Downey Savings & Loan Says Profit Dropped 17%
Downey Savings & Loan Assn., which earlier this month announced the abrupt departure of its president, said Thursday that its second-quarter profit dropped 17% to $9.5 million, or 58 cents a share.
“We were impressed with the numbers. It looks like things are tracking quite nicely at Downey,” said Tom Theurkauf, an analyst with the brokerage Keefe, Bruyette & Woods in New York. “If you put this in the context of thrifts operating in Southern California, I think they’re doing quite well.”
The company’s profit for the latest quarter compared to earnings of $11.4 million, or 70 cents a share, for the second quarter of 1992.
For the first six months of 1993, Downey reported a profit of $31.7 million, or $1.96 a share, compared with earnings of $22.7 million, or $1.40 a share, for the same period a year earlier.
The thrift, which is based in Newport Beach and has 52 offices across California, announced July 3 that its president and chief operating officer, F. Anthony Kurtz, had “departed” after just two years in the top operating spot. No explanation was given for the departure, which left the $3.5-billion thrift with no clear successor to Chief Executive Robert L. Kemper, 64, who is now also acting as president.
Analyst Sally McIver at SNL Securities, a Virginia research firm that tracks 350 thrifts, said Kurtz’s departure is probably not an indication of fiscal problems at Downey Savings. “The chief operating officer position is usually the person who next becomes CEO. Maybe Kurtz was given an indication that he wasn’t going to get that job,” she said. “To me, one of the chief concerns is what is going on with Southern California real estate, and they seem to have a handle on that,” she said. “They end up in my column of good companies.”
The company said last week that it has retained Lehman Bros. to review ways to enrich Downey’s stockholders. The company said it may opt to spin off its real estate unit, acquire more branches or sell its entire branch network.
“I think as it relates to our project with Lehman Bros., the board will address management succession issues at the appropriate time,” Tom Prince, Downey’s chief financial officer, said Thursday.
Downey’s stock, which had climbed dramatically last week after the company announced the arrangement with Lehman Bros., closed unchanged Thursday at $21.625 a share in New York Stock Exchange trading.
The thrift reported a 9.5% decline in non-performing assets for the latest quarter because of improvements in residential loan delinquencies. However, the amount of real estate acquired through foreclosure increased by $2.5 million to $11.7 million.
Non-performing assets now total $61 million and account for 1.75% of total assets. That is below the level for most publicly traded thrifts in California, which average 4.80%, said Gerard Cassidy, an analyst with a division of Sutro & Co., a San Francisco investment bank.
Downey recently sold all but two of its real estate investments for $13.7 million to its real estate unit. The thrift’s two remaining real estate investments will be sold to that unit during the third quarter.
Refinancing of single-family home loans continued to be significant during the second quarter, the company said, accounting for about 80% of all lending activity.
Downey Reports 2nd-Quarter Results
In the second quarter ended June 30, Downey Savings & Loan Assn. reported net income of nearly $9.5 million or 58 cents per share, compared with $11.4 million or 70 cents per share in second quarter 1992. Figures in millions of dollars, except per-share data:
2nd qtr 2nd qtr 6 months 6 months* 1992 1993 1992 1993 Net income $11.4 $9.5 $22.7 $31.7 Per share (loss) $0.70 $0.58 $1.40 1.96
* In the first quarter the implementation of SFAS 109 resulted in a one-time credit that increased net income by $15.1 million or 94 cents per share. Source: Downey Savings & Loan Assn.; Researched by JANICE L. JONES / Los Angeles Times
