Washington Mutual stock down on credit concerns

By Anastasija Johnson and Jonathan Stempel

NEW YORK (Reuters) - Washington Mutual Inc (WM.N: Quote, Profile, Research, Stock Buzz) shares fell more than 13 percent and the cost to insure its debt against default rose after an analyst said some creditors reduced their exposure to the largest U.S. savings and loan.

Citing the thrift's financial statements for the period ending June 30, Gimme Credit analyst Kathleen Shanley wrote that "many creditors have quietly been pulling funds" from the Seattle-based thrift.

Shanley wrote that federal funds purchased and commercial paper declined to $75 million as of June 30 from $2 billion at year end, while securities sold under repurchase agreements fell to $214 million from $4.1 billion.

Washington Mutual, in a response to Shanley's report, said that, as it had stated months ago, "WaMu funds all of its business through its banking operations and does not rely on commercial paper."

The thrift's shares closed down 62 cents at $4.03 on the New York Stock Exchange, recovering some losses after issuing the statement.

The shares have nevertheless fallen 31 percent since Tuesday, when the thrift reported a surprisingly large $3.33 billion quarterly loss, and 90 percent in the last year.

Washington Mutual was the sixth-largest U.S. mortgage lender in 2007, according to Inside Mortgage Finance, and has struggled with mounting credit losses.

On Tuesday, Washington Mutual said residential mortgage losses through 2011 would likely be toward the high end of the $12 billion to $19 billion range it forecast.