Washington Mutual yesterday reported third quarter 2004 earnings of $674 million, or $0.76 per diluted share, a 30 percent drop on a per share basis from the same period a year ago.

WaMu’s performance this quarter, however, was up 38 percent on a per share basis from the second quarter’s $489 million, or $0.55 per diluted share.

The company said in a statement that the decrease in year-over-year net income was due primarily to reduced mortgage refinancing activity this year and higher gains from the sale of securities in the third quarter of 2003. The increase from the second quarter of 2004 was mainly a result of improved performance of the company’s mortgage servicing rights (MSR) and related hedges, according to the company.

Net income for the mortgage banking business was $271 million in the third quarter compared with a $63 million loss in the second quarter of 2004 and net income of $117 million in the third quarter of 2003.

Other mortgage banking highlights include:

  • Total loan volume from the mortgage banking business was $40.49 billion, compared to $111.95 billion in the third quarter of 2003 and down $15.73 billion from $56.22 billion in the second quarter of 2004.
  • Adjustable-rate mortgage loan volume was 63 percent of total mortgage banking loan volume, up from 25 percent in the third quarter of 2003.
  • MSR performance, including amortization and the effect of hedges, improved to a net cost of $123 million in the quarter, compared to a net cost of $724 million in the second quarter.
  • The company closed about 100 home loan centers in non-strategic markets in 18 states and completed the sale of 94 of those offices.
  • Non-interest expense declined $47 million from the previous quarter, reflecting consolidations of locations and functions, headcount reduction, the closure of approximately 100 home loan centers and the conversion to a single loan servicing platform.

In a June statement, WaMu warned that increases in long-term interest rates would significantly impact its mortgage banking business. The lowered forecast was the second in seven months.

It also said its mortgage business might lose money as home-loan volume and profit from selling mortgages fall below expectations.

Those woes led to speculation that the company could become a takeover target.

WaMu’s stock (NYSE: WM) was trading at $38.38 this morning.

***

What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×