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Downey Reports Massive Increase In Withdrawals
Newport Beach Orange County, California based Downey Financial Corp., the parent company of Downey Savings and Loan Association said on Monday that its customers are withdrawing cash at a much faster rate, for the last month or so. Newport Beach-based Downey, said that "After the end of the second quarter the bank experienced elevated levels of deposit withdrawals."
The company further elaborated on the statement that they might not be able to handle these ever increasing debts, according to a filing with the Securities and Exchange Commission. The losses from bad loans are increasing day by day and they are mostly because of those customers who borrowed adjustable rate mortgages, which became really unaffordable when the rates were set at a much higher level.
At the end of June, 15.5% of its assets, which were mostly in the form of loans, were reported as non-performing assets. The Office of Thrift Supervision confirmed the fact that it will confine some of the Downey’s activities, which include “paying dividends” also.
The company hired Sandler O’Neil Partners LP as its financial adviser, after posting a massive loss of $258.9 million in its second quarter. The adviser was hired to explore different options for the betterment of the company. The company has recently made some changes in its executive lineups, as its chairman and chief executive have both stepped down. The announcement was done that Michael D. Bozrath will replace the co founder, chairman and dominant owner of the company Maurice McAlister and the company’s chief executive Daniel Rosenthal will be replaced by Chief Operating Officer Thomas Prince as an interim chief executive
The stock price of the company declined by more than 6% at close of the trading session on Monday before the announcement, giving it a market value of about 60 million dollars.