Another lawsuit on behalf of Washington Mutual shareholders has been filed.
The law firm of Weiss & Yourman announced Friday that it had filed a lawsuit seeking class action status on behalf of purchasers of Washington Mutual securities from April 15, 2003 through June 28, 2004. The lawsuit is at least the second one filed in the past month.
The complaint alleges that Washington Mutual and certain of its officers violated federal securities laws by making material false and misleading statements regarding the company’s financial health and future business prospects. It also alleges the company failed to disclose the company’s profits were due in large part to large mortgage volumes as a result of low interest rates and that these profits were not sustainable over the long run.
After the close of trading June 28, the WaMu announced that it expects its mortgage loan volumes and gain on sale margins to be below expectations.
The Seattle-based bank said it now expects to make $3 to $3.60 a share in 2004. That compares with its previously forecast profit of $4.35 a share.
The expected drop has been fueled primarily by higher interest rates. Mortgage rates have climbed, demand is drying up and refinance loans have dropped significantly from their peaks last year.
Additionally, the company has said more layoffs are probable. WaMu already cut about 7,400 jobs in the six months ending March 31.
In July, the company announced second-quarter 2004 earnings of $489 million, or $0.55 per diluted share, down 49 percent on a per-share basis from $995 million, or $1.07 per diluted share from continuing operations for the same period a year ago.
Total home loan volume from the mortgage banking business was $59.5 billion, compared to $106.7 billion in the second quarter of 2003. During the first quarter of 2004, it was $47.9 billion. Adjustable-rate mortgage volume was 54 percent of total mortgage banking home loan volume up from 24 percent in the second quarter of 2003.
Kerry Killinger, chairman, president and chief executive officer, called the quarter “disappointing.”
The company’s earnings and layoff woes have prompted some observers to speculate that it could become a takeover target. Rumors have circulated that both Citigroup and London-based HSBC are interested in acquiring WaMu.
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