Glenfed, With Earnings Down 39%, to Lay Off 240 at All Levels

Glenfed, the parent of Glendale Federal Bank, said it is eliminating 240 positions throughout the corporation, effective immediately.

The Glendale-based company said the layoffs would be spread across all levels of the organization from senior management to lower-level workers and would affect operations in California and Florida.

Steve Tragash, a Glenfed senior vice president, said about 30% to 40% of the layoffs would be in Southern California. The elimination of the jobs could save the company $25 million a year, he said.

Glenfed has about 7,500 employees and Glendale Federal is the nation’s fifth-largest savings and loan with $26 billion in assets and 239 branch offices.

In the nine months that ended June 30, Glenfed earned $116 million, down 39% from $189.4 million in net income a year earlier. Revenues rose 11% to $2.6 billion from $2.4 billion.

The company said the decline in earnings was largely attributable to the rise in short-term interest rates, which is hurting the entire thrift industry.

Despite the layoffs, the company has 300 job openings and Glenfed will try to place the laid-off workers in other positions, Tragash said.

He characterized the layoffs as part of an overall belt-tightening that is taking place throughout the troubled savings and loan industry, particularly because of new legislation that has imposed tougher capital requirements on thrifts.

“The emphasis of all companies is building capital and controlling expenses. This is part of that overall strategy,” Tragash said.

As part of that strategy, Glenfed earlier this year consolidated its mortgage banking subsidiary into its savings and loan operations and laid off 203 workers.

Charles J. Orabutt, a Duff & Phelps analyst, said Glenfed’s move reflected efforts by companies in the financial services industry to become more efficient, lower-cost producers.

Despite the recent decline in earnings, Orabutt said he considers Glenfed to be one of the best-managed thrifts. “They have restructured their balance sheet to reduce their sensitivity to interest rates, which should improve earnings over time,” he said.

Tragash said he didn’t anticipate any other major layoffs or business consolidations in the near future.