SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 3, 1997
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SIGNET BANKING CORPORATION
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(Exact name of registrant as specified in its charter)
Virginia 1-6505 54-6037910
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
7 North Eighth Street, Richmond, Virginia 23219
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 804 747-2000
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Not Applicable
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Former name, former address and former fiscal year, if changed since last report
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ITEM 5. Other Events.
On June 3, 1997, Signet Banking Corporation ("Signet") announced
the results of a comprehensive redesign program that will enable Signet to
achieve its strategic goal of becoming a national, customer focused,
information-based financial services company. See Exhibit 1 for the news release
dated June 3, 1997.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
1. News release dated June 3, 1997.
SIGNATURE
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 thereunto duly authorized.
SIGNET BANKING CORPORATION
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(Registrant)
Date: June 3, 1997 /s/ W. H. Catlett, Jr.
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W. H. Catlett, Jr.
Executive Vice President and Controller
(Chief Accounting Officer)
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EXHIBIT 1
June 3, 1997 Kitty Griffith
8:30 AM, EDT Corporate Communications
804-771-7251
SIGNET REPORTS CORPORATE REDESIGN RESULTS
Plan Aligns Infrastructure for Superior Customer Service, Revenue Growth
RICHMOND, VA., June 3--Signet Banking Corporation (SBK) today announced
the results of a comprehensive redesign program that will enable it to achieve
its strategic goal of becoming a leading national, customer-focused,
information-based financial services company with a strong Mid-Atlantic
presence.
Implementation of the program is expected to add $10 million to revenues
and to reduce expenses $58 million for an annual total benefit of $68 million
pre-tax by year-end 1998. These benefits are net of implementation costs and
significant investments in technology. The per share annual improvement is
expected to be $.72 after tax by December 1998, excluding the effect of branch
sales described below.
To accomplish this, Signet began a corporate redesign, known as ADVANCE,
in October 1996. The objective was to align Signet's infrastructure with its
business strategies to better serve customers, enhance revenues, improve
efficiency and create superior value for shareholders. The changes that begin
today are a direct result of ADVANCE.
In connection with the project, Signet will take a second quarter
restructuring charge estimated at $57 million pre-tax, which if applied to first
quarter operating income adjusted for the impact of the hiring freeze, would
result in a pro forma loss of $.08 per share.
Signet also announced that its board of directors has authorized the
buy-back of up to 5 percent of its common shares outstanding, to be completed by
year-end. The impact of the buy-back is not included in the financial
information relating to ADVANCE included in this release.
"Management is committed to providing investors with the highest possible
returns consistent with prudent capital management," said Malcolm S. McDonald,
chairman and chief executive officer.
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"To succeed in business, we must serve the needs of customers and
shareholders," he continued. "We have created a blueprint for our future which
does just that. Through these changes, Signet will achieve significantly
increased profitability."
Signet will reshape itself in many ways. The program will enhance
technology--a vital component for success--and revamp operations to provide
flexibility, efficiency, speed, focus and economies of scale.
Implementation of ADVANCE action plans will occur over the next 18 months
and will include the sale of 39 branches located in Southwest Virginia, the
Northern Neck of Virginia and the Eastern Shore of Virginia and Maryland. Signet
expects to receive a significant premium in connection with the sale, but
operating earnings will be reduced by an estimated $.12 per share, annualized.
"The sale of these branches was one of our most difficult decisions,"
McDonald said. He indicated that a painstaking analysis led to the decision to
concentrate capital and resources in the more rapidly growing, densely populated
area from Baltimore to Washington through Richmond to Hampton Roads where
customers can be served more efficiently with better returns on investments in
technology.
Through ADVANCE, Signet employees generated about 3,900 improvement
initiatives of which approximately 1,900 are expected to be implemented.
"These are changes people believe in," McDonald said. "Employee input
demonstrates a high level of commitment and creativity. Signet's action plans
will help make our vision of the company's future a reality. In every case,
ADVANCE allowed us to test ideas and prove to our satisfaction that we have made
decisions that will provide superior customer and shareholder value."
Successful implementation of ADVANCE will increase revenues through
enhanced sales and service delivery channels, value-based pricing and clear
customer segment differentiation. Expense reduction will stem from creating
common functions across business lines, process redesign, automation and systems
integration.
During the next 18 months, Signet will invest about $41 million in new
computer technology, both hardware and software. That investment will be funded
by savings achieved through ADVANCE--already netted out from the numbers quoted
earlier.
"Signet's state-of-the-art technology and process redesign will provide
comprehensive, integrated information about our prospective and current
customers," said T. Gaylon Layfield III, president and chief operating officer.
