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<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: May 14, 1997
Washington Mutual, Inc.
------------------------------------------------------
(Exact Name of Registrant as specified in its charter)
Washington
------------------------------------------------------
0-25188 91-1653725
- --------------------------------------------------------------------------------
Commission File Number IRS Identification No.
1201 Third Avenue, Seattle, Washington 98101
- --------------------------------------------------------------------------------
Address of Principal Executive Office Postal Code
206-461-2000
------------------------------------------------------
Registrant's telephone number including area code
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
99.1 Slide Presentation to Investment Analysts
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: May 14, 1997 By: /s/ Marc R. Kittner
----------------------------
Marc R. Kittner
Senior Vice President and
Corporate Counsel
<PAGE> 1
SLIDE 1
INVESTOR CONFERENCE
DO THE MATH
SLIDE 2
KERRY KILLINGER
Chairman, President &
Chief Executive Officer
<PAGE> 2
SLIDE 1
GROWTH + VALUE + EXPERIENCE = WAMU
SLIDE 2
GROWTH + VALUE + EXPERIENCE = WAMU
WAMU PROFILE
o SIZE
-- Largest bank headquartered in the Pacific Northwest
o MISSION
-- To be the premier financial services organization in the western
United States
o BUSINESS LINES
-- Consumer banking
-- Small- to mid-size commercial banking
-- Annuities
-- Securities and insurance brokerage
<PAGE> 3
SLIDE 1
GROWTH + VALUE + EXPERIENCE = WAMU
WAMU PROFILE
Total Assets $46.1 bn
Total Deposits $24.3 bn
Equity/Assets 5.27%
Locations 590
Households 1.5 mm
Marketplace WA, OR, CA, UT, ID, AZ,
CO, NV, MT
SLIDE 2
GROWTH + VALUE + EXPERIENCE = WAMU
KEY STRATEGIES
o Expand consumer and commercial banking franchises through
internal growth and acquisitions
o Maintain a high quality balance sheet
o Improve operating efficiency
o Limit sensitivity to interest rate movement
o Achieve financial targets
<TABLE>
<S> <C> <C> <C>
-- ROCE: (greater than)18% -- NPA/Total Assets: (less than)1%
-- EPS growth 15% -- Common Equity/Assets (greater than)5%
-- Efficiency Ratio (less than)50%
</TABLE>
<PAGE> 4
SLIDE 1
GROWTH + VALUE + EXPERIENCE = WAMU
A GROWING MARKET FRANCHISE
1987*
-----
o Assets $ 5.7 bn
o Loans 3.0 bn
o Deposits 3.5 bn
o Equity 316.9 mm
o Market Cap 211.9 mm
Note: As of 12/31/87
SLIDE 2
GROWTH + VALUE + EXPERIENCE = WAMU
A GROWING MARKET FRANCHISE
3/31/97*
--------
o Assets $ 46.1 bn
o Loans 32.2 bn
o Deposits 24.3 bn
o Equity 2.4 bn
o Market Cap 5.7 bn
Note: As of 12/31/97
<PAGE> 5
SLIDE 1
GROWTH + VALUE + EXPERIENCE = WAMU
DISTRIBUTION NETWORK
BANKING OPERATIONS
------------------
o Consumer Banking Locations
-- Traditional branches 343
-- In-store branches 84
-- Loan centers 103
---
529
o Commercial Banking Locations
-- Traditional branches 50
-- Business banking centers 13
---
63
o Households Served 1.5 mm*
Note: As of 3/31/97
SLIDE 2
GROWTH + VALUE + EXPERIENCE = WAMU
SUCCESSFUL GROWTH THROUGH ACQUISITIONS
ASSETS
ACQUIRED INSTITUTION (in Millions) BRANCHES
- -------- ----------- ------------- --------
1988-92 10 Acquisitions $ 2,041.2 84
1993 Pioneer(a) 926.5 17
1993 Pacific First 5,861.3 129
1994 Far West 42.2(b) 3
1994 Summit(a) 188.1 4
1995 Olympus(a) 391.4 11
1995 Enterprise(a)(c) 153.8 1
1996 Western(a)(c) 776.3 42
1996 Utah Federal(a) 122.6 5
1996 American(a) 21,915.8 221
1997 United Western 414.9 9
--------- ---
$32,235.3 526
(a) Pooling transaction
(b) Branch acquisition only
(c) Commercial bank
<PAGE> 6
SLIDE 1
STOCK MARKET OUTPERFORMANCE
Cumulative Total Return Comparison
[CHART]
(Assumes reinvestment of dividends)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WAMU 100 $ 92.99 $281.20 $245.1 $1,066.19 $848.84 $2,318.92 $2,598.52
S&P Financial Index 100 108.49 167.02 171.14 317.68 340.45 708.78 783.97
S&P 500 Index 100 118.28 184.69 288.51 404.66 451.33 763.50 740.87
3/83 12/84 12/86 12/90 12/92 12/94 12/96 3/97
</TABLE>
Source: Standard & Poor's Compustat
* $100 invested 3/83
SLIDE 2
GROWTH + VALUE + EXPERIENCE = WAMU
Stock Market Outperformance
Total Annual Return Peer Comparison (4/19/90 - 3/31/97)
[BAR GRAPH]
34.8% 28.6% 28.2% 26.1% 23.9% 23.8% 22.4% 20.4%
WAMU NoB CCI WFC BAC USBC Key NB
19.3% 16.71% 16.08% 15.3% 13.5% 12.6%
GWF ONE AHM SPX GDW WFSL
Source: Bloomberg
<PAGE> 7
SLIDE 1
INVESTOR CONFERENCE
DO THE MATH
<PAGE> 8
SLIDE 1
INVESTOR CONFERENCE
DO THE MATH
SLIDE 2
DEANNA OPPENHEIMER
Executive Vice President
Corporate Relations &
Consumer Banking
<PAGE> 9
SLIDE 1
THAT'S DIFFERENT,
THAT'S WASHINGTON MUTUAL
The Premier Consumer
Banking Strategy in the West
SLIDE 2
OVERVIEW: MARKET PRESENCE
Washington Consumer Deposit Market Share
[BAR GRAPH]
15.8% 14.5% 10.4% 9.6% 3.8%
BAC WAMU USBC Keg WFC
<PAGE> 10
SLIDE 1
OVERVIEW: MARKET PRESENCE
Oregon Consumer Deposit Market Share(a)
[BAR GRAPH]
26.4% 12.8% 9.5% 7.6% 7.0%
USBC WFC WAMU Keg BAC
(a) Percent dollar volume as of 6/96
Note: Excludes government and noninterest-bearing accounts
SLIDE 2
OVERVIEW: MARKET PRESENCE
California Consumer Deposit Market Share(a)
[BAR GRAPH]
16.1% 10.9% 9.6% 8.0% 5.0%
BAC WFC 5.9% AHM World
3.7%
WAMU/GWF
(a) Percent dollar volume as of 6/96
Note: Excludes government and noninterest-bearing accounts
<PAGE> 11
SLIDE 1
THE WASHINGTON MUTUAL
CONSUMER BANKING STRATEGY
o Extend multi-channel distribution
o Offer expansive, profitable product line
o Deploy extensive sales & productivity tools
o Take advantage of comprehensive research capabilities
o Use aggressive retail-oriented marketing/branding
SLIDE 2
DISTRIBUTION CHANNELS
[PICTURE IMAGES]
<PAGE> 12
SLIDE 1
MULTI-CHANNEL DISTRIBUTION
Financial Centers
o 427 financial centers throughout West
-- 343 free-standing financial centers
-- 84 in-store financial centers
SLIDE 2
MULTI-CHANNEL DISTRIBUTION
INVESTMENTS
MORTGAGE LENDING
CONSUMER LENDING
MONEY MARKET
CHECKING
SAVINGS/CDs
[IMAGES]
<PAGE> 13
SLIDE 1
DISPEL THE MYTH . . .
the full service branch lives!
