Embattled lending institution Washington Mutual (WM) attempted to quell speculation that the company may need a capital infusion by saying it has sufficient liquidity and capital to emerge from the lingering credit crisis.
"The company expects its capital ratios at quarter-end to
remain significantly above the levels for well-capitalized
institutions," said the company in a statement released Thursday evening. Washington Mutual "continues to be confident that it has sufficient liquidity and capital to support its operations while it returns to profitability."
WaMu shares came under significant pressure earlier in the week, dropping nearly 50 percent amid concerns that April's $7 billion cash infusion from a private equity firm in April would not be sufficient to see the firm through one of most difficult episodes in history for US financial firms. However, the stock was able to pare some of recent losses on Thursday, rising 22 percent ahead of the early release of a portion of its third-quarter performance.
WaMu shares were up almost 4 percent in pre-market trading Friday morning.
WaMu revealed Thursday evening that it expects to record lower provision for loan losses for the third quarter compared to the preceding second quarter.
The Seattle, Washington-based company expects third quarter net interest income to be in line with the second quarter interest income.
Looking forward, the provision for loan losses is expected to be about $4.5 billion, down from $5.9 billion reported in the second quarter.
The company expects its total loan loss reserve to increase to about $10.3 billion at the end of the third quarter from $8.5 billion at June 30.
Third quarter net charge-offs are expected to increase by less than 20%, lower than a growth rate of nearly 60%, reported during the second quarter.
Residential mortgage provisions are expected to be about $3.4 billion, down from about $5.5 billion in the preceding quarter. The company does not hold any common or any other equity securities issued by Fannie Mae or Freddie Mac.
For comments and feedback: editorial@rttnews.com