WaMu to Sell Some Servicing Units

Washington Mutual Inc., the largest savings and loan, said Wednesday that second-quarter profit fell 9%, largely reflecting one-time costs as it retrenches amid a slowing housing market.

The Seattle-based company said it would sell its portfolio of government mortgage servicing rights and some of its fixed-rate servicing portfolio to Wells Fargo & Co. Washington Mutual said its money-management unit also was for sale.

Second-quarter net income fell to $767 million, or 79 cents a share, from $844 million, or 95 cents, a year earlier.

The results included a $101-million charge for the pending sale of mortgage servicing rights and $52 million for a restructuring charge.

Excluding those items, profit would have totaled $920 million, or 94 cents a share. Analysts polled by Reuters forecast an average profit of 93 cents a share.

Revenue was up 17% to $3.64 billion.

Washington Mutual said it was selling servicing rights to about $140 billion of loans, representing about 1.3 million customers, and its servicing operations in Milwaukee to Wells Fargo. About 800 employees will move to San Francisco-based Wells Fargo, which is seeking to expand its mortgage business as the industry consolidates

Washington Mutual also announced that it would sell its WM Advisors money-management unit by year-end. That unit manages about $16 billion.

Shares of Washington Mutual rose 60 cents to $46.42 before the results were announced.

Chief Executive Kerry Killinger said he expected the firm to have 7,500 full-time employees outside the U.S. by the end of 2007, up from a prior forecast of 6,000, as Washington Mutual outsources jobs to reduce costs.