Mortgage - Home Loan, Commercial Loan

WARWICK – Rhode Island-based Home Loan Investment Bank recently laid off about 30 employees as the company shifts its focus from mortgages to commercial loans in the wake of major disruptions in the home loan industry.

Brian Murphy, CEO of the privately held company, this week confirmed the layoffs but insisted that Home Loan Investment Bank remains profitable. “We had to get down to the right size,” Murphy said. “We’re not sticking our head in the sand and hoping everything turns around. We’re adjusting.”

The bank – whose Web site sets the size of its local staff at more than 275 – said it continues to be a “strong, conservative and well-capitalized banking institution.”

“With over three times the capital required by its federal regulators, the bank is considered a well-capitalized institution,” Home Loan said in a statement.

The 49-year-old Home Loan Investment Bank – a federally chartered financial institution that does business in 25 states – still has six or seven employees originating mortgages, according to Murphy. But home loans have become a less significant part of the business as the mortgage industry has imploded in the past year and the housing market has cooled.

Layoffs are nothing new in the financial-services sector. One trade group said 86,000 jobs nationwide were cut in 2007 as a result of the subprime turmoil. An industry research firm had predicted another 130,000 jobs would vanish by the end of 2008.

Like many other banks and mortgage companies, Home Loan Investment Bank has instituted layoffs over the past year as the market has deteriorated industry-wide. Murphy said his company has gone from about 275 employees in 2005 to about 140 employees now.

But, he said, there won’t be any more layoffs. “We’re holding on to our core people,” he said.

In the meantime, the company’s commercial loan business – which centers on government-guaranteed loans – has picked up significantly, going from about $28 million in commercial loans in 2006 to $40 million in 2007. Murphy projects that the company will do as much as $90 million in commercial loans by year’s end.

Murphy said 85 percent of Home Loans Investment Bank’s revenue came from residential lending before the mortgage crisis – now 80 to 85 percent of its revenue is derived from commercial lending.

“The reduced headcount enables the bank to more efficiently originate mortgages during these difficult times,” the statement said, “and places the bank in an excellent position for future growth.”