Aug. 11 (Bloomberg) -- Downey Financial Corp., the California-based savings and loan that has reported four straight quarterly losses, said depositor withdrawals were ``elevated'' after the end of June.

It isn't yet clear whether Downey Financial will have enough cash on hand to meet its obligations, the Newport Beach, California-based company said today in a filing to the U.S. Securities and Exchange Commission.

Downey was one of the biggest sellers of option-ARMs, which let borrowers defer part of the monthly mortgage payment and add it to the principal. Option-ARMs become more risky for banks when housing prices are falling because the loan size can exceed the home's value. In California, households are foreclosing at 2.6 times the national average, contributing to a $258.9 million loss in the second quarter for the company and about $600 million in losses over the past year.

``In light of the current operating environment and Downey's recent quarterly losses, the holding company and the bank have been working closely with the bank's federal banking regulators,'' Downey said. The lender formed a committee to consider alternatives, including raising cash.

Downey Financial declined 14 cents, or 6.3 percent, to $2.10 at 4:15 p.m. in New York Stock Exchange composite trading today. The shares have lost 93 percent of their value this year. A call to Chief Financial Officer Brian Cote wasn't returned.

The U.S. Office of Thrift Supervision is limiting the lender's ability to take certain corporate actions, like paying dividends, and said Downey was subject to ``higher regulatory assessments'' and higher deposit insurance premiums from the Federal Deposit Insurance Corp.

IndyMac Bancorp Inc. was seized by U.S. regulators last month following a run by depositors.

To contact the reporter on this story: Linda Shen in New York at lshen21@bloomberg.net.

Last Updated: August 11, 2008 16:41 EDT