much of the state, with lenders in Worcester, the South and North Shores and Springfield areas making in the $125,000-$135,000 range. Commercial lenders on the Cape and Islands were more likely to be in the $95,000 range.

Boston-area banks, however, towered above the rest, with a median of $181,000 in total compensation, which is a detail Wilkinson and O’Donnell attributed to the fiercer competition for talent in the bank-heavy city.

One downbeat tidbit: more than 44 percent of respondents have more than 20 years experience, while only 11 percent had five years experience or less. That betrays a dearth of young people in the trade, Wilkinson said, and it indicates banks should concern themselves with recruiting fresh talent, as well as top-producing veterans.