"It will allow rapid development of new service and product packages and create
flexible, common information platforms across business areas. Signet's employees
will be able to serve our current and future customers at the highest added
value."
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A new integrated customer service platform will serve as the core of
Signet's systems and operations redesign. It will move Signet to more flexible
computer applications and platform architecture and will help the company to
meet its Year 2000 code requirements.
In addition to technological changes, Signet will adopt operational
changes that will streamline, consolidate and centralize many important
functions. Signet will organize itself around various consumer and business
customer segments that will focus on building in-depth, long-term relationships
and growing revenues. Underlying these will be redesigns of such key processes
as customer acquisition, service and management, credit underwriting and
collections.
Some specific changes include consolidating sales and service for
corporate customers. Private banking and personal trust will be consolidated for
private clients, and operations will be standardized in this segment. Student
loan processing and facilities management will be outsourced over time.
Centralized vendor management and procurement should save $7 million annually.
Signet began ADVANCE committed to reducing the impact of redesign on
people. While 1,135 positions were eliminated, actual employee impact will be
considerably less because 808 positions were reduced without layoffs--311 by a
hiring freeze, 156 by voluntary separations, 176 by projected attrition and 165
by the proposed sale of branches. As a result, layoffs were limited to 327
employees, 7.5 percent of Signet's total employee base, and such persons will
receive enhanced severance packages and job search assistance.
"The last seven months have been challenging for the Signet team, and I
want to thank everyone for their contributions," McDonald said. "This work has
been necessary. Signet will continue to be a growing and profitable financial
institution that provides excellent service to our customers, a sound investment
for shareholders and an active supporter of communities in our branch markets."
Aston Associates, a financial services advisory firm based in Greenwich,
Conn., facilitated the redesign efforts.
Signet, a $12 billion financial institution headquartered in Richmond, has
offices in Virginia, Maryland and the District of Columbia. Signet offers a wide
array of financial services and products through its consumer, commercial and
capital markets businesses. It also markets products nationally through direct
mail and other remote delivery channels.
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When used in this press release, or in oral statements relating to the press
release made with the approval of an authorized Company executive officer, the
words or phrases "would be," "will allow," "will enable," "intends to," "will
likely result," "are expected to," "expects to," "will continue," "is
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anticipated," "estimate," "project" or similar expressions are intended to
identify "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995.
While forward-looking statements are provided to assist in the understanding of
the Company's anticipated future financial performance, the Company cautions
readers not to place undue reliance on any forward-looking statements, which
speak only as of the date made. Forward-looking statements are subject to
significant risks and uncertainties, many of which are beyond the Company's
control. Although the Company believes that the assumptions underlying its
forward-looking statements are reasonable, any of the assumptions could prove to
be inaccurate. Actual results may differ materially from those contained in or
implied by such forward-looking statements for a variety of reasons. Factors
that might cause such a difference include, but are not limited to: sharp and/or
rapid changes in interest rates that could, among other things, impact the
Company's interest margins; significant changes in the economic scenario from
the currently anticipated scenario which could materially change anticipated
credit quality, charge-off and delinquency trends and the ability to generate
new loans; significantly increased competition in the banking and financial
services industries; significant delays in or inability to grow revenues and/or
control expenses to improve the Company's efficiency ratio; changes in the
capital markets that could affect the ability of the Company to fund itself in a
cost-effective manner; and significant changes in accounting, tax, or
governmental and regulatory practices or requirements. Further information about
factors affecting the Company's business and operations are included in the
Company's most recent Form 10-K.
In addition, any forward-looking statements relating to ADVANCE involve
significant risks and uncertainties. Actual results derived from ADVANCE may
differ significantly from the results discussed in such forward-looking
statements. Factors that could cause such a difference include, but are not
limited to: expected cost savings from ADVANCE cannot be fully realized or
realized within the expected time frame; income or revenues from ADVANCE are
lower than expected or operating costs are higher; competitive pressures in the
banking and financial services industries increase significantly, particularly
in connection with nationwide product delivery; business disruption related to
implementation of certain ADVANCE programs or methodologies; general economic
conditions either nationally or in states in which the Company seeks to expand
its business opportunities are weaker than expected; or other unanticipated
occurrences which could delay the implementation of all or part of ADVANCE,
increase the costs associated with the project or decrease the financial
benefits of the project.
The Company does not undertake, and specifically disclaims any obligation, to
update any forward-looking statements to reflect occurrences or unanticipated
events or circumstances after the date of such statements.
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