Through the normal course of business our bank has always given employees an annual bonus which we refer to as our "Christmas" bonus. There is no additional compensation for anyone including MLO's. Is there a problem with this practice? Or are "Christmas Bonuses" going to be a thing of the past for everyone?

Is the bonus based on profit?

No, bonuses are based on employee merit.

Would your bank give the bonuses if the bank lost money that year? Or would the amount change depending on how much the bank or department made? It is going to be difficult to explain to an examiner that a bonus is not based on profits in any way.

Yes, we would receive bonuses if the bank lost money, luckily we have never been in that situation, if we ever were we would still give bonuses even if we had to scale them down a bit. We accrue every month for them and have been since 1994 under current management. We are just trying to see if what we have always done is OK under the SAFE act or if we are going to have to make a change.

The bonus issue falls under Reg Z MLO Compensation Rules. Does everyone get the same % or how is the bonus determined? If it determined on some kind of evaluation, are MLOs evaluated on their portfolio (interest rate, fees, etc)? I agree with TMatt that will be hard to explain to an examiner bonus is not tied to profits.

You might want to read what the CFBP proposed yesterday to clarify the payment of bonus compensation. It goes into significant detail on what they are proposing is acceptable and what is not.