Downey S&L; Forced Into $6-Million Write-Down : Assets: The federal regulators’ order turns the thrift’s previously announced third-quarter profit into a $3.7-million loss.

Federal regulators required Downey Savings & Loan to turn a previously announced third-quarter profit into a $3.7-million loss Friday. Company officials said the one-time write-down of assets does not affect its financial stability.

The thrift, which had $4.2 billion in assets as of Sept. 30, was forced to write down by $6.1 million the value of certain mortgage-backed securities it holds.

The action was part of the federal Office of Thrift Supervision’s war on what it sees as lax accounting standards.

Dan Williams, a thrift industry analyst with Sutro & Co. in San Francisco, said a large number of S&Ls; are being required to take a more conservative approach to valuing the assets they carry on their books. He said regulators are requiring them to report values for the securities that reflect their actual market value rather than the often-higher par or face value.

In Downey’s case, regulators said, the thrift could no longer classify certain mortgage-backed securities as being “held for investment” but must carry them on the books as “held for sale.”

“Downey believes there is considerable confusion among the accounting profession as well as the different regulatory agencies as to the appropriate guidelines for distinguishing between assets held for investment versus held for sale,” the thrift said in a prepared statement.

Williams said regulators have held that if there is “any prospect that a security may be sold before its maturity, then it must be marked to market. That makes the value dependent on interest rates.”

Classifying the securities as an investment holding allowed Downey to carry them on the books at a price near their face value, disregarding the effect of interest rates.

But securities sold before they mature are generally worth less than their face value. And if current interest rates are higher than the rate at which the security pays interest, than its value as an investment is lower still.

Downey said Friday that while it was required to write down its mortgage-backed securities to reflect their market value Sept. 30, the day the third quarter ended, the securities have since gained almost $3.1 million in value, representing “a substantial recovery of the market loss.”

And even with the loss, Downey posted a $23-million profit for the first nine months, up 43% from $16.1 million a year earlier.

The S&L;, a leading developer of shopping centers in California and Arizona, is considered to be among the healthiest and best-run thrifts in the state, Williams said. He added that the one-time accounting loss should not hurt Downey.

A.J. Morsillo, Downey’s chief financial officer, said that the S&L;’s capital under the new accounting is 5.2% of tangible assets--well in excess of the new federal minimum of 1.5% that goes into effect Dec. 7.