The decision by Bank of America Corp. last week to shutter a unit of its mortgage lending business is expected to hit Southern California particularly hard.
More than half of the 1,200 employees in the company’s correspondent mortgage lending unit, which will be shut down by the end of the year, work in the greater L.A. area.
Correspondent mortgage loans are generated by third-party lenders and sold to servicing entities such as banks. They accounted for nearly $22 billion – or more than half – of Bank of America’s second quarter mortgage lending.
Terry Francisco, a spokesman for Bank of America’s Calabasas-based mortgage division, said the bank hopes to transfer some of the employees to positions where they can work with distressed homeowners, but he acknowledged that there will be some layoffs.
“We do know we have needs on our servicing side, so we’re looking very closely at placing those folks,” Francisco said. “Given that we have such a large presence in Southern California, we want to try to find as many other opportunities for these folks as we can.”
About 450 correspondent-lending employees work in the bank’s Westlake Village office, an additional 250 are in Thousand Oaks and roughly 50 are in Woodland Hills. The unit also has large offices in Texas, Florida and Illinois.
Employees are expected to be notified of reassignments within the next few weeks, Francisco said.
The bank announced plans in August to try to sell the correspondent-lending unit, but subsequent negotiations with New York’s Fortress Investment Group LLC reportedly broke down.
The decision to close the unit is one of a number of steps recently taken by the Charlotte, N.C.-based institution to overhaul its business after the disastrous 2008 acquisition of subprime lender Countrywide Financial Corp. in Calabasas. Bank of America recently unloaded an $8.3 billion stake in China Construction Bank.
Bank of America also announced last week that it will close as many as 40 former Countrywide loan offices, though the impact is expected to be minimal in Southern California.
Francisco noted that the correspondent-lending unit was profitable, but he said the bank wants to direct resources toward customers who choose to come to Bank of America, rather than ones who go to third parties.
“We would rather have more assets from customers who come directly to our brand,” he said.
Heading South
Opus Bank’s tenure as an L.A. institution didn’t last long.
The bank announced last week that it has formally moved its headquarters from Redondo Beach to Irvine, just a year after launching. The move makes Opus, which has $2.2 billion in assets, the largest bank headquartered in Orange County.
Opus was formed in September 2010 after investor Stephen Gordon raised $460 million to rescue Bay Cities National Bank, a struggling Redondo Beach institution. Gordon, who is now chairman and chief executive, renamed the bank Opus and used excess capital to acquire several additional banks along the West Coast.
The relocation was not unexpected. Opus maintained executive offices in Irvine even though the bank was technically headquartered in Redondo Beach.
The bank has 29 locations, including six in Los Angeles County, and it plans to open three additional local offices this year.
Upping the Ante
West L.A.’s Leonard Green & Partners LP appeared to have the inside track to acquire discount retailer 99 Cents Only Stores Inc., but there’s a new challenger in the race.
Ares Capital Corp., an investment firm with offices in Century City, made an offer of about $22 per share for the Commerce company last week, the New York Post reported, topping an earlier offer from Leonard Green of about $19 a share.
Leonard Green had received support from the Schiffer-Gold family, which owns a large portion of 99 Cents’ stock, but other shareholders said the offer was too low.
News of the latest offer sent shares up more than 8 percent to $20.05 on Oct. 6.
C-Suite News
Wilshire Bancorp Inc., the Koreatown holding company for Wilshire State Bank, has name John Taylor and Craig Mautner directors of both the company and the bank, pending regulatory approval. … Downtown L.A.’s City National Corp., parent of City National Bank, has hired Paul DeLauro as senior vice president and manager of tax and financial planning. … Promerica Bank has announced that John Quinn, chief executive and director, will resign from the downtown L.A. bank in February.
Staff reporter Richard Clough can be reached at [email protected] or at (323) 549-5225, ext. 251.
