When they launched a restructuring program two years ago, Vermont Financial Services Corp. executives didn't want to bring in outside consultants. But eager to get the effort behind them, they had a change of heart.
Last March, the Brattleboro-based bank retained a consulting firm to help reach its cost-cutting and revenue growth goals ahead of schedule.
"We were making progress. But we didn't want to spend another two and a half or three years doing it," said John D. Hashagen Jr., chief executive of the $1.2 billion-asset bank. "We decided to finish it sooner rather than later."
Mr. Hashagen noted that all the executives working on the Profit Improvement Plan task force still had their regular jobs to attend to. So the bank looked for outside assistance, and settled on Diversified Consultants Inc. of Atlanta.
"The combination of us being part way through the program - and them coming in with their expertise and having done it a few dozen times - made it work really well," he said.
Vermont Financial introduced peak-time staffing in its branches, brought in new technology to improve consumer loan operations, eliminated some unprofitable transaction account products, and raised some fees.
Those steps helped Vermont Financial beat its performance targets, which Mr. Hashagen talked about in an August 1994 Management Strategies feature.
At the time, the bank aimed to get its efficiency ratio, or noninterest expense per dollar of revenue, to 65% by the fourth quarter of 1995. The actual number was 63%, and the ratio for the year was 64%.
The bank also posted better-than-expected returns on assets and equity. Credit quality, which suffered in the early 1990s, continued to improve. The ratio of nonpeforming assets to total assets was 1.20% last year compared to 1.76% in 1994.
And while the staff was cut by 16% over the past two years, Mr. Hashagen said "not more than five or six" employees were given pink slips.
"We've been able to keep the staff here and the morale here pretty much intact while still getting down the efficiency ratio," he said.
