National City trims MidAmerica staff
Blame it on a struggling mortgage marketplace or the Chicago-area's proclivity for losing bank headquarter jobs; National City on Thursday said it intends to cut nearly 400 MidAmerica Bank jobs in its Clarendon Hills and Downers Grove offices.
Cleveland-based National City Corp. finalized the acquisition of Clarendon Hills-based MidAmerica Bank on Tuesday.
On Thursday, National City filed notice with the state of Illinois that 292 jobs will be cut in Downers Grove and another 98 jobs in Clarendon Hills.
MidAmerica had been a Chicago-area based bank for 85 years.
"It is a trend. The headquarters jobs are gradually going away in this city," said Tom Mondshean, professor of economics, DePaul University, Chicago. "How much of this is due to the merger and how much is due to mortgages, I don't know."
The loss of back-office and headquarters jobs comes on the heels of last month's estimate that the merger of Chicago-based LaSalle Bank and Bank of America could result in the loss of 4,150 LaSalle jobs, according to consulting firm Anderson Economic Group. The group estimated indirect earnings losses could mount to $780 million by 2009.
Systemwide, National City said it will lay off 1,300 people as it shrinks its struggling mortgage business.
National City, which with the merger became Chicago's fourth largest bank with 126 local branches, said it plans to scale back its home lending businesses.
National City said it is cutting back on issuing home loans the bank cannot sell to government agencies like Fannie Mae and Freddie Mac. Demand for mortgage debt not guaranteed by a government-sponsored enterprise has rapidly dried up in the past six weeks.
The bank will also suspend issuing home equity loans through brokers. Its home equity unit and mortgage unit will be combined into one subsidiary.
Stung by decaying credit quality, mortgage debt and investments backed by home loans have lost a lot of value this year. Homeowners are missing payments on their mortgages more frequently, and more than 50 lenders have gone out of business.
Because there is so little demand among investors for home loans, National City said it may have to keep some of its mortgage debt instead of sell it. When a bank elects to keep a loan, it must record the market value of this loan on its books. National City said it will likely record a $30 million accounting charge to reflect the lower value of loans on its books.
"It's a signal to the industry there are going to be big write-offs," Richard Bove, an analyst at Punk Ziegel & Co., said. "National City isn't the only company with this problem."
A spokeswoman for National City said some local employees will be allowed to apply for other jobs in the company and offered benefits and assistance. Before the merger, MidAmerica's parent MAF Bancorp Inc. employed 2,100 workers.
National City spokeswoman Terri Wilson said the cuts won't affect customer service at area branches.