First National cutting 350 jobs

Jan 28, 2009 (Omaha World-Herald - McClatchy-Tribune Information Services via COMTEX) -- FINN | Quote | Chart | News | PowerRating -- First National of Nebraska is letting 350 of its 6,500 employees go to reduce costs in the face of a declining economy.

They are the first major job cuts in modern times for the state's largest locally owned financial institution.

Daniel O'Neill, president of the banking company, said today that about 250 of the jobs are in Omaha, most at its three downtown office buildings and some at its office park at 144th Street and West Dodge Road.

About 100 are at an Atlanta credit card service center or other locations outside Nebraska.

"I think we reflect what's happening on a national basis," O'Neill said. "We're looking at any area that we think does not affect the customer. We're going to try to become more efficient.

"It's a tough time right now. The forecast of the economy that we listened to last fall did not look very promising, and we really wanted to prepare for n'09."

The bank has notified some employees and will tell the rest within 30 days, O'Neill said.

O'Neill said First National has a "redeployment" policy when it makes personnel changes, allowing people to remain employed for 60 to 90 days as they seek other jobs within the company or elsewhere.

"It's tough when people lose their jobs. Most people here have always had a good work ethic and have been loyal to the company. We want to try to help them as much as we can."

Many of the 350 cuts result from combining "back-office" services divisions that have operated separately for First National Bank of Omaha and for First National of Nebraska, the holding company that includes other banks as well. Those functions include technology and financial services such as tax preparation.

"I don't see any major reductions in our branches or our lending area or our retail area," O'Neill said.

Some of the cuts are related to the company's nationwide credit card operation, which has seen volume slow down as consumers reduce their spending.

Despite the difficult economy and an increase in the bank's troubled loans, O'Neill said, First National has strengthened its finances over the past year.

The company made a $75.4 million profit in 2008, compared with $80.2 million in 2007 and $120 million 2006. At the end of 2008, it had $14.7 billion in loans, up 3.1 percent from a year earlier.

The economy worsened in the last three months of 2008, O'Neill said, but First National broke even.

More importantly, he said, the bank added more than $100 million to its reserves to cover loan losses, boosting that figure to $233 million. That's enough to cover all its troubled loans, even though not all those loans may default.

O'Neill said he isn't sure what sort of job cuts First National may have made in the financial crisis of the 1930s. The bank celebrated its 150th year in 2008, and he said it looks like 2009 will be difficult.

It's unclear what the federal government will do and whether stimulus efforts will turn the economy around, he said, although the direction of the economy may be clearer by midyear. First National did not apply for the government's earlier stimulus program, known as the Troubled Asset Relief Program.

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