Magazine article American Banker

N.D. Bank to Cut 200 Jobs and Take $5 Million Charge

Magazine article American Banker

N.D. Bank to Cut 200 Jobs and Take $5 Million Charge

Article excerpt

By Pavlenko-Lutton, LAURA

Making good on a promise to cut expenses, Fargo, N.D.-based Community First Bankshares announced Friday that it is eliminating 200 jobs and taking a $5.5 million charge during the fourth quarter.

The $6 billion-asset company had been hinting for weeks that a cost- cutting plan was in the works to address a slowdown in acquisitions, rising expenses, and a flattening yield curve.

"There is pressure on earnings," said Donald R. Mengedoth, chairman and chief executive. "We needed to take some steps to reduce expenses."

The plan calls for Community First to spend half of the $5.5 million charge on severance packages and half to get rid of unneeded computer equipment acquired in recent bank deals. The company expects pretax earnings to increase by $18 million annually as a result of the cuts.

Community First has already eliminated 200 jobs since March, partly because it sold its subprime lending subsidiary last quarter. The additional 200 jobs will be cut throughout the company, Mr. Mengedoth said.

Community First, which has doubled its assets in two years primarily through acquisitions, had recently relied on mergers to increase earnings 10% to 15% a year.

But like most regional banks it has hit an acquisition dry spell because sellers have not adjusted expectations to meet acquirers' lower stock prices, Mr. Mengedoth said. Since Aug. 1, Community First's stock is down 17%.

Community banks are often shocked to receive bids that are half of what they would have received six months ago, Mr. …

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