Union Planters Corp. said it would streamline its branches, eliminating 600 jobs.
After years of building a chain of autonomous banks, the $18.4 billion- asset company said it now wants to make the 518 branches it operates in eight states more efficient.
The reorganization is expected to save at least $15 million a year, the Memphis-based company said.
Expanded operations centers in Mississippi and Tennessee would handle many functions ordinarily performed by the branches, including deposit- related operations, loan review, credit administration, and some marketing responsibilities.
"The opportunity is to drive the efficiency ratio lower," said Jack Parker, Union Planters' chief financial officer.
It was 52.99% in the first quarter, and the company has said it would like to get it below 50%. Ratios under 50% are considered "superior," said John Pandtle, an analyst with Robinson Humphrey Co.
The announcement of streamlining plans followed the Jan. 1 consolidation of Union Planters' 35 bank charters. A federal law allowing for such changes took effect last year.
Mr. Parker said Union Planters would leave the presidents of the old banks in place. "We don't want to lose that hands-on customer service," he said.
The company is also completing its acquisition of Magna Group of St. Louis, which would add $7 billion of assets and 139 locations in Missouri, Iowa, and Illinois.
That and other pending deals would push Union Planters to $31.2 billion of assets by yearend, a 73% jump from its current size.
Though it could have cut staff earlier, "I think the recent acquisitions combined with their current needs caused them to say, 'Let's get this all done now,'" said Joseph A. Stieven, analyst at Stifel, Nicolaus & Co. in St. Louis.
In addition to centralizing some operations, Union Planters is standardizing products so that customer service can be handled by five expanded call centers. In the past, each of Union Planters' banks operated its own customer service center.
"We probably have, through our 35 separate banks, 4,000 different types of checking accounts," Mr. Parker said. "We're changing that."
One of the call centers will be Magna's, in Belleville, Ill. The others are in Mississippi, Tennessee, and South Florida.
All will benefit from advanced technology, Union Planters officials said.
Eric E. Rothmann, an analyst with Stephens Inc. in Little Rock, said Union Planters was somewhat "behind the curve" in comparison with other regional banking companies. But he gave it credit for making changes now.
"It makes for a better company," he said.
Mr. Rothmann was particularly supportive of Union Planters' decision to keep the top managers of the old separate banks on the job. "If you're leaving the front people in place but still automating and centralizing, you get a better bank for your buck," he said.
Union Planters officials said that they would continue to hold management teams responsible for performance in the retail branches, and that the bank would continue to seek counsel from local advisory boards.
The company said it hopes that by leaving the management and board structures in place it can maintain its community banking culture.
"It's important that we maintain that autonomy," said spokesman Bill Andrews. "We're convinced that is what separates us from larger banks."
The company has been testing the streamlined structure at four of its old banks in Tennessee, Arkansas, and Mississippi.
The program will be implemented at the rest over the next year, Mr. Parker said.
