Washington Mutual said today its profits will drop by about 75% in the third quarter from $748 million a year ago, citing a weak housing market and upheaval in the market to sell mortgages to investors.
The Seattle-based thrift is adding $975 million to its reserve for future losses from sour loans as the housing downturn continues to hit subprime and home equity loans. It also cited growth in its loan portfolio.
It took a few other hits in the quarter:
• “Downward adjustments of approximately $150 million, related to approximately $17 billion in held-for-sale mortgage loans that were transferred to the company’s investment portfolio due to secondary market conditions;”
• “Net losses of approximately $150 million in the company’s trading securities portfolio, including market valuation adjustments on capital markets assets, retained interests on credit cards and other residual interests; and,”
• “Impairment losses of approximately $110 million on investment grade mortgage-backed securities in the company’s available for sale portfolio.”
“While we’re disappointed with our anticipated third-quarter results, we look forward to an improved fourth quarter as we continue to see good operating performance in our Retail Banking, Card Services and Commercial Group businesses,” said Kerry Killinger, chief executive, in a statement.
The company has the liquidity and capital necessary to grow its businesses and support its current dividend, Killinger said.
The lender will release its full earnings statement on Oct. 17.
To read today’s release, CLICK HERE.
The first reason for the drop is the huge killing they made in the real estate market - the dropoff difference now is huge. The second reason for their lack of success is the STUPID NAME CHANGE to WAMU - sounds like something a cow would say. I wouldn’t bank with them just because the name is so dumb.
Another result of the false appreciation and buying frenzy which I had been calling the demise of for the 2 years prior to the fall. WAMU was just as involved in the frenzy as the rest. They had very poor underwritting and in some cases no underwritting. Lots of WAMU and LONG BEACH people got rich. They along with everyone else will be back when the turn around comes, which it will. After all, we will never stop building homes and Wall Street will ALWAYS find a way to make money off of mortgage lending.
Lou Pacific
Real Estate and Mortgage Company Consultant
Serving OC for 30 Years.
Hey Mick , I bet you really crack yourself up. Your comments are more usable for renters , not homeowners who need real information from qualified indivduals not idiots. Lou Pacicfic, I concur with your assessment. The New Century and Argent guidelines allowed for borrowers to lie about thier abilities to pay fully amoratized loans knowing full on that in two years they would face dire consequences. However, the true culprit is Wall Street itself, they are the one who took all of those bad bets.
just so you know “WaMu” abbreviation has nothing to do with this. AND WaMu does so much more that residential lending. Know your facts.
Greed is good. Fortune has been made in housing market. Housing vengeance is back. Wall Streets, Lenders, Bond Managers, Investors, Builders and fat cat Banks are getting hit harder early next year.