FirstMerit Corp. will eliminate 338 positions as part of its cost-cutting initiative this year and next, executives said Tuesday. The cuts represent 11 percent of the company’s overall work force.
The bank will save $30 million in 2013 and an anticipated $15 million in 2012 with the cost-cutting, which also includes branch closings, President, Chairman and Chief Executive Officer Paul Greig said in a presentation to investors Tuesday morning in London. The bank said it used a consultant last fall to evaluate more than 4,000 submissions for cost-cutting by employees. There were 341 ideas selected to take “proactive steps to confront industry challenges” such as “current/future legislative environment, low [interest] rate environment, economic environment and declining level of branch traffic,” according to the presentation.
“This initiative speaks to our philosophy of addressing both challenges and opportunities in a proactive manner,” Greig said.
Last week, the Beacon Journal reported branch closures and that layoffs took place at the bank, including the elimination of assistant branch manager positions.
FirstMerit has 205 branches.
Spokesman Rob Townsend said he could not provide many immediate details of the initiative, but said “we hope to capture most of future positions through attrition.”
According to the presentation, 241 positions will be eliminated in an area dubbed “span of control,” which includes eliminating the assistant branch manager positions, an increase in teller staffing flexibility and eliminating what were judged redundant regional leadership positions.
In an area dubbed “duplication,” 75 positions will be eliminated in the reduction of branch geographic overlap, along with combining and eliminating statement printing and the consolidation of retail support call centers.
On Monday, the bank released the list of eight branches that would be closed and one being converted to a drive-up only location. Of the nine branches affected, six are in the Akron area. The closings will be later this summer in Barberton, Brunswick, Cuyahoga Falls, Medina, Sharon Center and Stow. The North Hill branch in Akron will convert to a drive-up location.
“The duties will be assigned within branches and the shift will be seamless,” Greig said. “We will continue to provide the same high levels of customer service for which we have been recognized.”
Another 38.5 positions will be eliminated in an area dubbed “other ideas,” listed on a FirstMerit presentation as “85 percent of the total ideas, 11 percent of the total positions eliminated and 14 percent of the total impact.” Greig said that area has another 291 ideas that will be used to cut costs.
Also on the slide presentation are negative numbers listed under positions eliminated, which include “strategic sourcing methodology, renegotiate vendor services, reduce temporary help, insource a portion of the attorney function for managed assets and replace non-billable … field examiners.”
An asterisk says those negative numbers indicate 16.5 positions added.
One-time expenses with the initiatives will be approximately $11 million before taxes, Greig told the analysts.
“We’re very pleased with the initiative, as the results will have a material impact on the company’s future bottom line and will progressively lower expenses over the remainder of the year,” he said. “We’re going to continue to look for ways to enhance the franchise in what is a very challenging environment.”
Before the cuts, the Akron-based bank said it employed 2,997.
Eye for acquisitions
Greig also told analysts that the company has a strong Chicago presence and continues to look for acquisition opportunities in the Midwest. Greig said the bank had looked at about 30 acquisition opportunities in the last two years.
Asked by an analyst if there were still opportunities in Chicago, Greig said there are many institutions of interest and the company will look for “real franchise value.”
“We’re not looking to add branches for the sake of adding branches. We’re looking to add an entity that will help us in generating good quality assets and give us a good deposit mix,” he said.
Betty Lin-Fisher can be reached at 330-996-3724 or email@example.com.