SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 31, 1996
WASHINGTON MUTUAL, INC.
(Exact name of the Registrant as specified in its charter)
Washington 0-25188 91-1653725
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1201 Third Avenue, Seattle, Washington 98101
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (206) 461-2000
N/A
(Former name or former address, if changed since last report)
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events.
As of November 30, 1996, Utah Federal Savings Bank of Ogden, Utah merged with
and into Washington Mutual Bank fsb, the federally-chartered savings bank
subsidiary of Washington Mutual, Inc. (Washington Mutual).
For the month of December 1996, the combined operations Utah Federal Savings
Bank and Washington Mutual were interest income of $274.0 million and a net loss
of $162.8 million.
Item 7. Financial Statements and Exhibits.
(c) Exhibit 99.1 is a copy of Washington Mutual's News Release dated January 21,
1997.
<PAGE>
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: January 22, 1997 By: /s/ Ruthanne M. King
-------------------
Ruthanne M. King, Vice President and
Assistant Controller
<PAGE>
Washington Mutual, Inc.
List of Exhibits
Exhibit Page
- --------------------------------------------------------------------------
99.1 News release dated January 21, 1997................................
<PAGE>
Media Contact: Bill Ehrlich
.........1-800-228-9268
.........(206) 461-2204
Investor Contact: JoAnn DeGrande January 21, 1997
(206) 461-3186 FOR IMMEDIATE RELEASE
Washington Mutual Announces Fourth-Quarter; Year-End Earnings,
Increases Cash Dividend on Common Stock
SEATTLE -- Washington Mutual, Inc. (Nasdaq: WAMU) today announced 1996 earnings
of $114.3 million, or 85 cents per share (fully diluted), compared with $289.9
million, or $2.42 per share (fully diluted) in 1995. Earnings for the year were
reduced $294.6 million by a previously announced after-tax charge of $209.8
million ($205.8 million of which was taken during the fourth quarter and $4.0
million during the third quarter) for transaction-related expenses resulting
from the company's merger with Keystone Holdings, Inc. and acquisition of
American Savings Bank, and by a third quarter after-tax charge of $84.8 million
representing the company's portion of the one-time assessment paid by savings
institutions and banks nationally to re-capitalize the Savings Association
Insurance Fund (SAIF). For the fourth quarter, earnings were reduced to a loss
of $87.9 million or 81 cents per share by the above referenced charge for
transaction-related expenses. (All financial results have been restated to
reflect the mergers with Keystone Holdings and Western Bank, both accounted for
as poolings of interests.)
The company's board of directors declared an increased cash dividend on
common stock of 25 cents per share, up from 24 cents the previous quarter. The
board also declared dividends of 57 cents per share on the series C preferred
stock (Nasdaq:WAMUO) and 47.5 cents per share on the series E preferred stock
(Nasdaq: WAMUM). Dividends on common and preferred stock are payable Feb. 14,
1997, to shareholders of record on Jan. 31, 1997.
"The results of the fourth quarter of 1996 topped off the most
successful 12-month period in our history as Washington Mutual produced strong
operating results and record loan originations; significantly expanded its
commercial banking business; and completed the acquisition of American Savings
Bank, our largest such transaction to date," said Kerry Killinger, the company's
chairman, president and chief executive officer.
"During the year, we made excellent progress in the execution of our
key business strategies: to expand our consumer banking operations throughout
the West; to build our commercial banking business; to re-mix our balance sheet
by replacing longer-term fixed-rate assets with adjustable-rate loans; to manage
credit quality; and to seek ways to operate more efficiently. These achievements
provide an excellent foundation for Washington Mutual heading into 1997."
Fourth-Quarter and Year-End Financial Highlights
Although net income was down due to one-time charges, net interest
income for the fourth quarter was up 13 percent to $307.6 million from $272.0
million a year earlier. For the year, the company's larger asset base and an
improved spread produced net interest income of $1.2 billion, up from $992.7
million for 1995. The spread in the fourth quarter was 2.76 percent compared
with 2.55 percent for the same period a year earlier. The spread for the year
was 2.75 percent, up from 2.53 percent for 1995.
The stronger housing market throughout the West helped the company
establish a new record for total loan originations during the fourth quarter and
for the year. Total lending during the most recent quarter was $3.6 billion, up
from $2.9 billion for fourth quarter 1995, and for the year was $13.6 billion,
compared with $9.4 billion in 1995.
In the fourth quarter, residential lending, the largest component of
loan originations, was $2.6 billion, up from $2.2 billion a year ago. During the
quarter, loans for home purchases increased to $1.6 billion, from $1.1 billion a
year ago. Meanwhile, refinancing activity decreased to $1.0 billion, from $1.1
billion in last year's fourth quarter.
