Is the Newport Beach-based lender in trouble or not? Different analysts are interpreting the data in different ways, which doesn't exactly help depositors (just make sure your accounts are FDIC insured). Christopher Whalen, a partner at Hawthorne-based market research firm Institutional Risk Analytics, believes that "hysteria and media hype" may be obscuring what he considers to be a strong banking franchise. Whalen argues that Downey doesn't rely on the hot money of brokered deposits (where investor money goes after the highest returns). Its core deposits are solid. Here's what he says about Downey Financial on Seeking Alpha (hat tip to Money & Co.)

The thing we have stressed with members of the "oh no" club is that whereas thrifts such as Countrywide, IndyMac and even the giant lake trout, Washington Mutual, have excessive liquidity risk in their dependence upon brokered funds (as manifest by rising advances from the FHLBs), two key red flags in the IRA world view, DSL does not. DSL has almost 80% core funding for its assets and shows no brokered deposits in its latest report to regulators. Only 10% of total assets are funded off the FHLBs, meaning DSL is below the level considered "excessive" by regulators and has access to ample additional liquidity if needed.

But let's not forget S&P downgrading Downey last week to B+/C. It's also on CreditWatch. Here's a nugget, courtesy of Calculated Risk:

We are concerned that depositors in Downey's footprint (think California and Arizona) have a heightened sensitivity to potential bank failures after recent experience and publicity (think IndyMac), which increases the possibility that Downey could experience further material deposit outflows.

S&P, like everybody else, is watching for any sign of withdrawals that could "overwhelm Downey's liquidity." Downey saw a bunch of withdrawals in July, but the situation in August has stabilized. For what it's worth Downey stock has been hovering around $2 a share for the last few days. Its 52-week low was $1.06.