The second quarter wasn't all bad news for Washington Mutual (NYSE:WM). Capital ratios improved. That's good. Its leaner-and-meaner cost structure could save the company $1 billion. That's great.

But as with many of its peers, there's little else to smile about for the Seattle-based bank. The second quarter brought a $3.33 billion net loss, or $6.58 per diluted share -- juuuust a smidgen worse than the $1.05-per-share loss analysts expected. In the same period last year, WaMu earned $0.92 per share. Loan-loss provisions for the quarter jumped to $8.46 billion -- more than WaMu's market cap, mind you.

By the numbers, there wasn't much unexpected news across the board:


Q2 2008

Q2 2007

Provisions for loan losses

$5.91 billion

$372 million

Net charge-offs



Foreclosed asset expense

$217 million

$56 million

Average retail deposits

$149 billion

$145 billion

Tangible equity/ Total tangible assets



The increase in tangible equity is a big step forward to ease weary investors' worries. Back in April, WaMu got a $7 billion injection from TPG Capital -- a dilutive nightmare, but necessary medicine. With a renewed capital base, WaMu has a decent-sized cushion to fall back on as it navigates the real estate mess. By golly, it's going to need it.

WaMu doesn't have the diverse strings of businesses that are holding together rivals like Bank of America (NYSE:BAC). It didn't have the conservative lending practices that have proved to be a boon for Wells Fargo (NYSE:WFC). It certainly doesn't have the Wall Street admiration JPMorgan Chase (NYSE:JPM) enjoys -- although it could have, if it had accepted the $8-per-share offer JPMorgan wanted to give it back in April. Oh, how painful hindsight can be.

Where does WaMu go from here? That depends on your view of the real-estate market, and I don't mean that with much sarcasm. WaMu is heavily engrained in real estate -- more so than many of its rivals. The one ray of hope WaMu can hold onto is the possibility of a near-term real-estate rebound. Problem is, the odds of that happening roughly equal your chances of being struck by lightning while winning the lottery. Until then, shareholders are going to need an iron gut and a healthy dose of patience ... assuming WaMu actually does make it out of this mess.

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Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. JPMorgan Chase and Bank of America are Motley Fool Income Investor recommendations. The Fool has a disclosure policy.