Golden West Profit Rises 20% on Strong Lending

Golden West Financial Corp., the Oakland-based parent of World Savings Bank, on Monday reported a 20% jump in second-quarter profit, with loans and deposits at record levels.

Golden West earned $272.5 million, or $1.76 a share, up from $226.4 million, or $1.44 a share, during the same period last year.

Net lending income rose 16% to $542 million, while income from other sources jumped 62% to $82.9 million.

Golden West, the largest California-based savings and loan, with $72 billion in assets, originated $8 billion in loans for the quarter, up 17%.

Deposits rose 2% to $44.4 billion, and loan-loss provisions fell from $5.2 million to $3.5 million.

A favorite of analysts, Golden West easily beat Wall Street expectations of $1.69 a share. Its stock fell 85 cents to $82.95 on the New York Stock Exchange amid general profit-taking and investors’ fears that rising interest rates on longer-term loans have ended the long mortgage refinance boom.

Golden West primarily makes adjustable-rate mortgages, which track short-term bond yields that the Federal Reserve has driven to 45-year lows.

Adjustable-rate mortgages become more attractive to borrowers as longer-term rates rise, noted analyst Charlotte Chamberlain at Jefferies & Co. in Los Angeles, reiterating her “buy” rating on Golden West.