<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: March 6, 1997
Washington Mutual, Inc.
------------------------------------------------------
(Exact Name of Registrant as specified in its charter)
Washington
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0-25188 91-1653725
- --------------------------------------------------------------------------------
Commission File Number IRS Identification No.
1201 Third Avenue, Seattle, Washington 98101
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Address of Principal Executive Office Postal Code
206-461-2000
------------------------------------------------------
Registrant's telephone number including area code
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 5, 1997, the Company and its wholly-owned subsidiary New
American Capital Inc. ("NACI") entered into an Agreement of Merger with Great
Western Financial Corporation ("Great Western"), whereby Great Western would be
merged with and into NACI. A summary of the transaction is included in the press
release issued to announce the transaction which is included herein as Exhibit
7(c).1.
Forward-Looking Statements; Factors to Consider
Exhibit 7(c).2 includes forward-looking statements regarding each of
the Company, Great Western and the combined company following the merger. Set
forth below are factors which may cause actual results of operations of the
combined company to vary materially from the forward-looking statements
contained therein.
Interest Rate Risk. Each of the Company and Great Western realizes its
income principally from the differential between the interest earned on loans,
investments and other interest-earning assets, and the interest paid on
deposits, borrowings and other interest-bearing liabilities. Net interest
spreads are affected by the difference between the repricing characteristics of
interest-
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earning assets and deposits and other liabilities. Loan volumes and yields, as
well as those of investments, deposits and borrowings, are affected by market
interest rates. Generally, the Company will experience increased interest rate
spreads during periods of downward interest rate movement and decreased interest
rate spreads during periods of upward interest rate movement, even though a
substantial portion of its loan portfolio consists primarily of adjustable-rate
mortgages ("ARMs") since the adjustments in the interest rates on the ARMs tend
to lag changes in the Company's cost of funds. To the extent that interest rates
generally are increasing during the period to which the forward- looking
statements apply, the combined company's actual interest rate spread, and thus
net income, may be materially less than set forth in the forward-looking
statements.
Operational Issues; Management. In December 1996, through a merger with
Keystone Holdings, Inc., the Company acquired American Savings Bank ("ASB"),
which at that time was an institution of comparable size to the Company. As a
result of the acquisition of ASB, the Company acquired substantial operations in
California, where it had not operated prior to the acquisition of ASB, and
became one of the largest depositary institutions and mortgage originators in
California. Upon consummation of the merger with Great Western, it is
anticipated that Great Western's wholly-owned subsidiary, Great Western Bank
("GW Bank"), will be merged into ASB. While Washington Mutual believes that the
integration of ASB's operations into the Company is proceeding as anticipated,
the integration of Great Western and ASB may pose difficulties that could
adversely affect the results of operations of the combined company. In addition,
the merger with Great Western will bring 120 branch locations in Florida with
$7.1 billion in deposits and 129 retail mortgage offices and 36 wholesale
offices in 27 states, areas where Washington Mutual has limited operating
experience.
The forward-looking statements assume that following the merger the
combined company will be able to retain a greater percentage of loan
originations than either Washington Mutual or Great Western could on a
stand-alone basis, which it is anticipated will increase net income. To the
extent that the combined company is not able to retain loans in its portfolio at
the levels assumed in the forward-looking statements, the estimates of future
net income contained therein may differ materially from actual results.
The forward-looking statements include estimates of cost savings which
will be available from consolidation of branches and loan offices and certain
corporate and administrative operations. No assurance can be given that the cost
savings included as part of the forward-looking statements which are anticipated
through the consolidation of retail branch and loan offices and administrative
functions of ASB and GW Bank will be achieved or will occur in the time periods
anticipated as a result of difficulties in consolidating operations. In
addition, when retail branches are
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<PAGE> 3
consolidated or closed, financial institutions often lose customers and deposits
as a result. While Washington Mutual has not experienced significant customer or
deposit loss after previous business combinations, to the extent that the
combined company loses customers or deposits in excess of that anticipated, the
operations of the Company could be materially adversely affected, particularly
in the short term. The forward-looking statements assume that the deposit base
of both the Company and GW Bank will remain substantially intact and grow at
historical rates during the period presented in the forward-looking statements.
To the extent that the change in ownership of Great Western, the consolidation
of branches of GW Bank and ASB or other factors result in either a temporary or
long-term loss of deposits, actual results of operations may vary materially
from the forward-looking information presented.
The forward-looking statements assume an increase in fee income from
the Company's consumer banking operations. The sources of these fee increases
include revised overdraft policies in accordance with Washington Mutual's
current programs, implementation of free checking throughout the Great Western
system and improved revenues in financial services subsidiaries. Washington
Mutual management at the holding company level has limited operating experience
in California, where the greatest expansion of consumer banking activities is
expected to occur. Accordingly, there can be no assurance that the combined
company's emphasis on consumer banking activities will be successful in the
California market or that any increase in fee income anticipated by the
forward-looking statements will be achieved.
A major asset of Great Western is its consumer finance company
subsidiary, Aristar. Washington Mutual has little experience in operating a
consumer finance company. The ability of the Company following the merger to
operate efficiently in this area, at least in the short term, will be enhanced
by its ability to retain existing management personnel of Aristar. The President
of Aristar, however, has announced that he is retiring. If Washington Mutual is
not able to retain other key management personnel of Aristar, results of
operation of Aristar could be materially adversely affected, which could
materially affect the earnings contribution of Aristar for purposes of the
forward-looking statements.
The ability of the combined company to operate efficiently, at least in
the short term, will depend in part on the ability to retain existing management
personnel. If the Company is not able to retain a substantial number of key
management personnel of Great Western, the consolidation of the two companies
may be more time-consuming, difficult and expensive, and may negatively affect
the predicted cost savings.
