BancorpSouth could cut as much as 10 percent of workforce
BancorpSouth Inc. could trim as much as 10 percent of its workforce through a voluntary early retirement program it says is part of the company’s efforts to cut costs and improve efficiency.
The company said it would take a one-time pretax charge of $8 million to $16 million, or 6 to 10 cents per share, during the second quarter. After that, BancorpSouth would save $7 million to $12 million a year, or 4 cents to 8 cents a share.
Reports surfaced earlier this week that the Tupelo-based financial holding company had identified employees within its 292-location, eight-state reach to make the offer. Arkansas Business said the voluntary retirement offer was extended to employees who were 60 and older with 10 consecutive years of service with the company. In its statement Wednesday, BancorpSouth only confirmed the offer had been made to 418 employees – about 10 percent of its workforce – “who were eligible because they met job classification, age and length-of-service criteria as of March 31, 2013.
However, BancorpSouth’s senior executive officers and other key employees were not eligible for the program.
Two years ago, the company announced a “branch optimization plan” that closed 22 offices in six states, affecting about 100 employees.
As of Wednesday, 296 of the 418 has responded to the voluntary early retirement offer, and 194 had accepted.
The remaining responses are due by May 23. The retirements are effective May 31.
Employees to accept the offer can take a lump-sum payment of the pension plan enhancements, the company said. However, it noted that if the payouts exceed $16.7 million, BancorpSouth would take an additional $8 million to $13 million pretax non-cash charge.
BancorpSouth said it does in fact expect distributions to exceed the threshold, given the offers that have been taken so far and past experience. The company also said pension expenses could be reduced $700,000 to $1.2 million annually over the next 11 years.