[PICTURE IMAGE OF BRANCH BUILDING]
SLIDE 2
MULTI-CHANNEL DISTRIBUTION
CASE STUDY; TANASBOURNE, OREGON, FINANCIAL CENTER*
o 1,500 households
o 1,300 checking accounts
o $9.8 million in deposits
o $10 million in consumer loans
o $6.3 million in mortgage lending
* First ten months of operation
<PAGE> 14
SLIDE 1
MULTI-CHANNEL DISTRIBUTION
IN-STORE FINANCIAL CENTERS
[PICTURE IMAGE OF BRANCH SERVICE COUNTER]
SLIDE 2
MULTI-CHANNEL DISTRIBUTION
IN-STORE FINANCIAL CENTERS
Benefits:
o Quick entry vehicle
o Lower construction cost
o High passenger traffic
o Partnerships with leading retail/grocery chains
o Offer full range of products
<PAGE> 15
SLIDE 1
MULTI-CHANNEL DISTRIBUTION
alternative delivery
[PICTURE IMAGE]
SLIDE 2
MULTI-CHANNEL DISTRIBUTION
TELEPHONE BANKING - SALES
Products offered:
o Consumer loans
o Mortgage loans
o Bank deposits
o Proprietary mutual funds/annuities
<PAGE> 16
SLIDE 1
MULTI-CHANNEL DISTRIBUTION
TELEPHONE BANKING - SERVICE
[BAR GRAPH]
3/94 3/95 3/96 3/97
-------- -------- -------- ----------
Total Calls 408,705 555,343 806,377 1,401,205
VRU Calls 53.0% 70.4% 69.3% 83.2%
Note: Northwest operations only
SLIDE 2
MULTI-CHANNEL DISTRIBUTION
INTERACTIVE FINANCIAL CENTERS/KIOSKS
o Currently piloting 3 locations
o Testing:
-- Technology design
-- Optimal marketing support
-- Customer acceptance and usage
o Preliminary findings:
-- Usage increases with active marketing
promotion/introduction of concierge
-- Users cross all age demographics
-- Production must meet corporate performance
standards prior to full roll-out
<PAGE> 17
SLIDE I
MULTI-CHANNEL DISTRIBUTION
HOME BANKING
The Integrion Network
o Partnership with IBM
o Members possess half of the banking
households in North America
o To be piloted in fourth quarter
o Integration with web site/bill-paying service
o Extension of Washington Mutual brand
SLIDE 2
[SERVICES AVAILABLE GRAPHICS]
- NO DIRECT DEPOSIT NEEDED
- NO CHARGE FOR TALKING TO US
- NO MONTHLY SERVICE FEES
- NO MINIMUM BALANCE
<PAGE> 18
SLIDE 1
SALES & PRODUCTIVITY TOOLS
[GRAPHICS]
SLIDE 2
SALES AND PRODUCTIVITY TOOLS
o Leading-edge technology
o Highly effective incentive
compensation plan
o Proven sales training
o Exportable sales culture
<PAGE> 19
SLIDE 1
HIGHLY EFFECTIVE INCENTIVE COMPENSATION PLAN
o Motivates producers
o Rewards:
-- Profitability
-- Cross-sell
-- Production
-- Efficiency
-- Customer service
SLIDE 2
HIGHLY EFFECTIVE INCENTIVE COMPENSATION PLAN
DEPOSITOR FEE INCOME
[BAR GRAPH]
(Dollars in Millions)
1994 $28.5
1995 $57.5
1996 $79.0
3/31/96 $16.8
3/31/97 $22.6
Note: Northwest operations only
<PAGE> 20
SLIDE 1
HIGHLY EFFECTIVE INCENTIVE COMPENSATION PLAN
CONSUMER LENDING
[BAR GRAPH]
(Dollars in Millions)
1994 $ 997.8
1995 $ 967.7
1996 $1,268.3
3/31/96 $ 237.4
3/31/97 $ 333.1
Note: Northwest operations only
SLIDE 2
HIGHLY EFFECTIVE INCENTIVE COMPENSATION PLAN
HOUSEHOLDS/PRODUCTION FTE
[BAR GRAPH]
March '94 225
March '95 255
March '96 270
March '97 281
Note: Northwest operations only
<PAGE> 21
SLIDE 1
HIGHLY EFFECTIVE INCENTIVE COMPENSATION PLAN
CUSTOMER SERVICE SKILLS
[BAR GRAPH]
Comparison to competitors:
Greeting skills
Competition WAMU
----------- ----
Stand to greet customer 70% 85%
Introduce self to customer 72% 83%
Ask customer's name 69% 78%
Use customer's name 60% 74%
Shake hands 66% 79%
Source: SG Marketing Jan. 1997
SLIDE 2
HIGHLY EFFECTIVE INCENTIVE COMPENSATION PLAN
SELLING SKILLS
[BAR GRAPH]
Competition WAMU
----------- ----
Ask 2+ Q's identifying needs 67% 85%
Resolve objections 84% 95%
Ask to open account 61% 82%
Source: SG Marketing Jan. 1997
<PAGE> 22
SLIDE 1
SALES AND PRODUCTIVITY TOOLS
Sales training/Exportable sales culture
[GRAPHIC]
SLIDE 2
HOUSEHOLD GROWTH
EXCLUSIVE OF ACQUISITIONS
[BAR GRAPH]
1994 23,332
1995 62,442
1996 86,616
Q 1/96 12,040
Q 1/97 26,709
Note: Northwest operations only
<PAGE> 23
SLIDE 1
THAT'S DIFFERENT,
THAT'S WASHINGTON MUTUAL
The Premier Consumer
Banking Strategy in the West
SLIDE 2
INVESTOR CONFERENCE
DO THE MATH
<PAGE> 24
SLIDE 1
INVESTOR CONFERENCE
DO THE MATH
SLIDE 2
LINDY J. FRIEDLANDER, PH.D.
Senior Vice President
Corporate Research & Development
<PAGE> 25
SLIDE 1
RESEARCH AND DEVELOPMENT
SLIDE 2
EXTENSIVE RESEARCH CAPABILITIES
o New product introductions
o Site assessment
o Retention of acquired households
o Product positioning for advertising
o Brand imaging
o Identification of market opportunities
<PAGE> 26
SLIDE 1
NEW PRODUCT INTRODUCTIONS
Case Study: Free Checking
Evolution of the Product:
o July 1991 - Free Relationship Checking
* Increase services per household
* Increase checking penetration
o September 1994 - "Free Checking"
* 1994 Research: 51% of the general population
said they'd be "very likely" to switch banks
to secure Free Checking
* Appealed most to people under age 55
* Likely to drive additional fee income
SLIDE 2
NEW PRODUCT INTRODUCTIONS
Case Study: Free Checking
Requirements for Profitability:
o Enforce strict fee waiver policy
o Provide automatic overdraft protection
o Offer free VISA(R) check card
o Price other fees near top of market
<PAGE> 27
SLIDE 1
NEW PRODUCT INTRODUCTIONS
Non-Interest Checking Base
<TABLE>
<CAPTION>
Dec '94 Dec '96
------- -------
<S> <C> <C>
Fee Income*
Old Base $ 7.81 $ 9.82
New Base $ 8.24 $14.64
Balance
Old Base $1,012 $1,188
New Base $ 733 $ 878
</TABLE>
Note: All figures reflect per-account averages
*Does not include all ancillary fees attributable to new checking accounts.
