Magazine article American Banker

Calif.'s Downey Squeezes out CEO

Magazine article American Banker

Calif.'s Downey Squeezes out CEO

Article excerpt

By OLAF de SENERPONT DOMIS James W. Lokey has become the latest in a string of Downey Financial Corp. chief executive officers to be shown the door.

Mr. Lokey resigned, succeeded by chief operating officer Daniel D. Rosenthal, the Southern California thrift said late Friday.

Mr. Lokey, who was hired in early 1997 to help build Downey's commercial lending business, is the fifth CEO in six years to be pushed out by the Downey board.

Maurice L. McAlister, the founder, chairman, and largest shareholder, suggested in an interview Monday that Mr. Lokey's extensive commercial banking expertise did not pay off as much as had been hoped.

"It turned out to be very difficult to break into the commercial banking business," Mr. McAlister said from his home in Bullhead City, Ariz. "It is such a small portion of our total business that it doesn't deserve much attention."

The announcement puzzled analysts. They said Newport Beach, Calif.-based Downey has performed strongly under Mr. Lokey, who previously spent 23 years with First Interstate Bancorp.

"You never get any warning when this happens," said Campbell K. Chaney, an analyst with Sandler O'Neill & Partners. "There's no real financial reason, and there's no mismanagement reason."

The thrift has been performing well, earning $12.8 million in the third quarter, up 21% from a year earlier.

"I am proud of the role I have played in leading Downey toward becoming a top-performing financial institution," Mr. …

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