Downey Financial Corp., which is struggling under the weight of bad mortgages, added a former bank examiner with the Office of the Comptroller of the Currency to its board.
On Thursday the Newport Beach, Calif., thrift company named Paul M. Homan, 68, as a director and cited his work in recent years as a consultant helping "troubled banks and thrifts."
Downey posted a $219 million second-quarter loss as a result of mounting nonperforming assets. Last week it said nonperfomers accounted for 15.08% of its $13.4 billion of assets as of July 31.
Investors welcomed the addition. Downey's shares climbed 7.25% Thursday.
"It seems like a good pick in that his experience fits in with what they are trying to work through," Robert B. Hoban Jr., a Standard & Poor's Corp. credit analyst, said in an interview Thursday.
Mr. Homan will remain a principal at the banking consulting firm Homan & Associates Inc., where he has worked since 1999. Before that he had spent 18 years as a bank examiner for the OCC.
Downey said Mr. Homan has "planned, restructured, and successfully managed the return to financial health of five troubled banks and thrifts."
Including Mr. Homan, Downey's board now has nine members.
"Given Paul's depth of banking and regulatory experience, his expertise and insights will be tremendous assets to Downey as we address our current challenges, as well as our long-term strategy," Michael Bozarth, its chairman, said in a press release.
Last month Downey said it had hired Sandler O'Neill Partners LP to advise it as it explores a "broad range of strategic alternatives." Analysts said the company is likely looking for a buyer or a capital infusion. Downey said its executives and directors would not discuss the matter Thursday, but in the release, Mr. Homan suggested it is looking to survive on its own.
"Downey has a long and rich history, and I look forward to helping maintain its long-term commitment to its customers and its important presence in the communities it serves," he said.