Crestar Financial Corp. will slash nearly 40 percent of Loyola Capital Corp.'s work force when it completes its acquisition of the Baltimore-based thrift company later this year, officials at both companies said yesterday.
About 260 of Loyola's 690 employees have been told by the Richmond, Va.-based company that they will no longer be needed. Those who won't be joining Crestar include five of Loyola's top six executives, sources said.
"Those who will not be offered jobs know about it," said William C. Harris, president of Crestar's greater Washington region. Loyola Capital is the parent of Loyola Federal S&L.; With the cuts, Crestar said, it will be able to run Loyola 30 to 40 percent more cheaply.
Crestar's acquisition of Loyola, which has $2.5 billion in assets, is expected to close at the end of the year in a transaction that is valued at $259 million. Crestar has $14.8 billion in assets.
Once the sale is completed, Baltimore will be home to just two banks that have assets of more than $1 billion: Mercantile Bankshares Corp. and Provident Bankshares Corp.
When asked if Crestar would have any interest in acquiring Provident, Mr. Harris said, "We wouldn't comment on that. We have interest in every bank and every thrift that would be of size to us in the Maryland marketplace."
Bank analysts say Mercantile isn't a likely candidate to be taken over because it is fiercely independent and would command a hefty price.
Crestar's stock was down 37 1/2 cents yesterday to close at $56.375 a share, while Loyola's was down 25 cents to close at $35.625.
Crestar has said the acquisition will cost the company $16 million on an after-tax basis.
Most of the Loyola employees being cut are secretaries, credit analysts and administrative support staff, said Barry Koling, a Crestar spokesman.
Loyola's Glen Burnie operations center, which processes checks and performs data processing functions, will take the single biggest crunch, with 100 employees losing their jobs, Mr. Koling said.
Crestar plans to shut down its operations center in Columbia, which houses about 100 employees, and move them to the Glen Burnie location, Mr. Koling said.
He said that if Crestar employees don't want to make the move, Loyola employees will be given "preferential consideration" to those jobs and others that open up.
"It is possible there will be additional jobs opening up for Loyola people but I don't anticipate that being substantial," Mr. Koling said.
Crestar had previously announced plans to shut seven of Loyola's 35 branches, including six in the Washington area and one in Baltimore.
All but one of Loyola's top executives will be leaving, including Joseph W. Mosmiller, chairman, who has been with the bank since 1959. Sources said the others are: James C. Johnson, president; Thomas R. Marvel, head of lending; James V. McAveney, chief financial officer; and Charles C. Schmitt, head of operations.
William A. Wycoff, executive vice president of Loyola, is the only executive who will stay. He is slated to become president of Crestar's newly created Maryland region, while Mr. Harris will become chairman.
Mr. Wycoff said he was disappointed with the cuts.
"I have been here 15 years, and I don't want to see any of those folks lose their jobs," he said.
He said job cuts would have been much deeper had Loyola merged with a Baltimore-based institution because there would have been more employees doing similar jobs.
"I think we made the right decision" merging with Crestar, Mr. Wycoff said.
Some analysts said they thought the cuts were steep, considering that the companies don't have large overlaps in business operations.
"I'd say that is probably the upper end of the range," said Kathryn H. Bissette, an analyst with Sterne, Agee & Leach Inc.
She speculated that Loyola executives might not have controlled costs as tightly as Crestar would have liked.
"Thrifts, many times, have greater opportunities for cost savings than banks do," she said. "They might have been overstaffed."
Mr. Harris said the cuts are in line with Crestar's experience. The company is one of the most prolific acquirers in Maryland and Virginia.
"My objective is to aggressively grow our share of the market in Maryland," said Mr. Harris.
He said Crestar would be starting a commercial banking unit in Baltimore. Loyola did not have such an operation.