Detailed Capital Plan to Address How First Federal Bank of California
Will Remain “Well-Capitalized” at Each Quarter-End Through 12/31/2011
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,” 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.
