Downey to cut 200 workers

Downey Savings and Loan slashed jobs from its Newport Beach headquarters this week.

Downey announced Thursday that it would shut down its wholesale loan department, cutting about 200 positions companywide.

Company spokeswoman Elizabeth Stover confirmed Friday that jobs had been cut from the company’s Newport Beach offices but declined to comment on the number of local layoffs. Downey’s wholesale loan department is based in Newport Beach, she said.

Stover declined to comment further but confirmed that the loan department accounted for about 80% of Downey’s loan production.

The company also announced Thursday that it would contract its retail loan department.

The lender has lost 95% of its market value over the past year.

“The Downey Savings Board and management team have been evaluating, and will continue to evaluate, our long-term business plan in light of the challenges facing the company, the banking sector and the entire economy,” Charles Rinehart, chief executive of Downey Savings, said in a written statement.

Rinehart, former chief executive of H.F. Ahmanson & Co.’s Home Savings, was named as Downey’s new chief executive last month.

Downey Financial, the lender’s parent company, was ordered in September by its main regulator, the Office of Thrift Supervision, to raise more capital.

The company put its 337,384-square-foot office headquarters on Jamboree Road up for sale earlier this year. Real estate industry trackers report that the company is asking $115 million for the building.

Founded in 1957 by mortgage banker Gerald McQuarrie and home builder Maurice McAlister, Downey offered quick loans to people and businesses with good credit.

The lender began offering adjustable-rate mortgages to borrowers with less-than-perfect credit in the late 1990s. Downey Savings and Loan offered low introductory payments to the borrowers. Many of those mortgages are now in default.

Downey must present regulators with a long-term business plan next week.

BRIANNA BAILEY may be reached at (714) 966-4625 or at brianna.bailey@latimes.com.