Downey Financial swings to a loss
January 23rd, 2008, 12:24 pm · 1 Comment · posted by Mathew Padilla, Reporter
Downey Financial in Newport Beach said today it lost $56.6 million in 2007, which compares to a profit of $199.7 million the prior year.
The big culprit: a $283.5 million addition to loan loss reserves, which dings earnings. And the lender suffered from a $94.8 million drop, or 18.3%, in net interest income due to a drop in assets that earn interest and a lower interest-rate spread. To read a previous post on Downey adding to nonperforming assets CLICK HERE.
Downey said nonperforming assets, including delinquent loans and foreclosed real estate, reached $1.042 billion at year end, or 7.77% of total assets, vs. 0.68% at year-end 2006.
Here’s more from the release:
Rick McGill, President, commented, “We are clearly disappointed with our results. The continued weakening of the housing market and its uncertain future have unfavorably impacted our borrowers and the value of their loan collateral. As a result, single family loan delinquencies, as well as losses from foreclosures, rose significantly during 2007 and led to the large increase to the allowance for loan losses. While we expect the environment to remain challenging in 2008, we enter the year with a strong capital position and stable funding sources from our retail branch franchise. As always, we remain committed to our heritage of providing our customers with excellent service.”
To read the full release CLICK HERE.
January 23rd, 2008 at 12:40 pm
Downey has been around a very long time. Like everyone else they need to take the writedowns and post their loses and ride out the market. They have a strong depositor base. They, like so many others got swept into the subprime frenzy but now we are seeing defaults in HELOC’s and Alt A as well. This area of lending will also suffer as home values continue to drop.
Lou Pacific
Mortgage and Real Estate Company Consultant
Serving OC for 30 Years