WaMu CEO to shareholders: 'Calm down'
But Kerry Killinger's remarks do little to soothe angry investors who went on the attack at Tuesday's annual shareholder meeting.
NEW YORK (CNNMoney.com) -- Washington Mutual chairman and CEO Kerry Killinger endured the wrath of frustrated shareholders Tuesday, but pleaded with investors to "have a little faith" in the bank's leadership.
Addressing an incensed crowd at the company's annual shareholder meeting, Killinger stressed that leadership at the Seattle-based bank was working to turn around the company, even as it provided greater details about its previously announced $1.1 billion first-quarter loss.
"I just want people to calm down and have a little faith," said Killinger, whose remarks were met, at times, with jeers. "We will get through this."
Shareholders' concerns about lackadaisical risk-management practices and lackluster stock performance came to a head last week after the company revealed plans to raise $7 billion by selling a stake to an investment group led by the private-equity firm TPG.
At the time, the company also said it would suffer a $1.1 billion loss. In the same period last year, the company reported a profit of $784 million.
In addition, the company revealed plans to cut its dividend to 1 cent from 15 cents.
WaMu said Tuesday it had wrapped up the capital-raising plan and provided greater details about the loss.
Facing further deterioration in the company's home-equity and home-loan portfolios as well as rising delinquencies, WaMu said it was forced to set aside more money for bad loans.
Killinger defended the plan to raise capital, telling analysts in conference call following the shareholder meeting that it was both a defensive move and a way of positioning the firm to capitalize on future opportunities.
But those moves failed to calm angry investors on Tuesday.
Institutional investors as well as current and former employees blasted the company's leadership, at times calling for Killinger's head.
"What you've got to do is what real men do - when you face a situation like this you stand down," said one gentleman, whose remarks drew applause.
Others questioned management's decision to raise capital from outside investors, asking why the company turned down a recent bid of about $7 billion from JPMorgan Chase, which was reported in the Wall Street Journal.
"JPMorgan would make this company grow," said one current employee and shareholder. "The way we are going now is destructive."
Shareholder activists did appear to walk away with one victory, as Mary Pugh, the head of the company's finance committee announced her resignation. Critics had charged that Pugh and her committee did not do enough to steer the company away from high-risk loan products like subprime and adjustable-rate mortgages.
There were some bright spots for WaMu. During the quarter, the company reported a jump in the number of new checking accounts, considered a valuable tool by banks to sell other products.
In addition, WaMu's credit card unit, which was among the company's two divisions to report a profit, saw an uptick in the number of new accounts. However, delinquencies in the division rose, a result that the company blamed on economic weakness and higher unemployment.
WaMu also revealed that its results were helped by an $85 million gain from last month's record-setting Visa IPO.
Washington Mutual is the second of six national banks and brokerages, including Citigroup (C, Fortune 500), Merrill Lynch (MER, Fortune 500) and JPMorgan Chase (JPM, Fortune 500), due to report results this week. On Monday, Wachovia (WB, Fortune 500) reported a surprising first-quarter loss of $350 million.