3
<PAGE> 4
Concentration of Operations in California. At December 31, 1996,
approximately 50% of Washington Mutual's loan portfolio and approximately 63% of
Great Western's loan portfolio were secured by real estate in California.
Following the merger, on a pro forma basis, approximately 56% of the Company's
loan portfolio will consist of loans secured by California real estate. In
addition, at December 31, 1996, on a pro forma basis, approximately 66% of the
combined company's retail deposits were on deposit at branches in California. As
a result, the financial condition and results of operations of the Company
following the merger will be subject to general economic conditions, and
particularly the conditions in the single-family and multi-family residential
markets, in California and, to a lesser extent, Washington and Oregon. The
forward- looking statements assume that there is no material adverse change in
the general economic conditions in the Company's primary market areas. If
economic conditions generally, or in California in particular, worsen or if the
market for residential real estate declines, the Company may suffer decreased
net income or losses associated with higher default rates and decreased
collateral values on its existing portfolio, and may not be able to originate
the volume of high quality single-family or multi-family residential mortgage
loans or achieve the level of deposits and mutual fund assets currently
projected.
The California economy and its real estate market showed signs of
recovery in 1994, 1995 and 1996 from the recessionary levels of the early
1990's, and consequently ASB's and GW Bank's delinquencies, non-performing
assets and loss provisions improved from earlier periods. The forward-looking
statements regarding the Company's results of operations assume that the
California economy and real estate market will continue the trend of
improvement. A worsening of current economic conditions or a significant decline
in real estate values in California could cause actual results to vary
materially from the forward-looking statements.
Competition. Washington Mutual and Great Western both face significant
competition both in attracting and retaining deposits and in making loans in all
of their respective markets. The most direct competition has historically come
from other thrift institutions, credit unions and commercial banks doing
business in their primary market areas of California, Washington, Oregon and
Florida. As with all banking organizations, however, both Washington Mutual and
Great Western have experienced increasing competition from nonbanking sources,
including mutual funds, corporate and government debt securities and other
investment alternatives. Competition for loans comes principally from other
thrift institutions, commercial banks, mortgage banking companies, consumer
finance companies, credit unions, insurance companies and other institutional
lenders. Many of these competitors have significant financial resources, larger
market share and greater name recognition than either Washington Mutual or Great
Western. The existence of such competitors may make it difficult for
4
<PAGE> 5
Washington Mutual to achieve the financial results reflected in the
forward-looking statements.
5
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) 1. Press Release dated March 5, 1997
2. Presentation to investment analysts at a meeting on
March 6, 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WASHINGTON MUTUAL, INC.
Date: March 5, 1997 By: /s/ Kerry K. Killinger
------------------------------
Kerry K. Killinger
President and Chief Executive
Officer
6
<PAGE> 7
EXHIBIT INDEX
99.1 Press Release dated March 5, 1997
99.2 Presentation to investment analysts at a meeting on
March 6, 1997
<PAGE> 1
[WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO]
NEWS RELEASE
Media Contact: Washington Mutual Washington Mutual
(East Coast) (West Coast)
Gavin Anderson & Company Libby Hutchinson/
Michael Geczi/Hollis Rafkin-Sax Terry Onustack
212-373-0230/0234 1-800-228-9268
Great Western Great Western
Abernathy MacGregor Ian Campbell
Michael Pascale/Steve Bruce (through March 6)
212-371-5999 212-371-5999
Charlie Coleman
818-775-3766
Investor Contact: Washington Mutual Great Western
Karen Christensen John Trotter
206-461-6329 818-775-8456
James Fitzgerald
206-461-4331
March 6, 1997
FOR IMMEDIATE RELEASE
WASHINGTON MUTUAL TO COMBINE WITH GREAT WESTERN
THROUGH STOCK MERGER;
ACCORD CREATES THIRD-LARGEST BANKING INSTITUTION IN THE WEST
SEATTLE, Washington and CHATSWORTH, California -- In a move that would
significantly expand Washington Mutual, Inc.'s position in California,
Washington Mutual (Nasdaq: WAMU) and Great Western Financial Corporation (NYSE:
GWF) today jointly announced the signing of a definitive merger agreement.
Terms of the transaction call for the tax-free exchange of 0.9 share of
Washington Mutual common stock for each of Great Western's outstanding common
shares. Based on Wednesday's closing price of $53.25 per share for Washington
Mutual common stock, this ratio represents a price of $47.93 per share of Great
Western stock. At that price, the transaction has an initial value of $6.6
billion, and the combined company would have a pro forma market capitalization
of $12.9 billion. Each share of Great Western 8.30% cumulative preferred stock
would be converted into one share of a new series of Washington Mutual preferred
stock with substantially the same terms.
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<PAGE> 2
- 2 -
Following the merger, Washington Mutual would have combined
consolidated assets of $87.4 billion, based on year-end 1996 results. It would
have $52.7 billion in deposits, more than 1,000 mortgage-lending, retail and
business banking offices, 502 consumer finance offices and serve 4.1 million
households. Moreover, Washington Mutual would rank third in deposits in the
state of California -- a state it entered in 1996 with its acquisition of
American Savings Bank. Overall, Washington Mutual would rank as the
third-largest bank in the western United States.
The transaction, which would be accounted for as a pooling of
interests, is anticipated to close in the third quarter of 1997. Already
approved by the boards of both companies, the acquisition requires the approvals
of the Office of Thrift Supervision and shareholders of both companies.
