Phila's largest bank plans 11% payroll cut

Despite steady loan growth and profitability in its earnings report today, Beneficial Bancorp, the largest bank still based in Philadelphia, says it "will reduce its salary and benefits expense by approximately 11%" by June through layoffs of middle managers and other relatively high-paid workers in branches and its headquarters at 1818 Market St. Statement here.

"It is painful. It is the worst," chief executive Gerry Cuddy told me, of the job cuts. He noted Beneficial hadn't reduced payroll in several years, "unlike the big banks that do this each quarter." But, as a newly-public company (it had been owned since the mid-1800s by depositors but has converted in stages to stock ownership), Cuddy said Beneficial can't wait any more for interest rates to rise; it has to manage for today's low profit margins: "We have to look at our expenses."

Investors cheered the job cuts by boosting Beneficial shares in early trading. Beneficial employed 766 at its 1818 Market St. headquarters and branch offices throughout the Philadelphia area as of Dec. 31. But Cuddy said the company has only cut 44 positions, mostly "senior people," about half of them from branches.  The deal also follows Beneficial's acquisition of the former Conestoga Bank.

Beneficial is often mentioned by bank analysts as a potential takeover target. But Cuddy says "our strategy is unchanged, we're going to grow organically and look for M&A opportunities like Conestoga."

"Employees whose positions are eliminated as a result of the reduction in force will receive severance packages, which will include outplacement services," the bank said.