WaMu Still Wary of Mortgage Servicing Rights.

New York -- Washington Mutual's chairman and CEO, Kerry Killinger, likes the mortgage business. But that doesn't mean he wants his company to be thought of as a mortgage bank.

Speaking at a Lehman Brothers investment conference here, Mr. Killinger said that increasingly WaMu looks more like a diversified commercial bank, such as Wells Fargo, than like a "less diversified company," citing Countrywide Financial Corp. as an example.

He said that while mortgage banking remains an essential part of WaMu's business, the company doesn't want to see its balance sheet dominated by mortgage assets. In fact, Mr. Killinger expects prime credit quality mortgage loans and mortgage servicing rights to account for a lower share of WaMu's assets in the future than they do today.

"We want to be a top-tier player, but we are not about trying to build the largest mortgage company in the world," Mr. Killinger said.

Mr. Killinger said the mortgage unit's contribution to WaMu's total earnings will vary because of the industry's cyclical nature.

In 2003, a year when mortgage business was booming, mortgage activity accounted for 33% of WaMu's income. Today, the mortgage unit contributes "a more representative" 26% of earnings, he said.

While WaMu may aim to reduce the percentage of prime quality mortgage loans on its balance sheet, Mr. Killinger said that WaMu will continue to grow its subprime mortgage origination business. Seattle-based WaMu is the parent of Long Beach Mortgage.