Business Off at WaMu; ARM Business Up

$61.4 billion 1st quarter production
By MortgageDaily.com staff
4/21/2004

Washington Mutual Inc. reported continued decreased conforming mortgage volume, but a boost in subprime fundings. At the same time, the west coast-based bank reports adjustable rate mortgages are playing a bigger roll in the company's operations.

WaMu announced that its first quarter production of loans secured by real estate totaled $61.4 billion. The figure is off 12% from the previous quarter and 76% below the volume reached in the first quarter 2003.

The Seattle-based banking behemoth said the drop was "due to the significant industrywide reduction in mortgage originations, which was partially mitigated by the company's balanced business model and strength in generating ARMs."

Residential loans contributed $50.5 billion to the latest volume, down 14% from the fourth quarter, WaMu reported.

Adjustable-rate mortgages represented 53% of the company's home loan origination volume, compared with 48% in the fourth quarter and 27% in the first quarter 2003.

Meanwhile, subprime loan portfolios and mortgage origination by subprime lending arm Long Beach Mortgage represented $7.1 billion of residential volume, up from $6.0 billion and $4.5 billion in the respective quarters.

Also contributing to the latest overall volume were home equity loans and lines of credit totaling $8.4 billion -- 6% above the fourth quarter and 62% higher than the first quarter last year, the Seattle-based institution said.

Home construction loans, multifamily and other real estate loans made up the remaining overall quarterly volume.

The financial thrift reported that its servicing portfolio had an ending balance of nearly $769.0 billion, which included $204.4 billion of its own loans.

Meanwhile, first quarter earnings of $1.05 billion, or $1.18 per diluted share, went up from $997 million, or $1.07 per diluted share for the same period a year ago, the company said.

Company results were led by strong growth in its Retail Banking and Financial Services business -- net income increased by 23% year over year -- "which helped to offset the significantly lower industrywide mortgage volume," CEO Kerry Killinger said in a statement.

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