Downey Joins Warning Parade

Downey Financial(DSL Quote) dropped 4% in early trading after the savings and loan warned that rising loan losses will lead to a loss for the third quarter.

The Newport Beach, Calif.-based bank said it expects to post an operating loss of $23 million, or 84 cents a share. Analysts had expected Downey to make $1.08 a share in the third quarter, according to Thomson Financial.

During the third quarter, the bank took an $82 million provision for credit losses. The provision will increase its allowance for loan losses to $144 million, or 1.22% of loans held for investment, it said. ...