Its fourth-quarter net income was down 20.7 percent, to $668 million, marking the third consecutive quarter it has posted a year-over-year quarterly earnings decline.
Washington Mutual ended 2004 with a flop, as Wall Street expected.
Its fourth-quarter net income was down 20.7 percent, to $668 million, marking the third consecutive quarter that the nation’s largest thrift has posted a year-over-year quarterly earnings decline.
That came to 76 cents per share, in line with analysts’ expectations, according to Thomson Financial/First Call. For the year, earnings were down 25.8 percent to $2.88 billion.
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Part of the blame for WaMu’s troubles is a sluggish mortgage market, which contributed to a 40.5 percent drop in quarterly net income at its mortgage banking segment.
The year’s results have also been weighed down by heavy losses in its hedging program and WaMu’s high cost structure, which led to more than 8,000 jobs cuts and other measures to rein in expenses.
In 2003, the fourth quarter was aided by a $202 million benefit when WaMu sold loan portfolios for which the money was being held in case of losses.
The results were released after regular trading ended, and WaMu management will discuss the report in an analyst conference call scheduled for this morning.
Washington Mutual officials refer to 2004 as a “transition year.” Some analysts believe its turnaround strategy will work; others are dubious.
Wall Street expects another year-over-year decline for the first quarter of 2005, after which analysts surveyed by Thomson Financial/First Call predict earnings will begin to show improvement over the weak later quarters of 2004.
Chief Executive Kerry Killinger was upbeat in the fourth-quarter earnings release, saying, “We leave 2004 with strong momentum in all areas of our business.”
He pointed to the success of WaMu’s retail bank, which added 250 branches in 2004, including 69 during the fourth quarter. The retail segment’s net income was up 51 percent to $565 million in the fourth quarter, providing the bulk of the company’s overall earnings.
Killinger also said the company is improving the efficiency of its mortgage-banking operations, as indicated by a 15 percent decline in that segment’s noninterest expense in the fourth quarter.
Melissa Allison: 206-464-3312 or firstname.lastname@example.org
|WaMu’s annual results|