Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, January 16, 1992 TAG: 9201160251
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: MAG POFF BUSINESS WRITER
DATELINE: LENGTH: Long
DOMINION BANK CUTS 500 JOBS
Dominion Bankshares Corp. on Wednesday cinched its belt again, announcing retrenchment intended to save $10 million a year but costing nearly 500 jobs, or 10 percent of its systemwide work force.In the Roanoke Valley, Dominion said, it will eliminate close to 200 jobs. Because many positions already are vacant, the move affects about 100 employees locally. The largest numbers were in Dominion's operations and credit card units, where employees were told Wednesday their jobs were eliminated, effective immediately.
However, 50 positions will be added at Dominion Mortgage Co. in Roanoke. Displaced workers will have priority for those and all other vacant jobs, reducing to about 50 the number of persons terminated.
Some operations, such as leasing of business equipment and vehicles, were closed immediately. Vacant jobs will be posted for workers who are laid off.
Warner Dalhouse, chairman of the Roanoke-based bank holding company, said in an interview that he couldn't give an exact number of the people who will be out of work until all of the new positions are filled.
Nor could Dominion officials say where in the company's territory - which comprises Virginia, Maryland, Tennessee and the District of Columbia - all of the job cuts would fall. But both management and clerical positions are involved.
Dominion has about 5,300 positions systemwide, about 2,100 of them in Roanoke.
The cut affects 20 to 25 workers at the operations center on Plantation Road and seven at the credit card center on Airport Road.
A salary freeze instituted last year remains in effect, Dalhouse said.
The layoffs and other cost reductions announced Wednesday are part of the company reorganization that began in 1990. In the first phase, Dominion eliminated 475 full-time jobs but created 278 others, for a net loss of 197 positions systemwide.
Dalhouse said he doesn't expect another layoff of this magnitude, but "it's not the last time" the company may have to retrench.
He projected a net savings of $10 million annually from the new cost-cutting measures after all of them are in place and initial costs are paid.
Investors reacted favorably to the move. Dominion's stock price rose a half-point Wednesday to $12.75 a share. About 393,000 shares were traded, compared with a recent average of 102,000 shares a day, according to J.C. Bradford & Co.
Dominion stock had gained $1.38 a share on Tuesday amid speculation about the expected announcement.
The bank will announce its year-end financial figures next Tuesday. In a memo to employees, Dalhouse said that the fourth quarter should be similar to last year's third-quarter results, when Dominion reported net income of $4.6 million. If so, that should give Dominion annual income of roughly $20 million.
In other measures announced Wednesday, Dominion will:
Combine, sell or close up to 30 branches across its system, or about 10 percent of its banking offices.
Two of those branches are in the Roanoke area. The office in the Roanoke Regional Airport terminal will be replaced by an automated teller machine. Also, the "Money Market" branch inside the Ridgewood Farms Kroger supermarket in Salem will be shut. Company officials said those branches do very little business.
Discontinue Dominion Leasing Co. and quit the leasing business. The move affects 11 employees at sales offices in Roanoke; Northern Virginia; Richmond; Norfolk; Charlotte, N.C.; and Nashville, Tenn.
Dominion Leasing buys and rents all types of business equipment to commercial customers. Customers will continue to be served from the Roanoke office, but no new contracts will be written. The five other offices will close.
Dalhouse said elimination of the federal investment tax credit made leasing unprofitable. If Congress changes the law to make leasing more attractive, Dominion would consider re-entering the business.
Close the capital markets operation within Dominion Investment Co. Dalhouse said the operation was "too small to compete" in placing loans for private companies with outside investors.
Close Dominion Trust Co. offices in Bassett and Bristol. Dalhouse said this is primarily a matter of terminating leases. Customers in those communities will be served from Roanoke.
Scale back its occupancy in the new Dominion Tower building in downtown Roanoke. The company will offer its lease on the 16th floor for sublease.
Dalhouse said the company will establish its new training center at the Plantation Road facility instead.
Also, occupancy of the new tower's top floors for Dominion executive offices will be delayed until late this year or early 1993. However, Dominion Trust Co. and the bank's legal department will move to the new building this weekend.
Contract with a Nashville firm to run its child-care center on Plantation Road. Dalhouse said this will not change employment at the facility. The firm specializes in corporate child care.
Sell the company plane. The Beechcraft jet is being advertised for sale internationally.
Implement peak-time staffing at branches, gradually replacing some full-time tellers with those who will work 12 to 15 hours weekly, primarily at midday.
Retain Andersen Consulting Co. of Chicago to make a three-year study on processing of paper transactions. Dalhouse said the goal is to eliminate duplicate or unnecessary steps. Andersen, a national company, will handle the work through its Charlotte office.
Dalhouse said Dominion will decide by the end of March whether it will contract management of its data processing to an outside company. He said a study that is nearing completion could lead to downsizing of that operation.
A memo distributed to employees Wednesday said that "announcements of other strategic changes will follow as detailed studies are included."
"The steps we are taking are necessary and appropriate to achieve our goals of improving margins, reducing bad loans and cutting expenses," the memo said.
Henry J. Coffey Jr., who follows the Southeast banking industry for J.C. Bradford & Co. in Nashville, said the "underlying theme in banking in the '90s is going to be cost control."
The only way to ensure profits, he said, is through pricing, improved loan quality and lowering overhead.
"I'm sure the town wants an independent bank" headquartered in Roanoke, Coffey said. This can happen, he said, only by making "the hard decisions necessary to survive."
Guy W. Ford, vice president at Scott & Stringfellow Investment Corp. in Norfolk, said layoffs are "a fact of life in the banking industry. It's not unique to Dominion."
Banks in Virginia and elsewhere have taken similar actions, Ford said. "There's overcapacity in the business."
He said it's a reflection of the economy, which has reduced revenues so that banks must control expenses.
"It's an unfortunate reality," Ford said.
"Our operating costs are simply too high," Dalhouse said.
Memo: CORRECTION