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More Tough Sledding on Rate Risk.(Hedging)
Byline: Ted Cornwell
You can't fault Washington Mutual for keeping investors and analysts in the dark. These may be trying times for the company, with its heavy exposure to home loan and consumer credit weakness, but the company continues to put out perhaps the most detailed quarterly financial reports in the industry. And while today's market is focused heavily on WaMu's ability to manage its credit risk exposure, the company also has to worry about interest rate risk.
WaMu may have bigger challenges on its plate than hedging its still considerable portfolio of mortgage servicing rights today, but the second quarter showed that MSR risk management is still a concern. WaMu's chief financial officer, Tom Casey, told investors during a conference call that WaMu lost $109 million during the quarter from the sale and servicing of home loans, but most of that loss related to lower gain-on-sale revenue as the company closed wholesale loan production and scaled back retail home loan production. WaMu also cited an increase in "repurchase reserves" related to prime mortgage loans, noting that the company has seen an increase in repurchase requests from investors.
The MSR portfolio saw lower revenue ...
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...difficulty in hedging interest rate risk associated with the mortgage...results may continue to lag while WaMu adjusts to the current environment. WaMu reported $38 million in net...months. Like Wells Fargo, WaMu has implemented SFAS 156, the...
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...business," said Kerry Killinger, WaMu Chairman and CEO. "For the...strong cross-sales of the WaMu credit card to our retail banking...improve the company's interest rate risk profile and reduce its geographic...Advisors completed. On Dec. 31, WaMu completed the sale of its retail...
Source: HighBeam Research, More Tough Sledding on Rate Risk.(Hedging)