United Carolina Takes a 63% Hit To Implement Drastic Staff Cuts

A mid-size North Carolina bank has eliminated 16% of its work force and 15 of 144 branches in an effort to become more efficient.

To implement the program, United Carolina Bancshares of Whiteville spent $10.6 million last quarter and took a one-time 63% hit to its earnings.

"It (the amount of the cutbacks) shows that they took a pretty good whack at it," said David M. West, first vice president of Davenport & Co., Richmond, Va. "It's significant for a company to do this on its own initiative. Nothing drove this except the desire to improve long-term profitability."

Most of the restructuring charges stemmed from the elimination of 235 full-time jobs and 85 part-time positions. The majority of those positions, which were cut last month, were held by employees who were offered early retirement packages, according to bank officials.

The $3.3 billion-asset United Carolina hopes the branch closings and job cuts will boost pre-tax earnings by $8 million to $10 million by 1996. The 15 branches will be shut down by the end of next month, bank officials said.

"The ones being consolidated were built in the old days when there were branches on every corner," said John F. McLaughlin, senior vice president at United Carolina. "Some are within a quarter-mile of each other. It was just inefficient."

The bank is also acquiring 12 branches and $200 million of deposits from neighboring BB&T Financial Corp. and Southern National Corp., which needed to divest the branches to win Federal Reserve approval of their pending merger.

The new branches are much larger than the soon-to-be abandoned offices and are all in contiguous or pre-existing markets that are among the fastest growing in the area, Mr. McLaughlin said.

For the year, United Carolina earned $29.8 million, an 11% decline from a year ago.

David C. Stumpf, a bank analyst at Wheat First Butcher Singer in Richmond, said United Carolina's streamlining may have stemmed in part from its traditionally conservative nature.

"They (United Carolina) have not been as aggressive in the acquisition game as their peers have been, and as a result, have not had the opportunities to look at themselves and improve their efficiencies," he said. "They haven't made the tough choices in the past, and so they have not been as efficient as their peers."

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