Last year was tough for brokerage firms around the country.

But now it can be confirmed that for at least one bank brokerage, the tough markets took a human toll. U.S. Bancorp, Portland, Ore., was forced to trim its brokerage staff by nearly a quarter.

"We had a good year and a profitable year, but not the year we envisioned," said Wayne Wilson, who took over last year as president of the U.S. Bancorp Securities brokerage affiliate.

Mr. Wilson said the retail brokerage had doubled the size of its branch- based sales force in 1993 to 95 full-service brokers, not counting 50 branch employees who were licensed to sell mutual funds in a test program in Washington.

The bank had been expecting a bang-up 1994. Instead it got a bust.

Mutual fund sales fell to half of 1993's volume, as investors shifted to short-term instruments and treasuries. This wasn't catastrophic, since total investment sales exceeded 1993's tally. But sales did not meet the bank's ambitious targets, Mr. Wilson said. As a result, staff reductions became a necessity.

The first cutbacks came in the spring, when the $21 billion asset banking company launched a highly publicized cost-cutting campaign aimed at reducing payrolls 10%, mostly through early retirement and voluntary severance packages. The brokerage affiliate shared in these cuts.

In the summer, the affiliate lost its president, Michael D. Diver. Mr. Wilson said Mr. Diver left as part of a reorganization which placed executive vice president Thomas P. Ducharme in control of treasury, insurance, and retail brokerage activities.

Mr. Wilson declined to elaborate on this matter and Mr. Diver did not return a call seeking comment.

As investment sales continued to fall below expectations, the brokerage affiliate did not replace new brokers hired in 1993 who were dismissed, left, or who took advantage of retirement and severance packages offered.

Instead U.S. Bancorp Securities shrunk its sales force to the current total of 74 full-service brokers, for the approximately 400 branches U.S. Bancorp operates throughout the Northwest.

The brokerage affiliate also is cutting administrative staff by a third, to 32 people. The last of these cuts is happening now, as the brokerage closes three of its seven regional supervision offices.

U.S. Bancorp's staff cuts are markedly different from the aggressive sales force expansions of some other regional banks - most notably, NationsBank and First Union Corp., which have hired and trained hundreds of new investment sales specialists.

But Wayne Lewis-Hutchinson, a senior consultant in the Red Bank, N.J., office of bank consultancy Spectrem Group, said brokerage staff cuts seemed like reasonable moves, given declining sales and layoffs at some of the country's largest brokers.

Mr. Wilson added that staff cuts haven't derailed U.S. Bancorp's ambitions. In November, the bank's brokerage began selling the bank's first proprietary mutual fund family, the Qualivest funds, which were launched in August. The family now consists of three money market, two equity, and two bond funds. Four more long-term funds are due out this spring.

December sales figures aren't in yet. But Mr. Wilson said that in November about 15% of the brokerage affiliate's fund sales were of Qualivest funds. Mr. Wilson said he thought this was an encouragingly high sales ratio, given that the Qualivest funds are new, and don't yet sport a full range of investing styles.

U.S. Bancorp also expects to license more branch employees to sell mutual funds.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.