USAA Bank of San Antonio cuts jobs due to lower demand for home loans and refinance

The USAA Federal Savings Bank has issued pink slips to more than 90 employees of its mortgage group in response to signs that potential buyers are increasingly rattled.

A record low housing stock, rising interest rates and declining housing affordability have combined to create a “challenging buying environment”, bank officials told employees in emails. emails obtained by the Express-News. The bank is also experiencing a drop in demand from borrowers looking to refinance their home loans.

The San Antonio bank’s home loan unit had staff in place to fund 38,000 loans this year, but now expects a 34% drop to 25,000 loans, according to an email to bank staff by Thom Cianelli, the head of the department.

“Despite the resumption of marketing and our plans to unsuspend our mortgage products here in April, these headwinds are expected for the foreseeable future and the size of our current workforce is greater than what is needed for the work ahead,” Cianelli wrote. week. “As a result, I have made the difficult decision to reduce the mortgage sales team by approximately 90 employees.”

He added: “I want you to know that this decision was not easy and that the leaders will do everything possible to support these teammates through this transition.”

The job cuts represent a tiny fraction of USAA Bank’s workforce. It had 16,800 employees at the end of last year, an increase of 3,300 from just two years earlier.

The bank will encourage eligible employees to apply for openings in its mortgage servicing unit, other positions at the bank and within USAA’s property and casualty insurance business, he said. It will also provide transitional benefits.

“I want to make it clear that Mortgage Lending remains fully committed to supporting our members with their mortgages for the next 100 years,” Cianelli told staff. The USAA, which has existed for nearly a century, has more than 13 million members, made up of service members, veterans and their families.

A company spokesperson said in an email Thursday, “USAA continually adjusts staff to reflect changing market conditions and to meet the demands of our members.”

On Thursday, mortgage rates hit their highest level in more than three years. Mortgage buyer Freddie Mac reported the 30-year fixed rate rose to 4.67% from 4.42% last week.

“Mortgage rates have continued to rise in the face of rapidly rising inflation as well as the prospect of strong demand for goods and continued supply disruptions,” said Sam Khater, chief economist at Freddie Mac. “Buying demand weakened slightly but continued to beat expectations.”

Despite this week’s job cuts, USAA Bank has spent heavily on hiring, compensation and technology systems to improve the business, as well as strengthen its risk management and regulatory compliance.

In March, two banking regulators imposed $140 million in fines on the bank.

The Financial Crimes Enforcement Network, or FinCEN, reported that USAA Bank admitted it failed to accurately report thousands of suspicious transactions by its customers, including those using personal accounts for apparent criminal activity.

FinCEN imposed a fine of $140 million, while the Office of the Comptroller of the Currency imposed a fine of $60 million. The bank had to pay $140 million instead of $200 million because FinCEN agreed to credit the OCC penalty.

These fines followed others.

In 2020, the OCC fined the bank $85 million for “violations of the law” that were “part of a pattern of misconduct.” The bank has neither admitted nor denied violating banking laws.

And in 2019, the Consumer Financial Protection Bureau ordered the bank to pay a $3.5 million fine and $12 million in restitution to settle charges of violating banking laws.

The job cuts come on the heels of seven straight quarters of losses through the end of last year at USAA Bank, according to data from the Federal Deposit Insurance Corp.

USAA Bank suffered combined losses of $710 million in 2020 and 2021 due to declining loan volumes, soaring deposits and – until recently – record high interest rates. The bank remains well capitalized and is in no financial danger.

The bank had nearly $4.8 billion in residential real estate loans on its books at the end of last year, down 24% from about $6.3 billion at the end of 2019.

The fall contributed to an overall decline of $10.4 billion in the bank’s lending volume over the past two years. It ended last year with $38.8 billion in loans. The largest declines occurred in credit card loans and consumer loans.

During the same period, deposits increased by $27.3 billion, or 35%, to almost $105.1 billion.

“It’s been a difficult environment to grow lending in the banking industry, given that consumer deposits are so high,” Michael Moran, the bank’s chief financial officer, said in an interview in February.

The bank reported $117.4 billion in assets at the end of last year, ranking it among the 35 largest financial institutions in the country.

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