"This transaction will enable us to significantly expand our presence
in California, the nation's largest consumer market, and solidify our position
as one of the West's top banking franchises," stated Kerry Killinger, Washington
Mutual's chairman, president and chief executive officer, who will continue in
his current positions following the transaction.
"The combination brings together two strong companies, which have been
industry leaders in moving from the traditional thrift model to that of a
consumer bank. Most importantly, it will create a company that is positioned for
long-term growth, and the delivery of enduring value to all of our key
constituencies -- shareholders, employees, customers and communities.
"We have structured a transaction that is driven by strategic business
fundamentals and one that we believe will produce long-term revenue enhancements
plus meaningful cost savings. The transaction is anticipated to be accretive to
earnings within 12 months of completion."
Killinger added that Washington Mutual would begin immediately to work
with the management team of Great Western to ensure the successful conclusion of
the transaction in the most timely manner. Washington Mutual has completed 22
acquisitions since 1983.
John F. Maher, president and chief executive officer of Great Western,
added: "We are most pleased to be joining forces with Washington Mutual, which
is one of the premier banking franchises in the western United States and one of
the most successful and respected banks in the country. Washington Mutual and
Great Western share similar strategies, cultures and operating goals. The
combination of our companies is unique and provides the best fit for two
outstanding franchises. The merger makes compelling economic sense for
stockholders and will yield significant benefits to our customers, employees and
communities.
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<PAGE> 3
- 3 -
"It is a testament to the hard work and dedication of Great Western's
employees that Washington Mutual has chosen to enter into this agreement with
us," added Maher. "Their skills and professionalism have made Great Western one
of the finest companies in the banking industry and their continued efforts and
enthusiasm will make for an even stronger and more dynamic company."
Robert Bass, Washington Mutual's largest stockholder, said: "Washington
Mutual has a demonstrated track record of acquiring and successfully growing
financial institutions. The combination of Washington Mutual and Great Western
would accelerate this trend. As shareholders, we have great confidence in
management's ability to undertake and maximize the value of this acquisition --
not only for investors, but for employees, customers and the communities Great
Western serves."
ADDITIONAL TERMS OF THE TRANSACTION
Great Western has agreed to pay a $75 million fee plus documented
expenses not exceeding $20 million to Washington Mutual if the merger agreement
is terminated under certain circumstances. Moreover, if within 18 months of
termination Great Western engages in a business combination with another party
it would pay an additional $100 million fee.
Four current Great Western directors would be added to Washington
Mutual's board upon consummation of the merger.
As part of the transaction, Washington Mutual will incur a pre-tax
charge of $440 million ($278 million net after-tax), including an addition to
loan-loss reserves of $100 million. Administrative and operations areas will be
combined by the second quarter of 1998.
A BUSINESS COMBINATION PREDICATED ON GROWTH
The acquisition would greatly accelerate Washington Mutual's growth in
California, the nation's most populous state.
"Our integration of American is on schedule and is factored into our
timetable for Great Western," Killinger stated. "In fact, our consumer-banking
strategy is showing initial signs of success in California, with new checking
account openings and residential mortgage originations both proceeding at a
brisk pace, ahead of last year."
In addition to building one of the largest banking franchises in the
western United States, through the merger Washington Mutual would enter Florida,
where Great Western at year-end 1996 had $7.1 billion in deposits, representing
the No. 5 market share (8 percent). Many of its households are located in the
affluent counties of Dade, Broward and Palm Beach. Overall, Great Western
operates 120 branches in nine Florida counties, and serves nearly 650,000
households. "Consistent with our strategy in other states, we will look for
opportunities to profitably grow our business in Florida," Killinger said.
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<PAGE> 4
- 4 -
It is anticipated that additional revenues would be generated by the
selective expansion of Great Western's consumer finance subsidiary, Aristar,
Inc., which offers a diversified portfolio of personal, secured real estate and
retail finance loans. Currently, Aristar operates 502 branches in 23 states,
with its largest operations in Tennessee, North Carolina, Florida, South
Carolina and Louisiana.
"We have previously stated our intention of entering businesses that
offer attractive margins that can augment our core consumer banking operations,"
Killinger said.
SHAREHOLDER VALUE
Both companies believe that significant -- and enduring -- shareholder
value will be created in the transaction as a result of the combination of
revenue-enhancement opportunities; cost savings; the blending of strong and
like-minded management teams; the creation of a strong and low-risk balance
sheet, and earnings accretion.
"The transaction provides immediate value to Great Western's
stockholders and will further the business strategies of our two companies,"
Maher stated. "We believe the prospects for creating long-term stockholder value
are compelling."
INTEGRATION
It is anticipated that a total of 200 branch and loan offices will be
consolidated as a result of the transaction, most of which are located in
overlapping markets in California. "Washington Mutual is a collection of very
talented people, many of whom have joined us from past acquisitions," Killinger
said. "Because of growth in our company, we believe there to be many
opportunities for top-producing sales and production staff at consolidating
locations."
Total annual pre-tax expense reductions, on a combined basis, are
anticipated to total $208 million in 1998, and $340 million in 1999. As part of
the combination, Great Western Bank and American Savings Bank will merge and
operate under the single Great Western name in California and American's other
states of Arizona, Nevada and Colorado, where it operates loan offices.
Killinger pointed out that because Washington Mutual and Great Western share the
same kind of deposit and loan-servicing systems, conversion is expected within
six months of closing.
As a result of the systems conversion, Great Western will receive
Washington Mutual's new branch and lending front-end systems, new products
(including combined statements, combined cash cards, pay by phone and home
banking) and new productivity tools for internal use.
