Washington Mutual, Inc. (NYSE:WM) said late yesterday that it earned $784 million, or $0.86 per diluted share, for the first quarter of 2007, compared with net income of $985 million, or $0.98 per diluted share, in the year-ago period.
Driving the drop in net income at the bank was poor performance in the company's mortgage lending business, which reported its second straight quarterly loss. WaMu's Home Loans business unit reported a $113 million loss in the first quarter, coming on the heels of a $122 million loss during the fourth quarter of 2006. The mortgage unit had recorded a profit of $52 million in the first quarter of last year.
â€œOur Home Loans business was challenged during the first quarter by difficult market conditions,â€? said Kerry Killinger, the company's chairman and CEO. â€œOver the past 12 months, we have taken a number of prudent actions to reduce our exposure to the subprime mortgage industry. These actions, along with a diversified business mix, limited our exposure to the mortgage market's downturn and position us well to expand and grow as market conditions improve.â€?