WaMu gets $7 bln infusion, cuts jobs, sees loss

By Jonathan Stempel

NEW YORK (Reuters) - Washington Mutual Inc, battered by mortgage delinquencies and defaults, said Tuesday it obtained a $7 billion capital injection from private equity firm TPG Inc and other investors, but projected a $1.1 billion quarterly loss and set plans to eliminate 3,000 jobs.

The largest U.S. savings-and-loan also said it will close its 186 stand-alone home lending offices and stop offering loans through mortgage brokers by the end of June. It will instead offer mortgages in its roughly 2,300 retail branches, where some of the affected workers will be offered jobs.

WaMu, as the thrift is known, will also slash its quarterly dividend per share to 1 cent from 15 cents, saving $490 million a year. It is the second dividend cut in four months.

Shares of WaMu closed down 10 percent, dropping $1.31 to $11.81 on the New York Stock Exchange. The shares had risen $2.95, or 29 percent, on Monday after news of the plan to raise capital first surfaced. WaMu's capital boost was $2 billion larger than earlier expected.

The expected first-quarter loss is $1.40 per share, more than twice the 51 cents that analysts had on average expected. Seattle-based WaMu expects to set aside $3.5 billion for loan losses in the quarter, nearly twice its previous forecast, and said net charge-offs will total $1.4 billion.

Chief Executive Kerry Killinger is raising money and curbing risky lending to boost capital and assure investors the 119-year-old thrift can survive the nation's housing crisis.

"These companies are getting serious," said James McGlynn, a portfolio manager at Summit Investment Partners in Southlake, Texas. "They are bringing in capital, (and) getting out of businesses where they weren't efficient. It just seems like they are getting their comeuppance."

WaMu joined more than a dozen commercial and investment banks to seek cash from outside investors in the last year, following more than $200 billion of write-downs and credit losses tied to the nation's housing and credit crises.