Downey Posts $219M Loss; Looking for Buyer

Downey Financial Corp., one of the largest thrifts in California, lost $219 million in the second quarter and said it is looking at "strategic opportunities," a code phrase that means the company is for sale. At the end of June, Downey had loan loss reserves of $734 million. It bolstered its reserve for credit losses by $259 million in the second quarter alone and charged off $70 million in loans. It also warned that mortgages held on its balance sheet are going bad faster than in previous down cycles. "In particular, collateral values have been trending downward in the greater Sacramento, Stockton, Modesto, and Contra Costa areas of Northern California, the Inland Empire, and San Diego county," it said in its second-quarter earnings statement. At deadline time, Downey's stock was trading at just over $2, a plunge of 23%. Its 52-week high is $63.