Stung by writedowns in its real estate portfolio and theslowdown in home lending, the $419 million Air Academy FederalCredit Union of Colorado Springs confirmed Tuesday it laid off 19employees last week and has closed several branches.

While stressing the CU remains in sound financial condition,management said it has decided future growth lies in the “onlinesector and in electronics” apart from retail branches.

On the layoffs, the 42,000-member Air Academy FCU said thatbased on a projected shrinking of the refinance market, it let go12employees in its mortgage department, plus seven others including a vicepresident all involved in branch and real estate support jobs.However, no further layoffs are planned, the credit union said.

Following a closing of a Sand Creek branch in August and threeothers over the past two years, Air Academy FCU eventually expectsto reduce its branch footprint from nine to seven facilities in ElPaso and Douglas counties. Two years ago Air Academy had 13branches.

“We are definitely seeing a greater acceptance ofelectronics—the smart phones, the remotes—and a migration from thebranches so there is no need for all the back office supportrequired in the past,” said Brad Barnes, chief financial officer. That would includestaffing for ATM and general ledger balancing in the branches, hesaid.

Regarding real estate losses, Barnes said his CU already took a“one-time $830,000 in writedowns on some land foreclosures andwe've already sold three pieces with gains” so 2011 will produce aprofit, though the CU did report a $78,000 loss for the first ninemonths. Also figured into the third quarter loss was the NCUAassessment of $886,000, Barnes said.

Meanwhile, with mortgage rates climbing above 4%, the refimarket has started to slow and that trend should continue into2012, he forecast. “Annual mortgage production which once wasin the $200-$300 million range is now projected at only $90-$100million for next year,” said Barnes. With refi transactions makingup about 70-80% of total Air Academy production, the slowdown inrefis “has a large impact on our business,” he said.

Air Academy said also its member statistics show that only 20%use branches once a month for three consecutive months.

As part of future branch consolidation, Kira Schubert, marketingmanager, said the CU eventually expects to sell property where itsprevious headquarters is located and possibly combine two of itsDouglas County branches at Parker and Highlands Ranch.