LOS ANGELES--(BUSINESS WIRE)--FirstFed Financial Corp. (NYSE:FED) (the “Company”) announced today a reduction in the staff of its wholly-owned banking subsidiary, First Federal Bank of California, FSB (the “Bank”), by 62 persons, or approximately 10% of the Bank’s current workforce. The reductions will come primarily from the Bank’s single family lending and commercial lending operations as well as some reduction in support areas of the Bank. The Company currently expects this workforce reduction to result in estimated annualized compensation cost savings of approximately $4.2 million.
“FirstFed has always had great pride in its employees and it is with deep regret that we must take this action”
“FirstFed has always had great pride in its employees and it is with deep regret that we must take this action,” remarked Babette E. Heimbuch, the Company’s Chief Executive Officer. “Given the economic pressures we are under, doing so has become necessary. We are saddened to take this action and wish the best for all of these individuals affected so directly by this economic recession.”
The Company also announced today that the Company and the Bank have each consented to the issuance of an Order to Cease and Desist (the “Company Order” and the “Bank Order,” respectively, and together, the “Orders”) by the Office of Thrift Supervision (the “OTS”). The Company Order requires that the Company notify, or in certain cases receive the permission of, the OTS prior to, among other things, declaring, making or paying any dividends or other capital distributions on its capital stock; incurring, issuing, renewing, repurchasing or rolling over any debt; increasing any current lines of credit or guaranteeing the debt of any entity; or making payments of any kind on any existing debt, including interest payments. The Company Order also requires that the Company submit to the OTS within fifteen days a detailed capital plan to address how the Bank will remain “well capitalized” at each quarter-end through December 31, 2011.
The Bank Order requires that the Bank notify, or in certain cases receive the permission of, the OTS prior to, among other things, increasing its total assets in any quarter in excess of an amount equal to net interest credited on deposits during the quarter (other than for balance sheet increases resulting from activities to maintain liquidity); paying dividends or making other capital distributions on its capital stock; and entering into third-party contracts outside the normal course of business. The Bank Order also requires that the Bank submit to the OTS within fifteen days a detailed capital plan to address how the Bank will remain “well capitalized” at each quarter-end through December 31, 2011. If the Bank fails to remain “well capitalized,” the Bank must then submit to the OTS a detailed contingency plan to accomplish either a merger with or acquisition by another federally insured institution or holding company thereof, or a voluntary liquidation of the Bank. The Bank must also submit to the OTS within prescribed time periods a classified asset reduction plan, liquidity plan, business plan and loan documentation plan and refrain from any unsafe and unsound practices that resulted in the current high level of classified assets, inadequate capital, poor earnings, and high level of wholesale funding.
Ms. Heimbuch continued, “FirstFed has been working with the OTS to address the challenges we are currently experiencing and we intend immediately to begin satisfying our obligations under today’s orders. We have made substantial progress on addressing a number of the OTS’s concerns, and we hope to finalize those plans promptly so that we can focus our energies on meeting the needs of our clients and communities. Our valued depositors should know that their deposits continue to be FDIC-insured to the maximum amount permitted by law, and that we remain committed to delivering the superior client service they have come to expect from us.”
The description of each Order and the corresponding Stipulation and Consent to Issuance of Order to Cease and Desist set forth herein are qualified in their entirety by reference to the Orders and Stipulations, copies of which are attached as Exhibits 10.1, 10.2, 10.3 and 10.4 to the Company’s Current Report on Form 8-K filed today with the Securities and Exchange Commission.
About FirstFed Financial Corp.
FirstFed Financial Corp. is a savings and loan holding company. The Company owns and operates First Federal Bank of California, a federally chartered savings association. The Company’s principal executive offices are located at 12555 W. Jefferson Boulevard, Los Angeles, California 90066, and its telephone number is (310) 302-5600. Information about the Company, including corporate background and press releases, is available through the Company’s website at www.firstfedca.com.
This press release contains certain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Act of 1995. These forward-looking statements are subject to various risks and uncertainties, many of which are beyond the Company’s control, which could cause actual results to differ materially from such statements. Such risks and uncertainties include, but are not limited to, the general business environment, interest rate fluctuations that may affect operating margin, changes in laws and regulations affecting the Company’s business, the California real estate market, competitive conditions in the business and geographic areas in which the Company conducts its business and regulatory actions, and those risk factors discussed in Part I, “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007, as well as other periodic reports filed with the Securities and Exchange Commission. Unless legally required, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.