Mortgage fallout prompts banks to trim work forces

Thousands of layoffs planned nationwide

Others may follow suit. Last month, executives with Citigroup, the New York parent of Citibank, brushed off published reports that significant layoffs are in the works.

‘‘We are engaged in a planning process in anticipation of our new CEO,” said Shannon Bell, a Citigroup spokeswoman. ‘‘Our business heads are planning ways in which we can be more efficient and cost-effective to position our businesses in line with economic realities. Any reports on specific numbers are not factual.”

Citibank is the 12th largest bank in Maryland in deposits as of June, with $1.3 billion, according to the Federal Deposit Insurance Corp.

Companies in the banking and mortgage industries have cut more than 100,000 jobs this year, according to financial news company MarketWatch. Countrywide Financial Corp., which has numerous offices in Maryland, topped the list with 11,520 layoffs.

Provident Bank got ahead of the curve by implementing an efficiency program to control expenses about a year ago, said Lisa Punt, managing director of human resources. Provident has laid off 43 employees in the past year, but 13 people have found other positions in the company, she said.

Provident saw net income decline in the first nine months by 19 percent to $47.6 million from the same period in 2006. Income drops have been a trend across the U.S. FDIC-insured institutions across the nation reported that net income declined by 25 percent in the third quarter from a year ago to $28.7 billion.

The last time banks earned less than $30 billion in a quarter was in 2003. A slowdown in residential mortgage loans was a primary factor, executives said.

Bank of America executives said last month they would reduce the company’s workforce by 3,000, mostly in the lending, capital markets and treasury services areas. The bank’s profit dropped by 32 percent in the third quarter, and its stock price has declined about 20 percent in the past year.

The latter is another trend, as most banks have seen stock prices slide, contributing to the cost-cutting direction as shareholders demand an end to the bleeding.

A Bank of America spokesman said he could not say how many of the layoffs are occurring in Maryland. Bank of America is the richest bank in the state with deposits of $17.4 billion as of June.

‘‘No one geographic area is being disproportionately impacted,” said Ernesto Anguilla, a Bank of America spokesman. ‘‘The reductions are occurring at sites across the country.”

The company is in the process of informing employees and doesn’t have a firm ‘‘end date,” he said.

Seasonal reductionat Sandy Spring

Sandy Spring Bancorp, the Olney parent of Sandy Spring Bank, shed 27 employees between June and September to reach 716, according to the FDIC. That is still more than the 623 it had a year ago, as the bank acquired Potomac Bank of Virginia and CN Bancorp of Glen Burnie this year.

The employment decrease is mainly related to summer interns and seasonal employees that Sandy Spring hires starting in May who are gone by the end of September, said CFO Philip J. Mantua.

Washington Savings Bank of Bowie saw its net income fall by 67 percent to $352,000 in its first fiscal quarter ending Oct. 31. WSB executives, who cited residential mortgage loan problems for the earnings drop, could not be reached for comment about future employee moves.

Wachovia, the fourth largest bank in Maryland in deposits, consolidated its Baltimore region with the Washington area earlier this month. A spokeswoman said that is causing only ‘‘minimal impact” to employees but declined to provide specific numbers. A published report said that Wachovia eliminated about 200 jobs in investment banking companywide.

Wachovia executives said in a recent filing with the U.S. Securities and Exchange Commission that loan losses in the fourth quarter could reach more than $500 million.

‘‘The expected credit deterioration will likely be focused in certain geographic areas that have recently experienced dramatic declines in housing values,” the filing says.

SunTrust, the sixth largest bank in Maryland, is eliminating 2,400 employees by the end of 2008 in a cost-cutting measure. Most will be in back-office functions, a spokesman said.

This report originally appeared in The Business Gazette.