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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 28, 1995
MERIDIAN BANCORP, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 0-12364 23-2237529
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Ident. No.)
35 North Sixth Street, Reading, Pennsylvania 19601
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (610) 655-2000
N/A
(Former name or former address, if changed since last report.)
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Item 5. Other Events.
On June 28, 1995, Meridian Bancorp, Inc. issued the press
release attached hereto as Exhibit 99.1, which is incorporated
herein by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
99.1 Press release of Meridian Bancorp, Inc., dated
June 28, 1995.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
MERIDIAN BANCORP, INC.
Dated: July 7, 1995
By/s/ David E. Sparks
David E. Sparks
Vice Chairman and Chief
Financial Officer
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EXHIBIT INDEX
Exhibit Number
99.1 Press release of Meridian
Bancorp, Inc., dated June 28, 1995.
EXHIBIT 99.1
PRESS RELEASE OF MERIDIAN BANCORP, INC.
MERIDIAN BANCORP ADOPTS FINDINGS OF SIX-MONTH
PERFORMANCE STUDY; UNIFORM NAME STRATEGY,
$55 MILLION IN COST SAVINGS,
$13 MILLION IN REVENUE ENHANCEMENTS
Reading, Pa., June 28, 1995 -- Meridian Bancorp, Inc.
(NASDAQ/NMS: MRDN) will adopt a unified marketing and delivery
plan using the single "Meridian" brand name as the engine driving
an organizational transformation. This action is one of many
recommendations approved by Meridian's Board of Directors, and it
caps an intensive six-month process designed to improve the
company's operating performance and competitive position.
"Our Board's approval of management's recommendations will
enable Meridian to bring the resources of the total organization
to the individual customer level," said Samuel A. McCullough,
Meridian's chairman, president and chief executive officer. "We
will be positioned to move from a banking company limited by the
service and delivery capabilities of traditional branches and
electronic banking to an organization that allows its customers
to virtually design their own customized banking services from
the versatile Meridian brand."
The anticipated results are:
-- The consolidation of Meridian's three member banks--
Meridian Bank, Delaware Trust Company and Meridian
Bank, New Jersey;
-- The ability to capitalize on Meridian's three-state
banking network;
-- Annual pre-tax cost savings of approximately $55
million and annual revenue enhancements, pre-tax, of
approximately $13 million;
-- A one-time pre-tax restructuring charge of $32 million,
or 37 cents per share after tax;
-- Cost savings that would have yielded a pro forma
performance ratio, or non-interest expenses as a
percentage of income, of 59.6 percent for the first
quarter of 1995 compared with the actual 66.11 percent
performance ratio reported for the same period and
compared with a stated goal of 59.9 percent by the end
of the first quarter of 1996;
-- A reduction in staff of 1,107 positions through a
combination of a hiring freeze imposed in January 1995,
separations, attrition and transfers of positions
through outside alliances;
-- Planned branch banking office consolidation affecting
24 of Meridian's 319 branches;
-- Proposed strategic alliances with outside firms
involving Meridian's automation and technology unit and
other units; and
-- An ongoing efficiency management process to ensure that
Meridian continues to improve upon its performance
ratio.
Financial Impact
Overall, more than 1,500 recommendations were submitted by
Meridian employees from across the organization during the six-
month internal review process initiated last January. The
recommendations, when fully realized, are expected to result in
annual pre-tax cost savings of approximately $55 million or 63
cents per share. This figure is in addition to the approximately
$9 million in cost savings identified prior to the latest six-
month performance study through renegotiations of outside vendor
contracts and the re-engineering of Meridian's corporate lending
processes.
Additionally, annual revenue enhancements of approximately
$13 million, pre-tax, have been identified in the most recent
six-month performance study. A major example of revenue
enhancements is the uniform application of fee schedules, fee
waivers and pricing points for various retail, corporate and non-
bank products and services.
These cost savings and revenue enhancement figures translate
into an expected positive after-tax impact of 78 cents per share
on Meridian's annualized financial results.
Meridian is estimating earnings for the second quarter of
1995 at approximately 80 cents per share prior to a restructuring
charge, compared to 70 cents per share for the second quarter of
1994, an increase of 14.3 percent. The restructuring charge is
estimated to be $32 million, or 37 cents per share after-tax.
The restructuring charge accounts for items such as employee
severance, write-off of fixed assets and expenses relating to
branch reconfiguration. Earnings per share for the second
quarter of 1995 are estimated to be 43 cents after the effect of
the restructuring change.
"By driving home the importance of customer service and
profitable growth, we've identified the kind of forward-looking
company we want to be, and we've challenged all of our people to
achieve that level," McCullough said. "We're acting at a time
when our company is strong, and this process will make us even
stronger," he added.
