Stung by a slowdown in mortgage refinancings, Eldorado Bancshares said its earnings would fall 50% short of an estimate in its first full quarter as a public company.

The Laguna Hills, Calif., company announced Friday that its second- quarter earnings are expected to be $1.5 million, or 10 cents per share.

Keefe, Bruyette & Woods Inc., the only investment banking firm that tracks Eldorado, had projected it would earn $3 million, or 20 cents per share.

The firm immediately downgraded the stock to "hold" from "buy."

Shares of Eldorado fell 8%, to $10.125, on the news last Friday. They were trading at $9.50 midday Tuesday. the stock had opened on the Nasdaq National Market in April at $10.

The $1.3 billion-asset company is the parent of Eldorado Bank and Antelope Valley Bank. It operates 25 branches from San Diego to Sacramento.

Robert P. Keller, president and chief executive officer of Eldorado, attributed the earnings shortfall to its residential mortgage unit.

"I've never seen anything lose so much money in one month in my life," said Mr. Keller. "The refi market disappeared."

He said loan volume has fallen 50% below projections, in part because of higher long-term interest rates.

Eldorado plans to lay off loan officers and cut overhead costs in its mortgage division. The 160-employee unit's payroll has been slashed by 9% in the past two months, Mr. Keller said.

The mortgage chief, William Rast, has resigned, the company said Friday. Mr. Keller refused to discuss the departure.

Mr. Rast has been succeeded by Dennis Meroney, who formerly ran his own mortgage consulting business.

Keefe Bruyette has reduced its 1999 earnings estimate for Eldorado to 53 cents per share from 85 cents. It set a 12-month target price of $10 per share.

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