
DATE: Tuesday, June 3, 1997                 TAG: 9706030264

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY TOM SHEAN, STAFF WRITER 

                                            LENGTH:   91 lines

BANK TO CUT BRANCHES, WORKERS SIGNET TO ANNOUNCE MAJOR RESTRUCTURING

In an effort to bolster its profitability, Signet Banking Corp. will unveil the details of a major restructuring this morning.

The plan, which has been taking shape since late last year, is likely to include a reduction of Signet's 4,500-person work force and the sale of less-productive branches, said securities analysts who follow the Richmond-based banking company.

``It will be fairly sweeping,'' said Vernon Plack, an analyst with the securities brokerage firm Scott & Stringfellow Inc. ``I understand that downtown (Richmond) will get hit pretty hard.''

He estimated that the restructuring will involve cutting Signet's work force by 15 percent to 20 percent, which would be 675 to 900 employees.

In addition, the company probably will take a charge of $40 million to $50 million to cover the cost of revamping its operations and letting employees go, he said.

Signet has 245 employees and 27 branches in Hampton Roads.

David West, an analyst with Davenport & Co. of Virginia, predicted that most of the Signet branches being sold will be in areas like Bristol and Danville that are outside the company's core area. Signet's greatest concentration of branches is in an arc running from Baltimore through Northern Virginia and Richmond to Hampton Roads.

``My sense is that this is the first step in an evolution,'' West said.

Last October Signet announced that it would concentrate on delivering financial products to a nationwide market via telephone, computer and mail. To plan for the reorganization, it hired a bank consulting firm and named a team of Signet executives headed by president and chief operating officer T. Gaylon Layfield.

Signet's pursuit of a national market grew out of its experience with credit-card marketing and heavy reliance on statistical analysis of prospective customers. A pioneer in the credit-card business in the 1950s, Signet spun that card operation off to shareholders in the form of Capital One Financial Corp. two years ago. Afterward, it set up another credit-card unit.

Since then, Signet has applied computer-related marketing techniques to the sale of student loans, mutual funds and home equity lines of credit to consumers throughout the country. In its latest annual report to shareholders, Signet executives said the company would rely more heavily on information analysis and alternative ways for delivering financial services.

``The traditional regional bank model that has served us well in the past will no longer be as effective in the future,'' the annual report said.

Scott & Stringfellow's Plack said he expects the new strategy to improve Signet's earnings, partly because the consulting firm advising Signet has produced favorable results at other large banking companies.

``I don't think it's clear that one strategy is better than another,'' he said. ``It all comes down to execution.''

Plack said he has raised his projections for Signet's 1997 earnings because of the company's new emphasis on using information technology to sell its products nationwide.

However, some members of the investment community have been skeptical of Signet's effort to remain independent. On several occasions in recent years, the price of its shares has climbed suddenly amid speculation that the company was about to be acquired.

Signet's shares, which trade on the New York Stock Exchange, rose 62 cents Monday to $33.50, a high for the past 52 weeks.

Organized in 1922 as the Morris Plan Bank of Richmond, Signet expanded beyond Virginia in the mid-1980s by acquiring banks in Maryland and Washington. However, its profitability has been depressed on several occasions by heavy lending in sectors that later suffered severe setbacks.

In the early 1980s, it was bloodied by losses on loans to a handful of Latin American and Eastern European countries. During the early 1990s, Signet was hit by anotherround of painful losses from construction and commercial real estate loans that went sour.

Last year, its earnings were reduced by a computer-leasing scam involving someone who passed himself off as an employee of cigarette-maker Philip Morris Cos. ILLUSTRATION: Color photo

NHAT MEYER, The Virginian-Pilot

Signet has 245 employees at 27 Hampton Roads branches and the Signet

Building in downtown Norfolk, above.

Graphic

SIGNET BANKING CORP.

Headquarters: Richmond

Organized: in 1922 as the Morris Plan Bank of Richmond; name

later changed to Bank of Virginia Co. and then to Signet

Principal market area: Virginia, Washington and Maryland

Employees: 4,528, including 245 in Hampton Roads

Bank branches: 238, including 27 in Hampton Roads

Assets: $11.7 billion