The Home Savings and Loan Co. on Thursday laid off employees in multiple departments just three weeks after completing a major asset sale to clear a bulk of troubled loans off its books, according to President and Chief Executive Patrick W. Bevack.
The layoffs came with no warning, said one employee who wished to remain anonymous and who was let go along with at least seven others.
Bevack would not disclose the number of employees laid off Thursday but said most departments “did something toward making the reductions.”
Employees laid off at the bank were given severance packages based on seniority levels, and Bevack said for now, no more layoffs are planned.
On Sept. 21, Home Savings completed a long-awaited transaction with Navy Portfolio, a financial-services firm specializing in the acquisition of distressed commercial real-estate loans. The transaction found Home Savings selling $115 million of assets, erasing nearly $93 million in troubled loans from the bank’s balance sheet and reducing impaired or underperforming loans to $85 million at the bank. At the time, Bevack said the move gave his institution ballast and “reduced a considerable amount of risk” in the bank’s portfolio.
Bevack said layoffs were made in the special assets and commercial lending departments to reduce the work force needed to manage those former debts.
“You have a lot of people working to contact borrowers, work out payment plans and figuring out ways to restructure deals in such a manner that works for both parties,” Bevack said. “The workload in regards to troubled assets dropped significantly with that sale, and the bank needs to come in line with its revenue streams and be efficient — you cannot be inefficient.”
However, human resources and marketing, along with other departments in Youngstown and elsewhere, were asked to find greater efficiencies, such as eliminating unfilled positions or curbing administrative costs.
Bevack said the bank will continue to look at internal operations, but he stressed that no other facet of the bank will be changed.
Federal regulations, such as the WARN Act, require employers to provide notification 60 calendar days in advance of mass layoffs, which is defined as between 50 and 499 employees. Furthermore, the U.S. Securities and Exchange Commission requires filings within four business days of any disposal or exit activities if an action has the potential to trigger any significant investor reactions.
Bevack said no such filings would be required, and layoffs were well below 50 employees.
Home Savings, like other banks, began to experience turmoil with underperforming loans on its balance sheets beginning in 2008. In July, the bank wrote off a $5.2 million loss associated with another group of $22.1 million in impaired loans.
Its most-recent sale resulted in a loss of $29.4 million.
The bank has seen declines in its commercial real-estate loans, according to recent quarterly reports, but its profits also have leveled off in the past three quarters with gains in residential mortgage lending.