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Bonds News

Downey Financial posts 9-fold rise in bad loans from last year

June 13 (Reuters) - Downey Financial Corp DSL.N, one of the largest savings and loan holding companies in California, said one seventh of its total assets were non-performing assets with a nine-fold rise in bad loans for May from a year ago, as the weak housing market continued to hurt.

The parent of Downey Savings and Loan Association said its total non-performing assets (NPAs) rose 14.3 percent of total assets of $12.78 billion as of May 31. NPAs were at 1.3 percent of total assets of $15.0 billion in May last year.

The company’s NPAs, which stood at 13.24 percent in April, were steadily rising in the last 12 months and breached the double digit mark in February.

Downey, which originates and invests in loans, mainly residential real estate mortgage loans, investment securities and mortgage-backed securities, has 169 branches in California and five in Arizona.

Many small-sized banks in the United States have suffered due to their exposure to commercial real estate and construction loans, as defaults soared due to a slump in prices amid the worst U.S. housing market downturn since the Great Depression.

Downey shares, which lost more than 90 percent of their value in the last 12 months, closed at $4.93 Thursday on the New York Stock Exchange. (Reporting by Supantha Mukherjee in Bangalore; Editing by Gopakumar Warrier)

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