F.N.B. CORP. Job cuts, additions to be part of separation of banks

F.N.B. expects its stock to remain attractive because of its dividends.
THE VINDICATOR, YOUNGSTOWN, OHIO
By DON SHILLING
VINDICATOR BUSINESS EDITOR
HERMITAGE, Pa. -- First National Bank of Pennsylvania is looking to add some employees but cut others as it splits apart from its sister bank in Florida.
The net result will be fewer workers but not a substantial number, said Steve Gurgovits, president and chief executive of the Pennsylvania bank.
F.N.B. Corp., a bank holding company, announced Thursday it is creating separate companies to run its Pennsylvania and Florida operations.
About 1,800 employees now work for the Pennsylvania-based operation, which includes the bank, data processing center and subsidiaries that deal in finance, insurance and wealth management. Gurgovits said he couldn't estimate how many employees will be left after the restructuring.
F.N.B. said, however, that it expects to take a $20 million accounting charge for restructuring expenses, mostly related to employee severance costs. It expects to save $12 million beginning next year.
Job cuts
Gurgovits said job cuts are coming because each banking company can be more efficient when separated. Operating two banking systems that far apart required some duplication of services, he said.
The company also will save money because fewer corporate workers will be needed even though there will be two headquarters, he said. Federal regulators require additional corporate staff if a holding company operates more than one bank.
F.N.B. built a $7.5 million, six-story headquarters in Hermitage in 1997 and then moved its senior corporate executives to Naples, Fla., in 2001. Some corporate workers stayed behind, however.
Gurgovits said about 100 workers remain in the building today and he expects that number to increase slightly. F.N.B. will be recruiting some senior executives.
Its Hermitage data processing center, which employs 250, will probably add some positions because some processing work is now done in Florida, Gurgovits said. Other jobs at the center could be consolidated, however, to increase efficiency, he said.
Despite the reductions, Gurgovits said he expects customers and employees to welcome the change because F.N.B. management will be focused solely on improving operations locally. Gurgovits is to be president and chief executive of F.N.B., while Peter Mortensen will remain chairman.
Florida growth company
In recent years, F.N.B. has been investing in the acquisition of banks in high-growth areas of Florida.
Gurgovits said this created confusion in the investment community because F.N.B. was partly a growth company and partly a value company.
The split is designed to make the Florida operation a growth company that reinvests earnings to expand operations. F.N.B. will become a value company that pays a larger dividend to shareholders because it doesn't need to invest as much in expansion.
Even though F.N.B. won't be looking to grow as much as the Florida company, Gurgovits said he expects F.N.B. stock to be attractive to investors because of the recent cut in taxes on dividends.
He said he expects the two companies will pay a higher dividend than F.N.B. did alone and is hopeful that the combined stock prices will be higher as well.
The company's stock closed Thursday at $29.48, down about 5 percent.
January target
Officials expect the deal to be completed by January, when F.N.B. shareholders would receive stock in the Florida company. The value of F.N.B. stock would fall by about the value of the new stock.
Gurgovits said the initial price of the Florida company's stock will be set by Wall Street analysts, but he expects both stocks to be valued roughly the same. He said the prices of the stocks could jump around for a couple of months as investors get used to the companies but he thinks they eventually will settle into the same range.
First National Bank of Florida has 61 offices, $3.6 billion in assets and more than 1,200 employees. First National Bank of Pennsylvania has 130 offices in that state and Ohio and $4.5 billion in assets.
shilling@vindy.com