Delta Financial Corp., which was able to dodge liquidity concerns when the subprime meltdown broke out in March, will lay off 20 percent of its workforce in conjunction with the closure of wholesale operating centers in three states.
The Woodbury, N.Y.-based subprime lender announced today it has eliminated approximately 300 jobs. Most of the layoffs resulted from the closing of satellite wholesale offices in California, Florida and Texas. Some of the cuts involved production jobs.
“The rapid deterioration of the credit markets has caused issues in our sector that are beyond our control,” Hugh Miller, president and chief executive officer, said in the statement. “As we continue to make the necessary rate increases and program cuts in order to address the changing business environment, the result in the near term is a likely reduction in loan production.”
The company reported $1.4 billion in second quarter production, higher than the prior quarter and the prior year.
Delta said it will take a third quarter pre-tax charge of as much as $2.5 million as a result of the consolidation.
Earlier this month, the company reported a second quarter earnings of $0.8 million — tumbling from $7.2 million a year earlier.
Miller noted at the time that liquidity has become one of the most important issues facing lenders today.
At its annual shareholder meeting in May, Delta boasted about its success — explaining its positive results were attributed to the origination of mostly fixed-rate mortgages, its avoidance of riskier mortgage products and a balance between direct and broker origination channels.
“It is the fiscally responsible decision to make at this time,” Miller said of today’s announced actions.
