Newport Beach-based savings and loan operator Downey Financial Corp. says bad loans will bring a loss to its third-quarter results. The company expects a $23 million loss for the quarter, versus a profit of $57 million a year earlier. Wall Street had expected a profit of $30 million for the third quarter.
“We are clearly disappointed with our third-quarter results,” said Daniel Rosenthal, Downey’s chief executive.
The company’s results are due Oct. 17.
Downey had a recent market value of about $1.5 billion.
Losses from foreclosures and delinquent loans forced Downey to up its cash reserves, Rosenthal said.
Downey said it would make an $82 million provision for credit losses. About $9 million was lost from the real estate thrift holds.
The company said it has further tightened its lending guidelines and will work with borrowers to modify loans.
,Dan Beighley
