Downey S&L; Cites Health, Sees Stock Soar by 10.7%
Downey Savings & Loan, having issued a statement saying it was in a “select group” of thrifts able to meet or exceed new capital requirements, saw its stock on Wednesday become the fourth-largest percentage gainer on the New York Stock Exchange.
Downey’s stock rose $1.625 a share to $16.875--a 10.7% increase over the previous day’s close of $15.50 a share. About 40,700 shares traded hands Wednesday.
About 800 of the nation’s 2,600 S&Ls; do not meet one or more of three capital requirements imposed earlier this month, and industry leaders worry that new capital will be hard for thrifts to find next year. Stock prices of all thrifts have been affected by the pervasive industry problems.
Downey issued the statement partly because of adverse publicity it received in a KNBC-TV news report Tuesday. In a report on the industry’s capital woes, the station showed a montage of various S&L; offices, including Downey’s logo. Depositors began calling the thrift immediately, said John Dennis, a Downey spokesman.
“The impact of the visuals sometimes overrides the impact of the words spoken,” Dennis said. “And the viewers got the wrong message. That’s the trouble with using a wide brush on the industry--everyone gets painted the same color.”
Downey, long regarded as one of the best-run S&Ls; in the nation, had been planning for the last two weeks to release financial information as an example of the healthy side of the industry. But executives held back, worrying that it would seem too boastful, Dennis said.
