WaMu Posts Big Loss But Says Capital Is Sufficient
Washington Mutual reported a larger-than-expected loss and a steep decline in revenue. WaMu, the largest U.S. savings and loan, posted a $3.33 billion second-quarter loss, boosting its reserve for loan losses as the number of soured mortgages soared.
The net loss equaled $6.58 per share, reflecting a one-time adjustment related to the Seattle-based thrift's $7.2 billion capital issuance in April.
Excluding that change, Washington Mutual said it lost $3.34 per share, compared with a profit of $830 million, or 92 cents per share, a year earlier.
Washington Mutual set aside $5.91 billion for loan losses, and said net charge-offs totaled $2.17 billion.
The thrift also said it expects cumulative residential mortgage loan losses to be "toward the upper end" of the $12 billion to $19 billion range it had forecast in April.
Some analysts had predicted the losses might end up higher.
"In the face of unprecedented housing and mortgage market conditions, we are continuing to execute on a comprehensive plan designed to ensure that we have strong capital and liquidity, an appropriately-sized expense base and a strong, profitable retail franchise," Chief Executive Kerry Killinger said in a statement.
Washington Mutual also said that Killinger, Chief Operating Officer Steve Rotella and Chief Financial Officer Tom Casey will not receive annual incentive payments under a company bonus plan, in light of the thrift's performance this year.
Shares of WaMu fell 21 cents to $5.61 in after-hours electronic trading. They closed regular trading up 34 cents at $5.82 on the New York Stock Exchange.
The shares lost 52 percent during the quarter to end the period at $4.93. The stock is down about 56 percent year to date.
WaMu became one of the first retail banks to seek outside cash in the wake of the credit crisis when it agreed to sell equity securities to an investment fund managed by TPG Capital and to other investors this spring.
During the quarter, WaMu also announced plans to exit the wholesale lending business and close all remaining standalone home loan centers. WaMu said it will instead focus its mortgage-originating efforts in its retail bank branches and Web site, and by expanding its call center operations.
- Wire services contributed to this story.