Downey Financial's Profit Up 50%

By E. Scott Reckard

July 20, 2004 12 AM PT

Times Staff Writer

Downey Financial Corp. reported 50% higher second-quarter earnings Monday, with improvements in both its mortgage and real estate investment businesses.

The Newport Beach holding company, whose Downey Savings & Loan Assn. has more than 160 branches in California, earned $27.8 million, or 99 cents a share, compared with $18.5 million, or 66 cents, during the second quarter of 2003.

Marangal I. Domingo, Downey’s president and chief executive, said growth in home loans continued although borrower preference was shifting from fixed-rate loans to adjustable-rate mortgages. “Since year-end, our loan portfolio has increased by 22%,” he said.

Soured loans and other so-called nonperforming assets declined $14 million during the quarter to $40 million, or 0.28% of total assets, compared with 0.42% at year-end.

Operating expense jumped by $6 million, nearly 12%, from the second quarter of 2003, to $57.2 million, mainly because of higher salaries.

The financial results beat Wall Street expectations by 2 cents a share. Shares of Downey rose 80 cents to $53.04 on the New York Stock Exchange.