SLIDE 2
CHECKING ACCOUNT GROWTH
Northwest operations
<TABLE>
<C> <C> <C> <C> <C> <C>
120,000
116,965
100,000
82,375
80,000
60,000
55,561
40,000
34,358
20,000
20,718
0
1994 1995 1996 Q 196 Q 197
</TABLE>
Note: Reflects growth in checking account base, excluding acquisitions.
<PAGE> 28
SLIDE 1
CHECKING ACCOUNT GROWTH
American Savings Bank
<TABLE>
<C> <C> <C>
35,000
30,000
31,113
25,000
20,000
15,000
10,000
5,000
0 -2,403
-5,000 Q 196 Q 197
</TABLE>
Note: Reflects growth in checking account base, excluding acquisitions.
SLIDE 2
SITE ASSESSMENT
Market Potential Modeling
o Rank geographic census tracts in WM markets
o Overlay demographic and competitive information
o Use local market knowledge
o Match appropriate delivery channel to market
<PAGE> 29
SLIDE 1
SITE ASSESSMENT
Market Potential Modeling:
Insight Gained
o Potential to generate new business
- New site or acquisition
- Focus on intensifying sales efforts
o Where to adjust distribution channels
- Monitor life cycles of markets
- Relocations, consolidations, changes in
delivery channel
SLIDE 2
RETENTION OF ACQUIRED HOUSEHOLDS
Research used to determine:
- Product retention
- Product revision
- Product mapping
- Identification of customer concerns
- Cross-sell opportunities
<PAGE> 30
SLIDE 1
RETENTION OF ACQUIRED HOUSEHOLDS
Combined household growth six months
after a large acquisition*
108%
106% 4%
104%
102%
100%
98% 11/91 5/92
96%
Washington Mutual/Crossland Savings
*At least 10,000 households
SLIDE 2
RETENTION OF ACQUIRED HOUSEHOLDS
Combined household growth six months
after a large acquisition*
106%
104%
2%
102%
100%
98% 4/82 10/92
96%
Washington Mutual/Great Northwest Bank
*At least 10,000 households
<PAGE> 31
SLIDE 1
RETENTION OF ACQUIRED HOUSEHOLDS
Combined household growth six months
after a large acquisition*
106%
104%
Level
102%
100%
98% 3/93 9/93
96%
Washington Mutual/Pacific First Bank/Pioneer Savings
*At least 10,000 households
SLIDE 2
RETENTION OF ACQUIRED HOUSEHOLDS
Combined household growth six months
after a large acquisition*
108%
106%
4%
104%
102%
100% 4/85 10/95
98%
96%
Washington Mutual/Olympus Bank
*At least 10,000 households
<PAGE> 32
SLIDE 1
RETENTION OF ACQUIRED HOUSEHOLDS
COMBINED HOUSEHOLD GROWTH:
WASHINGTON MUTUAL/AMERICAN SAVINGS BANK
108%
3%
106%
104%
102%
100% 12/96 3/97
98%
96%
WASHINGTON MUTUAL/AMERICAN SAVINGS BANK
Note: Three months following 12/96 close
SLIDE 2
A CROSS-SELLING OPPORTUNITY
ACQUIRED HOUSEHOLDS
INCREASED SERVICES PER HOUSEHOLD AT NEWLY
ACQUIRED INSTITUTIONS SINCE 1992
o Great Northwest Bank 55%
o Pioneer Savings 49%
o Pacific First Bank 44%
Note: Institutions with 10,000 households or more
<PAGE> 33
SLIDE 1
PRODUCT POSITIONING FOR ADVERTISING
CASE STUDY: FREE CHECKING
TOP 3 "PET PEEVES" OF NON-CUSTOMERS:
o Being charged unreasonable fees
o Being inflexible and bureaucratic
o Only caring about making a profit off of you
SLIDE 2
PRODUCT POSITIONING FOR ADVERTISING
CASE STUDY: FREE CHECKING
DECISIONS:
o Aggressively promote Washington Mutual's Free Checking
o Point out competition's "Free Checking" comes with strings attached
<PAGE> 34
SLIDE 1
PRODUCT POSITIONING FOR ADVERTISING
CASE STUDY: HOME EQUITY
KEY QUESTIONS:
o How do we sell more home equity loans?
o What do consumers use them for?
o What messages would work?
SLIDE 2
PRODUCT POSITIONING FOR ADVERTISING
CASE STUDY: HOME EQUITY
WHERE DO CUSTOMERS GATHER INFORMATION?
Banker 69%
Friends 20%
Mail 15%
Newspaper 12%
Finance Co. 9%
TV 6%
Radio 4%
0% 10% 20% 30% 40% 50% 60% 70% 80%
<PAGE> 35
SLIDE 1
PRODUCT POSITIONING FOR ADVERTISING
CASE STUDY: HOME EQUITY
What are customers willing to use home equity loans for:
Home Imprv [ ] 93%
Debt Consol. [ ] 70%
Medical [ ] 57%
Education [ ] 57%
Car [ ] 35%
Furn/Applian [ ] 21%
Boat/RV [ ] 16%
Vacation [ ] 9%
0% 20% 40% 60% 80% 100%
SLIDE 2
PRODUCT POSITIONING FOR ADVERTISING
CASE STUDY: HOME EQUITY
Decisions:
o Advertise heavily in branches
o Don't promote use of home equity for "frivolous" items
<PAGE> 36
SLIDE 1
BRAND IMAGE
o How is Washington Mutual viewed by consumers?
o What are the company's competitive strengths?
o How should the company position itself?
SLIDE 2
BRAND IMAGE
FOCUS GROUPS
Findings of customers & non-customers:
o Non-customers usually chose cold, self-serving or
mechanized pictures to illustrate their bank
o Washington Mutual customers usually chose warm, caring
and trustworthy scenes
o Attitudes were consistent in all markets
<PAGE> 37
SLIDE 1
BRAND IMAGE
FOCUS GROUPS
How the competition is viewed:
o Automated
o Mechanized
o Overworked
SLIDE 2
BRAND IMAGE
FOCUS GROUPS
How the competition is viewed:
o Stiff
o Arrogant
o Cold
<PAGE> 38
SLIDE 1
BRAND IMAGE
FOCUS GROUPS
How Washington Mutual is viewed:
o Casual
o Comfortable
o At home
SLIDE 2
BRAND IMAGE
FOCUS GROUPS
How Washington Mutual is viewed:
o Caring
o Warm
o Personal
<PAGE> 39
SLIDE 1
BRAND IMAGE
FOCUS GROUPS
Customers/non-customers; California/Northwest:
o Want warm & caring service
o Want advanced technology and convenience
o Want less complicated bank
o Want fees to be fair
SLIDE 2
IDENTIFICATION OF MARKET OPPORTUNITIES
Survey question:
"Using a 1-to-5 scale with 1 meaning it does not describe your
feelings at all and 5 meaning it describes your feelings
completely, how much would you agree that "Brand X" is a bank
you'd recommend to your friends?"
<PAGE> 40
SLIDE 1
Identification of Market Opportunities
Would you recommend your primary bank to a friend?
<TABLE>
<C> <C> <C> <C>
100%
80% 88%
60%
40%
20% 43% 49%
0%
B of A [CA] Wells Fargo [CA] Wash. Mutual [ WA/OR]
</TABLE>
SLIDE 2
Identification of Market Opportunities
Would you recommend your primary bank to a friend?
