Wachovia Corp. said deferred interest within a residential mortgage portfolio it acquired last year grew at a slower rate last month than in previous months, even though the portfolio shrank.

Deferred interest - or accumulated negative amortization - in the portfolio, inherited in the Golden West Financial Corp. acquisition, rose 6.5% from a month earlier and 210% from a year earlier, to $1.83 billion, the $707 billion-asset Charlotte company said last week.

Wachovia had previously said the deferred interest grew 9% in January from December.

Several analysts have voiced concerns about rising deferred interest within the portfolio since Wachovia bought Golden West, the Oakland, Calif., parent of World Savings Bank, in October for $24 billion. Wachovia executives have downplayed those concerns, and the company said in disclosing the February numbers that the portfolio is performing as expected.

Robert McGee, the chief operating officer of Wachovia's retail bank and the executive coordinating the Golden West integration, said in a December interview that analysts "are really overreacting" to negative amortization. "The credit and the risk isn't any different than when people draw from a home equity line. There is still a huge amount of equity in these properties."

The portfolio of loans and mortgage-based securities at World Savings Bank shrank 0.3% from January and 0.5% from a year earlier, to $122.13 billion. The portfolio has fallen for five straight months after peaking in September. The yield on those assets was 7.74% last month.

As a percentage of total loans and mortgage-backed securities, nonperforming assets grew 7 basis points from January and 33 basis points from a year earlier, to 0.69%. Originations rose 109% from January and 63% from a year earlier, to $5.74 billion.

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