Evansville-based Springleaf Financial plans to cut ties with its mortgage services division and eliminate 170 positions in the process. When it comes to the impact on the local economy, economic development leaders believe the move is more of a body blow than a knockout punch.
According to it's second-quarter earnings report filed Thursday with the U.S. Securities and Exchange Commission, Springleaf said it had reached agreements to sell more than $7 billion in real estate assets. This essentially liquidates all of it's mortgage-related holdings by the end of September.
The report comes days after the company filed a WARN notice with the Indiana Department of Workforce Development that detailed the future elimination of 170 positions including administrative staff, collections specialists and call center employees. According to the notice, the positions will be officially eliminated on or about October 5th.
With close to a thousand employees, Springleaf Financial is one of the largest employers in Evansville. The position cuts account for roughly 1/10th of it's workforce.
"It's the psychology of 170 positions being lost in the community, in particular, the white collar sector," said Greg Wathen, president of the Economic Development Coalition. "That probably does as much damage as anything for the psyche of the community."
Springleaf's elimination of it's mortgage services division comes as the company has seemingly cuts ties with real estate all together. The company, formerly known as American General Finance, was pummeled by the Great Recession. Springleaf was spun off into a separate company in 2009 before going public in 2013.
As far as the impact on the local economy is concerned, Wathen said the key goal moving forward is matching displaced employees with certain skill sets to other local businesses.
"When you look at the labor shed, we draw labor in from a three state area," Wathen said. "It's not uncommon for people to live here and work at the U.S. Bank mortgage service center in Owensboro." The U.S. Bank mortgage service center has expanded three times in recent years including a $15 million investment in March 2013.
"I'd say in 3 1/2 years, we've closed on projects that are adding almost 2000 jobs in the community," said Debbie Dewey, president of the Growth Alliance of Greater Evansville or GAGE. "While every job lost is important, we are also adding jobs at a greater rate than we are losing jobs fortunately."
In it's quarterly-earnings report, Springleaf noted a net income of $72 million compared to a net income of $56 million in the second quarter of 2013. This could be good news, Wathen said, because it could increase the likelihood that Springleaf transfers some of the affected employees to other more profitable divisions of the business.
"It seems like they're doing something right and the market is responding," Wathen said, citing Springleaf's shares increasing more than 12% on Thursday. "The hope is whatever they decide to do, we hope they do it in our market."
Mayor Lloyd Winnecke also issued a statement on Springleaf's cuts. The Mayor’s office received the WARN notice on August 6, officials said. A representative from the company reached out to the Mayor a few days prior to the release of the WARN notice as a courtesy to the Mayor.
"The decision by Springleaf Financial to reduce its workforce in Evansville is obviously disappointing and our thoughts go out to the 170 individuals that will be displaced in October. The city encourages the impacted individuals to contact WorkOne now to start utilizing the training and job search services available.
Even with the recent announcement, Springleaf remains a large employer in our region employing hundreds of our fellow citizens, and the city will continue working with their leadership as they make transitions in our local economy. As our employment rate remains low and job opportunities are available in the community, the city will continue its retention efforts to support expansions and will work to attract new companies to the region."