For the year, residential loan originations totaled $9.9 billion, up
from $6.8 billion last year. Of these annual totals, loans to purchase homes
accounted for $5.9 billion and refinancing activity produced $4.0 billion in
1996, compared with the previous year's $3.9 billion and $2.9 billion,
respectively. In addition, of the total residential loans originated in 1996,
approximately 63 percent were adjustable rate. Without the addition of American
Savings Bank, adjustable-rate loan originations would have been 35 percent.
Favorable interest rates and generally positive regional economies in
the West also had a positive effect on residential construction and consumer
lending in this year's fourth quarter. Residential construction originations
were $312.9 million during the quarter just ended, up from $261.6 million in
fourth quarter 1995; and were $1.3 billion for the year, compared with $935.8
million in 1995. Consumer loan originations increased to $347.2 million for the
quarter versus $250.6 million a year ago; and were $1.3 billion in 1996, up from
$997.0 million last year.
With the acquisition of American Savings Bank and its predominantly
adjustable-rate residential loan portfolio, the company significantly reduced
its sensitivity to movements in interest rates. Prior to the acquisition,
adjustable-rate residential mortgage loans made up only 45 percent of Washington
Mutual's residential loan portfolio, compared with 75 percent after the
transaction was completed. Killinger said that the company continues to sell on
the secondary market the majority of the fixed-rate residential loans it
originates, while generally retaining the servicing rights.
Washington Mutual's total assets were $44.6 billion at Dec. 31, 1996, up
from $42.0 billion at year-end 1995. The increase was primarily the result of
growth in the company's loan portfolio. Total deposits were $24.1 billion at
Dec. 31, 1996, down slightly from $24.5 billion at the end of 1995. Annuities
underwritten by WM Life Insurance Co., Washington Mutual's insurance
underwriting subsidiary, increased $9.6 million during the quarter to $878.1
million, compared with $855.5 million at year-end 1995. The insurance subsidiary
had pretax operating income (before amortization of intangible assets and
intercompany eliminations) of $16.3 million for the year, up from $14.3 million
in 1995.
Assets of the Composite Group of mutual funds, managed by the company's
investment management firm, increased slightly to $1.4 billion. Pre-tax
operating income (before amortization of intangible assets and intercompany
eliminations) for the securities subsidiaries increased to $4.5 million in the
fourth quarter of 1996, from $4.3 million in the fourth quarter in 1995, and to
$19.1 million for the year just ended versus $15.1 million in 1995.
Operating expenses, which included a $152.8 million pretax
transaction-related charge, were $340.8 million. Without the charge, operating
expenses during the fourth quarter would have been $188.0 million. For the year,
operating expenses were $1.0 billion. Net of SAIF and transaction-related
expenses, operating expenses were $743.0 million, compared with $700.5 million
in 1995.
The company's operating efficiency ratio (other expense as a percentage
of net interest income and other income) was 89.0 percent during fourth quarter
compared to 53.5 percent for fourth quarter 1995. The operating efficiency ratio
for the year was 70.7 percent versus 58.3 percent for 1995.
Total nonperforming assets were $329.4 million at Dec. 31, 1996,
compared with $323.1 million at Sept. 30, 1996, and $338.9 million at year-end
1995. The company's larger asset size helped keep the ratio of total
nonperforming assets to total assets at 0.74 percent at Dec. 31, 1996, the same
level as at the end of the third quarter, and down from 0.81 percent at year-end
1995.
As was previously announced and as part of transaction-related charges,
the company added $125.0 million (pretax) to American's reserve for loan losses
to conform more closely to Washington Mutual's existing credit practices.
Exclusive of this addition, the quarterly provision for loan losses of $18.4
million was up slightly from $17.1 million in third quarter 1996. Loan loss
reserves increased to $363.4 million at Dec. 31, 1996, versus $234.3 million at
Sept. 30, 1996, and at year-end 1996, were 110.3 percent of nonperforming assets
and 160.5 percent of nonperforming assets, less real estate owned.
At Dec. 31, 1996, stockholders' equity stood at $2.4 billion, or 5.38
percent of assets. In addition, capital ratios of the company's banking
subsidiaries continued to exceed the FDIC's requirements for classification as
"well-capitalized" institutions, the highest regulatory standard.
American Savings Bank Acquisition Completed
Washington Mutual completed its merger with Keystone Holdings on Dec. 20
and significantly expanded the company's West Coast banking franchise. Through
Keystone's primary banking subsidiary, American Savings Bank, the company
expanded into the nation's most populous state, California, and immediately
assumed the No. 2 position in the state's residential mortgage market.
Washington Mutual holds the No. 1 position in both Washington and Oregon.
