WaMu Loses $1.1 Billion as Credit Card Charge Offs Rise

The nation’s largest thrift late yesterday released a barrage of information, announcing a billion dollar loss in its first quarter, the closing of a $7 billion capital infusion, and the resignation of a controversial director.

Washington Mutual (NYSE – WM) reported a first quarter net loss of $1.1 billion compared with profits of $784 million in the same period a year ago.

WaMu has been hit hard by the subprime mortgage crisis. Its provision for losses in the first quarter was $3.5 billion, doubling the figure from the fourth quarter of 2007. The Seattle-based thrift said the increase was due to a rise in delinquencies and losses as home prices have declined. WaMu reported charge offs rose 83 percent to nearly $1.4 billion.

The credit card services group reported its receivables at $26.4 billion at the end of the quarter, up nearly 12 percent from $23.6 billion a year ago. Managed net credit losses rose nearly 48 percent to 9.32 compared with 6.31 percent a year ago. Net income fell to $199 million from $249 million. The 30 day plus delinquency rate rose to 6.89 percent compared with 5.15 percent, an increase of nearly 34 percent.

WaMu attributed the problems in the portfolio to the weakening economy and higher unemployment. Despite the troubles, the card service group opened more than 666,000 credit card accounts in the quarter.

The $7 billion capital infusion came from private equity firm TPG and other investors. Some WaMu investors have complained that the infusion has diluted the value of existing shareholder’s investments. WaMu also announced the resignation of Mary E. Pugh, a WaMu director who served on the board for nine years and was chair of its finance committee for three years. According to press reports, many investors blamed Pugh for WaMu’s aggressive expansion into subprime mortgages.