Downey Savings Loses $9 Million; Regulatory Adjustments Blamed
LOS ANGELES -- Downey Savings and Loan Association, Newport Beach, announced Thursday that it lost $9.6 million in the third quarter.
The thrift attributed the loss to charges imposed by regulators. It said earnings "were impacted by two major items arising out of the recent examination by the Office of Thrift Supervision."
Downey added a $17.9 million allowance against bad loans and real estate investments. "We feel comfortable with these reserve levels," said David T. Hansen, chief financial officer.
The thrift also took a $10.1 million loss from reclassifying $252 million of long-term government bonds. They had been classified as investment securities, which may be booked at cost. Now, as trading securities, they must be marked to the lower of cost or market price.
Downey's third-quarter loss equaled 59 cents per share. The thrift earned $5.3 million, or 33 cents per share, in the 1990 quarter.
The loss has not hurt the company's strong capital position. Core and tangible capital stand at 5.14% and risk-based capital at 10.57%.
Nonperforming assets, at 0.68% of assets on Sept. 30, were also below industry norms. The figure was 0.52% on June 30 and 0.18% at Sept. 30, 1990.
"This is an excellent company," said James F. Wilson, a thrift analyst at Montgomery Securities, San Francisco. "They have among the highest capital ratios of any thrift in the state and very low nonperforming loans."
This fall, Downey announced that it had named Robert L. Kemper chief executive officer and F. Anthony Kurtz president and chief operating officer. Both had tried to turn around Great American Bank, which eventually failed. They replaced Downey's founders, who retired.