AmeriServ Financial to lay off 43 employees
AmeriServ Financial Inc. will lay off about 9 percent of its work force and initiate a wide-ranging series of cost-cutting measures designed to boost its sagging bottom line.
Johnstown-based AmeriServ, formerly USBancorp, announced Thursday that 43 full-time workers would be released — including 23 unionized positions. AmeriServe expects the reductions to save the company $2 million.
AmeriServ, a financial company that manages $1.2 billion in assets, is one of only 13 unionized banks in the country. AmeriServ employs 440 people in central and southwestern Pennsylvania. The majority, or 270 workers, are represented by Local 2635-6/7 of the United Steelworkers union. The remaining 170 workers are not unionized.
"Anytime you reduce the work force, its difficult. But we're doing this to improve the profitability of the company. We're in an interest rate environment that we feel will continue to be unfriendly," said Jeffrey A. Stopko, senior vice president and chief financial officer.
Stopko declined to comment on the specific locations of the work force reductions or their job functions. He said affected employees have not been formally notified. AmeriServ operates 23 retail branches spread over Cambria, Westmoreland, Somerset and Centre counties. In Westmoreland, AmeriServ operates branches in Derry and Seward, along with AmeriServ Mortgage Co., which employs about 20 people at its office along Route 30.
Company officials have scheduled a conference call Tuesday to discuss the latest turn of events.
The leadership of the steelworkers union has agreed to present a concessionary package of wage and benefit cost savings for 2003 to the membership for a vote. AmeriServ did not reveal the particulars, but said details and results of the union vote would be released next week.
The bank separated from non-unionized affiliate Three Rivers Bank of Monroeville in April 2000, in part to promote its own union affiliations and to attract greater union business. The company has been unionized since 1973.
AmeriServ said it expects to report a net loss for the third quarter, due in part to approximately $1 million in charges associated with the earnings improvement program, which was previously announced Aug. 26. AmeriServ is scheduled to release third quarter results Oct. 15. Ameri stock closed yesterday at $2.50, up 10 cents a share.
AmeriServ also said it plans to implement a wage freeze for all non-union employees in 2003, and suspend an incentive plan for about 25 top executives. The company also said it will significantly curtail advertising expenses, reduce technology-related spending and defer certain planned capital spending.
AmeriServ said the first phase of the earnings improvement program will conclude by the end of the year. The company expects the initiative to produce $4 million or more in pretax earnings improvement, with $3.5 million stemming from cost savings and the remainder from identified revenue enhancements.
Directors of AmeriServ also approved a new common dividend rate of 12 cents per year, effective with the fourth quarter dividend declaration scheduled in November. Stopko said the new dividend rate is based on the current stock price of $2.50.
AmeriServ said the second phase of its cost-cutting plan will begin immediately, and continue through the first quarter of 2003. The initiative will include continued efforts to sell Standard Mortgage Corp., a subsidiary based in Atlanta. AmeriServ picked up the mortgage loan service when it acquired Johnstown Savings Bank in 1994.
