Downey S&L; Projects Strong 2nd-Period Net
Amid a flurry of interest in its upward-spiraling stock, Downey Savings and Loan Assn. said Thursday that a $13-million profit from the sale of securities and mortgage loans will give it “above-average” earnings for its second quarter.
A spokesman for the Costa Mesa S&L; said Downey sold more than $100 million in securities and loans during the period in an effort to match the maturities of its assets and liabilities.
In addition to the gain on securities, the company said Thursday that it would have record operating earnings for the second quarter, meaning the net profit for the period will be in excess of $13 million, or about 18 times the $720,000 in profit reported for the same period last year. Downey had net earnings of $11.1 million for the first quarter of 1985, compared to $1.5 million for the initial three months of 1984. The S&L; posted an annual profit of $12.2 million for all of 1984, more than three times the $3.6 million reported for 1983.
Thursday’s announcement was made because the company has been receiving inquiries from stock analysts and investors anxious to learn why the S&L;'s stock price has been soaring, a Downey spokesman said.
The company’s stock price has risen from a 1984 high of $11.75 per share to $20.63 at the close of American Stock Exchange trading Thursday. Since May 31, Downey’s stock has jumped almost six points, from $14.88 a share.
The stock’s performance apparently has been fueled by the improved earnings picture. It also may have been helped by declining interest rates, which have helped boost the prices of other savings and loan stocks in recent months.
“We have been recommending the stock since January,” said Allan Bortel, a first vice president at Shearson Lehman Bros. in San Francisco. “The investors are realizing the hidden assets that have been developed over the years.”
Bortel was referring in part to Downey’s development of shopping centers and the money it earned from servicing loans for others.