<TABLE>
<C> <C> <C> <C> <C>
100%
80% 88%
60%
40%
20% 53% 19%
0%
B of A/Seafirst [WA/OR] Wells Fargo [WA/OR] Wash. Mutual [WA/OR]
</TABLE>
<PAGE> 41
SLIDE 1
Research and Development
SLIDE 2
INVESTOR CONFERENCE
do the math
<PAGE> 42
SLIDE 1
INVESTOR CONFERENCE
do the math
SLIDE 2
Brad Davis
Senior Vice President
Marketing and Corporate Relations
<PAGE> 43
SLIDE 1
WASHINGTON MUTUAL MARKETING
- "Real People Talking to Real People"
* Human/genuine
* Approachable
* Non "Bank-like"
SLIDE 2
WASHINGTON MUTUAL MARKETING
[GRAPHIC]
Keeping the Northwest safe for Free Checking
[WASHINGTON MUTUAL LOGO]
<PAGE> 44
SLIDE 1
WASHINGTON MUTUAL MARKETING
[GRAPHIC]
SLIDE 2
WASHINGTON MUTUAL MARKETING
[GRAPHIC]
<PAGE> 45
SLIDE 1
WASHINGTON MUTUAL MARKETING
[GRAPHIC]
SLIDE 2
WASHINGTON MUTUAL MARKETING
[GRAPHIC]
<PAGE> 46
SLIDE 1
WASHINGTON MUTUAL MARKETING
[GRAPHIC]
SLIDE 2
WASHINGTON MUTUAL MARKETING
[GRAPHIC]
Keeping the Northwest safe for truth, justice and
FREE CHECKING
[WASHINGTON MUTUAL LOGO]
<PAGE> 47
SLIDE 1
WASHINGTON MUTUAL MARKETING
[GRAPHIC]
SLIDE 2
WASHINGTON MUTUAL MARKETING
[GRAPHIC]
Keeping the Northwest safe for truth, justice and
Free Checking
[WASHINGTON MUTUAL LOGO]
<PAGE> 48
SLIDE 1
WASHINGTON MUTUAL MARKETING
[GRAPHIC]
A WASHINGTON MUTUAL COMMERCIAL
WE'LL BE WAITING TO SEE
SLIDE 2
WASHINGTON MUTUAL MARKETING
[GRAPHIC]
<PAGE> 49
SLIDE 1
WASHINGTON MUTUAL MARKETING
[GRAPHIC OF 3 POSTERS]
THOSE FELLERS AT YER BANK
keeping you from not having
DIRECT DEPOSIT?
TIRED OF BEING
hog tied by
DIRECT DEPOSIT
REQUIREMENTS?
PAYIN'
TO TALK TO A
TELLER
giving you
A RAW HIDE?
SLIDE 2
WASHINGTON MUTUAL MARKETING
[GRAPHIC]
Keeping the Northwest safe
for Free Checking
[WASHINGTON MUTUAL LOGO]
<PAGE> 50
SLIDE 1
WASHINGTON MUTUAL MARKETING
[GRAPHIC]
NO-HASSLE
SASS-FREE
CHECKING ACCOUNT KIT
The Fastest Little
AUTOMATIC
PAYMENT FORM
IN THE WEST
SLIDE 2
WASHINGTON MUTUAL MARKETING
[GRAPHIC]
NOW OPENING A
free
CHECKING
ACCOUNT
is so easy, you could do it
on horseback.
------------------
(But we wouldn't recommend it)
<PAGE> 51
SLIDE 1
WASHINGTON MUTUAL MARKETING
[BAR GRAPH]
Bank Advertising Recall (First Mention Awareness)
1992 1993 1994 1995
---- ---- ---- ----
Washington Mutual 25% 24% 25% 20%
SeaFirst 32% 41% 34% 32%
King County
SLIDE 2
WASHINGTON MUTUAL MARKETING
[BAR GRAPH]
Bank Advertising Recall (First Mention Awareness)
Washington Mutual 42%
SeaWest 22%
Nov. 1996 King County
<PAGE> 52
SLIDE 1
WASHINGTON MUTUAL MARKETING
[BAR GRAPH]
Bank Advertising Recall (First Mention Awareness)
Washington Mutual 33%
Wells Fargo 26%
Nov. 1996 Portland
SLIDE 2
Product Positioning
[GRAPHIC]
<PAGE> 53
WASHINGTON MUTUAL MARKETING
--------------------------------------------
| |
| |
| DO |
| THE 0 (0) = 0 |
| MATH: |
| |
| |
| |
| FREE CHECKING from WASHINGTON MUTUAL |
| |
--------------------------------------------
WASHINGTON MUTUAL MARKETING
[DO THE MATH AD]
<PAGE> 54
WASHINGTON MUTUAL MARKETING
At some banks, AMERICAN SAVINGS BANK PRESENTS
"FREE CHECKING"
doesn't add up R E A L L Y
F R E E
[CHECKING CHARGES] C H E C K I N G
---------------
D O T H E M A T H
[COMPARISON TABLE]
WASHINGTON MUTUAL MARKETING
- ------------------------------------------
| DO |
| THE 0 (0) = 0 |
| MATH: |
| |
| FREE CHECKING from WASHINGTON MUTUAL |
- ------------------------------------------
---------------------
| |
| DO THE MATH: |
| |
--------------------------------------------------
| FREE |
| CHECKING |
| 0 x 0 = 0 from |
| WASHINGTON |
| MUTUAL |
-------------------------------------
<PAGE> 55
WASHINGTON MUTUAL MARKETING
D O COMPARE AMERICAN SAVINGS BANK FREE CHECKING
WITH YOUR CHECKING ACCOUNT
THE MATH: AND SEE HOW MUCH YOU COULD BE SAVING.
0 + 0 = 0
[Comparison Chart]
[AMERICAN SAVINGS BANK LOGO]
WASHINGTON MUTUAL MARKETING
D O
T H E M A T H
0 - 0 = 0
0 + 0 = 0
0 x 0 = 0
FREE CHECKING from WASHINGTON MUTUAL
<PAGE> 56
SLIDE 1
CROSS SELLING
SLIDE 2
WASHINGTON MUTUAL MARKETING
QUICK QUICK
APPROVAL APPROVAL
REMODELING HOME EQUITY
LOAN
FOR DETAILS, STOP BY THIS STORE'S FINANCIAL CENTER.
<PAGE> 57
SLIDE 1
WASHINGTON MUTUAL MARKETING
["Introducing Savings" ad]
SLIDE 2
WASHINGTON MUTUAL MARKETING
MONEY FOR
P I Z Z A
(OH, YEAH, AND TUITION.)