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<PAGE> 5
- 5 -
COMMUNITY ISSUES
Washington Mutual's banking subsidiaries, including American Savings
Bank, and Great Western's primary banking subsidiary, Great Western Bank, have
"outstanding" Community Reinvestment Act (CRA) ratings. Killinger said that the
added financial strength of a combined Washington Mutual/Great Western would
enable more families and individuals throughout the West -- and nationally -- to
obtain financing for homes. "Over the years, Washington Mutual and Great Western
have demonstrated that we are serious about our commitment to our communities.
We intend to continue to pay close attention to meeting the credit needs of low-
to moderate-income and minority neighborhoods as a combined company."
With assets of $42.9 billion at year-end, Great Western Financial is a
diversified financial services company operating more than 1,150 mortgage
lending, retail banking and consumer finance offices nationwide. The company's
principal subsidiary, Great Western Bank, is a mortgage-oriented consumer bank
with banking branch networks in California and Florida.
With a history dating back to 1889, Washington Mutual is a diversified
financial services company focusing on families and small- to medium-size
businesses. At year-end, Washington Mutual and its subsidiaries had assets of
$44.6 billion and operated more than 550 offices in Washington, California,
Oregon, Idaho, Utah, Montana, Arizona, Colorado and Nevada. The company's
subsidiaries provide consumer and commercial banking, full-service securities
brokerage, mutual fund management and insurance underwriting.
###
This press release contains forward-looking statements regarding the benefits of
the merger of Washington Mutual and Great Western, including cost savings to be
realized, earnings accretion, transaction charges and additional loan-loss
reserves and revenue enhancement opportunities following the merger. Actual
results may vary materially from the forward-looking statements as described in
Washington Mutual's Current Report on Form 8-K dated March 6, 1997, to which
reference is made. These factors include without limitation possible delays in
integration of Great Western operations into Washington Mutual's, increases in
interest rates which could reduce net interest margin, competitive factors which
could adversely affect consumer banking strategy and general economic conditions
which negatively impact the volume of loan origination and amount of loan
losses.
###
Editor's Note: Kerry Killinger and John F. Maher will participate in a telephone
conference call for reporters at 1:00 p.m. Eastern Standard Time on Thursday,
March 6. To participate in the conference, please call 1-800-753-9057 by 12:50
p.m. EST. International participants can call 913-661-9057.
Executive photos, service-area map, and logos are available through Business
Wire/AP Photo Express. Additional photos will be available later today.
###
<PAGE> 6
WASHINGTON MUTUAL/GREAT WESTERN
AT-A-GLANCE
DECEMBER 31, 1996, FIGURES (ALL DOLLAR FIGURES IN MILLIONS, EXCEPT PER SHARE
PRICES). FINANCIAL RATIOS REFLECT YEAR-TO-DATE FIGURES.
<TABLE>
<CAPTION>
WASHINGTON GREAT PRO FORMA
MUTUAL WESTERN
<S> <C> <C> <C>
Total Assets $ 44,552 $ 42,875 $ 87,427
Total Deposits $ 24,080 $ 28,587 $ 52,667
Total Loans $ 30,331 $ 30,823 $ 61,154
Net Income(1) $ 114.3 $ 115.8 $ 230.1
Nonperforming Assets $ 329.5 $ 471.8 $ 801.3
Nonperforming Assets/Assets 0.74% 1.10% 0.92%
Reserves(2) $ 363.4 $ 313.7 $ 777.1
Reserves/Nonperforming Loans(2) 160.52% 89.12% 134.4%
Stockholders' Equity/Assets 5.38% 6.05% 5.44%
Book Value Per Share $ 19.30 $ 17.63 $ 18.22
Closing Stock Price Per Share (3/5/97) $ 53.25 $ 45.00
Market Capitalization (billions) (3/5/97) $ 6.3 $ 6.2 $ 12.9
Branch Locations 413 416 829
Loan Offices 96 220 316
Commercial Bank Offices(3) 48 -- 48
Total Banking Locations 557 636 1,193
Consumer Finance Offices -- 502 502
Households Served (millions) 1.4 2.7 4.1
Employees 9,500 12,000 21,500
</TABLE>
- -------------------------------
(1) Includes SAIF Recapitalization and other nonrecurring after-tax charges of
$294.6 million for Washington Mutual and $195.2 million for Great Western
(2) Reflects $100 million addition to loan-loss reserves
(3) In addition, Washington Mutual has 14 Business Banking Centers
###
<PAGE> 1
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WASHINGTON MUTUAL, INC.
[LOGO] MERGER WITH [LOGO]
GREAT WESTERN FINANCIAL CORPORATION
HIGH GROWTH CONSUMER BANKING
MARCH 6, 1997
- ------------------------------------------------------------------------------
<PAGE> 2
FORWARD-LOOKING INFORMATION
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This presentation contains estimates of future operating results for 1997, 1998
and 1999 for both Washington Mutual, Inc. and Great Western Financial
Corporation on a stand-alone and pro forma combined basis, as well as estimates
of financial condition, operating efficiencies and revenue creation on a
combined basis. These estimates constitute forward-looking statements (within
the meaning of the Private Securities Litigation Reform Act of 1995), which
involve significant risks and uncertainties. Actual results may differ
materially from the results discussed in these forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in WAMU's Current Report on Form 8-K dated March 6, 1997, as
filed with the Securities and Exchange Commission, to which report reference is
hereby made.
