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Principal Financial to Lay Off 500

January 30, 2003

DES MOINES, Iowa (AP) _ Principal Financial Group Inc. said Wednesday it will lay off about 500 employees as it restructures its home mortgage business.

Principal Residential Mortgage Inc. will close 78 branch offices across the country by the end of February as the Iowa-based company phases out that business, said Paul Bognanno, president of the mortgage unit.

Bognanno said business in the branch offices remained flat as customers flocked to the company’s Mortgage Direct operation, which allows customers to apply for loans online or over the phone. That operation generated $1.5 billion in mortgage loans in the first three quarters of 2002 compared to $361 million for the same period in 2001.

The move will not affect customers who already have mortgage loans through the branch offices, or those in the process of getting loans, the company said.

Home mortgage loans through Principal Residential Mortgage in 2001 totaled $37.8 billion.

Bognanno said the decision to close the branch offices was timed to coincide with the robust home mortgage market.

``This gives those employees the best opportunity to get on with other mortgage companies quickly,″ he said.

Principal’s shares rose 2 cents to close at $28.85 Wednesday on the New York Stock Exchange.


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