MSB Bancorp has unveiled a cost-cutting plan that management said will boost profits by $600,000 this year and $1.7 million in 1998.
The $825 million-asset Goshen, N.Y., parent of MSB Bank said it will eliminate $757,000 of payroll costs and $614,000 of facility costs.
"Our main goal in life at MSB is to enhance shareholder value whenever possible," said William C. Myers, president, CEO, and chairman of MSB Bancorp. "We felt it was time to reduce some of the expense out of the organization."
MSB announced its plan late Monday. Its stock closed Tuesday at $22.69 a share, up $1.19.
Market watchers welcomed the move.
"Obviously there's a feeling this is the right thing to do," said Joseph R. Biondo, a Smith Barney senior portfolio management director in Port Jervis, N.Y., who represents 213 shareholders that own about 15% of the company's stock. "You have to run a profitable business to stay competitive."
Kevin Timmons, senior bank analyst at First Albany Corp., said the move is overdue, noting that the thrift company hadn't reorganized after nearly doubling its size by acquiring seven New York branches of California's First Nationwide Bank in January 1996.
"I wouldn't say this is a huge step," Mr. Timmons said. "It's certainly quite helpful."
He said the acquisition had diluted the stock, causing it to trade in the mid-teens, down from a mid- to high 20s trading range in the fall of 1995.
"The expectation was that it was going to add to bottom line," he said. "The quarterly numbers have really not gone up like they had hoped for."
Mr. Myers said the 15-branch banking company had already fired six employees, including three vice presidents, from its staff of 280. This is expected to result in about a $357,000 saving annually.
"Anytime you lay someone off, it's tough," said Mr. Myers, who added that no other layoffs are planned.
The layoffs included the company's three-person marketing staff. Mr. Myers said marketing responsibilities will be split between outside firms and employees within the company.
A reorganization of branches and branch staff is expected to save another $400,000 annually, and two branches in Newburgh, N.Y., will be consolidated to save about $214,000, he said.
MSB reported return on equity of 5.43% and return on assets of 0.48% at March 31.