With the addition of American's operations, the company now operates
more than 500 offices in nine western states. American is a wholly owned
subsidiary of Washington Mutual, Inc., and continues to operate under its own
name in California, Arizona, Nevada and Colorado.
"We are ahead of schedule on our original transition plan and are
optimistic that we will achieve the four goals for the acquisition," Killinger
said. The goals include having the company's consumer banking strategy in place
at American by mid-year 1997, building on American's strong residential lending
operations, consolidating the administrative and operational areas of the two
companies where appropriate, and positioning American for growth through
potential future acquisitions in California.
Other Market Expansion
In late November, the company completed its acquisition of Utah Federal
Savings Bank, of Ogden, Utah, improving the company's competitive position in
the state. The transaction had a total value of $15.1 million and added three
financial centers and three loan offices to the company's Utah presence.
On January 15, 1997, Washington Mutual completed the acquisition of
another Utah-based institution, United Western Financial Group, Inc., of Salt
Lake City and its United Savings Bank and Western Mortgage Loan subsidiaries.
United Western reported consolidated assets of $414.9 million and deposits of
$294.4 million at Sept. 30, 1996.
The purchase of United Western, for $79.5 million in cash, added nine
locations to Washington Mutual's operations. The company now operates 28
financial centers and five loan centers and is one of the leading mortgage
lenders in the state of Utah. "We entered Utah in February 1995 with the
intention of some day being the state's No. 1 residential mortgage lender and
Utahns' top choice for consumer-oriented financial products and services," said
Killinger. "These acquisitions have placed us in a strong position to achieve
that goal even sooner than we originally expected."
In addition to growth through acquisitions, the company's focus on
internal growth continued in the fourth quarter and led to an impressive
increase in its checking account base for the year. Net of acquisitions and
exclusive of American Savings Bank, the company's banking subsidiaries during
the fourth quarter added 31,520 new checking accounts, considered the core
account of consumer banking. For the year, they added 116,434 such accounts.
These new account openings produced a net increase of 24.4 percent in checking
account base from Jan. 1, 1996, through the end of the year.
"Our consumer banks will continue to emphasize checking accounts as the
primary means of attracting new customers in our market area," Killinger said.
"Checking accounts provide a source of low-cost deposits and additional fee
income. And, as we envisioned, our noninterest-bearing checking account has
generated demand for our other products and services."
Growth In Commercial Banking
Commercial lending originations increased as well with the Enterprise
Bank and Western Bank divisions posting record volume for loan originations in
the fourth quarter. For the period, the two commercial banking divisions
originated $89.8 million of mostly adjustable-rate commercial loans, compared
with $48.0 million in last year's fourth quarter. For the year, the divisions
originated $348.4 million in 1996, versus $167.8 million in 1995.
In 1996, the commercial banking division opened 14 new locations (known as
business banking centers) that focus exclusively on commercial banking clients
and two full-service community banking offices.
New Executives; Board Members Named
In light of the company's expanding operations, Killinger announced on
Jan. 6 that Washington Mutual's five-person executive committee would expand by
two new members.
Joining the committee and reporting to Killinger are new members Craig
S. Davis, formerly executive vice president of American for mortgage origination
and ASB's nonbanking subsidiaries; and Steven P. Freimuth, formerly senior vice
president of lending operations for Washington Mutual Bank. Both are now
executive vice presidents of Washington Mutual, Inc.
Davis, 45, is based in Seattle and has responsibility for residential
mortgages originated through American's 68 loan offices, as well as through
independent mortgage brokers in California, Arizona, Nevada and Colorado. In
addition, he will oversee all of the company's securities brokerage, mutual fund
management and insurance agency operations.
Freimuth, 40, will be responsible for lending administration for all of
Washington Mutual's banking subsidiaries and will oversee several major areas,
including loan servicing, appraisal, loan underwriting and closing.
In addition, the board of directors elected two new members, David
Bonderman and J. Taylor Crandall, following the completion of the company's
merger with Keystone Holdings, Inc., and acquisition of its American Savings
Bank subsidiary. The addition of Bonderman, 54, and Crandall, 42, brings
Washington Mutual's total board membership to 15.
Bonderman, a principal and general partner of TPG Partners, L.P., of
Fort Worth, was previously chief operating officer of the Robert M. Bass Group,
Inc. (RMBG), which now does business as Keystone, Inc. Crandall is chief
financial officer and vice president of Keystone, Inc., and president and
director of Acadia MGP, Inc.
In other news of the fourth quarter, Washington Mutual called for
redemption, the company's noncumulative convertible perpetual perferred stock,
Series D. Based on the conversion price, each share of Series D was convertible
into approximately 3.8709 shares of common stock. The 1,398,904 shares of Series
D were converted into approximately 5.4 million shares of common stock and 1,096
shares were redeemed.
