Westcorp Will Unload 55% of Staffers in Banking Unit

Westcorp, a financial services company, said Monday that it will fire 200 employees, or 55% of the staff, at its mortgage banking unit as it seeks to regain profits from that business amid lower interest rates.

Irvine-based Westcorp is restructuring its Western Financial Bank’s mortgage operations to target subprime and nonconforming loans, which it said generate more revenue than conventional loans. The company will take a $3-million pretax restructuring charge in the fourth quarter.

Over the next 60 days, Westcorp will merge 14 mortgage banking offices into four. Western Financial originated $622 million in loans in the third quarter, down 11% from a year earlier, and serviced $6 billion in mortgage loans, down 6.25%.

Last year, Westcorp consolidated operations of its auto finance subsidiary, WFS Financial Inc., which it said would save as much as $10 million a year in expenses.

Westcorp said it expects to make a profit in the fourth quarter, primarily from the securitization of $700 million in automobile loans by WFS Financial. The company had a loss of $3.87 million, or 15 cents a share, last quarter. It earned $10.1 million, 38 cents a share, in the fourth quarter a year ago.

The restructuring was announced after the close of U.S. markets.

Westcorp shares rose $1.31 to $8.25. Last year, the stock lost nearly 59% of its value.