<PAGE> 58
SLIDE 1
WASHINGTON MUTUAL MARKETING
H O M E E Q U I T Y
KITCHEN SALE
SLIDE 2
WASHINGTON MUTUAL MARKETING
M O N E Y D E C I S I O N S
[Ad]
<PAGE> 59
SLIDE 1
WASHINGTON MUTUAL MARKETING
["Pump Up Your Checking Account" ad]
SLIDE 2
WASHINGTON MUTUAL MARKETING
P L U S P A C K A G E
<PAGE> 60
SLIDE 1
BRAD DAVIS
Senior Vice President
Marketing and Corporate Relations
SLIDE 2
THE END
<PAGE> 61
SLIDE 1
INVESTOR CONFERENCE
D O T H E M A T H
SLIDE 2
CAPITAL & PRODUCTION
Washington Mutual Lending Machine
<PAGE> 62
SLIDE 1
CRAIG DAVIS
Executive Vice President
Lending and Financial Services
SLIDE 2
LENDING STRATEGY
o Offer a broad product line
o Gain new customers -- build market share
o Focus on service/relationships
o Deliver through multiple channels
o Maintain asset quality
o Improve efficiency
o Use capital to grow portfolio
o Retain higher margin loans/sell low margin loans
o Increase proportion of adjustable rate loans
<PAGE> 63
SLIDE 1
CONSOLIDATED LOAN ORIGINATIONS*
45% increase
$ 14
$13.6
12
10
8 $8.3 $8.4
6
17% increase
4
$4.3 $5.0
2
0
1994 1995 1996 YTD YTD
APR. 96 APR. 97
*in billions
SLIDE 2
LENDING VOLUME BY TYPE
[PIE CHART]
SFR Adjustable 45%
SFR Fixed 27%
Consumer 10%
SFR Custom 6%
SFR Builder 4%
Multi-family 4%
Non-res RE 2%
Commercial 2%
<PAGE> 64
SLIDE 1
BROAD PRODUCT LINE
Residential Mortgage Lending
Broad line allows the "machine" to adapt and
switch to consumers' choices
30/15 Year FHA/VA Bridge Loans
COFI ARM 1/3/5-Year ARM Lines of Credit
Treasury ARM MTA ARM Portfolio
No Closing Costs 97% LTV Conforming
Down Payment Assistance Alt. Doc Jumbo
SLIDE 2
SFR MORTGAGE ACTIVITY*
[BAR GRAPH]
46% Increase 8% Increase
$6.3 $6.8 $9.9 $3.2 $3.5
1994 1995 1996 YTD YTD
APR. 96 APR. 97
<PAGE> 65
SLIDE 1
RESIDENTIAL LENDING MARKET SHARE
Washington
[BAR GRAPH]
<TABLE>
<CAPTION>
1994 Market Share* 1997 Market Share**
<S> <C> <C> <C> <C> <C>
9.60% 4.40% 3.99% 15.32% 6.13% 2.35%
WAMU Countrywide Norwest WAMU Norwest Countrywide
</TABLE>
* Year end
** Year-to-date Feb.
SLIDE 2
RESIDENTIAL LENDING MARKET SHARE
Oregon
[BAR GRAPH]
<TABLE>
<CAPTION>
1994 Market Share* 1997 Market Share**
<S> <C> <C> <C> <C> <C>
5.85% 5.08% 4.73% 10.80% 5.60% 3.79%
BofA WAMU Norwest WAMU Norwest BofA
</TABLE>
* Year end
** Year-to-date Feb.
12
<PAGE> 66
SLIDE 1
RESIDENTIAL LENDING MARKET SHARE
California
[BAR GRAPH]
<TABLE>
<CAPTION>
1994 Market Share 1997 Market Share
<S> <C> <C> <C> <C> <C>
7.00% 4.31% 3.35% 8.83% 4.85% 2.98%
BofA Home ASB BofA ASB World
Savings
</TABLE>
SLIDE 2
RESIDENTIAL LENDING MARKET SHARE
Utah
[BAR GRAPH]
<TABLE>
<CAPTION>
1994 Market Share* 1997 Market Share**
<S> <C> <C> <C> <C> <C>
8.84% 6.85% 0.00% 5.48% 4.83% 4.28%
First Zion WAMU WAMU Norwest Countrywide
Security
</TABLE>
* Year end
** Year-to-date Feb.
13
<PAGE> 67
SLIDE 1
RESIDENTIAL LENDING MARKET SHARE
King County*
[BAR GRAPH]
*1996 Year end
17.11% 2.66% 5.82% 2.35%
WAMU Bank of America Norwest World Savings
SLIDE 2
MARKET SHARE GROWTH
How has this been accomplished?
o Price
o Asset quality
o Distribution
<PAGE> 68
SLIDE 1
PRICING ANALYSIS
30-Year Conforming Fixed Rate
Institution Rate 30-Day Lock Equiv. Yield
- --------------------------------------------------------------------
Home Savings 8.150 0.750 8.317
Countrywide 8.125 1.125 8.375
Washington Fed 8.250 0.625 8.389
Bank of America 8.250 0.897 8.449
WASHINGTON MUTUAL 8.250 0.875 8.444
Chase Manhattan 8.250 1.125 8.500
Norwest 8.375 0.875 8.569
AVERAGE 8.243 0.832 8.428
*Washington state - 4/10/97 - The Heitman Group
SLIDE 2
PRICING ANALYSIS
5/1 Year CMT Adjustable
Institution Rate 30-Day Lock Equiv. Yield
- --------------------------------------------------------------------
Home Savings 7.450 0.750 7.600
Great Western 7.500 0.875 7.675
MellonBank 7.500 0.875 7.675
Countrywide 7.500 1.000 7.700
WASHINGTON MUTUAL 7.750 0.625 7.875
Chase Manhattan 7.875 1.125 8.100
Bank of America 8.125 1.250 8.375
AVERAGE 7.671 0.929 7.857
*Washington state - The Heitman Group
<PAGE> 69
SLIDE 1
ASB PRICING ANALYSIS
COFI Three Month ARM
Effective
Institution Rate Margin Points Cap Margin
- ------------------------------------------------------------------
1st Nationwide 4.950 2.500 0.06 11.58 2.15
Downey 3.950 2.450 0.88 11.95 2.24
Great Western 3.950 2.450 1.00 11.95 2.27
Coast 4.450 2.450 1.00 11.95 2.29
PNC Mtg 6.250 2.400 1.00 11.45 2.35
AMERICAN 4.950 2.500 1.00 11.95 2.37
World 5.250 2.500 1.00 11.95 2.39
Home 4.150 2.650 1.00 11.95 2.47
Stockton 4.000 2.750 1.00 11.00 2.55
California - 4/10/97 BISYS Research
SLIDE 2
LENDING DISTRIBUTION STRATEGY
A Multi-Channel Approach
-----
[GRAPHIC]
<PAGE> 70
SLIDE 1
LENDING DISTRIBUTION STRATEGY
o Financial Centers
o Home Loan Centers
o Wholesale
SLIDE 2
LENDING DISTRIBUTION STRATEGY
[PIE CHART]
WAMU SFR Originations by Channel
Wholesale 24%
FCs 28%
<PAGE> 71
SLIDE 1
LENDING DISTRIBUTION STRATEGY
[PIE CHART]
ASB SFR Originations by Channel
Wholesale 53%
Loan Centers 47%
SLIDE 2
LENDING DISTRIBUTION STRATEGY
Multi-state lending
Colorado Springs
Denver
Boulder
Las Vegas
Reno
Tucson
Phoenix
Mesa
<PAGE> 72
SLIDE 1
LENDING DISTRIBUTION STRATEGY
[MULTI-STATE GROWTH LINE GRAPH]
In Millions
ARIZONA COLORADO NEVADA
------- -------- ------
MARCH '96 2.4
APRIL 9.1
MAY 11.6
JUNE 11.8
JULY 15.8
AUGUST 13.0
SEPTEMBER 16.1
OCTOBER 19.3
NOVEMBER 17.3 2.5
DECEMBER '96 16.6 6.7 6.0
JANUARY '97 14.8 10.4 6.2
FEBRUARY 15.1 15.7 9.0
MARCH 16.1 19.9 9.1
APRIL 26.8 25.9 16.5
SLIDE 2
MORTGAGE DISTRIBUTION THROUGH FINANCIAL CENTERS
Coming Soon to California!!
