In the past, we have drawn attention on Seattle Bubble to cutbacks or other unpleasant news for local mortgage-related businesses. The reason for this is to draw attention to the fact that the national slowdown in housing is having negative local effects here in the Seattle area. With that in mind, I thought I should probably mention today’s Washington Mutual news.
Seattle-based Washington Mutual blamed a 9 percent drop in its third-quarter profit Wednesday on a slowdown in its mortgage business.
The drop was more severe than Wall Street analysts had expected, and shares of WaMu stock fell $1.70, or 3.89 percent, to $42.01 in after-hours trading.
WaMu has eliminated nearly 10,000 jobs in the past year as it tries to become more profitable.
“The housing market is clearly weakening, with the pace of housing price appreciation slowing in most regions of the country,” Chief Executive Kerry Killinger told analysts and investors in a Wednesday conference call, held after the close of regular trading.
“We are also experiencing somewhat higher delinquencies and loan losses,” he said.
WaMu reported a profit of $748 million, or 77 cents a share, for the July-through-September period. That was down from $821 million, or 92 cents a share, a year ago, marking the second consecutive quarter in which WaMu has failed to report a profit increase.
Analysts had been expecting a profit of 93 cents a share, according to a poll by Thomson Financial.
“Patience is running out,” said Fred Cannon, an analyst at Keefe, Bruyette & Woods. “2007 is really going to be a watershed for the company.”
It is important to note that $748 million is still an awful lot of money. I’m not trying to say that WaMu is in dire straights, I’m just pointing out that Seattle’s economy is most certainly tied to nationwide events. If housing (or the economy as a whole) takes a serious downward turn nationwide, Seattle will not be unscathed. We’re not that special.
(Amy Martinez, Seattle Times, 10.19.2006)