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WaMu Posts Loss, Mortgage Volume Drops 49 Percent

Washington Mutual posted its first quarterly loss since 1997 as the ongoing mortgage crisis led to larger write-downs and higher loan loss provisions.

The Seattle-based thrift lost $1.87 billion, or $2.19 a share in the fourth quarter, compared to a profit of $1.06 billion, or $1.10 a share a year ago.

“It was not an easy quarter. I’m certainly disappointed in the overall level of performance,” Chief Executive Kerry Killinger said in an interview. “Credit costs are elevated, and are likely to remain elevated for some time.”

Analysts surveyed by Thomson Financial anticipated a loss of $1.36 per share.

Fourth-quarter revenue of $3.41 billion also fell short of analyst expectations of $3.51 billion.

And as a result of the poor fourth-quarter performance, WaMu recorded a net loss of $67 million, or 12 cents per share, for all of 2007.

The loss included a previously-disclosed $1.6 billion writedown tied to bad mortgage loans and heightened loan loss provisions of $1.53 billion.

The thrift’s percentage of non-performing assets rose to 2.17 percent during the quarter, up from just 0.80 percent a year ago.

The Home Loans division reported a loss of $1.96 billion, up from a loss of $342 million in the third quarter, citing an increase in bad loans and costs for layoffs and facility closures.

Loan origination volume of $19.09 billion was 28 percent lower than in the third quarter, and 49 percent lower compared to the fourth quarter of 2006.

Shares of Washington Mutual dropped 93 cents, or 6.95%, to $12.46 in trading Thursday on the NYSE.

Update: Standard & Poor’s cut its rating on WaMu one notch to “BBB-plus,” the third-lowest investment grade, from “A-minus.”

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