Despite the loss provision of $4.5 billion, WaMu officials said the company expects net charge-offs to total only $2.7 billion. Additionally, this is less than the $5.9 billion set aside in the second quarter of 2008 for losses in the company's mortgage and credit card portfolios.
On Monday, September 8, WaMu announced that its long-time CEO Kerry Killinger had been removed, making way for a new chief executive to steer the company through the credit crisis. Additionally, WaMu signed a deal with federal regulators promising to draft a new business plan to strengthen its balance sheet and revise its earnings forecasts.
On July 22, Washington Mutual reported a second-quarter net loss of $3.3 billion, more than triple what analysts had been expecting. WaMu set aside $5.91 billion for loan losses and had write downs of $2.17 billion. After the release, Moody's stated that it might downgrade WaMu's debt to "junk" status.
Rumors of a $5 billion injection from investors led by private equity firm TPG Inc result in 30% increase from previous week close. Latest rumors state that investment could be as much as $7 billion.
Washington Mutual has been plunging in the last few days due to target price cut by DA Davidson on credit and housing market concerns.
WM being the leading thrift lender is hard hit by the subprime crisis and credit crunch.
Washington Mutual reported its 2007 first quarter net income as $785 million, raising its dividend per share to $0.55 for the 47th consecutive quarter.
The S&P Downgrades Washington Mutual equity to sell: over exposure to a drying up sub-prime market with 8% of mortgage portfolio increases the firm specific risk.
The confidence in Washington Mutual’s recently elected executive staff resulted in nearly a $3 dollar gain in stock price. Tony Vuoto was chosen to replace Joseph Saunders as president of the Card Services segment.
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