Outlook
"As we enter 1997, we bring excellent momentum from our performance
last year, as well as continued commitment to the execution of our business
plan. We will continue to look in all markets of the West -- both existing and
new -- for expansion opportunities that meet our criteria and create long-term
value for our shareholders," Killinger said.
With a history dating back to 1889, Washington Mutual is a regional
financial services company that provides a diversified line of products and
services to consumers and small- to mid-sized businesses. Its subsidiaries
provide consumer and commercial banking services, securities brokerage, mutual
fund management, property/casualty and life insurance sales, and underwriting
for insurance annuities. At Dec. 31, 1996, Washington Mutual and its
subsidiaries had consolidated assets of $44.6 billion. The company operates more
than 500 offices in nine western states.
# # #
Editor's Note: Washington Mutual's press releases are available at no charge
through the News On Demand Plus System. For a menu of Washington Mutual press
releases or to retrieve a specific release, call 1-800-329-6236. On the
Internet, press releases may be accessed at
http://www.businesswire.com/cnn/wamu.htm
<PAGE>
Washington Mutual, Inc.
Consolidated Statements of Income
(unaudited)
<TABLE>
<CAPTION>
Quarter ended Twelve months ended
December 31, December 31,
- -----------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands, except for per share amounts) 1996 1995 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Income
Loans $582,210 $536,369 $ 2,139,860 $ 2,061,801
Available-for-sale securities 174,989 128,737 782,737 381,633
Held-to-maturity securities 49,509 100,755 220,673 409,063
Notes Receivable - 2,191 58,841
-
Cash equivalents 4,290 2,317 6,313 4,748
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest income 810,998 770,369 3,149,583 2,916,086
Interest Expense
Deposits 261,778 292,405 1,060,823 1,134,818
Borrowings 241,596 205,942 897,753 788,618
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest expense 503,374 498,347 1,958,576 1,923,436
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income 307,624 272,022 1,191,007 992,650
Provision for loan losses 143,374 17,447 201,512 74,987
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 164,250 254,575 989,495 917,663
Other Income
Depositor fees 28,113 23,656 102,597 79,017
Securities, annuity & other service fees 12,885 12,994 53,350 49,679
Loan servicing fees 9,534 8,265 41,303 29,315
Other operating income 10,658 8,746 36,462 31,035
Gain on sale of loans 8,536 3,834 23,759 1,717
Gain (loss) on sale of other assets 5,716 (1,381) 1,793 (655)
Loss on sale of covered assets - (37,399)
- -
FDIC assistance on covered assets - 55,630
- -
- -----------------------------------------------------------------------------------------------------------------------------------
Total other income 75,442 56,114 259,264 208,339
Other Expense
Salaries and employee benefits 85,959 79,519 336,065 313,304
Occupancy and equipment 32,031 28,716 120,623 111,381
Regulatory assessments 6,638 13,785 43,171 54,909
SAIF special assessment - 124,193
- -
Data processing fees 11,967 12,011 40,733
36,538
Other operating expense 41,434 31,771 163,196 145,394
Transaction-related expense 152,821 158,121
- -
Amortization of goodwill and other intangible assets 6,791 6,969 27,672 28,306
Real estate owned (REO) operations, inclusive of write-downs 3,121 2,719 11,530 10,682
- -----------------------------------------------------------------------------------------------------------------------------------
Total other expense 340,762 175,490 1,025,304 700,514
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes (101,070) 135,199 223,455 425,488
Income taxes (benefits) (16,202) 43,326 95,607 119,793
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before minority interest (84,868) 91,873 127,848 305,695
Minority interest in earnings of consolidated subsidiaries 3,066 3,549 13,570 15,793
- -----------------------------------------------------------------------------------------------------------------------------------
Net Income (Loss) ($ 87,934) $ 88,324 $ 114,278 $ 289,902
===================================================================================================================================
Net Income (Loss) Attributable to Common Stock ($ 92,539) $ 83,678 $ 95,859 $ 271,318
===================================================================================================================================
Net income (loss) per common share:
Primary ($0.81) $0.75 $0.85 $2.47
Fully Diluted ($0.81) 0.73 0.85 2.42
Financial Ratios
Return on average assets (0.80)% 0.88% 0.27% 0.73%
Return on average equity (14.71) 16.63 4.89 13.44
Return on average common equity (15.91) 17.12 4.70 13.73
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(unaudited)
<TABLE>
<CAPTION>
Quarter ended Twelve months ended
December 31, December 31,
