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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 18, 1998
St. Paul Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Delaware 01-15580 36-3504665
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
6700 West North Avenue
Chicago, Illinois 60707
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (773) 622-5000
Not Applicable
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(Former name or former address, if changed since last report)
Page 1 of 3 Pages
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Item 5. Other Events
On August 18, 1998 St. Paul Bancorp, Inc. (the "Company") announced a
$9 million cost-reduction plan and a related pre-tax charge to earnings of
$19 million to $23 million.
A copy of the press release dated August 18, 1998 is attached as an
exhibit.
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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.
ST. PAUL BANCORP, INC.
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(Registrant)
/s/ Patrick J. Agnew
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Patrick J. Agnew
President
Attest:
/s/ Clifford M. Sladnick
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Clifford M. Sladnick
Senior Vice President, General Counsel
and Corporate Secretary
Date: August 18, 1998
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[ST PAUL BANCORP INC. LETTERHEAD]
EXHIBIT 1
N E W S
FOR IMMEDIATE RELEASE
August 18, 1998
Contacts: Robert N. Parke
(773) 804-2360
Robert E. Williams
(773) 804-2284
ST. PAUL BANCORP ANNOUNCES COST-REDUCTION PLAN,
RELATED PRE-TAX CHARGE
CHICAGO - August 18, 1998 -- St. Paul Bancorp, Inc. (NASDAQ: SPBC)
announced today a cost-reduction plan that is expected to reduce ongoing annual
costs by approximately $9 million, pre-tax. The Company expects to incur a
related pre-tax charge of $19 million to $23 million. This charge is in
addition to the previously announced pre-tax charge of $11.5 million relating to
the acquisition of Beverly Bancorporation. When combined with the $4.8 million
ongoing benefit of the Beverly acquisition charge, the Company expects to
achieve total ongoing annual benefits of approximately $14 million, pre-tax.
The additional third quarter charge represents one-time expenses that will
reduce the Company's overall cost structure and make it more consistent with
ongoing business strategies. The largest components of these charges include
modifications to the Company's compensation and benefits programs and technology
outsourcing initiatives.
"This charge was necessary to re-align our cost structure and make it
conform to our ongoing business initiatives," said Joseph C. Scully, chairman
and chief executive officer. "Having just completed two important acquisitions,
we are entering new markets and offering new products. These acquisitions have
necessitated a review of our employee benefit programs and information systems
to bring them into alignment with our new business strategies. Our goal, of
course, is to provide improved returns to shareholders. A combination of asset
growth, capital management and expense reductions will help us achieve our goal
of a 15% return on equity within two years," he added.
The charge includes approximately $7.5 million related to modifications to
the Company's supplemental retirement plan and the directors' retirement plan.
Current obligations of both plans will be funded and frozen at current levels.
The Company's qualified pension plan will be converted to a cash-balance
defined-benefit plan. These modifications will reduce the Company's annual
benefit expense by approximately $1.3 million.
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Also included in the charge is approximately $5 million related to the
termination of the Company's Employee Stock Ownership Plan (ESOP). An
accounting change in 1993 made continuation of the plan beyond 1998
cost-prohibitive for St. Paul. The discontinuation of the ESOP will save the
Company approximately $1.1 million per year.
The Company's bonus program for officers and senior executives has been
suspended for the remainder of 1998 and 1999. As a result, compensation expenses
will be reduced by approximately $3 million. The bonus program and associated
performance benchmarks will be reevaluated.
The Company has introduced an early retirement program for approximately
180 eligible employees. One half of the eligible employees are expected to take
advantage of the program, resulting in annual expense reductions of up to $3.5
million. Costs primarily associated with the early retirement program represent
approximately $2.5 million of the new charge.
Also included in the new charge is approximately $5 million related to
upgrading certain components of the Company's technology platform. The
upgrading of those systems is expected to improve operating efficiency and
customer service, and allow the Company to adapt more quickly to technological
advances and to assimilate acquisitions more quickly.
St. Paul Bancorp is the parent of St. Paul Federal Bank, the largest
independent savings institution in Illinois. The Company also provides discount
brokerage, insurance, annuity, real estate development, trust services and
mortgage brokerage services through other subsidiaries. St. Paul stock is
listed on the Nasdaq Stock Market under the symbol SPBC.
To receive this news release and other information on St. Paul Bancorp via
fax or mail, call the Company's News Hotline at (773) 889-SPBC (7722).
Additional information is available on the internet at www.stpaulbank.com.
Stockholders may dial (800) 730-4001 toll-free to inquire about stockholder
records, stock transfers, ownership changes, address changes, dividend payments
or the dividend reinvestment plan. Written inquiries can be directed to
BankBoston, P.O. Box 8040, Boston, MA 02266-8040.
FORWARD-LOOKING INFORMATION
This news release contains certain "forward looking statements." The Company
desires to take advantage of the "safe harbor" provision of the Private
Securities Litigation Reform Act of 1995 and is including this statement for the
express purpose of availing itself of the protection of the safe harbor with
respect to all of such forward-looking statements. These forward-looking
statements describe future plans or strategies and include the Company's
expectations of future financial results. The Company's ability to predict
results or the effect of future plans or strategies is inherently uncertain.
Factors that could affect the actual results include but are not limited to:
(1) unanticipated costs or expenses; (2) higher than expected costs pertaining
to benefit plan modifications; (3) higher than expected costs pertaining to the
early retirement program; (4) higher than expected costs pertaining to
technology upgrading; (5) the impact of reevaluation of the Company's bonus
program; (6) fluctuations in real estate markets; (7) general market rates; (8)
changes in market interest rates or the shape of the yield curve; (9) general
economic conditions; (10) legislative / regulatory changes; (11) monetary and
fiscal policies of the U.S. Treasury and the Federal Reserve; (12) changes in
the quality or composition of the
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Company's loan and investment portfolios; (13) demand for loan products; (14)
the level of loan and MBS repayments; (15) deposit flows; (16) competition and
demand for financial services in the Company's markets; (17) changes in
accounting policies, principles or guidelines; and (18) expected Beverly-merger
cost savings and revenue enhancements cannot be realized or realized within the
expected time frame. These factors should be considered in evaluating any
forward-looking statements, and undue reliance should not be placed on such
statements.
The Company does not undertake and specifically disclaims any obligation to
update any forward-looking statements to reflect occurrence of anticipated or
unanticipated events or circumstances after the date of such statements.
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