Downey Plummets on Loss, CEO Departure

As TheStreet.com discussed last week, Downey's asset quality has been worsening at an alarming pace. Nonperforming assets, excluding performing restructured loans, comprised 11.16% of total assets as of June 30, accelerating the pace of credit deterioration from last month and last quarter.

Net loan charge-offs for the second quarter totaled $70 million, up from $37 million last quarter and $1 million in June 2007.

The company reported that its primary subsidiary, Downey Savings and Loan of Newport Beach, California, remained well capitalized as of June 30, with a core capital ratio of 7.57% and a risk-based capital ratio of 14.31%. These were down from 8.43% and 15.28% last quarter.

Loan loss reserves totaled $732 million, and covered 63.78% of nonperforming loans (again, excluding performing restructured loans) and 6.44% of loans held for investment.

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