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[LOGO] WASHINGTON MUTUAL GREAT WESTERN [LOGO]
<PAGE> 3
TRANSACTION SUMMARY
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Fixed Exchange Ratio: 0.90x
Implied Value Per GWF Shares:(a) $47.93
Caps/Collars: None
Consideration: 100% common stock
Accounting/Tax Treatment: Pooling of interests/Tax-free exchange
Assumed Closing: 3rd Quarter 1997
Board Composition: Four GWF Directors to join WAMU Board
Termination Fee: $175 million
(a) Based on WAMU closing stock price of $53.25 on 3/5/97
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[LOGO] WASHINGTON MUTUAL [LOGO] GREAT WESTERN
<PAGE> 4
BENEFITS OF THE TRANSACTION
- ---------------------------
PREMIER CONSUMER BANKING FRANCHISE
- - Strong, geographically diversified powerhouse
- - National mortgage and consumer finance franchise
CREATES SHAREHOLDER VALUE
- - EPS accretion of 5% in 1998 and 11% in 1999
- - Cost Savings of $340 million in 1999
- - Accelerates earnings growth
LOW RISK EXECUTION
- - Strong management team with proven track record
- - Complementary operating systems
- -------------------------------------------------------------------------------
[LOGO] WASHINGTON MUTUAL GREAT WESTERN [LOGO]
<PAGE> 5
COMBINATION CREATES STRENGTH AND SCALE
- --------------------------------------
($ in billions)
<TABLE>
<CAPTION>
At 12/31/96
-------------------------
WAMU GWF Pro Forma
----- ------ ---------
<S> <C> <C> <C>
Assets $44.6 $42.9 $87.4
Deposits $24.1 $28.6 $52.7
Market Capitalization(a) $ 6.3 $6.2 $13.1
Banking and Lending Offices 557 571 1,028
Consumer Finance Offices -- 502 502
Households (mm) 1.4 2.7 4.1
Checking Accounts (mm) 0.9 1.6 2.5
Mutual Funds Under Management $ 1.4 $3.6 $ 5.0
Single Family Mortgage
Originations $10.0 $6.1 $16.1
</TABLE>
(a) Based on closing stock prices as of 3/5/97.
Pro forma includes the exercise of GWF options.
- -------------------------------------------------------------------------------
[LOGO] WASHINGTON MUTUAL GREAT WESTERN [LOGO]
<PAGE> 6
LEADING WEST COAST CONSUMER FRANCHISE
- -------------------------------------------------------------------------------
($ in billions)
<TABLE>
<CAPTION>
TOTAL TOTAL MARKET
ASSETS DEPOSITS CAPITALIZATION(a)
------- -------- -----------------
<S> <C> <C> <C>
1 BankAmerica Corporation $250.8 $168.0 $41.9
2 Wells Fargo & Co. 108.9 81.8 28.3
- ---------------------------------------------------------------------------------------
WAMU/GWF 87.5 52.7 13.1
- ---------------------------------------------------------------------------------------
3 Ahmanson & Company (H.F.) 49.9 34.8 4.6
4 Washington Mutual 44.6 24.1 6.3
5 Great Western 42.9 28.6 6.2
6 Golden West Financial 37.7 22.1 4.0
7 U.S. Bancorp 33.3 25.0 7.5
8 UnionBanCal Corp. 29.2 21.5 3.1
</TABLE>
(a) Prices as of 3/5/97. Assets and deposits as of 12/31/96
- -------------------------------------------------------------------------------
[LOGO] WASHINGTON MUTUAL GREAT WESTERN [LOGO]
<PAGE> 7
INDUSTRY LEADERSHIP
- -------------------------------------------------------------------------------
[] #2 mortgage originator in California
[] #3 bank in California in deposits and assets
[] #6 mortgage originator in the United States
[] #7 mortgage servicer in the United States
[] #12 bank in the United States based on assets
- -------------------------------------------------------------------------------
[LOGO] WASHINGTON MUTUAL [LOGO] GREAT WESTERN
<PAGE> 8
STRONG WEST COAST AND FLORIDA FRANCHISES
- ----------------------------------------
[Map of Western U.S. & Florida]
<TABLE>
<CAPTION>
Deposits
State ($B)(a) Share Rank Locations
- ----- -------- ----- ---- ---------
<S> <C> <C> <C> <C>
California $35 9% 3 562
Washington 8 15% 2 189
Oregon 3 10% 3 135
Florida 7 4% 5 140
Other States 1 NA NA 20
</TABLE>
(a) June 30, 1996 deposit data updated for announced
acquisitions through February 26, 1997.
- --------------------------------------------------------
[Washington Mutual Logo] [Great Western Logo]
<PAGE> 9
STRONG DEPOSIT SHARE IN ATTRACTIVE MARKETS (a)
- ----------------------------------------------
<TABLE>
<CAPTION>
California
<S> <C>
BAC 21%
WFC 15%
WAMU/GWF 9%
AHM 8%
UNBC 5%
Washington
BAC 23%
WAMU/GWF 15%
USBC 14%
KEY 11%
WFC 6%
</TABLE>
(a) June 30, 1996 deposit data updated for announced
acquisitions through February 26, 1997.
