Merced Sun-Star
County Bank laid off about 20 employees Tuesday -- the first time in its 31-year history that the bank has been forced to cut back on staffing.
Company spokesman Thomas Smith, noting the bank's parent company's $12 million loss last quarter, said the decision was due solely to the troubled Valley economy.
"It was a very, very tough business decision that has been percolating for awhile," he explained Wednesday. "It's been 'what-if'd' to death."
No specific job type or branch was targeted in the layoffs, which represent less than 5 percent of the bank's work force of 500. The eliminated jobs, some part-time, were in cities scattered across the state, including Merced.
County Bank is owned by Capital Corp of the West, the only company headquartered in Merced that's publicly traded, on the NASDAQ.
Smith downplayed the size of the cutback by comparing it with massive layoffs at larger banks, such as Chase and Wachovia.
The financial sector has seen the highest number of job cuts. More than 100,000 layoffs have been recorded in the United States this year, according to figures compiled by Challenger, Gray & Christmas Inc., a consulting company that helps workers find new jobs.
County Bank's cuts weren't even necessarily based on the employees' performance, Smith said. For example, some business banking positions were cut because they service a part of the economy that's ailing.
The bank's parent company announced its first-ever annual loss in fiscal year 2007 when it posted a $3.6 million loss. Weeks later, it announced a first quarter profit in 2008 of $2.3 million.
The bank's financial health is closely tied to the Valley's economy, pummeled by foreclosures and sliding housing values, which have been cut in half.
County Bank has remained unscathed from foreclosures because it didn't carry any home loans. However, it did lend money to developers, who've been having a hard time paying off construction loans.
At the end of the second quarter, County Bank reviewed 80 percent of its commercial and real estate loan portfolio and wrote off $20.3 million.
Though no more layoffs are in the works, Smith didn't rule them out. "Are housing values going to decline further?" he asked.
All the employees chose to leave their jobs Tuesday. They'll be paid their regular salary until mid-September, when severance packages start.
Counseling and other services will be offered to the employees to make the transition to a new job easier, Smith said. The company is trying to treat them well even in hard times:
"We bowl with them. Our kids go to the same schools. We really care about them, and (the decision) was really tough."
Reporter Scott Jason can be reached at (209) 385-2453 or sjason@mercedsun-star.com.
