Dime Bancorp said Friday that it will eliminate 400 jobs, or 6% of its work force, and record $125 million in charges in a restructuring that bears the mark of new chairman Anthony P. Terracciano.
The company said it is taking "a series of actions" intended to slash expenses by $50 million. They include the sale of $2 billion of securities, mostly mortgage-backed, to reduce risk in its balance sheet.
Mr. Terracciano, who is known as a cost-cutter and turnaround artist from stints at Mellon Bank Corp. and First Fidelity Bancorp, was seen having a similar belt-tightening in mind when he joined Dime in July.
"These profit-improvement initiatives are designed to improve our productivity while positioning Dime to take full advantage of new technology to deliver a more extensive product set and higher levels of satisfaction to our customers," Mr. Terracciano said.
The job cuts are to come in the New York metropolitan area, about three-fourths in banking operations that do not have contact with customers and the rest in mortgage operations.
"This is an opportunity to improve productivity and customer service," Lawrence J. Toal, Dime's chief executive officer, said in an interview.
The securities sale, representing half of Dime's portfolio, is to result in a $87 million charge in the third quarter. The remaining $38 million of charges are for severance and other items.
The $25 billion-asset company is the latest to announce a restructuring this year. In August, Bank of America Corp. announced plans to eliminate 7% of its workforce. In July, First Union Corp. said it would cut 7% of its jobs, shut down its consumer finance unit, and sell off its credit card and mortgage servicing portfolios.
Investors and market watchers are also eagerly awaiting a restructuring announcement from KeyCorp.
Meanwhile, Dime continues to fend off a $1.9 billion hostile takeover by Melville, N.Y.-based North Fork Bancorp. In July, Dime secured a partner in that fight. Warburg Pincus Equity Partners agreed to invest $238 million in Dime to help it buy back more than 13 million of its shares in a Dutch auction.
So far Dime has collected only 275,000 of its shares in the auction, which is paying a range of $16 to $18 a share. Dime's stock is trading higher - it closed Friday at $21.625, up $1.50 - and that may force it to raise the range of the auction or drop it and buy back shares in the market.
John Adam Kanas, chairman and CEO of North Fork, told American Banker in a recent interview that he might consider dropping his bid for Dime, and said the ongoing battle is to blame for his own company's falling share price.
The investment by Warburg and the agreement by Mr. Terracciano to join Dime were the culmination of a months-long strategic review that began after North Fork launched its takeover bid and blocked Dime's merger with Mahwah, N.J.-based Hudson United Bancorp.
James Ackor, an analyst at Tucker Anthony Cleary Gull, said the moves indicate Mr. Terracciano is "making his initial mark."
Analysts also said the announcement is a refreshing change after months of nasty exchanges between Dime and North Fork and growing shareholder discontent with the way Dime management has been managing the situation.
"This is at least a shift away from the corporate-governance blunders that have kept a lid on the stock," Mr. Ackor said.
The restructuring of the balance sheet by selling securities is to be "shareholder equity-neutral," Mr. Toal said, and should widen the company's net interest margin by 20 to 25 basis points. Most of the changes should be done by yearend, he added.
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