InsideWaMu

One of the joys of being a WaMu shareholder, employee or interested party is listening to the hourlong earnings call each quarter.  If you are any of the above you really should call in Tuesday July 22nd at 2:00PM Pacific.  Webcasts are available at http://www.wamu.com/ir.

These usually proceed with precision of a Swiss timepiece.

1. Introduction by Alan Magleby IR maestro
2. Opening comments by Kerry noting the “unprecedented turmoil” of the current mortgage market.  (If the last four quarters have each been unprecedented, at what point does it become precedented though?)
3. A comment on how Home Loans had a very rough quarter and lost another chunk of money larger than the GDP of most Pacific Island countries (it has been a period of unprecedented turmoil after all), but that this latest turnaround plan is going to work and Home Loans will turn a profit in next 12 months (Project Restart is the latest of many turnaround plans - from my knowledge of the extremely limited scope of it though, I promise there will be a Project Reboot, Restore, Rescope or Resize next quarter).
4. A comment by Kerry that the other three segments are churning along nicely though and the “diversified revenue streams” from each segment will allow the company to see these unprecedented times through.
5. A very competent runthrough of financials by CFO Casey (I really do think we’re lucky to have him still at WM - and most of the analyst reports I’ve read agree on that).
6. Followed by the unveiling of the latest WM earnings drivers.  Now hopefully the second the call starts you were already skimming ahead in the prepared notes and running the drivers through your calculator to figure out what “the number” for this year will be, so when Tom gets to the drivers you’re a step ahead.  It is a very easy calculation to do and can add another level of fun to the call.  Two quarters ago I ran the numbers 30 seconds into call and realized WM was not scheduled to turn a profit while IR man Alan was still reading the disclaimers.  Kerry’s intro was that much more interesting once I knew that little tidbit…
7. Tom hands off back to Kerry to discuss some political/external issues,
8. And then at the bottom of the hour the fun begins with analyst questions.  Pay attention to Tom on these, he is like Michael Jordan in the mid-90’s on these questions.  The man never gets stumped, often corrects the analysts questions and knows every number by heart.  If asked to state WM exposure to loans in zipcode 90210, with a FICO under 700, that have reset in last six months, with two children in residence, and have a palm tree on left side of the driveway, Tom wouldn’t just know the answer he’d give them the splits between option ARM’s and regular ARMs - by memory.  The man is a beast and the analysts are as ineffective as Bryon Russell trying to trip up MJ in the Finals.  Just don’t ask Tom to provide NIM splits by month if you know what’s good for you.
9. Another fun item to watch is how many analyst questions Rotella jumps in to answer with the prepared talking points.  I’m not knocking him - it’s his job to hammer these home for the analysts, and he does it well, but it is absolutely hilarious.  You’ll know they’re talking points when he answers unrelated questions such as: credit card production per retail store and a question on subprime HELOC exposure with >75% the same answer.  What is especially funny is that the talking points will be unrelated to either question (did you know that WM has plenty of liquidity and capital?  And that our commercial segment had a kickass quarter?).  So loyal readers, keep score at home and as you see how many of these points will be hit on tomorrows earnings call ask yourself if they did or didn’t just replay the first 30 minutes from an earlier earnings call.