Washington Mutual Inc. said its third-quarter profit slid nearly 9 percent as the company continued broad efforts to cut costs amid a slowdown in the home loan market. The results widely missed Wall Street’s expectations.
The nation’s largest savings and loan said strong growth in retail banking fees was offset by a decline in mortgage revenue amid a slowing housing market and competitive pressures.
Net income in the company’s retail banking division was $651 million, up 10 percent from third-quarter 2005, while the home loan unit suffered a net loss of $33 million, down 57 percent over the same period a year ago.
“This is about the most difficult environment we’ve seen in the mortgage banking industry since the early to mid-90s,” Steve Rotella, president and chief operating officer, said in a conference call with analysts.
For the three months ended Sept. 30, Washington Mutual reported earnings of $748 million, or 77 cents per share, down from $821 million, or 92 cents per share, a year ago.
The results, released after markets closed for regular trading Wednesday, included a $31 million after-tax charge from a previously announced sale of $2.53 billion in mortgage servicing rights to Wells Fargo & Co., plus a $33 million charge related to “ongoing efficiency initiatives” the company said would continue in the fourth quarter.
Excluding the two charges, Washington Mutual said its earnings would have been 84 cents a share.
Analysts surveyed by Thomson Financial were expecting earnings of 93 cents per share on revenue of $3.7 billion.
Total quarterly revenue, including net interest income and noninterest income, was $3.52 billion, compared with $3.29 billion in the same period last year.