Seeking to slash overhead and boost customer service, a Vermont bank holding company is planning a four-month restructuring that will eliminate almost one-third of the company's staff and disperse many employees to branch sites.

Burlington-based Merchants Bancshares is cutting about 100 to 150 positions during the next few months, as it reduces its staff to about 370.

Another 40 employees will be reshuffled into customer service positions in the bank's 39-branch network, placing almost 70% of the total staff in customer service, compared with the current 55%.

Officials are hoping to reduce the staff through routine attrition, early retirement packages, and a voluntary severance program. Some layoffs are possible toward the end of the restructuring, but Merchants' president and chief executive Joseph L. Boutin said, "We'll get a lot of people to opt out early."

Officials expect the staff cuts and restructuring to yield savings of $8 million to $12 million, he said.

Merchants is reexamining its branch network to ensure that its delivery system is properly serving each market. Some branches may be moved into locations with lower occupancy costs or replaced with automated teller machines or supermarket branches. Others will just see reduced hours.

The company is also going to introduce computer and telephone banking in the fall so that "our customers can get to us anytime, anywhere, anyhow," Mr. Boutin said.

Finally, Merchants is lowering its service fees, although no changes will be made to the bank's rates.

"We need to enhance customer service," Mr. Boutin said. "If we're going to be a community bank, we're going to differentiate ourselves by how we deliver service. We're going to deliver that service with technology but with a very soft touch, a very human touch."

The company has hired John Floyd & Associates of Houston, a reengineering firm that specializes in community banks, to help with the restructuring.

The $626 million-asset company is hoping the restructuring will increase its earnings by attracting more customers, while simultaneously removing expenses that have sapped its revenues, Mr. Boutin said.

Merchants' efficiency ratio is generally in the high 60% to low 70% range, while the industry average is in the high 50% to low 60% range, Mr. Boutin said. The efficiency ratio measures the cost to produce $1 of revenue.

"It just sticks out like a sore thumb because we've been so focused on asset quality that we haven't been focused in this organization on how we do the work," Mr. Boutin said. "We're just going to look at that with a vengeance over the next four months."

Mr. Boutin admitted that some branches might be shuttered completely, although the bank has not included that in its estimates of cost savings. But he stressed that Merchants would remain in all its markets through automation.

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