220 to Be Laid Off at Irvine Thrift by New Parent; President Resigns

IRVINE â€”  In the first major organizational changes announced since its $1.7-billion acquisition of American Savings Bank, Washington Mutual Inc. said Monday that about 220 American Savings administrative employees--about 7% of the thrift’s total work force--will be laid off.

A round of top-level executive changes was also announced, including the resignation of American Savings President Robert T. Barnum. Chairman and chief executive Mario J. Antoci retired from the Irvine-based savings and loan Dec. 20, the day that Washington Mutual’s acquisition became official.

A Washington Mutual spokesman said the layoffs would occur in stages during the coming year as the transition to the Seattle parent company’s computerized accounts and other information systems is completed.

But no branch or loan office closings or mass layoffs throughout the branch network are expected, the spokesman said, because there is no geographical overlap between American Savings and Washington Mutual.

In fact, more jobs are likely to be added throughout American Savings’ branch system in the coming months as its customer base is expanded, said Kerry Killinger, Washington Mutual’s chairman and chief executive.

“I wouldn’t be surprised if one year from now the overall employment is higher than today,� he said.

American Savings, now a wholly owned subsidiary of Washington Mutual, will continue to operate under its own name. Washington Mutual said it intends to use the Irvine thrift as a springboard for more acquisitions throughout the state.

Barry Rubens, president of Santa Monica bank-consulting firm California Research Corp., said that possible acquisition targets for Washington Mutual would be mid-sized institutions such as Coast Savings.

It’s an aggressive course for Washington Mutual in the rapidly consolidating banking and savings and loan industries. The American Savings acquisition has nearly doubled the size of Washington Mutual, giving it total assets of more than $43 billion, deposits of $24 billion, more than 500 branches and more than 8,200 employees in nine Western states.

Yet the layoffs expected at American Savings pale compared to the massive job losses in the aftermath of other recent financial institution mergers. For instance, several thousand workers lost their jobs in the wake of Wells Fargo’s acquisition of First Interstate Bancorp.

Analysts said the relatively small layoffs at American Savings are not surprising, because there isn’t a lot of fat to trim at the thrift. The departures of Antoci and American Savings President Robert T. Barnum also were expected, in part because dual management teams aren’t needed now, they said.

Also, Washington Mutual tends to keep its management ranks lean, said Scott W. McAdams, an analyst at Ragen MacKenzie in Seattle. “It’s one of the reasons they keep expenses low.�

Barnum, the Irvine thrift’s president, said he plans to stay with the company through March 31. He said he had discussed with Killinger the possibility of joining Washington Mutual, but decided he didn’t want to leave Southern California. Barnum, 50, said his plans are unclear, but he may explore another turnaround situation in a different industry.

Antoci, 62, a former Home Savings of America executive, was brought in to American Savings in 1988 to restore confidence at the then-troubled institution after years of financial turmoil and a government bailout. He has been given high marks for transforming the thrift into one of the state’s largest mortgage lenders, and for focusing on lending in low-income and minority neighborhoods.

Killinger said he is committed to retaining the successful community lending operations at American Savings, and that Antoci has agreed to advise the company on its community outreach activities. He plans no replacements for Antoci and Barnum. Instead, American Savings operations will be headed by a trio of executives.

Craig S. Davis, an American Savings executive vice president, has been named an executive vice president of Washington Mutual, and will move to Seattle.

John E. Donohue will continue as an executive vice president at American Savings, where he will be responsible for residential mortgage and apartment lending operations. Michael L. Amato will head American’s consumer banking activities.

James R. Bradshaw, an analyst at Pacific Crest Securities in Portland, said it’s unlikely there will be any big surprises as Washington Mutual continues to digest its acquisition of American Savings.

But there probably will be some subtle changes. Bradshaw said he expects American Savings to begin offering new products and services, such as free checking accounts, mutual fund services and more commercial banking features.

“That’s how they’ll pay for the acquisition,� he said, “by leveraging up the deposit base and becoming more of a full-service institution instead of a savings institution.