July 15, 2008 / 12:11 AM / 10 years ago

WaMu says well-capitalized after shares sink

NEW YORK (Reuters) - Washington Mutual Inc (WM.N) said it is “well capitalized” with more than $40 billion of liquidity and $150 billion of retail deposits, moving to reassure investors and depositors after shares of the largest U.S. savings and loan sank 34.7 percent on Monday.

A woman walks into a Washington Mutual bank in New York April 7, 2008. REUTERS/Joshua Lott

The thrift said it would provide further details on its financial health and steps it is taking to work through the market environment when it reports second-quarter results on July 22.

Analysts on average expect a second-quarter loss of 93 cents per share, according to Reuters Estimates. This would be the third straight quarterly loss.

Shares in major U.S. banks plunged on Monday as fears about the sector’s stability mounted following Friday’s seizure by regulators of IndyMac Bancorp Inc IMB.N.

The decline in Washington Mutual shares also came after Lehman Brothers Inc analyst Bruce Harting wrote that the savings and loan could face $26 billion of losses, including $21 billion for mortgages.

Harting wrote that Washington Mutual, based in Seattle, would be unprofitable until credit costs normalize, around the second half of 2009.

He also wrote that write-downs on bad loans could force the thrift to set aside $4 billion in the second quarter, resulting in a $1.48 per share loss.

Washington Mutual said in its statement that it recently raised $7.2 billion of capital and had a 7.8 percent ratio of tangible equity to total tangible assets as of June 30.

The thrift also said it significantly exceeded regulatory minimums for capital.

Shares of Washington Mutual closed down $1.72 at $3.23 on the New York Stock Exchange, but rose to $3.56 in after-hours trading after the thrift’s statement. The shares’ 52-week high is $42.93, set last July 16.

Reporting by Jonathan Stempel

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