- -----------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands, except for per share amounts) 1996 1995 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Data Used To Compute Per Share Amounts
Net income ($87,934) $88,324 $114,278 $289,902
Preferred stock dividends:
Noncumulative Perpetual, Series C (1,569) (1,596) (6,276) (6,384)
Noncumulative Perpetual, Series E (936) (950) (3,743) (3,800)
Noncumulative Convertible Perpetual, Series D (2,100) (2,100) (8,400) (8,400)
===================================================================================================================================
Net income available to primary common stock ($92,539) $83,678 $95,859 $271,318
===================================================================================================================================
Net income ($87,934) $88,324 $114,278 $289,902
Preferred stock dividends:
Noncumulative Perpetual, Series C (1,569) (1,596) (6,276) (6,384)
Noncumulative Perpetual, Series E (936) (950) (3,743) (3,800)
===================================================================================================================================
Net income available to fully diluted common stock ($90,439) $85,778 $104,259 $279,718
===================================================================================================================================
Average common shares used to calculate earnings per share:
Primary 113,879,104 111,596,473 112,858,781 109,944,477
Fully diluted 118,564,782 117,015,720 118,335,611 115,363,724
Net Interest Spread
Yield on loans and note receivable 7.90% 8.34% 7.95% 7.97%
Yield on investments 6.95 6.92 7.05 7.06
- -----------------------------------------------------------------------------------------------------------------------------------
Combined yield on earning assets 7.60 7.85 7.64 7.70
Cost of deposits 4.33 4.81 4.41 4.67
Cost of borrowings 5.53 6.16 5.61 6.11
- -----------------------------------------------------------------------------------------------------------------------------------
Combined cost of funds 4.84 5.29 4.89 5.17
===================================================================================================================================
Net interest spread 2.76% 2.55% 2.75% 2.53%
===================================================================================================================================
Net interest margin 2.91% 2.74% 2.89% 2.62%
Average Balances
Loans and note receivable $29,393.1 $25,088.3 $26,903.2 $26,601.5
Investments 13,055.5 13,253.3 14,327.2 11,260.0
- -----------------------------------------------------------------------------------------------------------------------------------
Total earning assets 42,448.6 38,341.6 41,230.4 37,861.5
Deposits 24,026.7 23,781.7 24,046.6 24,280.8
Borrowings 17,057.6 13,189.7 15,977.8 12,897.0
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest bearing liabilities 41,084.3 36,971.4 40,024.4 37,177.8
Total assets 44,113.3 40,265.6 43,001.9 39,702.6
Stockholders' equity 2,391.3 2,124.3 2,336.7 2,157.0
</TABLE>
<PAGE>
Washington Mutual, Inc.
Consolidated Statements of Financial Position
(unaudited)
<TABLE>
<CAPTION>
Dec. 31, Dec. 31,
(dollars in thousands, except for per share amounts) 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 831,063 $ 983,833
Trading account securities 1,647 238
Available-for-sale securities 9,111,274 12,154,725
Held-to-maturity securities 2,860,347 3,197,720
Loans, net of allowance for loan losses 30,103,386 24,109,136
Loans held for sale 227,390 83,704
Real estate owned 103,111 125,101
Bank premises and equipment 482,391 452,743
Goodwill and other intangible assets 133,509 161,127
Other assets 697,807 758,295
- --------------------------------------------------------------------------------------------------------------------------------
Total assets $44,551,925 $42,026,622
================================================================================================================================
Liabilities
Deposits:
Checking accounts $ 2,979,962 $ 2,776,329
Savings and money market accounts 6,842,061 6,573,543
Time certificates 14,258,118 15,113,088
- --------------------------------------------------------------------------------------------------------------------------------
Total deposits 24,080,141 24,462,960
Annuities 878,057 855,503
Federal funds purchased 1,052,000 433,420
Securities sold under agreements to repurchase 7,835,453 7,984,756
Advances from the Federal Home Loan Bank 7,241,492 4,715,739
Other borrowings 676,986 590,217
Other liabilities 389,908 362,323
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities 42,154,037 39,404,918
Minority interest - 80,000
Stockholders' Equity
Preferred stock, no par value: 10,000,000 shares authorized -
4,722,500 and 6,122,500 shares issued and outstanding - -
Common stock, no par value: 350,000,000 shares authorized -
126,142,285 and 119,687,860 shares outstanding - -
Capital surplus 951,240 920,406
Valuation reserve for available-for-sale securities 41,666 188,715
Retained earnings 1,404,982 1,432,583
