Newport Beach-based savings and loan operator Downey Financial Corp. said Friday deposits stabilized in August after “elevated” withdrawals last month.
About 45% of the withdrawals from July were recovered, according to the company.
Certificates of deposits, which typically pay higher interest rates than simple savings accounts, made up most of the new deposits. Advertising the accounts gave them a boost, Downey said.
Fear over the savings and loan operator’s future has come into play after the July government seizure of Pasadena-based IndyMac Bancorp. Inc.
Downey’s deposits were down by $507 million in July to $9.4 billion, mostly from accounts with limits above the government insured amount.
Bad loans were up 3% last month, the smallest increase so far this year, it said.
Non-performing loans have been increasing each month for about a year, mostly from borrowers who took out adjustable-rate mortgages that became unaffordable when they reset at higher rates.
Downey’s total non-performing assets, which are mostly loans, stand at 15.08% of its $13.4 billion in assets.
That’s down from 15.5% in June with an increase in assets, the company said.
Downey’s borrowing was up $1.3 billion in July to handle deposit losses and short-term cash needs.
The company reported a second-quarter loss of $218.9 million last month after upping its loan loss provisions by nearly $250 million.
It also announced the departure of cofounder, chairman and dominant owner Maurice McAlister, who was replaced by independent director Michael D. Bozrath.
Shares of Downey were down about 4% at close of trading, giving it a market value of $54 million.
The Office of Thrift Supervision also said earlier this week that it was limiting some of Downey’s activity including paying dividends. It is also being charged more for deposit insurance by the Federal Deposit Insurance Corp.