<PAGE> 73
SLIDE 1
WASHINGTON MUTUAL: THE ASB PERSPECTIVE
WAMU brings:
o Capital
o Technology
o Expanded Distribution Philosophy
SLIDE 2
ASB SFR ORIGINATIONS*
[BAR GRAPH]
1994 $4.2
1995 $4.4
1996 $5.5 (26% increase)
YTD Apr. 96 $1.7
YTD Apr. 97 $2.0 (14% increase)
* in billions
<PAGE> 74
SLIDE 1
STEVEN P. FREIMUTH
Executive Vice President of
Lending Administration
SLIDE 2
BROAD PRODUCT LINE
Consumer Lending Products
o Home Equity Loans and Lines of Credit
o Manufactured Homes
o Unsecured Personal Lines of Credit
o Auto, Boat and RV
o Education
<PAGE> 75
SLIDE 1
CONSUMER LENDING ACTIVITY
[BAR GRAPH]
1994 $939
1995 $888
1996 $1,268 (41% increase)
YTD Apr. 96 $357
YTD Apr. 97 $478 (33% increase)
*In millions - WMB and WMBfsb
SLIDE 2
BROAD PRODUCT LINE
Consumer Lending:
New California Opportunities:
o Expanded product line
o Opportunities for cross-selling consumer
loans to ASB mortgage customers
o Explosive growth in applications in
California since January
<PAGE> 76
SLIDE 1
CALIFORNIA CONSUMER LENDING
[BAR GRAPH]
GROWTH IN APPLICATIONS
AUG SEP OCT NOV DEC JAN FEB MAR APR
--- --- --- --- --- --- --- --- ---
71 82 87 120 109 138 153 158 457
SLIDE 2
BROAD PRODUCT LINE
MULTI-FAMILY LENDING
o Higher margin than residential mortgage lending
o Expertise in local markets
o Long-term relationships
o Smaller loans, diversified geographic reach reduces risk
o Average loan amount -- $650,000 -- $750,000
<PAGE> 77
SLIDE 1
MULTI-FAMILY LENDING ACTIVITY*
45% increase 8% increase
------------------ ---------------
YTD YTD
1994 1995 1996 APR.96 APR.97
---- ---- ---- ------ ------
$618 $349 $505 $173 $186.2
*in millions (new originations only) -- consolidated
SLIDE 2
BROAD PRODUCT LINE
CONSTRUCTION FINANCE
o Builder Banking:
* Land Development
* Residential Construction
o Custom Construction
* One Loan Customs
* Rehabilitation Loans
* Remodel
<PAGE> 78
SLIDE 1
BUILDER BANKING
A Market Leader in the Northwest
o Long-standing relationships with builders
o Specialize in small to medium-size builders
o Less competitive and more profitable market
o Risk is spread out over many builders and markets
o Great source for permanent mortgage loans
SLIDE 2
BUILDER CONSTRUCTION ACTIVITY*
45% INCREASE 20% INCREASE
------------------- ---------------
YTD YTD
1994 1995 1996 APR.96 APR.97
---- ---- ---- ------ ------
$329 $352 $510 $176 $211
* in millions -- WMB and WMBish
<PAGE> 79
SLIDE 1
CUSTOM CONSTRUCTION
o One loan from construction to occupancy
o Advantage over mortgage companies
o Higher margins help augment loan portfolio
o Customer base provides cross-sell opportunities
o Expertise provides for low cost and low risk
SLIDE 2
CUSTOM CONSTRUCTION ACTIVITY*
34% increase 36% increase
------------------ ---------------
YTD YTD
1994 1995 1996 APR.96 APR.97
---- ---- ---- ------ ------
$706 $584 $780 $185 $250
*in millions -- WMB and WMBfsb
<PAGE> 80
SLIDE 1
BROAD PRODUCT LINE
Niche Lending
o Risk based pricing
o Higher margin business
o Flexibility to place non-conforming loans in portfolio
o Credit risk controls in place
o Low cost process through existing delivery system
SLIDE 2
NICHE LENDING ACTIVITY*
455% increase 57% increase
-------------------- -------------
1994 1995 1996 Q1 96 Q1 97
---- ---- ------ ------ ------
$ - $57.7 $320.0 $76.0 $120.0
*in millions - WMB and WMBfsb (Niche Lending began 8/95)
<PAGE> 81
SLIDE 1
MAINTAIN ASSET QUALITY
o Experienced staff with local knowledge
o High utilization of credit scoring models
o Diversification of product
o Geographic dispersion
SLIDE 2
MAINTAIN ASSET QUALITY
WMI NPA/Assets Ratio (in millions)
[BAR GRAPH]
1994 418.7 1.12%
1995 338.9 0.81%
1996 329.5 0.74%
Q1 1997 334.6 0.73%
<PAGE> 82
SLIDE 1
IMPROVE EFFICIENCY
Reengineered Process
o Simplify and standardize the process
o Eliminate non-value added documentation
o "LoanWorks" leading-edge technology
o Macro vs. micro credit analysis
SLIDE 2
IMPROVE EFFICIENCY
LoanWorks capabilities
o Sales screens for product comparisons
o Single entry of data
o Download of existing customer data
o Autofills credit report information
o Immediate loan approvals
<PAGE> 83
SLIDE 1
IMPROVE EFFICIENCY
LoanWorks capabilities
o All regulatory disclosures
o Electronic order out of title, mortgage
insurance and appraisal
o Electronic transfer of loan file
o Five day loan closings from start to finish
SLIDE 2
IMPROVE EFFICIENCY
Loan Servicing
o Outsourced to Alltel
* Industry leader
* Unlimited capacity
o On-site staff available for customer service
o AutoPay increased to 60% of portfolio
<PAGE> 84
SLIDE 1
LOAN SERVICING
[LINE GRAPH]
LOANS PER FTE
1/96 2/96 3/96 4/96 5/96 6/96 7/96 8/96 9/96 10/96 11/96 12/96 1/97
- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----- ----- ----- ----
1669 1668 1687 1683 1761 1731 1694 1729 1743 1810 1848 1897 1908
SLIDE 2
CAPITAL & PRODUCTION
Washington Mutual Lending Machine
<PAGE> 85
SLIDE 1
INVESTOR CONFERENCE
do the math
<PAGE> 86
SLIDE 1
INVESTOR CONFERENCE
do the math
SLIDE 2
SALLY JEWELL
Executive Vice President for
the Commercial Banking Division
President of Western Bank
<PAGE> 87
SLIDE 1
WASHINGTON MUTUAL
AND WESTERN BANK
A Winning Combination
SLIDE 2
BUSINESS OWNERS WANT
o Reliability and predictability
* "Be there when I need you."
o Stability
* "Give me a banker who
understands my business, not a
revolving door."
o Accuracy and timeliness
* "Make banking service hassle-free."