- --------------------------------------------------------
[Washington Mutual Logo] [Great Western Logo]
<PAGE> 10
STRONG DEPOSIT SHARE IN ATTRACTIVE MARKETS(a)
- -----------------------------------------------------------------------------
Oregon
USBC 33%
WFC 18%
WAMU/GWF 10%
BAC 9%
KEY 9%
Florida
BBI 19%
FTU 17%
NB 12%
STI 10%
WAMU/GWF 4%
(a) June 30, 1996 deposit data updated for announced acquisitions through
February 26, 1997
- -------------------------------------------------------------------------------
[WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO]
<PAGE> 11
NATIONAL CONSUMER ORIGINATION FRANCHISE
[MAP OF UNITED STATES]
<TABLE>
<CAPTION>
Mortgage Consumer
Loan Finance
State Offices Locations GREAT WESTERN:
----- -------- --------- --------------
<S> <C> <C> <C> <C>
California 107 28 [] Retail Mortgage
Washington 30 -- * Wholesale Mortgage
Oregon 13 -- [ ] ARISTAR
Florida 20 35
Other States 123 439 WASHINGTON MUTUAL:
--- --- o Mortgage Loan Offices
Total 293 502
=== ===
</TABLE>
[WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO]
<PAGE> 12
SINGLE FAMILY MORTGAGE LENDING LEADERSHIP
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BAC WAMU/GWF GDW NOB AHM
------ -------- ---- ---- ---
<S> <C> <C> <C> <C> <C>
California(a) 9% 5% 3% 3% 3%
2%
--
7%
<CAPTION>
WAMU/GWF NOB BAC CCR Cont'l
-------- ---- --- --- ------
<S> <C> <C> <C> <C> <C>
Washington(a) 15% 6% 3% 2% 2%
2%
---
17%
</TABLE>
(a) October 1996 data
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[LOGO] WASHINGTON MUTUAL GREAT WESTERN [LOGO]
<PAGE> 13
SINGLE FAMILY MORTGAGE LENDING
LEADERSHIP
- --------------------------------------------------------------------------------
OREGON(a) WEST COAST ORIGINATIONS ($B)(b)
WAMU/GWF 10% WAMU/GWF $ 9
1% $ 3
11% $12
NOB 6% BAC $11
BAC 5% NOB $5
MEL 2% GDW $4
Premier Mortgage 2% AHM $3
(a) OCTOBER 1996 DATA
(b) SOURCE: CALIFORNIA TRW READITRACK
- --------------------------------------------------------------------------------
[LOGO] WASHINGTON MUTUAL GREAT WESTERN [LOGO]
<PAGE> 14
STRONG BUSINESS LINE FIT
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
[] CONSUMER LOAN PRODUCTS [] BUSINESS BANKING PRODUCTS
. Home Equity [LOGO] W . Small Business Lending [LOGO] GW
. Consumer Finance [LOGO] GW . Business Checking [LOGO] GW
. Manufactured Housing [LOGO] W . Community Banking [LOGO] W [LOGO] GW
. Auto/Other [LOGO] W
[] RETAIL BANKING PRODUCTS
[] NON-BANKING SERVICES . Transaction Accounts [LOGO] W [LOGO] GW
. Mutual Funds [LOGO] W [LOGO] GW . Certificates/Savings [LOGO] W [LOGO] GW
. Annuities [LOGO] W [LOGO] GW
. Securities Brokerage [LOGO] W [LOGO] GW [] MORTGAGE LENDING
. Credit Insurance [LOGO] W [LOGO] GW . Single Family [LOGO] W [LOGO] GW
. Residential Construction [LOGO] W
. Multi-Family [LOGO] W
- --------------------------------------------------------------------------------------------------------
</TABLE>
[LOGO] WASHINGTON MUTUAL [LOGO] GREAT WESTERN
<PAGE> 15
- -------------------------------------------------------------------------------
FINANCIAL OVERVIEW
- -------------------------------------------------------------------------------
[LOGO] WASHINGTON MUTUAL [LOGO] GREAT WESTERN
<PAGE> 16
FINANCIAL OVERVIEW
- -------------------------------------------------------------------------------
[] Returns meet or exceed WAMU's requirements:
- Accretive in 1998, double digit accretion in 1999
- Maintains solid capital levels and capital flexibility
- Strong NPA, loss reserve ratios
- Accelerates achievement of WAMU's 5-year plan
- -------------------------------------------------------------------------------
[LOGO] WASHINGTON MUTUAL [LOGO] GREAT WESTERN
<PAGE> 17
ATTRACTIVE EPS ACCRETION(a)
- -------------------------------------------------------------------------------
($ in millions, except per share data)
<TABLE>
<CAPTION>
1997P 1998P 1999P
----- ----- -----
<S> <C> <C> <C>
WAMU Estimated Net Income(b) $471 $556 $623
GWF Estimated Net Income(b) 397 434 470
---- ---- ------
Total Estimated Net Income $868 $990 $1,093
Net Interest Income Pickup 0 68 98
Fee Income Increases 0 36 53
Cost Savings 9 125 204
---- ---- ------
Pro Forma Net Income $877 $1,218 $1,448
Stand Alone EPS $3.84 $4.58 $5.13
PRO FORMA EPS(c) $4.81 $5.71
% Accretion/(Dilution) to First Call 5.1% 11.2%
% EPS Growth 38% 19%
</TABLE>
(a) Excludes anticipated transaction-related charge.
(b) Fist Call estimates for 1997 and 1998. 1999 estimates based on earnings
growth rates of 12% and 10.5% for WAMU and GWF, respectively.
(c) Based on 252.1 million pro forma shares outstanding in 1997, 253.1 million
in 1998, and 253.8 million in 1999.
