Despite chief executive officer Kerry K. Killinger's recent campaign to promote Washington Mutual Inc.'s stock, shares of the largest thrift in the country hit a 52-week low last week on persistent concerns about next year's earnings.

Some analysts said the worries about Washington Mutual are irrational. But investors have been shedding shares of banking and thrift companies ever since earnings shortfall warnings by U.S. Bancorp of Minneapolis, and National City Corp. of Cleveland. Both said their fourth-quarter earnings - and in the case of U.S. Bancorp, 2000 earnings - would fall short of analysts' expectations because of funding issues.

Because of the recent preannouncements by other financial companies, "investors are concerned that Washington Mutual will have the same problems," said Chad Yonker, an analyst at Fox-Pitt, Kelton. "Those other companies preannounced because of funding reasons and margin compression. Washington Mutual has a portfolio which is interest-rate-sensitive, so every time the Federal Reserve increases interest rates its portfolio will be under pressure."

Washington Mutual shares fell $1.0625, or 3.94%, to $25.9375, on Friday, when many other thrift stocks were up on government data indicating that inflation was not out of control. The American Banker thrift index was down 0.72%, and the American Banker index of the 50 largest banks was up 1.61%.

In a rising-rate environment investors tend to disfavor companies that have interest-rate-sensitive assets, said R. Jay Tejera, an analyst at Ragen MacKenzie Group Inc. in Seattle. "U.S. Bancorp and National City can reprice their assets much more quickly than Washington Mutual."

Investors are also selling out of the companies that have done large deals, Mr. Tejera added. "If you have done a major deal in the last two years, you are guilty by association" because of the troubles that some big banks have had integrating their acquisitions.

Washington Mutual amassed $176 billion of assets in a series of acquisitions, including the thrift companies Great Western Financial Corp. of Chatsworth, Calif., in 1997 and H.F. Ahmanson & Co. of Irwindale, Calif., in 1998, and the subprime lending specialist Long Beach Financial Corp. of Orange, Calif., in October.

Some analysts, however, said fears of an earnings shortfall are overblown.

"I am confident that the company will make its numbers for 2000," said Mr. Yonker of Fox-Pitt, Kelton. "Most analysts have already factored the concerns about a rising rate environment already into their numbers.

"And even if they are off by 10 to 15 cents next year, it will still be an attractively rated stock," said Mr. Yonker, who has a "buy" recommendation on the company.

"There are a lot more plusses around the company than minuses," said Mr. Tejera. Washington Mutual is in a strong market and initiated a $1.6 billion buyback program this year, the analyst said.

Because it is buying back its stock, the company is generating a "25% cash-on-cash internal rate of return, which is staggering for a company of that size," Mr. Tejera said.

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