<PAGE> 88
SLIDE 1
SHIFTING CUSTOMER LOYALTIES
o Traditionally, customers were loyal to an
institution
o Today, loyalty is directed more toward
individuals
o Small business clients are more willing to
move with their bankers
SLIDE 2
COMMERCIAL BANKING
o Western Bank
* Shared resources as a division of Washington
Mutual Bank
* Separate branding strategy
* Experienced commercial bankers
* 50 full-service/13 BBCs
* Assets = $1.1 billion
<PAGE> 89
SLIDE 1
WESTERN'S IMPORTANCE TO WM
o Higher margins/returns
o Lower cost of deposits
o Cross referrals and higher combined market
share
o People-oriented customer service
philosophy
o Diversification
SLIDE 2
COMMERCIAL BANKING VISION
o Build "Super Community Bank"
* Commercial banking expertise
* Community banking friendliness, flexibility
and simplicity
<PAGE> 90
SLIDE 1
COMMERCIAL BANKING VISION
o Full service for small- and medium-sized
businesses and individuals
o High touch, responsive service, premium
pricing
SLIDE 2
COMMERCIAL BANKING VISION
o Local identity and market knowledge
o Inspired, team-oriented people who make
decisions that benefit the client and the
company
<PAGE> 91
SLIDE 1
ACCOMPLISHING OUR VISION
o Concentrate on clients who value service
and quality more than price and
convenience
o Listen to clients and provide tools to meet
their needs
SLIDE 2
ACCOMPLISHING OUR VISION
o Environment that attracts smart, committed
people
o Shared information at all levels
o Pride in our people/services
* Price for quality
<PAGE> 92
SLIDE 1
WESTERN BANK TODAY
o Full Service Commercial Bank Branches
* Shared Transaction and Referral Financial Center (STAR)
[o] BBC/STAR Combination
[GRAPHICS]
[*] Business Banking Center
SLIDE 2
LEVERAGING THE INFRASTRUCTURE
o 13 Business Banking Centers
o 52 STAR locations
o Plan for 100 STARs by year end
o Attracts deposits
o Generates cross referrals
o Minimal operations impact [GRAPHICS]
<PAGE> 93
SLIDE 1
MARKET STRATEGY
o Two brands
o Western Bank focuses on community-based commercial banking
o WM and ASB focus on consumer banking
o Internal cooperation captures greater market share
SLIDE 2
RESULTS
performance
[GRAPHICS]
[WESTERN BANK LOGO]
<PAGE> 94
SLIDE 1
LOANS - AVERAGE BALANCE
[BAR GRAPH]
1994 1995 1996 Q1 96 Q1 97
---- ---- ---- ----- -----
(in millions)
$482 $565 $745 $619 $957
SLIDE 2
ASSET QUALITY
Non Performing Assets/Total Assets
[BAR GRAPH]
Peer Group
1993 1994 1995 1996
---- ---- ---- ----
2.01% 1.58% 1.21% 1.17%
Western Bank
1993 1994 1995 1996
---- ---- ---- ----
0.16% 0.07% 0.12% 0.13%
<PAGE> 95
SLIDE 1
ASSET QUALITY
Net Loan Charge Offs/Total Loans
[GRAPH]
1993 1994 1995 1996
----- ----- ----- -----
Western Bank 0.05% 0.01% 0.09% 0.09%
Peer Group 0.78% 0.46% 0.37% 0.41%
SLIDE 2
DEPOSITS - AVERAGE BALANCE
[BAR GRAPH]
(in millions)
1994 $750
1995 $781
1996 $886
Q1 96 $838
Q1 97 $953
<PAGE> 96
SLIDE 1
ADJUSTED NET INCOME AFTER TAX
[BAR GRAPH]
(in millions)
1994 $10.7
1995 $12.7
1996 $13.2
Q1 96 $ 2.968
Q1 97 $ 3.409
SLIDE 2
FUTURE OPPORTUNITIES
o Gain Market Share
* Disruption caused by commercial bank
mergers
* Blend of expansion with select acquisitions
* Growth in existing markets
o Washington, Oregon, Idaho, Utah
* Explore new markets
o California
o Increase product penetration in client base
<PAGE> 97
SLIDE 1
WASHINGTON MUTUAL AND WESTERN BANK.
A WINNING COMBINATION
[GRAPHIC]
SLIDE 2
WASHINGTON MUTUAL
AND WESTERN BANK
A Winning Combination
<PAGE> 98
SLIDE 1
INVESTOR CONFERENCE
do the math
<PAGE> 99
SLIDE 1
INVESTOR CONFERENCE
do the math
SLIDE 2
LIANE WILSON
Executive Vice President
Corporate Operations
<PAGE> 100
SLIDE 1
AN INFRASTRUCTURE
FOR GROWTH
The Washington Mutual
Technology Platform
SLIDE 2
AN INFRASTRUCTURE
FOR GROWTH
[GRAPHIC]
Enable Growth and Stability
Focus on Core Consumer Banking Business
Study/Reformulate Business Processes
Deploy Technology
<PAGE> 101
SLIDE 1
FOCUS ON CORE CONSUMER BANKING BUSINESS
Objectives:
o Improve efficiency
o Help predict costs
o Allow employees to serve customers
better
o Increase value to shareholders
SLIDE 2
STUDY / REFORMULATE BUSINESS PROCESSES
o Effort began in 1992
o Ongoing process
o Includes all areas of Washington
Mutual Business
* Lending
* Deposits
* Transactions
* Administration
* Acquisitions
<PAGE> 102
SLIDE 1
STUDY / REFORMULATE BUSINESS PROCESSES
Case Study: Loan Originations
o Studied each step of loan origination
process
o Reduced number of hand-offs and
repetitive steps
o Result: Average loan origination time
reduced from 45 days to 25 days
without additional technology
SLIDE 2
DEPLOY TECHNOLOGY
Underlying Philosophy:
o Keep employees focused on core
consumer banking business
o Continue to reformulate business
processes
o Utilize technology partnerships
<PAGE> 103
SLIDE 1
WASHINGTON MUTUAL TECHNOLOGY
After
[COMPUTER SCREEN GRAPHIC]
SLIDE 2
THE UNIVERSAL WORKSTATION
Advantages:
o Uses graphical interface like a PC
o Reduces cycle times for processing
and training
<PAGE> 104
SLIDE 1
THE UNIVERSAL WORKSTATION
Advantages:
o Consolidates customer information
services
o Improves ability to serve rapidly
growing customer base
SLIDE 2
LOANWORKS
Advantages:
o Intuitive system
o Initiates each step of loan process
o Loan originations completed in
five days
<PAGE> 105
SLIDE 1
LOANWORKS
[COMPUTER SCREEN GRAPHIC]
SLIDE 2
LOANWORKS
[COMPUTER SCREEN GRAPHIC]
<PAGE> 106
SLIDE 1
LOANWORKS
[COMPUTER SCREEN GRAPHIC]
SLIDE 2
LOANWORKS
[COMPUTER SCREEN GRAPHIC]
<PAGE> 107
SLIDE 1
LOANWORKS
[COMPUTER SCREEN GRAPHIC]
SLIDE 2
LOANWORKS
[COMPUTER SCREEN GRAPHIC]
<PAGE> 108
SLIDE 1
VISUAL BANKER
Advantages:
o Provides comprehensive customer
information
o Reduces "re-keying" of information
o Enhances cross-selling process
SLIDE 2
VISUAL BANKER
[COMPUTER SCREEN GRAPHIC]
<PAGE> 109
SLIDE 1
VISUAL BANKER
[COMPUTER SCREEN GRAPHIC]
SLIDE 2
VISUAL BANKER
[COMPUTER SCREEN GRAPHIC]
<PAGE> 110
SLIDE 1
VISUAL BANKER
[COMPUTER SCREEN GRAPHIC]
SLIDE 2
TRANSACTION PLATFORM
Advantages:
o Provides comprehensive customer
information
o "Re-keying" reduced
<PAGE> 111
SLIDE 1
USING PARTNERSHIPS TO DEPLOY TECHNOLOGY
o Reduces risks and costs
* Enables new technology to be introduced in a timely
fashion
* Allows company to pay for processing at today's
volume rather than tomorrow's capacity
* Makes newest technology available at lower capital
cost
o Provides access to industry leaders
o Enables additional growth
SLIDE 2
USING PARTNERSHIPS TO DEPLOY TECHNOLOGY
Partnership: IBM
o Infrastructure management
* Voice/data network management
o Desktop management
o Help desk
o Training
<PAGE> 112
SLIDE 1
USING PARTNERSHIPS TO DEPLOY TECHNOLOGY
Partnership: IBM
o Developed underlying platform for
Visual Banker
o Co-partner in development of
transaction platform
SLIDE 2
USING PARTNERSHIPS TO DEPLOY TECHNOLOGY
Partnership: IBM
o Technology provider for the Integrion
Financial Network
* Consortium of 16 large banks:
WAMU founding member
* Members possess half of the banking
households in North America
* Will test network's on-line banking service in
4th quarter '97
<PAGE> 113
SLIDE 1
USING PARTNERSHIPS TO DEPLOY TECHNOLOGY
Partnership: Hogan
o Provides customer information system
o System for all deposit products
o ATM/Debit card management system
SLIDE 2
USING PARTNERSHIPS TO DEPLOY TECHNOLOGY
Partnership: Hogan
o WAMU first bank nationally to convert
to publicly available release 2.0
* Allows for significant expansion of customer
base
* Year 2000-compliant
<PAGE> 114
SLIDE 1
USING PARTNERSHIPS TO DEPLOY TECHNOLOGY
Partnership: AllTel
o Servicing system for:
* Residential mortgages
* Consumer loans
* Commercial real estate loans
SLIDE 2
USING PARTNERSHIPS TO DEPLOY TECHNOLOGY
Partnership: EDS
o Item processing
o Posting for mail-in payment
o Statement processing
o Research and return items
<PAGE> 115
SLIDE 1
GROWTH AND STABILITY
Acquisition Integration:
A Washington Mutual Business Process
o Groundwork laid at due diligence
o Areas/constituents addressed:
* Financial/asset quality
* Customer base composition
* Systems compatibility
* Customers/employees/shareholders
* Sales/corporate culture
o Successfully repeated 22 times since 1983
SLIDE 2
GROWTH AND STABILITY
Case Study: American Savings Bank
[TIMELINE GRAPHIC]
Jul. 22, '96 Announced Definitive Agreement
Jul. 24, '96 Initial Integration Planning with Exec. Teams
Sep. 15, '96 WAMU/ASB Integration Team Planning Meeting
Oct. 15, '96 Tactical Integration Plans Due from Team Leads
Dec. 15, '96 Detailed Integration Plans Due from Team Leads
Dec. 20, '96 Transaction Closed
<PAGE> 116
SLIDE 1
GROWTH AND STABILITY
Case Study: American Savings Bank
[TIMELINE GRAPHIC]
Dec. 20, '96
Jan. 17, '97 WAMU Marketing Strategy Introduced in Calif.
