James W. Lokey has become the latest in a string of Downey Financial Corp. chief executive officers to be shown the door.

Mr. Lokey resigned, succeeded by chief operating officer Daniel D. Rosenthal, the Southern California thrift said late Friday.

Mr. Lokey, who was hired in early 1997 to help build Downey's commercial lending business, is the fifth CEO in six years to be pushed out by the Downey board.

Maurice L. McAlister, the founder, chairman, and largest shareholder, suggested in an interview Monday that Mr. Lokey's extensive commercial banking expertise did not pay off as much as had been hoped.

"It turned out to be very difficult to break into the commercial banking business," Mr. McAlister said from his home in Bullhead City, Ariz. "It is such a small portion of our total business that it doesn't deserve much attention."

The announcement puzzled analysts. They said Newport Beach, Calif.-based Downey has performed strongly under Mr. Lokey, who previously spent 23 years with First Interstate Bancorp.

"You never get any warning when this happens," said Campbell K. Chaney, an analyst with Sandler O'Neill & Partners. "There's no real financial reason, and there's no mismanagement reason."

The thrift has been performing well, earning $12.8 million in the third quarter, up 21% from a year earlier.

"I am proud of the role I have played in leading Downey toward becoming a top-performing financial institution," Mr. Lokey said in a press release. "Downey has been a rewarding opportunity, but I am looking forward to new challenges that are presenting themselves."

Mr. Lokey, who spent his last five years at First Interstate as executive vice president of commercial banking in Southern California, was hired in part to build a middle-market lending operation at Downey.

He was unavailable for further comment Monday, but in an Oct. 29 interview Mr. Lokey acknowledged that stiff competition from small to midsize thrifts and commercial banks made it tough going.

"We are not lacking in competitors," Mr. Lokey had said.

Mr. Rosenthal's appointment, approved by the Downey board last Wednesday, marks a return to a more traditional philosophy for the thrift, observers said. Downey was founded in 1957 to help fund Mr. McAlister's real estate investment business. The new CEO brings a wealth of experience. Besides being chief operating officer, the 23-year Downey veteran also was president of DSL Service Co., a subsidiary that invests in real estate.

"He is a brilliant businessman," Mr. McAlister said.

Downey said Paul G. Woollatt, a 15-year veteran of the company, succeeds Mr. Rosenthal as chief operating officer. Mr. Woollatt most recently served as director of the retail banking division.

Mr. Rosenthal and Mr. Woollatt were unavailable for interviews.

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