Metro Bancorp in Harrisburg, Pa., which has been under pressure from several investors, is taking steps to improve earnings and shareholder returns.
The $2.9 billion-asset company said in a press release Tuesday that it will look to cut annual operating expenses by $3 million. The effort will include delaying the development of two branches, which will save $650,000 next year and $1.4 million in 2016. Metro is still dedicated to opening a branch in Lancaster, Pa., in late November.
Metro also said it redeemed $15 million in trust preferred securities last month, which should save the company about $1.1 million in annual interest expenses.
The company also said it will begin paying an annual dividend. Metro also plans to buy back about 5% of its stock starting in December.
Metro has been under pressure from several activist shareholders that want the company to sell itself. Letters sent in June from PL Capital, Basswood Capital Management, and Clover Partners all highlighted concerns over the company's underperformance.
"We carefully considered the views of shareholders," Gary Nalbandian, Metro's chairman and chief executive, said in a letter to investors. "We ultimately concluded that the continued execution of the strategic plan we have in place including the initiatives announced today is in the best interests of the company and will drive long-term value for all of our stakeholders."
Metro said the cost-cutting measures should increase its 2015 earnings by 12 cents a share and the following year's earnings by 25 cents a share. The company also said its repurchase program could boost earnings per share by 5 cents to 10 cents by the end of next year.
Metro Bancorp also announced that it will appoint three independent directors Douglas Berry, Jessica Meyers, and Thomas Smida in a move designed to further reassure investors.
At least one of Metro's investors is displeased with the moves, particularly the decisions to remain independent and to increase the size of the board. PL Capital said in a press release late Tuesday that it plans to nominate one or more directors for Metro's board in advance of the company's 2015 annual meeting.
"PL Capital is disappointed that you and the board did not reach out to PL Capital, or by your own admission, any other shareholders, before you appointed three new directors," Richard Lashley, one of the investment firm's principals wrote in a letter to Nalbandian included in a late Tuesday press release. "It would have been appropriate for you and the board to give PL Capital or other interested parties a chance to suggest qualified nominees for those seats."