Eliminating jobs was a hard decision for Cullen/Frost Bankers in San Antonio.
The $41 billion-asset company took a number of other measures, including a 10% pay cut for executives and directors, before announcing that it had eliminated 68 positions last month, or roughly 1.4% of its workforce.
The layoffs were a “difficult step” and “really the last thing” management wanted to do to control expenses as the coronavirus pandemic pinches revenue, Phillip Green, Cullen/Frost’s chairman and CEO, said during a Thursday call to discuss fourth-quarter results.
“We started with … everything that’s discretionary,” Green said. “When we got down to the end of it, we did need to reduce some of these positions because it was the right thing to do.”
Cullen/Frost is one of many banks that have been making difficult decisions about expenses during the pandemic.
“We believe we’ve always been prudent in managing expenses, but in this zero-rate environment, our approach [to expenses] has become even more focused,” Chief Financial Officer Jerry Salinas said during the conference call. “We asked all our teammates to question discretionary spending and revisited vendor relationships to reduce costs where we could.”
Brady Gailey, an analyst at Keefe, Bruyette & Woods, noted during Cullen/Frost’s conference call that the company hadn’t pursued a large round of layoffs in “a couple of decades.”
“We didn’t take out a hatchet and make the reductions —
they were very thoughtful,” Green said, noting that the company’s first move was to reduce the number of open positions. Those openings were much hirer than the number of jobs Cullen/Frost actually cut.
“We’d rather much reduce a position for someone we don’t know and haven’t hired yet that doing it to someone we have hired,” Green said.
Positions that were cut came from areas “where business needs have changed, where technology could be better utilized and where responsibilities could be consolidated,” Salinas said.
While Cullen/Frost continues to look at other ways to contain costs, Green said he isn’t expecting “anything similar” to the recent layoffs as the company makes it way through the rest of 2021.
Net income available fell by 7% from the third quarter and 15% from a year earlier, to $88.3 million. Revenue increased by 2% from the third quarter but decreased by 3.6% from a year earlier, to $357 million.
Noninterest expense rose 10% from the third quarter and were flat yeara over year, at $223 million.
