Butterfield Equities Corp., apparently acting under pressure from state and federal regulators, said Wednesday that it was laying off almost a third of its employees and discontinuing a number of its real estate and financial planning activities.
About 80 of the 250 jobs at Santa Ana-based Butterfield were eliminated Wednesday. The layoffs and operational changes were announced in a terse, two-page "position statement." The changes reflect an about-face from Butterfield's longstanding goal of becoming a national real estate investment syndicator and wholesale mortgage banker.
Butterfield, a diversified financial services company that operates Butterfield Savings & Loan Assn., lost $7.1 million in the first quarter of its 1985 fiscal year and $6.5 million in fiscal 1984, which ended last June 30. Butterfield also has a retail financial planning unit and a restaurant group consisting of the Love's restaurant chain and the Wendy's fast-food franchise for most of Orange County.
Butterfield officials could not be reached for comment Wednesday.
However, several knowledgeable industry sources said the company has been under tremendous pressure from both the state Department of Savings and Loan and the Federal Home Loan Bank to restructure its operations. Butterfield Equities' 15-month string of losses reduced the S&L's ratio of capital to assets to well below 3%--the minimum level both agencies require.
Butterfield said Wednesday it will reduce the S&L's total assets and deposits but did not elaborate. It also will shed its retail financial planning unit and its residential mortgage banking operation and is discontinuing a project under which it hoped to package, and sell nationally, real estate investment programs.
The two operations it is discontinuing were among Butterfield's ventures into what regulators have termed "non-traditional" activities for S&Ls and contributed to the company's rapid expansion. In its financial planning unit, it sold investment shares in Butterfield-financed real estate syndications; Butterfield's mortgage banking unit bought and sold large blocks of mortgages in the secondary investment market.
Data System Slowed
Butterfield also said it is slowing development of its internal computerized data system.
The actions, Butterfield said, "are critical to the viability of Butterfield's business activities."
Butterfield bought the S&L in 1980 and made it one of the most entrepreneurial S&Ls in the nation. But it began pulling back in late 1984 with a management shuffle and corporate realignment.
Salvatorre Serrantino, president of California Research Corp. of Santa Monica, called Wednesday's announcement "a dramatic realignment in the (Butterfield) objectives, but one that was very much expected. I would have to believe they have altered their growth plans because they are way out of concert with the present federal regulatory position" that reins in S&Ls that are growing too rapidly.
Los Angeles financial consultant Edward Carpenter, chairman of Edward Carpenter & Associates, agreed that Butterfield's action falls in line with recent federal regulatory actions, which have imposed "a more traditional direction" on the S&L industry.
Federal Home Loan Bank Board Chairman Edwin Gray often cited restaurant operations, like those of Butterfield Equities, as an example of injudicious investments by S&Ls. And Butterfield itself had blamed some of its early losses on problems with its restaurant operations.
However, Butterfield is keeping its restaurant chains, according to the reorganization announced Wednesday.