to 250 employees this month, or up to 2.6% of its workforce, and will record a fourth-quarter pretax charge of up to $30 million in a cost-cutting campaign.
T. Joseph Semrod, chairman and chief executive officer, acknowledged the bank has struggled to boost revenues. He said the restructuring will eliminate "internal bureaucracy" so that remaining employees can focus on customers.
Summit said it has already eliminated half of the targeted jobs, and the remaining cuts should be completed by Nov. 30. The company said it expects the program to save it $20 million a year. "Summit has reevaluated its core strengths and believes it can grow top-line revenues and improve performance,'' Mr. Semrod said.
Its stock closed Thursday at $34.50, up 25 cents.
Summit, New Jersey's largest homegrown bank, has faced increasing competition in the last two years from out-of-state players including Pittsburgh-based PNC Bank Corp. and Charlotte, N.C.-based First Union Corp.
The company has attempted to increase revenue by expanding in Pennsylvania and entering Connecticut. In August it bought $1 billion-asset Prime Bancorp near Philadelphia.
Late last year and earlier this year, Summit put itself on Connecticut's map after completing separate deals for NSS Bancorp in Norwalk and New Canaan Bank and Trust, which combined to create an $825 million-asset subsidiary. Last month it made a move to build its Connecticut presence further, announcing a deal to buy $392 million-asset NMBT Corp. of New Milford.
Analysts said Summit, which maintains an efficiency ratio of around 50%, has a reputation as a disciplined expense manager. But cost management alone is not enough anymore, they added. "They have not been able to drive the revenues," said John Wimsatt, an analyst at Friedman Billings Ramsey, who was skeptical about whether the restructuring will help. "I don't see them outperforming" their peers, he said.
The restructuring announcement comes on the heels of a 21% decline in third-quarter profits, to $93.6 million, largely, Summit said, because it wrote off a $60 million loan to a company that declared bankruptcy.