- ------------------------------------------------------------------------------
[WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO]
<PAGE> 18
STRONG OPERATING FUNDAMENTALS
- --------------------------------------------------------------------------------
($ in millions)
<TABLE>
<CAPTION>
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Earnings $877 $1,218 $1,448
Cash Flow 936 1,277 1,507
ROAA 0.96% 1.20% 1.35%
ROACE 17.4% 22.1% 22.4%
Net Interest Margin 2.90% 2.98% 3.06%
Non-Interest Income/Assets 0.73% 0.74% 0.78%
</TABLE>
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[LOGO] WASHINGTON MUTUAL GREAT WESTERN [LOGO]
<PAGE> 19
ATTRACTIVE PORTFOLIO AND GROWTH OPPORTUNITIES
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
($ in millions)
1998 1999
---- ----
<S> <C> <C>
Planned Loan Origination/Retention:
Residential Single Family $3,600 $4,700
Consumer and Other 750 1,000
------ ------
$4,350 $5,700
====== ======
Net Interest Income Pickup:
Investment of excess capital at 8.00% 11 29
Residential Single Family at risk
adjusted spread of 2.00% 72 94
Consumer and Other at risk adjusted
spread of 4.00% 30 40
------ ------
Total Pre-tax $113 $163
Total After-tax $68 $98
====== ======
</TABLE>
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[LOGO] WASHINGTON MUTUAL GREAT WESTERN [LOGO]
<PAGE> 20
ATTRACTIVE PORTFOLIO AND GROWTH
OPPORTUNITIES
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
$ in millions) 1998 1999
---------- ----------
<S> <C> <C>
Average Excess Capital:
Capital from discontinuing GWF's stock
repurchase program $ 80 $ 213
Capital impact from increasing earnings 56 146
------ ------
Total 136 359
Potential Average Asset Growth
(5% Leverage Ratio):
Excess Common Equity Capital 2,726 7,185
Additional $125 mm of trust preferred
stock 2,500 2,500
------ ------
Total $5,226 $9,685
</TABLE>
- -------------------------------------------------------------------------------
[WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO]
<PAGE> 21
FEE INCOME
- --------------------------------------------------------------------------------
($ in millions)
<TABLE>
<CAPTION>
1998 1999
---- ----
<S> <C> <C>
Retail Banking Fees:
Revised overdraft policies and pricing to
WAMU product $31 $39
Implementation of WAMU free checking 12 26
Improved sales/fees in financial services
subsidiaries 13 16
Enhanced fees from expanded loan production 4 7
---- ----
Total Pre-tax $60 $88
Total After-tax $36 $53
</TABLE>
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[LOGO] WASHINGTON MUTUAL GREAT WESTERN [LOGO]
<PAGE> 22
SUBSTANTIAL CONSOLIDATION ECONOMIES
- --------------------------------------------------------------------------------
($ in millions)
<TABLE>
<CAPTION>
1997 1998 1999
-------------------- -------------------- -------------------
% OF GWF % OF GWF % OF GWF
AMOUNT OP. EXP(a) AMOUNT OP. EXP(a) AMOUNT OP. EXP(a)
------ ---------- ------ --------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Administration/Finance $8 6% $52 41% $65 51%
Lending -- -- 15 11 69 49
Corporate Operations -- -- 56 25 96 43
Retail Banking 7 2 77 21 99 27
Subsidiaries -- -- 8 5 11 7
--- -- ---- -- ---- --
Total Pretax Cost Savings $15 2% $208 23% $340 38%
</TABLE>
(a) Based on budgeted 1997 expenses
- --------------------------------------------------------------------------------
[LOGO] WASHINGTON MUTUAL GREAT WESTERN [LOGO]
<PAGE> 23
STRONG CAPITAL RATIOS
- --------------------------------------------------------------------------------
($ IN MILLIONS; EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
At December 31, 1996
-------------------------------------------
WAMU GWF ADJUSTMENTS PRO FORMA
---- ------ ----------- ---------
<S> <C> <C> <C> <C>
Trust Preferred $0.0 $400.0(a) $0.0 $400.0
Preferred Equity 118.1 165.0 0.0 283.1
Common Equity 2,279.8 2,430.2 (222.3)(b) 4,487.7
-------- -------- ------- --------
Total Equity $2,397.9 $2,595.2 $(222.3) $4,770.8
======== ======== ======= ========
Book Value Per Share $19.30 $17.63 -- $18.22
Tangible Book Value
Per Share 18.17 15.56 -- 16.52
Total Equity/Assets 5.38% 6.05% -- 5.44%
Tangible Equity/Assets 5.10 5.42 -- 4.99
Tangible Common
Equity/Assets 4.84 5.03 -- 4.67
</TABLE>
(a) Includes $300 million issued in January 1997
(b) Assumes full exercise of outstanding options
- --------------------------------------------------------------------------------
[LOGO] WASHINGTON MUTUAL GREAT WESTERN [LOGO]
<PAGE> 24
STRONG ASSET QUALITY AND RESERVES
- ------------------------------------------------------------------------------
($ in millions)
<TABLE>
<CAPTION>
At December 31, 1996
-----------------------------------------
WAMU GWF Adjustments Pro Forma
---- --- ----------- ---------
<S> <C> <C> <C> <C>
Non-Performing Loans $226.4 $352.0 - $578.4
Real Estate Owned 103.1 119.8 - 229.9
------ ------ ----------- ---------
Non-Performing Assets $329.5 $471.8 - $808.3
====== ====== =========== =========
% of Assets 0.74% 1.10% - 0.92%
Loan Loss Reserves $363.4 $313.7 $100.0 $777.1
Reserves/NPLs 160.5% 89.1% - 134.4%
- -------------------------------------------------------------------------------
</TABLE>
[LOGO] WASHINGTON MUTUAL GREAT WESTERN [LOGO]
<PAGE> 25
<TABLE>
<CAPTION>
TRANSACTION CHARGES DETAIL
- --------------------------------------------------------------------------------
($ in millions)
<S> <C>
Additional Loan Loss Reserves $ 100
Severance and Management Payments 145
Facilities and Equipment 106
Other Charges 92
-----
Total Charges $ 443
Tax Effect (125)
-----
Net Charges $ 318
=====
</TABLE>
- --------------------------------------------------------------------------------
[WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO]
<PAGE> 26
ACCELERATES ACHIEVEMENT OF 5-YEAR GOALS
- -----------------------------------------------------------------------------
5-Year Goal
-------------------------------------------------
ROACE 18.0%
ROAA 1.20
Efficiency 50
NPAs/Assets <1.00
Reserves/NPLs <1.00
Equity/Assets <6.00
- -----------------------------------------------------------------------------
[Washington Mutual Logo] [Great Western Logo]
<PAGE> 27
- -----------------------------------------------------------------------------
WAMU'S POSITIONING
- -----------------------------------------------------------------------------
[Washington Mutual Logo] [Great Western Logo]
<PAGE> 28
STRONG ACQUISITION RECORD
- -----------------------------------------------------------------------------
[MAP OF WESTERN U.S.]
