Thursday, December 18, 2014

UPDATE: First Niagara cuts 170 managers as branch banking fades

Blames Internet, smartphones

UPDATE: First Niagara cuts 170 managers as branch banking fades

(Adds comments from bank officials) First Niagara Financial Group, the Buffalo, NY company that operates former Harleysville National Bank offices in suburban Philadelphia, confirms it is cutting up to 170 branch managers and teller supervisors at its nearly 450 branches across four states, as branch traffic drops and more customers bank online and by phone. The cuts come a year after First Niagara laid off dozens of assistant branch managers.

The bank has now reduced management headcount, from the former three per branch, for example, in suburban Philadelphia, to one; at some branches the ranking officer will be a "service manager" with limited management responsibilities, First Niagara retail banking chief Mark Rendulic told me, confirming an account by a laid-off manager who asked their name not be used because official severance papers hadn't been signed.

First Niagara also says it has promoted 200 branch employees from tellers to "customer care" specialists to handle some of the duties the laid-off staff used to do, and will give them financial incentives to boost sales, said Scott Fisher, the bank's branch distribution chief. The bank has also designated more "financial advisers" who can sell customers investments and other products.

As at other banks, First Niagara says more customers are checking accounts and services online or by phone, instead of stopping by branches. First Niagara operated 136 branches in Pennsylvania as of last summer, down from 148 two years before, and has said it plans to shut more branches this year.

The number of bank branches in Pennsylvania dropped to 4,584 last summer, from 4,822 in 2008, according to Federal Deposit Insurance Corp. data. The state's largest banks have accounted for a disporportionate part of the cuts: PNC, the state's largest bank, had 486 offices in the state at last FDIC count, down from 564 five years earlier, including locations of the former National City Bank, some of which PNC closed after it bought Nat City. Also, Wells Fargo reported 288 branches in the state, down from 307 five years earlier; Citizens fell to 369, from 403. 

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As First Niagara's branch network and management ranks thin, the bank's call centers in Albany and Lockport, N.Y., "will play a more prolific role," Fisher said. He noted, for example, that the phone sales staff has doubled recently, to around 20.

Branches remain "very important" for many customers, Ranzulic added. "Yes, there's some cost reduction in the branch staffing. But we are continually investing in the digital platforms" and call centers. 

Some banks are still adding new branches in targeted neighborhoods. TD Bank plans to open a new Center City branch at 4th and Market St. on Jan. 17.

First Niagara may be right that bank branches are fading for real this time, but this also looks like a cost-cutting move under stress: Despite revenue growth fueled by acquisitions, First Niagara shares returned just 15% over the two years 2012-13, vs. 25% for S&P mid-cap financials, and 35% for the KBW Bank Index of major bank stocks. 

Joseph N. DiStefano
About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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