A switch to adjustable-rate mortgage loans and a decline in profitable automobile loans led Westcorp, the holding company for Western Financial Savings Bank in Orange, to post net income of $2.1 million net income for the third quarter, down 30% from $3 million earned in the same period last year. Revenues, however, rose 44.2% to $41.1 million from $28.5 million last year.
In the first nine months, Westcorp's net income fell 12.5% to $7.7 million from $8.8 million, while revenues rose 35.9% to $116.6 million from $80.7 million in the first nine months of 1986.
The lower earnings reflect the S&L's changeover since March to adjustable rate mortgages that carry reduced interest rates during their first six months of life. Stephen W. Prough, the company's president, predicted higher future earnings as normal rates begin kicking in.
The company's quarterly earnings also have been affected by lower consumer demand for automobiles. Unlike traditional S&Ls, Western Financial has half of its assets in automobile loans.