PremierWest Bank has announced that it will consolidate 11 branches into existing nearby branches by the end of April, 2012.
The decision to consolidate these branches and the projected reduction in expenses follows an extensive branch network analysis with a focus on reducing expenses, improving efficiency, and positively impacting the overall value of the company.
These branches represent less than 10% of total bank wide deposits. Branch consolidation is projected to result in expense savings of approximately $1.9 million annually beginning in the second quarter of 2012. First quarter 2012 reduction of pretax income as a result of consolidation expense is expected to be approximately $790 thousand.
Jim Ford, President and CEO of PremierWest Bank, stated: “This is an extremely difficult decision, because it affects our employees and in some cases communities already hard-hit by the extended period of economic weakness. We certainly will continue, as we always have, to put people first and act with compassion toward our employees and the affected communities.”
The branches to be consolidated are as follows: In Oregon: Drain, Glide, Shady Cove, Running Y in Klamath Falls, and Airport Rd. in Medford. In California: Weed, Dunsmuir, Dorris, Tulelake, McCloud, and Bechelli Ln. in Redding. All affected customers will receive the necessary communication to be able to access their accounts throughout this transition.
When asked if the Shady Cove staff will have opportunity to move to the Eagle Point branch, Ford said, “we have not made those decisions yet, but will review our needs in the consolidated branch(s) and make that Decision over time. Also, we have other offices in the Rogue Valley as well as our administrative departments and any affected employees will have priority for those openings.”
The accounts and services in each of these branches will be transferred to a nearby branch, minimizing the impact on customers. Ford continued: “ Nationally, branch banking locations have declined every year since 2008 due to three trends which cannot be ignored:
1) the rapid increase in popularity of internet, mobile, and remote banking options
2) the weakness in the economy and
3) increased government regulation affecting the costs of operating community banks. These factors led to pressure on profitability, particularly for community banks operating numerous small, neighborhood branches.
PremierWest has made every effort to continue to operate each of our locations, but in some cases branch consolidation is the only viable option. We expect to retain a sizable percentage of our customers through service at our nearby branches. And in response to customer preferences, PremierWest has made significant investments in improving our online, electronic, and mobile
services. We plan continued upgrades and new electronic services throughout 2012, further enabling continued service to our customers in the affected areas.”
As a result of consolidation, some key measurements of the bank’s financial health will improve such as average deposits by branch, which are expected to improve by 40%, a reduction in core expenses, and an anticipated improvement in key capital ratios.