WaMu's Big Credit Cushion Brings Huge Loss

Updated from 5:48 p.m. EDT

Washington Mutual(WM Quote) on late Tuesday posted a wider-than-expected quarterly loss due to a significant boost to its loan-loss provision, as the bank said it expects as much as $19 billion in mortgage-related losses.

The Seattle-based bank recorded a loss of $3.3 billion, or $6.58 a share. Excluding a previously disclosed EPS reduction of $3.24 a share related to the company's June conversion of preferred stock, WaMu's second quarter earnings loss was $3.34 a share. Analysts had estimated that the thrift would post a loss of $1.05 a share.

The company said it took a $5.9 billion provision in the quarter, up from $3.5 billion in the first quarter, to offset the rise in bad loans as home prices significantly fell as well as changes in the company's provisioning assumptions. ...