Local banking industry job losses begin to subside; but depository institution employment 20% below peak.

The banking industry continues to bleed jobs, but at a gentler flow than in years past.

"We're not seeing the rate of change we were seeing a year ago," said Gary Saenger, Los Angeles regional manager for outplacement firm Right Associates.

The worst hemorrhaging, according to industry experts, is probably over. But the patient is convalescing slowly.

"While the rate of decline looks like it's moderating somewhat, you have to look at the quality of jobs being offered now," said Jack Kyser, chief economist with the Economic Development Corp. of Los Angeles County. For example, he noted, "A lot of tellers are now part-time." And a banking job, he observed, is no longer a life position.

Doug Perron, a labor market analyst with the state's San Francisco-based Employment Development Department, concurred: "A lot of that has to do with branches closing, with automation replacing tellers, and with processing centers moving out of state."

These factors similarly affect Southern California and Northern California banks, but appear to disproportionately hit lower-level banking industry employees.

"You'll see more (job loss) at the lower levels, some at the middle level and a few higher," Saenger said.

A total of 600 Los Angeles County depository institution jobs evaporated in February 1994, the most recent month for which figures are available, according to the EDD. And 5,100 such jobs were lost in L.A. County between February 1993 and February 1994.

The EDD defines depository institutions (including Federal Reserve banks, savings and loans, commercial banks, local branches and agencies of foreign banks and credit unions) as a segment of the Financial/Insurance/Real Estate industry, FIRE for short. In Los Angeles County, the entire FIRE category has lost 30,600 jobs, or 11 percent of its total employment, since its December 1990 peak, Kyser reported.

By comparison, the depository institutions segment of FIRE has lost 19.7 percent of its total L.A. County jobs since its March-April 1990 peak, according to Kyser. That far exceeds the 13.4 percent and 10.7 percent local job shrinkage rate suffered since 1990 by the insurance and real estate segments of FIRE, respectively. Those shrinkage rates translate to about 11,000 local insurance jobs lost and about 6,500 local real estate jobs lost, Kyser reported.

Running contrary to those contractions, the non-depository financial institutions segment of FIRE has actually showed a 17.3-percent employment gain in L.A. County since 1990. This segment -- consisting primarily of lending institutions, such as mortgage lenders, that don't take deposits -- recently enjoyed relative strength due to a boom in residential refinancings brought on by low interest rates. L.A. County employment at such non-depository institutions now stands at about 20,300, up from 17,300 in 1990. But that strength is an anomaly in the otherwise downtrodden FIRE category of L.A. County.

"The biggest FIRE job losses have been in traditional financial institutions -- banks and S&Ls," Kyser observed.

"As long as banks and S&Ls continue to consolidate, most likely, people will fall by the wayside," said Los Angeles-based EDD labor market analyst Jay Horowitz.

His colleague Perron agreed, warning of new, reported layoffs that haven't shown up in statistics yet. In the Bay Area counties he monitors -- San Francisco, San Mateo and Marin, comprising the San Francisco metropolitan area -- depository job losses have been proportionately higher than in Los Angeles County during the past five years.

In that five-year period, San Francisco-area depository jobs fell from an average annual 39,700 in 1988 to 33,800 in 1993, representing a 14.9-percent loss. In Los Angeles County, 1988 offered an annual average of 94,000 depository jobs, dropping to 83,300 in 1993. This represents an 11.4-percent job loss.

Outplacement manager Saenger also cited restructuring in general as the No. 1 cause of unemployment in the banking industry.

Nonetheless, FIRE damage doesn't compare to the bloodletting experienced in the aerospace sector. Horowitz offered as comparison to 5,100 banking jobs lost in the year ended February 1994 the devastation of 21,000 aerospace jobs lost in that same year. On a monthly basis, the aerospace industry is averaging 2,500 to 3,000 jobs lost, as compared to 400 to 600 in banking.

Additionally, many banking employees appear to be landing new jobs fairly quickly, according to Saenger, offering two to four months as an average. Some laid-off banking employees take their accounting, electronic data processing or other transferable skills out of the FIRE segment altogether, while others, like more-finance-specific loan officers, move to a less-affected end of the industry, like credit unions, Saenger explained.

"The group that's had the most trouble finding work are those associated with mainframe computers, or system people," he said. Many, he added, are being retrained by their employers for new, computer network-type work.

Kyser said he expects FIRE job losses to bottom out by the end of 1994 at 11.2 percent or 11.3 percent below the category's 1990 employment peak, representing only a slight dip from its current position of 11 percent below that peak.

"There are still shake-outs ahead in small banks," he warned. Overall, the worst seems to be over.