1987(a)
Assets $5.7B
Loans 3.0B
Deposits 3.5B
Equity 316.9mm
Stock Price $6.28
Market Capitalization 390.0mm
[MAP OF WESTERN U.S.]
1996(a)
Assets $44.6B
Loans 30.3B
Deposits 2.1B
Equity 2.4B
Stock Price $43.31
Market Capitalization 5.1B
(a) As of and for the latest twelve months ended 12/31/87 and 12/31/96
- -------------------------------------------------------------------------------
[WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO]
<PAGE> 29
AMERICAN INTEGRATION
- -------------------------------------------------------------------------------
- -- Closed transaction on time
- -- Integration ahead of schedule
- -- Effectively capitalizing on product opportunities with ASB customers
- -- Consumer banking strategy showing clear signs of success
- 15,000 net new checking accounts opened in first two months of 1997, a
500% increase over 1996
- Majority of checking accounts opened represented new households
- Residential mortgage originations in 1997 on pacc to exceed 1996 record of
$5.7 billion
- -- Strengthening of senior and middle management
- -------------------------------------------------------------------------------
[WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO]
<PAGE> 30
PROVEN CONSUMER MARKETING STRATEGY
----------------------------------
Strategies Results
---------- -------
- Offer competitive - Increase in households
consumer-oriented served
products
- Employ aggressive [arrow] - Increase in checking
marketing techniques accounts
- Increase customer - Increase in fee income
contact; multiple
delivery channels
- Cross sell customers - Increase in consumer
loan originations
________________________________________________________________________________
[WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO]
<PAGE> 31
LEVERAGE OF AMERICAN'S FRANCHISE
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1993 1994 1995 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Retail Checking accounts
-American ............. 568,572 611,482 743,852 863,837
-WAMU ................. 329,978 393,845 489,047 608,364
<CAPTION>
1993 1994 1995 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Households Served
-American............ 1,170,402 1,197,245 1,322,677 1,423,341
-WAMU ............... 623,076 652,643 737,257 830,425
</TABLE>
- --------------------------------------------------------------------------------
[LOGO] WASHINGTON MUTUAL GREAT WESTERN [LOGO]
<PAGE> 32
_______________________________________________________________________________
EXECUTION STRATEGY
_______________________________________________________________________________
[WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO]
<PAGE> 33
ORGANIZATIONAL AND OPERATIONAL ISSUES
- -------------------------------------------------------------------------------
[ ] WILL USE THE GW NAME IN CALIFORNIA
[ ] COMBINE BACK OFFICE, BUILD AROUND GW DISTRIBUTION NETWORK IN CALIFORNIA
[ ] EXPECT TO CONVERT SYSTEMS WITHIN SIX MONTHS OF CLOSING
[ ] UTILIZE WAMU'S PLATFORM TO LEVERAGE GW'S FRANCHISE
[ ] CONSOLIDATE MORTGAGE OPERATIONS
[ ] SELECTIVE EXPANSION OF ARISTAR NETWORK
[ ] COMBINE ASSET MANAGEMENT COMPANIES
- -------------------------------------------------------------------------------
[LOGO] WASHINGTON MUTUAL GREAT WESTERN [LOGO]
<PAGE> 34
SYSTEMS AND PRODUCTIVITY ENHANCEMENTS
- -----------------------------------------------------------------------------
[] New branch and lending front end systems
[] New products:
- Combined statement, cash card
- Customer relationship package
- Pay by phone, home banking (Integrion)
[] New productivity tools
[] Year 2000 compliance systems (e.g., latest release of HOGAN)
[] WAMU modeling tools, direct mail
- ------------------------------------------------------------------------------
[WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO]
<PAGE> 35
CONFIDENCE IN EXECUTION
- --------------------------------------------------------------------------------
- -- Core deposit/mortgage lending systems are the same
- -- Network infrastructure is the same
- -- WAMU partnerships with:
- IBM
- EDS
- ALLTEL
- -- Track record of integrating within 6 months of close
- --------------------------------------------------------------------------------
[WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO]
<PAGE> 36
- -----------------------------------------------------------------------------
SUMMARY
- -----------------------------------------------------------------------------
[Washington Mutual Logo] [Great Western Logo]
<PAGE> 37
SUMMARY
- -------------------------------------------------------------------------------
[] Premier Consumer Banking Franchise
[] Creation of Shareholder Value
[] Low Risk Execution
- -------------------------------------------------------------------------------
[LOGO] WASHINGTON MUTUAL GREAT WESTERN [LOGO]
<PAGE> 38
STOCK MARKET OUTPERFORMANCE
- -----------------------------------------------------------------------------
4/1/90-12/31/96 COMPARATIVE RETURN(a)
[Percentage Chart]
34%
29%
28%
26%
25%
24%
22%
19%
19%
16%
15%
14%
WAMU NOB CCI WFC BAC KEY USBC NB ONE S&P AHM GWF
Source: Bloomberg
(a) Total return assumes reinvestment of dividends
- -------------------------------------------------------------------------------
[LOGO] WASHINGTON MUTUAL GREAT WESTERN [LOGO]
