Downey Financial Corp. vice chairman Cheryl Olson,daughter of chairman and dominant owner Maurice McAlister,is leaving the board of the Newport Beach-based savings and loan operator.
Olson, who’s set to step down on Dec. 31, plans to run the McAlister family’s charitable foundation. She could return to Downey later, the company said.
Daniel Rosenthal, Downey’s chief executive and McAlister’s former son-in-law, is set to become vice chairman upon Olson’s retirement.
Olson’s departure comes at an interesting time for Downey.
In November, Texas billionaire investor Gerald J. Ford bought 7% of Downey through his Dallas-based Hilltop Holdings Inc.
Ford has built a career out of turning around and selling banks, and Downey long has been a rumored takeover target.
But Ford cut his Downey stake to 5% just weeks after he bought in, giving the appearance that he was backing out. The reason may have come from McAlister’s continued reluctance to sell his 20% stake.
The 82-year-old cofounder hasn’t made public any succession plans, which some speculate could include Olson, who owns a 2.5% stake.
Earlier this month, Downey reported another rise in bad mortgages.
The company said mortgages in default or close to it were 3.65% of its portfolio in November, up from 2.74% in October.
The figure has been steadily climbing from 2.25% in September and 1.96% in August.
The vast majority of Downey’s loans are adjustable-rate mortgages that were made to people with less than great credit, but better than the riskiest subprime borrowers.
The loans, known as option ARMs, allow borrowers to pay credit card-style minimum payments with the difference tacked onto the balance of the loan.
The loans switch to a higher rate after two years, putting payments out of reach for some borrowers.
With the majority of Downey’s loans resetting at higher rates in the next year, it is feared the thrift has yet to see the worst from defaults.
