Mortgage Woes Slam Washington Mutual Earnings

| About: WMIH Corp. (WMIH)
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Profits at Washington Mutual skidded some 70% in the third quarter to $210M ($0.23/share) from $748M ($0.77/share) a year ago, pressured heavily by the slumping housing market subprime crisis. The results were short of the $0.27/share average estimate of analysts polled by Thomson First Call. Given the credit crisis, the third-largest home lender in the U.S. allocated some $967M to cover potential borrower defaults, up from $166M in 2006. Losses at the banks home loan group widened to $348M from $23M in 2006, while home mortgage sales dropped to a loss of $222M from a gain of $192M. Subprime mortgage production plunged 95% to $9.4B from $483M. "I have never seen housing credit conditions change so significantly over such a short period of time, nor can I remember a period when there was less clarity about near-term housing and credit trends," CFO Tom Casey said (full earnings call transcript later today). Net interest income rose 3.4% to $2.01B while noninterest income dropped 12% to $1.38B.

Sources: Press release, AP, MarketWatch
Commentary: U.S. Banks Still Need To Come Clean on SubprimeSome Banks Never Learn
Stocks to watch: WM. Competitors: BAC, WB, WFC. ETFs: PJB, KBE
Earnings call transcript: Washington Mutual, Inc. Q3 2007

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