Staffing Impact
As a result of changes implemented from the six-month study,
1,107 out of a total of 7,112 positions will be eliminated across
the Meridian organization by mid-1996. Of these positions, 163
will result from attrition and from a partial hiring freeze in
effect at Meridian since last January; 334 will result from
strategic alliances with outside firms; and 610 from separations.
Meridian is offering outplacement services and an enhanced
severance package to those employees whose positions have been
eliminated and who cannot locate other positions within the
corporation.
"I am very proud of the way in which our employees have
stepped up and made, with extreme sensitivity, the tough
decisions -- especially those decisions involving people and
their livelihoods," said McCullough. "It's been a painful and
demanding process in order to make us more competitive -- and
we're trying to make the outcome as positive as we can for
everyone," he added.
Leveraging the Meridian Brand
According to McCullough, "The time is ripe for Meridian to
leverage our wide name recognition and our advertising and
marketing investments in support of a single brand name. The
regulatory environment and the advantages of one name versus
specific identities and separate cost structures now strongly
favor a one-brand strategy. We are creating a unified Meridian
brand, emphasizing customer segment-based marketing," McCullough
said.
More Efficient Use of Financial Management and Real Estate
Resources
Another key strategy inherent in the results of Meridian's
six-month study is the more efficient use of the corporation's
financial, management and real estate resources. In the coming
months, there will be planned branch banking office
consolidation, into existing Meridian branches, affecting 24
sites in Pennsylvania, New Jersey and Delaware. Meridian will
employ an integrated approach of geographically responsive teams
of local marketing and community relations specialists working
with knowledgeable branch banking managers who are sensitive to
local market needs.
Elsewhere in the Meridian organization, strategic investment
of resources is expected to further leverage the corporation's
business unit strengths through external alliances with outside
firms. For example, Meridian is negotiating with Andersen
Consulting as its strategic technology partner to assist Meridian
in its transformation of all of the functions currently residing
in its automation and technology unit. The value of the contract
over 10 years is estimated to be approximately $400 million. The
terms and conditions of the contract will be negotiated over the
next 90 days. Other external alliances also are being negotiated
separately with outside firms involving Meridian's merchant card
and property management units.
Organization
The Office of the Chairman under McCullough, where major
changes were made in September of 1994, remains intact.
Continuing to report to McCullough in the Office of the Chairman
are: David E. Sparks, Vice Chairman, Chief Financial Officer and
head of Finance and Administration; P. Sue Perrotty, Group
Executive Vice President and head of Retail Banking and Strategic
Market Distribution; William M. Fenimore, Jr., Group Executive
Vice President and head of Technology and Planning; and Thomas G.
Strohm, Executive Vice President and head of Corporate Staff.
Perrotty will continue to direct the retail and strategic
market distribution areas. Meridian's corporate banking
operations will be reorganized into a Corporate and Institutional
group structure to provide businesses with credit, non-credit,
investment banking and corporate finance services. A head of
this newly formed group is expected to be named in the near
future. In the interim, Wayne R. Huey, Jr., executive vice
president, will continue to manage Meridian's corporate
relationship banking unit.
Meridian's asset management subsidiary, reporting to
McCullough, and its Meridian Securities, Inc. securities
subsidiary, reporting to Sparks, will maintain their existing
executive management. George W. Grosz remains president and CEO
of the asset management subsidiary. Robert J. Unruh will remain
chairman of the securities subsidiary, and William T. Burke will
assume the additional title of chief executive officer in
addition to his current title of president of the securities
subsidiary.
Meridian's geographical orientation in the service of
corporate customers also is changing in tune with its one-brand
strategy and with interstate banking's emergence. Five
geographic regions, all eventually trading under the single
Meridian Bank identity, have been designated. John F. Porter,
III has been named to head a new unit of Delaware Trust Capital
Management serving high net worth customers, and he will continue
to serve as chairman and CEO of Delaware Trust Company until
completion of Meridian's one-bank strategy.
Paul W. McGloin will head a region that encompasses suburban
Philadelphia and the City of Philadelphia. Kermit R. Dyke will
continue to manage Meridian Bank, New Jersey until the completion
of the announced acquisition of United Counties Bancorporation.
Thomas P. Dautrich will cover the Susquehanna Valley and northern
Pennsylvania. Within that region, Barry R. Stiger will serve as
president of the Williamsport area. Jan Berninger will continue
to manage the region which spans Berks, Schuylkill, Lehigh and
Northampton counties.
Meridian Bancorp, Inc., a $15.0 billion diversified banking
and financial services holding company, is based in Reading, Pa.
Through its subsidiaries, Meridian operates its banking franchise
throughout the eastern half of Pennsylvania, southern New Jersey
and the state of Delaware.
