California's SierraWest Bancorp is hoping that a Texas consultant will help the bank slash its high expenses.
Truckee-based SierraWest, a leading Small Business Administration lender among California community banks, hired Austin-based Alex Sheshunoff Management Services in March to redesign a lending process that has lost consistency as the company has grown.
"We've got too many different ideas about how to process a loan," said William T. Fike, president and chief executive officer of $474 million- asset SierraWest. "Instead of having a consistent and uniform way of processing, our activities were often the result of putting everybody's experiences together and didn't necessarily represent the most efficient way to process our work."
Company officials expect the redesign to let them reduce staffing by about 15%, or 40 people, saving about $1.5 million per year. Most of those cuts are expected to be in back-office operations, Mr. Fike said, and much can be achieved through normal attrition.
Already, however, SierraWest has eliminated two senior positions created in October when its Nevada and California banks were merged. Chief banking officer Martin Sorensen has already left; Mary Jane Posnien, who led centralized operations, is staying on as a consultant to help with the acquisition of Sacramento-based Mercantile Bank. That deal is slated to close June 30.
"We started with the top of the organization and are working our way down," Mr. Fike said. "We need to demonstrate to our employees that we are serious about this, and that no position is sacred."
SierraWest will record a charge of $1.1 million in the second quarter to pay Sheshunoff Management and cover termination benefits.
"I think those types of savings are very realizable," said Philip L. Hage, vice president of Van Kamper & Co. in San Francisco. "This is certainly the opportunity to realize some economies."
Sheshunoff Management is not related to Sheshunoff Information Services, an affiliate of American Banker.
SierraWest's expenses have soared over the years as it has grown, particularly through SBA lending.
Also, the bank's small branches in the pricey Lake Tahoe area tend to be expensive to maintain.
The bank expects to have more information about the changes in the next two months. Officials said much of the overhaul, including staff cuts, should be over by Aug. 1.