Great Western to Lay Off Most Homefed Employees : Banking: Company may release two-thirds of payroll it inherited when it acquired failed thrift. It is also closing 70 branch offices.
Great Western Bank said Monday that it may lay off as many as two thirds of the 1,700 new employees inherited when it acquired the failed Homefed Bank from the federal government last month.
Great Western, the nation’s second-largest thrift, also said it has closed 13 branches and will close another 57 by the end of next month. Most of the closures will come from the 119 Homefed branches that Chatsworth-based Great Western acquired for $151 million.
Of the branches either closed or to be closed, 29 are in San Diego County and 16 are in Orange County. Another 15 are in Los Angeles County, four are in Ventura County, two are in Santa Barbara County and four are in San Luis Obispo County. Accounts at the closed branches will be moved to nearby offices.
Great Western and other lenders are furiously cutting overhead in the face of growing competition for deposits and borrowers from mutual funds and mortgage bankers. Even before acquiring Homefed, Great Western last fall launched a drastic cost-cutting program called “Performance 94” that could eliminate up to 1,000 administrative jobs in Chatsworth.
For many institutions, including Great Western, the key to efficiency is to concentrate as many accounts as possible in fewer branches, which minimizes payroll and building expenses. Unfortunately for employees, that means branch closings and layoffs.
When it made the winning bid for Homefed, Great Western acknowledged that the main attraction in buying the failed thrift was its $4 billion in deposits. At the time, Great Western predicted that it would close branches and make significant layoffs.
Great Western Senior Vice President R. Phillip Altman said most of the branches to be closed are located near existing Great Western branches.
But the extent of the job cuts came as something of a surprise. Great Western is keeping none of Homefed’s 600 administrative employees, most of whom work at a five-building complex in San Diego.
No decision has been made on how many of Homefed’s 1,100 branch employees will be cut, but Great Western would eliminate half if the “rule of thumb” of consolidations is followed, Altman said. The job cuts could come through layoffs as well as attrition, he said.
However, Altman said the final number of layoffs in the branch offices may be lower because of job openings elsewhere in the Great Western network. In any event, the branch closings, which will include nine existing Great Western offices, will be completed by the end of February.
“It’s apparent that consolidation is taking place all across the country, and there is general agreement that it will continue to take place,” said Robert Schmermund, spokesman for Washington-based Savings & Community Bankers of America, a trade group of thrifts and banks. Illustrating the extent of the consolidation, an official at the Federal Reserve Bank of San Francisco said the number of banks nationwide dropped to 11,363 at the end of the 1992, down 22% since 1980.
Bank Consolidation
Fifteen former Homefed Bank branches and one former Great Western Bank branch are expected to be consolidated in Orange County as a result of Great Western’s acquisition of Homefed.
Closing branch Accounts transferred to Buena Park (HF) Buena Park (GW) 5470 S. Beach Blvd. 8020 Stanton Ave. Dana Point (HF) San Juan Capistrano (HF) 32595 Street of the Golden Lantern 31972 Camino Capistrano Irvine Culver (HF) Irvine Barranca (GW) 15323 Culver Drive 3978 Barranca Parkway UC Irvine (HF) Irvine (HF) UCI Student Center, Suite E200 4543 Campus Drive Laguna Hills (HF) Laguna Hills--A/S (GW) 24300 Paseo de Valencia 24100 El Toro Road Laguna Niguel (HF) Laguna Niguel (GW) 30160 Town Center Drive 28131 Crown Valley Parkway La Habra (HF) Whittier (GW) 1050 S. Beach Blvd. 15175 E. Whittier Blvd. Mission Viejo--Alicia (HF) Mission Viejo (GW) 23482 Alicia Parkway 27752 Vista del Lago Newport Beach (HF) Newport Beach (GW) 1100 Newport Center Drive 450 Newport Center Drive Orange (HF) Orange (GW) 1302 N. Tustin St. 1915 N. Tustin St. Rancho Niguel (HF) Laguna Niguel (GW) 28211 Crown Valley Parkway 28131 Crown Valley Parkway Santa Ana (GW) Santa Ana (HF) 1418 N. Main St. 1701 N. Main St. Seal Beach (HF) Seal Beach (GW) 1350 Pacific Coast Highway 2999 Westminster Ave. South Coast Metro (HF) Costa Mesa (GW) 3600 S. Bristol St. 3200 Park Center Drive Tustin (HF) Tustin (GW) 18231 Irvine Blvd., Suite 100 13031 Newport Ave. Villa Park (HF) Orange (GW) 17781 Santiago Blvd. 1915 N. Tustin St.
(HF) HomeFed branch; (GW) Great Western branch
Source: Great Western Financial Corp.
