WaMu Shares Sink on Analyst's Concerns

Washington Mutual(WM Quote - Cramer on WM - Stock Picks) shares plunged 13% on Thursday after an analyst said that creditors "have been quietly pulling funds from the bank."

Gimme Credit analyst Kathleen Shanley said she was not convinced the Seattle thrift's outlook was as conservative as rivals like JPMorgan(JPM Quote - Cramer on JPM - Stock Picks). While she noted the bank boosted its loan loss provision this quarter and is "'comfortably' well-capitalized under regulatory standards," she cited potential liquidity challenges for WaMu.

"We won't use the phrase 'run' on the bank, but we would be remiss if we did not observe that many creditors have quietly been pulling funds from the bank," Shanley writes. "With unsecured creditors taking a giant step backwards, the combined percentage of the balance sheet funded by deposits and the Federal Home Loan Banks has increased to 78%, up from 75% at year-end and 71% a year ago."

WaMu emailed a statement late Thursday downplaying the report.

"As we stated publicly months ago, WaMu funds all of its business through its banking operations and does not rely on commercial paper," the company said.

Investors have grown increasingly jittery of WaMu over the last two days after the Seattle-based company posted a second-quarter loss of $3.3 billion, or $6.58 a share, and took a $5.9 billion provision in the quarter to offset the rise in bad loans as home prices significantly fell as well as changes in the company's provisioning assumptions.

While WaMu assured analysts that it has sufficient capital on its conference call, some observers aren't so sure. Given that the thrift expects cumulative losses on its mortgage portfolio to be at the high end of a previous range of $12 billion to $19 billion, the company may have no choice but to raise more capital. WaMu received a $7 billion capital injection in April from TPG and other investors.

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