- --------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 2,397,888 2,541,704
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $44,551,925 $42,026,622
================================================================================================================================
Book value per common share $19.30 $20.70
Tangible book value per common share 18.17 19.32
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(unaudited)
<TABLE>
<CAPTION>
Quarter ended Twelve months ended
December 31, December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
(dollars in millions) 1996 1995 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Loan Volume
Loan originations by property type:
Residential real estate $2,617.5 $2,224.8 $9,947.8 $6,821.4
Residential construction 312.9 261.6 1,286.3 935.8
Consumer 347.2 250.6 1,288.3 997.0
Apartment buildings 151.7 103.4 504.5 348.9
Other commercial real estate 83.7 51.3 267.1 167.0
Commercial 89.8 48.0 348.4 167.8
- -----------------------------------------------------------------------------------------------------------------------------------
Total loan originations 3,602.8 2,939.7 13,642.4 9,437.9
Loan purchases 16.9 173.1 278.7 338.1
----------------------- --------------------
Total loan volume $3,619.7 $3,112.8 $13,921.1 $9,776.0
===================================================================================================================================
Nonbanking Subsidiary Pretax Operating Income
Securities $ 4.5 $4.3 $19.1 $ 15.1
Insurance 4.5 3.4 16.3 14.3
Travel and other 4.5 (0.4)
- -
- -----------------------------------------------------------------------------------------------------------------------------------
Net income before taxes, amortization of goodwill and other
intangible assets, and elimination of intercompany transactions $9.0 $7.7 $39.9 $29.0
===================================================================================================================================
Dec. 31, Sep. 30, June 30, Dec. 31,
1996 1996 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
Interest Sensitivity
One-year interest sensitivity using principal balances
as a percentage of total assets (3.4)% (1.0)% n.a. (2.6)%
Capital Adequacy
Washington Mutual, Inc.:
Stockholders' equity ratio 5.38% 5.54% 5.21% 6.05%
Tangible stockholders' equity ratio 5.10 5.24 4.88 5.69
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(unaudited)
<TABLE>
<CAPTION>
Dec. 31, Sep. 30, June 30, Dec. 31,
(dollars in millions) 1996 1996 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Reserve For Loan Losses
Balance at beginning of quarter $234.3 $234.3 $232.9 $238.7
Provision for loan losses 143.4 17.1 20.1 17.4
Reserves charged off, net of recoveries (15.4) (17.1) (18.7) (20.8)
Reserves added through business combinations 1.1 - - -
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at end of quarter $363.4 $234.3 $234.3 $235.3
==================================================================================================================================
Allocated reserves:
Apartment buildings and other commercial real estate $ 47.7 $ 21.6 $ 18.0 $ 16.5
Residential construction - 0.2 0.2 0.1
Commercial 1.4 1.7 - -
- ----------------------------------------------------------------------------------------------------------------------------------
Total allocated reserves 49.1 23.5 18.2 16.6
Unallocated reserves 314.3 210.8 216.1 218.7
- ----------------------------------------------------------------------------------------------------------------------------------
Total reserve for loan losses $363.4 $234.3 $234.3 $235.3
==================================================================================================================================
Reserve for loan losses as a percentage of:
Nonperforming assets 110.33% 72.53% 72.48% 69.42%
Nonperforming assets, less real estate owned 160.52 108.33 110.43 110.04
Loans By Collateral Type
Residential real estate $ 22,660.7 $ 20,977.2 $ 19,339.9 $17,303.3
Residential construction 723.6 669.0 634.4 615.8
Apartment buildings 2,558.8 2,473.9 2,433.1 2,199.2
Other commercial real estate 1,252.2 1,258.8 1,346.7 1,288.4
Consumer 3,158.7 3,056.9 2,846.0 2,841.8
Commercial 340.2 295.3 270.4 179.6
Loan loss reserves (363.4) (234.3) (234.3) (235.3)
- -----------------------------------------------------------------------------------------------------------------------------------
Total loans $30,330.8 $28,496.8 $26,636.2 $24,192.8
==================================================================================================================================
Nonperforming Assets
Nonaccrual assets $226.4 $ 216.3 $ 212.1 $213.8
REO:
REO 110.1 113.4 117.9 135.2
Reserve for losses (7.1) (6.6) (6.8) (10.1)
- ----------------------------------------------------------------------------------------------------------------------------------
Total REO 103.0 106.8 111.1 125.1
- ----------------------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $329.4 $323.1 $323.2 $338.9
