Washington Mutual Posts $1.14 Billion Loss for Quarter

Washington Mutual, the largest U.S. savings and loan, posted a $1.14 billion first-quarter loss, hurt by mounting credit losses as more mortgage borrowers fall behind on payments.

The Seattle-based thrift also unexpectedly announced the resignation of Mary Pugh, a director who chaired its finance committee. Several shareholder advisory services had called on shareholders to withhold votes from one or more directors, including Pugh and James Stever.

The latter leads the human resources committee, which sets executive compensation.

WaMu, as the thrift is known, said the quarterly loss equaled $1.40 per share, and compared with a year-earlier profit of $784 million, or 86 cents.

The thrift set aside $3.51 billion for loan losses, up from $1.53 billion in the fourth quarter.

"Nothing of this scale has happened since the Great Depression," Chief Executive Kerry Killinger said at WaMu's annual meeting. "This is the toughest credit cycle I have seen in my years in the industry."

Analysts on average expected a loss of $1.40 per share after WaMu on April 8 projected a loss of that size, or equal to about $1.1 billion.

The company also said it will cut 3,000 jobs, slash its dividend 93 percent, and raise $7 billion from a group of investors including private equity firm TPG to shore up capital.

The thrift has lost $3.01 billion in the six months ended March 31.

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Sparks Fly at Annual Meeting

Under pressure from investors and governance experts, WaMu reversed a decision to ignore mortgage losses in awarding performance bonuses to top executives, including Chief Executive Kerry Killinger.

At its annual meeting, which also took place Tuesday, WaMu announced the resignation of director Pugh, who chaired its finance committee and has been fiercely criticized for failing to protect Washington Mutual from overexposure to subprime and other risky mortgages.

Killinger announced the changes at the Seattle-based thrift's annual meeting, where several shareholders denounced management and directors and said they should be held accountable for the thrift's troubles.

In a question and answer session, Killinger and his team came under repeated fire from shareholders. One accused Killinger of being the "Ken Lay" of Wamu, while another said the firm's president and COO Steve Rotella should be "booted out."

Still another who served on the executive committee for ten years said to Killinger, "You have destroyed the bank, why are you not being held accountable?"

Though one speaker defended Killinger and his team, another who's filed a $500 million lawsuit against the firm called the capital infusion deal with TPG as "just awful" and said his lawsuit is "going to the jury."

- Reuters contributed to this report.