WaMu Links Earnings Drop to Mortgage Loss

Washington Mutual Inc., Seattle, has reported earnings of $489 million ($0.55 per share) for the second quarter, down from $995 million ($1.07 per share) a year earlier, a decline that it attributed chiefly to a net loss of $63 million in its mortgage banking segment.The mortgage banking segment had recorded net income of $489 million a year earlier, WaMu said. "The principal drivers of the year-to-year difference were the results of the company's mortgage servicing rights hedging program, a high cost structure in the mortgage banking segment, and declining loan volumes," the company said. Originations of home loans totaled $59.49 billion for the quarter, down from $106.68 billion a year earlier. "While second-quarter results were affected by the volatility of our mortgage servicing rights, the root of our problem is the unacceptably high cost structure in our mortgage banking business," said Kerry Killinger, WaMu's chairman, president, and chief executive officer. "We know what we need to do, our efforts are well under way, and we will not be satisfied until we have fixed it." WaMu can be found online at http://www.wamu.com.