===================================================================================================================================
Nonperforming assets by collateral type:
Residential real estate $ 253.2 $ 241.1 $ 237.8 $235.5
Residential construction 10.9 8.8 8.2 10.2
Apartment buildings 22.2 27.3 34.3 52.7
Other commercial real estate 25.0 35.5 35.8 38.6
Consumer 24.1 16.0 13.2 11.2
Commercial 1.1 1.0 0.7 0.8
Reserve for REO losses (7.1) (6.6) (6.8) (10.1)
- ----------------------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $329.4 $323.1 $323.2 $338.9
===================================================================================================================================
As a percentage of total loans 1.09% 1.13% 1.21% 1.40%
As a percentage of total assets 0.74 0.74 0.76 0.81
Troubled Debt Restructurings $111.7 $95.1 $78.5 $ 90.6
As a percentage of total loans 0.37% 0.33% 0.29% 0.37%
As a percentage of total assets 0.25 0.22 0.18 0.22
</TABLE>
<PAGE>
Supplemental Financial Data
For the year ending December 31, 1996
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Washington American Keystone SAIF &
Mutual, Savings Holdings & Transaction-
Inc.* Bank Adjustments Sub-total related exp. Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Summary Income Statement
Interest income $1,685,374 $1,460,176 $4,033 $3,149,583 $3,149,583
Interest expense 967,104 958,744 32,728 1,958,576 1,958,576
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income 718,270 501,432 (28,695) 1,191,007 1,191,007
Provision for loan losses 11,650 64,862 76,512 125,000 201,512
Other income:
Depositor fees 78,963 23,634 102,597 102,597
Securities, annuity & other service
fees 33,931 19,419 53,350 53,350
Loan servicing fees 19,654 21,649 41,303 41,303
Other operating income 20,066 16,396 36,462 36,462
Gain on sale of loans 12,584 11,175 23,759 23,759
Gain (loss) on sale of other assets (4,622) 6,415 1,793 1,793
- -----------------------------------------------------------------------------------------------------------------------------------
Total other income 160,576 98,688 259,264 259,264
Other expense:
Salaries and employee benefits 209,677 126,388 336,065 336,065
Occupance and equipment 84,876 29,507 6,240 120,623 120,623
Regulatory assessments 12,035 31,136 43,171 124,193 167,364
Data processing fees 13,553 27,180 40,733 40,733
Other operating expense 118,764 38,513 5,919 163,196 163,196
Transaction-related expense 158,121 158,121
Goodwill and other intangible assets 27,672 27,672 27,672
REO operations (3,490) 15,020 11,530 11,530
- -----------------------------------------------------------------------------------------------------------------------------------
Total other expense 463,087 267,744 12,159 742,990 282,314 1,025,304
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 404,109 267,514 (40,854) 630,769 (407,314) 223,455
Writedown of deferred tax asset 30,596 30,596
Income taxes (benefits) 150,129 66,530 (8,305) 208,354 (143,343) 65,011
Minority interest 13,570 13,570 13,570
- -----------------------------------------------------------------------------------------------------------------------------------
Net income (loss)
$253,980 $200,984 $(46,119) $408,845 $(294,567) $114,278
===================================================================================================================================
Fully diluted earnings per share $3.37 ($2.49) $0.85
Fully diluted shares used to calculate
earnings per share 118,335,611 118,335,611 118,335,611
* Does not include Keystone Holdings and all of its subsidiaries, including
American Savings Bank. Also excludes transaction- related expenses and the
special SAIF assessment.
</TABLE>
<PAGE>
Supplemental Financial Data
For the year ending December 31, 1996
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Washington American Keystone SAIF &
Mutual, Savings Holdings & Transaction-
Inc. Bank Adjustments Sub-total related exp. Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Financial Ratios:
Return on average assets 1.14% 0.97% 0.95% 0.27%
Return on average equity 15.19% 16.58% 17.50% 4.89%
Return on average common equity 15.70% 16.58% 17.98% 4.70%
Operating efficiency, excluding goodwill 49.5% 44.6% 49.3% 68.8%
Operating efficiency, including goodwill 52.7% 44.6% 51.2% 70.7%
Effective tax/benefit rate (1) 37.2% 24.9% 20.3% 33.0% 35.2% 29.1%
Net interest margin 3.37% 2.53% 2.89% 2.89%
(1) Income taxes for American Savings Bank and Keystone Holdings Inc. for
1996 were reflective of tax benefit sharing agreements with the FDIC which
lowered the company's effective tax rate. After the acquisition, the tax rate
for American Savings Bank will be adjusted to a normal tax rate because of
limitations on net operating loss carryforwards. The effective tax rate for the
combined companies is expected to be approximately 39%. Had this higher tax rate
been in effect for 1996 the fully diluted earnings per share, prior to SAIF and
transaction-related expenses, would have been reduced to $3.05.
