WaMu hurt by mortgage write-downs

Washington Mutual Inc., the largest savings and loan, on Thursday reported its first quarterly loss since 1997 after writing down the value of its home mortgage unit and setting aside $1.5 billion to cover bad loans.

The loss in the fourth quarter was $1.87 billion, or $2.19 a share, compared with a profit of $1.06 billion, or $1.10, a year earlier, the Seattle-based company said. It was expected to post a loss of $1.43 a share, according to the average estimate of 17 analysts surveyed by Bloomberg.

WaMu signaled that the unprofitable mortgage unit would continue to struggle this year, with Chief Executive Kerry Killinger predicting a dramatic rise in loans that will need to be modified to avert defaults. Credit card losses are likely to rise as well, from 6.9% to as much as 9.5%.

Washington Mutual shares fell 93 cents to $12.46, leaving the stock down 72% in the last year. Earnings were released after the regular session ended.