Downey S & L Turns Profit, Reversing an Earlier Loss : Finance: The firm reported earning $10.5 million, or 65 cents a share, in the third quarter. It lost $9.6 million in the same period last year.

NEWPORT BEACH —  Bolstered by bigger profit margins and a still-booming refinancing market, Downey Savings & Loan reported Thursday that it earned $10.5 million for the third quarter, reversing a loss of $9.6 million for the same period last year.

That translates to earnings of 65 cents a share for the quarter ended Sept. 30, compared with a loss of 59 cents a share a year earlier. Quarterly revenue rose 5% to $73.5 million from $70.1 million.

The apparent turnaround is not quite as spectacular as it might seem, however; the loss in the third quarter last year was an anomaly because of special factors.

For the latest three months, Downey said, 1.8% of its $3.4 billion in assets were non-performing--past-due loans, for example. That compared with 0.7% a year earlier.

The S&L; said it continued during the quarter to focus on residential loans, of which refinancing accounted for about 80% of the total.

Downey reduced its assets from $3.9 billion a year earlier, which helped it boost its already solid ratio of capital to assets to 7.9% for its core, or basic, capital level and 13.9% for capital measured against risky assets. Regulators require minimum ratios of 3% and 7.2%, respectively.

Downey was once the state’s leading developer of neighborhood shopping centers, a profitable business that a 1989 federal law requires to be unwound. When the law was passed, Downey had to sell more than $480 million in real estate holdings to comply with regulations. It now has to sell $88 million more to meet federal goals.

Regulators have told Downey to comply with the rules by year’s end.