Downey Reports 9% Quarterly Drop : Earnings: Despite slide from last year’s first quarter, S&L;’s latest showing--net profits of $11.3 million--remains impressive.

Downey Savings & Loan Assn. said Thursday that its first-quarter earnings slipped more than 9% to $11.3 million from a year earlier. But one industry analyst said he expects the thrift’s profits to climb the rest of the year.

“I like the new management team,” said Campbell K. Chaney, an analyst with Sutro & Co. in San Francisco. “It will be the shot in the arm the investors have been looking for.”

Indeed, Chief Executive Robert L. Kemper and President F. Anthony Kurtz, who took over management of the S&L; in September from founders Gerald McQuarrie and Maurice McAlister, have promised to initiate new strategies to pull the institution out of its financial doldrums.

And despite the nearly 10% drop from the year-ago period, Downey’s $11.3 million net earnings for the first three months--70 cents a share--remained an impressive showing.

The $12.5 million or 77-cents-per-share net earnings posted for the first quarter of 1991 made that the S&L;’s most profitable quarter since the beginning of 1988, said Chief Financial Officer David T. Hansen.

Profits for the remaining three quarters and for 1991 overall fell 41% from 1990 as interest rates plummeted and the recession stifled demand for new home loans.

Hansen said Downey now is “doing much better than last year” in its core business of mortgage lending.

Since the company’s helm changed hands in September, Downey officials have concentrated on gaining a sizable chunk of the refinancing market, which has been fueled by the attractiveness of lower interest rates for home loans, Hansen said.

The institution has increased advertising for its various mortgage refinance packages, enlarged its loan-origination processing staff and courted realty companies to win their business referrals, Hansen said.

As a result, loan originations have ballooned 262%.

Downey Savings & Loan

Lower intesest rates and the lingering recession contributed to Downey Saving’s 24% drop in first-quarter revenue. Revenue this quarter was $73.3 million compared to $95.8 million for the same period last year.

(Dollars in thousands, except per-share data)

Percent 1992 1991 Change Total revenue $73,252 $95,771 -23.5 Net earnings 11,281 12,463 -9.5 Earnings per share 0.70 0.77 -9.1

Source: Downey Savings & Loan Assn.