By Dennis Seid/NEMS Daily Journal
TUPELO – More than half of the BancorpSouth employees who were eligible to take part in a voluntary early retirement program did so, officials said Monday.
In early May, the Tupelo-based financial holding company announced the program, which it said was part of its efforts to cut costs and improve efficiency.
With banking, insurance, mortgage and trust offices in eight states, BancorpSouth employs some 4,000 people in nearly 300 locations.
About 10 percent of that workforce – or 418 people – was eligible to take the early retirement option. They had until May 23 to reply to the offer; the retirements were effective Friday.
The company said 227 people, or 54 percent, accepted the offer.
“We are thankful for the contributions of each and every individual who has chosen to participate,” said CEO Dan Rollins. “The acceptance rate confirms the confidence management had that the program provided pension enhancements that are reflective of each individual’s value and service to our company.”
BancorpSouth said it will take a one-time pretax charge of $10.9 million, or 7 cents a share, during the second quarter. When the program is fully phased in, the company expects annual pretax savings of about $9 million, or 6 cents a share.
After announcing the program in early May, the company said it expected to take a charge between $8 million to $16 million, or 6 to 10 cents a share, with savings ranging from $7 million to $12 million a year, or 4 to 8 cents a share.
Participants could take either a lump sum or annuity payment.
BancorpSouth said if total lump-sum payments from its pension plan related to the voluntary early retirement program and other non-related programs exceed $16.7 million, it could take another pretax, non-cash charge of $8 million to $10 million this year. Accelerating the charge would reduce its pension expense $700,000 to $900,000 annually over the next 11 years.
The early retirement program is BancorpSouth’s second major cost cutting and efficiency improvement plan in two years. In May 2011, it shuttered 22 banking offices in six states. The move affected about 100 employees, and the company said it expected to save about $4 million a year with the closures.