A Tale of Two BanksBy
Two of the nation's largest banks reported earnings this week. Bank of America, which has big consumer banking focus but did not jump on the mortgage bandwagon as aggressively as some of its peer, saw its earnings leap 41%. B of A has been very innovative with new products like its "Keep the Change" accounts, which allow debit card customers to round up their bill to the nearest dollar and deposit the difference in a savings account. Home equity loans were up 16% year-over-year.
Results at Washington Mutual, on the other hand, came in below expectations. WaMu's net income declined 16% from the year-ago quarter, thanks largely to its mortgage unit which posted a loss. That's even after WaMu reduced the number of employees in the unit by 21%. Mortgage originations were down as well. "We're not pushing any panic buttons yet," writes Morningstar analyst Ryan Batchelor in a recent report. "However, we believe investors will need some patience with WaMu as it wades through a tough housing market--but not a crashing one, in our opinion."