Newport Beach Downey Financial Corp. reported another rise in bad debt.
For January the thrift operator said the number of loans in default was 9.14% of total assets, up from 7.77% in December.
Home loans the company refinanced to help borrowers struggling with payments increased to 3.59% of assets, up from 2.99% in December.
In January these restructured loans were reclassified to non-performing status following the advice of accountant KPMG LLP.
Analysts expect the company to continue to struggle with borrowers missing payments on option adjustable rate mortgages that reset at higher rates throughout the year.
In January the company said it lost $109 million in the fourth quarter compared to a profit of $52 million a year ago.
It also said set aside $218 million from earnings to cushion itself against future defaults.
Shares of Downey were up modestly in midday New York trading, giving it a market value of almost $800 million.
With 45% of its shares sold short in January by investors expecting the stock to drop, traders buying to cover positions are a likely contributor to its rise.