Downey Savings to Halt Wholesale Lending

October 16, 2008 No Comments »


Downey Savings announced today it will shutter its wholesale lending department and associated loan processing centers effective immediately, resulting in roughly 200 layoffs.

The Newport Beach, CA-based bank and mortgage lender said it will also “contract” its retail loan department as a result of ongoing challenges in the mortgage industry.

“The Downey Savings’ Board and management team have been evaluating, and will continue to evaluate, our long-term business plan in light of the challenges facing the Company, the banking sector and the entire economy,” said Charles R. Rinehart, Chief Executive Officer of Downey Savings, in a release.

“We have determined that a wholesale lending channel is no longer a necessary component of the plan. In addition, while we will continue to originate loans through our retail lending channel, we are scaling back our Retail Loan Department to better reflect the industry-wide contraction in retail lending.”

In July, the company had a scare after seeing about a half-billion in deposits withdrawn shortly after the Indymac failure.

Weeks later, Downey said depositor activity had normalized, and about 45 percent of what was lost had been recovered thanks to deposit-focused advertising.

Last week, the Orange County Business Journal reported Downey was looking to sell its “posh headquarters” in Newport Beach in a bid to raise cash after it was deemed “adequately capitalized” by the Office of Thrift Supervision.

Shares of Downey Savings were unchanged at $2.06 in late afternoon trading on Wall Street.

Check out the latest list of mortgage layoffs, lender closures, and mergers.

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