Loan Originations:
Residential 4,286,590 5,661,249 9,947,839 9,947,839
Residential construction 1,286,319 1,286,319 1,286,319
Consumer 1,267,916 20,364 1,288,280 1,288,280
Apartment buildings 181,153 323,378 504,531 504,531
Other commercial real estate 241,079 25,964 267,043 267,043
Commercial 348,400 348,400 348,400
- -----------------------------------------------------------------------------------------------------------------------------------
Total loan originations 7,611,457 6,030,955 13,642,412 13,642,412
===================================================================================================================================
Summary Balance Sheet:
Total assets
22,863,116 21,915,778 (226,969) 44,551,925 44,551,925
Deposits
Checking accounts
1,644,354 1,335,608 2,979,962 2,979,962
Money market accounts
3,300,269 1,772,361 5,072,630 5,072,630
Savings and time deposits
6,198,437 9,829,112 16,027,549 16,027,549
- -------------------------------------------------------------------------------------------------------- ------------
Total deposits
11,143,060 12,937,081 24,080,141 24,080,141
===================================================================================================================================
</TABLE>
<PAGE>
Supplemental Financial Data
For the quarter ending December 31, 1996
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Washington American Keystone SAIF &
Mutual, Savings Holdings & Transaction-
Inc.* Bank Adjustments Sub-total related exp. Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Summary Income Statement
Interest income $427,117 $382,814 $1,067 $810,998 $810,998
Interest expense 237,365 257,609 8,400 503,374 503,374
- ----------------------------------------------------------------------------------------------------------------------------------
Net interest income 189,752 125,205 (7,333) 307,624 307,624
Provision for loan losses 2,912 15,462 18,374 125,000 143,374
Other income:
Depositor fees 22,178 5,935 28,113 28,113
Securities, annuity & other service
fees 8,588 4,297 12,885 12,885
Loan servicing fees 4,611 4,923 9,534 9,534
Other operating income 6,680 3,978 10,658 10,658
Gain on sale of loans 3,398 5,138 8,536 8,536
Gain (loss) on sale of other assets (1,185) 6,901 5,716 5,716
- ----------------------------------------------------------------------------------------------------------------------------------
Total other income 44,270 31,172 75,442 75,442
Other expense:
Salaries and employee benefits 53,606 32,353 85,959 85,959
Occupancy and equipment 23,672 6,799 1,560 32,031 32,031
Regulatory assessments 271 6,367 6,638 6,638
Data processing fees 4,207 7,760 11,967 11,967
Other operating expense 33,631 5,612 2,191 41,434 41,434
Transaction-related expense 152,821 152,821
Goodwill and other intangible assets 6,791 6,791 6,791
REO operatiopns (1,346) 4,467 3,121 3,121
- ----------------------------------------------------------------------------------------------------------------------------------
Total other expense 120,832 63,358 3,751 187,941 152,821 340,762
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 110,278 77,557 (11,084) 176,751 (277,821) (101,070)
Writedown of deferred tax asset 30,596 30,596
Income taxes (benefits) 40,713 16,966 (1,814) 55,865 (102,663) (46,798)
Minority interest 3,066 3,066 3,066
- -----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $69,565 $60,591 $(12,336) $117,820 $(205,754) $(87,934)
===================================================================================================================================
Fully diluted earnings per share $0.97 ($1.74) ($0.81)
Fully diluted shares used to calculate
earnings per share 118,564,782 118,564,782 118,564,782
* Does not include Keystone Holdings and all of its subsidiaries, including
American Savings Bank. Also excludes transaction- related expenses and the
special SAIF assessment.
</TABLE>
<PAGE>
Supplemental Financial Data
For the quarter ending December 31, 1996
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Washington American Keystone SAIF &
Mutual, Savings Holdings & Transaction-
Inc. Bank Adjustments Sub-total related exp. Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Financial Ratios:
Return on average assets 1.26% 1.11% 1.07% -0.80%
Return on average equity 16.04% 19.87% 19.71% -14.71%
Return on average common equity 16.59% 19.87% 20.29% -15.91%
Operating efficiency, excluding goodwill 48.7% 40.5% 47.3% 87.2%
Operating efficiency, including goodwill 51.6% 40.5% 49.1% 89.0%
Effective tax/benefit rate (1) 36.9% 21.9% 16.4% 31.6% 37.0% 46.3%
Net interest margin 3.55% 2.38% 2.91% 2.91%
(1) Income taxes for American Savings Bank and Keystone Holdings Inc. for
1996 were reflective of tax benefit sharing agreements with the FDIC which
lowered the company's effective tax rate. After the acquisition, the tax rate
for American Savings Bank will be adjusted to a normal tax rate because of
limitations on net operating loss carryforwards. The effective tax rate for the
combined companies is expected to be approximately 39%. Had this higher tax rate
been in effect for 1996 the fully diluted earnings per share, prior to SAIF and
transaction-related expenses, would have been reduced to $0.86.
Loan Originations:
Residential 1,185,760 1,431,768 2,617,528 2,617,528
Residential construction 312,887 312,887 312,887
Consumer 340,560 6,617 347,177 347,177
Apartment buildings 37,110 114,610 151,720 151,720
Other commercial real estate 83,527 100 83,627 83,627
Commecial 89,766 89,766 89,766
- -----------------------------------------------------------------------------------------------------------------------------------
Total loan originations 2,049,610 1,553,095 3,602,705 3,602,705
===================================================================================================================================
</TABLE>
