Washington Mutual disappoints; numbers strong for other lenders

Thursday, July 22, 2004 | 11:04 a.m.

SUN STAFF AND WIRE REPORTS

While the flood of bank earnings continued to report strong results on Wednesday, one major mortgage lender delivered expected bad news.

Seattle-based Washington Mutual Inc.'s net income fell 52 percent in the second quarter as home-loan mortgage banking income declined amid rising interest rates.

Washington Mutual has 27 retail branches and three home-loan centers in the Las Vegas area.

The savings and loan company on Wednesday reported net income of $489 million, or 55 cents a share, compared with $1.02 billion, or $1.09 a share, a year earlier. Year-earlier net included 2 cents a share in income from discontinued operations. Loan volume decreased 35 percent to $79.52 billion. Total home-equity loan and line-of-credit volume of $11.57 billion rose to $4.42 billion. "Most of Washington Mutual is strong and growing profitably, but this was a disappointing quarter," said Washington Mutual Chief Executive Kerry Killinger. "While second-quarter results were affected by the volatility of our mortgage servicing rights, the root of our problem is the unacceptably high cost structure in our mortgage banking business."

Meanwhile, Salt Lake City-based Zions Bancorporation on Wednesday reported second-quarter net income of $98.8 million, or $1.09 per share.

Net income and earnings per share increased 6.94 percent and 6.86 percent over the $92.4 million, or $1.02 per share for the second quarter of 2003.

Zions is the parent company of Nevada State Bank, which has 46 Las Vegas-area branches and about 550 local employees. Loans and leases at June 30 totaled $21.5 billion, an increase of 4.2 percent from the first-quarter end balance of $20.6 billion and up 10.6 percent from $19.4 billion at June 30, 2003.

The bank credited continued strong loan growth in Arizona and Nevada for adding about $400 million in loans.

The strong news did not come as a surprise for Bill Martin, president of Nevada State Bank.

"I think the (Nevada) economy is still strong for everyone," he said. "Bankers are looking smart right now. Growth is strong and delinquency rates are very low."

Also, Northern Trust Corp., a Chicago-based money manager with one Las Vegas-area office, said second-quarter earnings almost doubled. Net income increased to $130.8 million, or 59 cents a share,from $66.6 million, or 30 cents, a year ago. Revenue climbed 6.2 percent to $585.1 million.

And, Sun West Bank, which has three Las Vegas-area branches and two in Northern Nevada, reported second-quarter, pre-tax net income of $1.21 million, up from $680,000 in the same 2003 quarter.

Assets for Sun West reached $258.6 million at the end of the quarter, up from $209.9 million a year ago.