Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, January 18, 1992 TAG: 9201200206
SECTION: EDITORIAL PAGE: A-9 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
DOWNSIZING AT DOMINION
A HEADLINE that blares "Dominion Bank cuts 500 jobs" comes as a jolt to the Roanoke Valley, where Dominion Bankshares Corp. is crucially important to economic vitality.It is, of course, also downright scary for Dominion's 2,100 local employees, and for another 2,200 throughout the Dominion system, to hear from the boss, Warner Dalhouse, that this latest downsizing probably won't be the last.
The good news, however, is that Dominion - the valley's fourth largest employer - remains a strong and profitable institution, and at a time when many regions of the country are burdened with financial institutions not so strong or profitable or well-managed. (Check out New England's banking scene!)
Like most other medium-sized and large banks in Virginia and industry-wide, Dominion is going through a necessary retrenchment following the expansion-driven, go-go days of the 1980s. Even if a recession weren't reducing revenues from loans, linked in some cases to the speculative commercial real-estate development of the past decade, technological evolution in banking would seem to dictate downsizing employment.
Dominion is taking some sensible back-to-basic steps, including closing out such sidelines as the leasing of business equipment and vehicles. It is shutting or consolidating 30 branches in its territory, which includes Virginia, Maryland, Tennessee and the District of Columbia, where the collapse of the commercial real-estate market has hit Virginia-based banks with a particularly hard wallop.
The contraction (after expansion) of employment is an unfortunate and wasteful thing; a little more foresight in Northern Virginia, in particular, might have avoided some current and future pain. Still, the steps taken - however hard for the people affected - apparently are necessary now for Dominion to control its operating costs.
The result should be that the Roanoke-based bank will be able to ride out the recession and emerge a stronger institution when the economy recovers. It isn't insignificant that investors have responded positively to the bank's cost-cutting measures. The retrenchment triggered an increase in Dominion's stock prices.
In addition to initiating construction of the Dominion Tower, an economic-development landmark in Roanoke's downtown, the bank in recent years has been consolidating employment in the Roanoke Valley. The net loss of jobs here, from the downsizing announced this week, could prove as few as 50, says Dalhouse. The bank seems to be making an effort to protect its hometown employment base.
But it is not only with banking jobs, of course, that Dominion's fortunes are linked to the valley's. The local economy benefits in many ways from a strong banking presence (civic, cultural and charitable leadership among them). For now the chief problem, here as elsewhere, is shortage of capital. For the longer term, the challenge is to remain masters of our economic destiny.
If banks have ridden a roller-coaster in the past 10 years, the next 10 may prove equally unusual, if in different ways. The competitive and regulatory environment, as well as the technology of financial institutions and markets, seems poised for more and rapid change.
The hope is that Dominion, by managing its affairs wisely, will be able to maximize influence over its fate - and help lead an economic recovery by doing what must remain any bank's central role: lending money.