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By CHRISTINA BINKLEY; Times Leader Staff Writer
Thursday, February 04, 1993 Page: 1 & 12A QUICK WORDS: FIRST EASTERN CUTS
WILKES-BARRE — First Eastern Corp. will shut down 10 bank branches and
eliminate 150 jobs by midyear under a restructuring plan announced Wednesday
afternoon.
The only changes apparent to customers will be a longer drive for some to
their nearest branch, said President and Chief Executive Officer Frederick
Deal.
The restructuring, which will be gradually, will save the bank about $5
million a year, he said.
“We are not abandoning any major market area, nor is it our intention to
abandon customers,” Deal said. Customer accounts will be consolidated with
other branches.
The branches to be closed are at Numidia, Briar Creek, Mifflinville,
Dunmore, Nanticoke, Kidder Street in Wilkes Barre, Butler Valley, Conyngham
Plaza, Mountainhome and Pittston Plaza.
The eliminated positions come from all levels and include from one to five
senior vice presidents. About a third come from the closing branches.
Employees whose jobs are eliminated can apply for other jobs in the company
or accept a severance package and take advantage of an out-placement program
to help them find new jobs, Deal said.
“It’s very unpleasant news. I don’t know how they took it,” Deal said, when
asked how employees reacted to the restructuring.
More than a third of the employees whose jobs will be eliminated learned so
today, Deal said. Others will learn in coming weeks; some jobs will be
eliminated through attrition.
The bank must receive approval for the plan from the Office of the
Comptroller of the Currency and the Federal Reserve. The agencies have 90 days
to approve the plan from the Feb. 17 application date.
First Eastern now has about 60 branches in a nine-county area.
The 10 to be closed were unprofitable and the possibility that they would
turn profits in the future was “nil,” Deal said.
The parent of the area’s largest independent bank, First Eastern Bank, has
struggled with financial problems for three years.
The bank’s problems originated with a deteriorating real estate loan
portfolio and heavy losses.
The company lost $65 million since 1990, but earned $2.5 million in the
last quarter of 1992.
First Eastern’s capital base — the money that would be left over if all
liabilities were paid — exceeds minimum guidelines for adequately capitalized
banks.
However, the bank’s capital-to-asset ratio of 5.04 percent is below the 6.5
percent level that the U.S. comptroller of the currency ordered the bank to
reach by June 30, 1993.
That forced bank officials to move quickly to raise capital. And $28
million raised in an overseas sale last week should satisfy capital
requirements, Deal said.
The stock was sold in Europe because the transactions could occur more
quickly than in the United States. After three weeks of presentations in
Europe by Deal and First Eastern’s treasurer, John Adonizio, the stock sold
for an undisclosed price.