Feb. 19, '97 Investment Portfolio Converted to WAMU Platform
Mar. 31, '97 Payroll/Human Resources Systems Conversion
Apr. 7, '97 Network Technology Hardware Installation Began
Apr. 14, '97 Loan Servicing Test
Apr. 30, '97 Sales/Employee Training Completed
May 17, '97 Deposit Systems Conversion Test
SLIDE 2
GROWTH AND STABILITY
Case Study: American Savings Bank
[TIMELINE GRAPHIC]
May 17, '97
Jun. 2, '97 Account Conversion Materials Mailed to Customers
Jul. 3, '97 Deposit Accounts Conversion
Jul. 7, '97 Network/Branch Technology Goes Online
Aug. 6, '97 Loan Account Conversion
<PAGE> 117
SLIDE 1
AN INFRASTRUCTURE
FOR GROWTH
The Washington Mutual
Technology Platform
SLIDE 2
INVESTOR CONFERENCE
do the math
<PAGE> 118
SLIDE 1
INVESTOR CONFERENCE
do the math
SLIDE 2
Bill Longbrake
Chief Financial Officer
Executive Vice President
Corporate Finance
<PAGE> 119
SLIDE 1
FINANCIAL OVERVIEW
The Success Story Continues
SLIDE 2
[GRAPHIC]
Note: All figures for "WMB" reflect
the collective operations of
Washington Mutual Bank and
Washington Mutual Bank, fsb
<PAGE> 120
SLIDE 1
FINANCIAL MANAGEMENT STRATEGY
Five-Year Financial Target: 1995 - 2000
Results
Target 3/31/97
-----------------------------------------------
ROCE >18.00% 19.42%
Efficiency ratio <50.00 49.10
One-year GAP <(10.00) (.76)
Common equity/assets >5.00 5.02
EPS Growth 15.00
SLIDE 2
FEE INCOME STRATEGY
o Focus on increasing retail banking fees
o Aggressively market free checking accounts
o Vigorously cross-sell securities and
annuity products
<PAGE> 121
SLIDE 1
FEE INCOME STRATEGY
Retail Banking Fees First Quarter 1997 ($ In Millions)
ASB WMB WMI
--------------------------------------------------------
Depositor fees $ 6.0 $22.6 $28.6
Total retail banking fees $14.2 $33.7 $47.9
Total fee income $22.5 $46.9 $69.4
Retail banking fees % change
1996 Q1 to 1997 Q1 0% 25% 16%
SLIDE 2
FEE INCOME STRATEGY
Free Checking Profitability Per Account*
Revenue:
Overdraft, ATM, other $206
Interest income 60**
----
Total 266
Expenses:
Financial centers 93
Corporate support 80
Net losses 25
Interest expense 0
----
Total 198
----
Earnings Contribution $ 68
----
Average balance $900
====
* Based on 1996 Q1 data
** Assumes 88% invested in earning assets at yield net of loan
origination and servicing expenses
<PAGE> 122
SLIDE 1
FEE INCOME STRATEGY
Growth in Number of Transaction Accounts at WMB
[BAR GRAPH]
3Q95 1Q97
Interest Checking 180,922 210,420
Free Checking 286,195 428,772
SLIDE 2
EXPENSE AND PRODUCTIVITY STRATEGY
Financial Centers
o Marketing
* Drive more business and revenue through
established infrastructure
o Customers
* Increase retention
* Provide high quality service
* Cross-sell multiple services
<PAGE> 123
SLIDE 1
EXPENSE AND PRODUCTIVITY STRATEGY
Financial Centers
o Technology
* Reduce cost per transaction
* Reduce errors
* Improve service times
o Employees
* Compensate managers for increasing
profitability per employee
SLIDE 2
EXPENSE AND PRODUCTIVITY STRATEGY
Support Operations
o Focus on vital few, maintain bias to do a
few things well
o Outsource non-core competencies
o Measure productivity
* Expect improvement, reward achievement
o Re-engineer work processes
<PAGE> 124
SLIDE 1
EXPENSE AND PRODUCTIVITY STRATEGY
Support Operations
o Think and act like owners
o Provide key managers and employees equity
ownership
* Stock purchase at discount
* Restricted stock grants
SLIDE 2
EXPENSE AND PRODUCTIVITY STRATEGY
Number of Applications Underwritten per Underwriter FTE
[BAR GRAPH]
WMB 320
High Performers 145
Low Performers 65
Source: 1996 Mortgage Banking Best Practices by Arthur Andersen
Note: Performer numbers based on number of applications underwritten
per underwriter FTE
<PAGE> 125
SLIDE 1
EXPENSE AND PRODUCTIVITY STRATEGY
Retail Processing and Closing Productivity
[BAR GRAPH]
Avg. Days from Avg. Days from
Application to Approval Application to Closing
WMB 3 25
High Performance 23 40
Low Performance 32 54
Source: 1996 Mortgage Banking Best Practices by Arthur Andersen
Note: Performer numbers based on average monthly volume of
loans closed
SLIDE 2
EXPENSE AND PRODUCTIVITY STRATEGY
WMB Teller Transaction Productivity
[LINE GRAPH]
Mar-93 1555
Dec-93 1559
Sep-94 1793
Jun-95 2253
Mar-96 2286
Dec-96 2551
<PAGE> 126
SLIDE 1
EXPENSE AND PRODUCTIVITY STRATEGY
Production to Non-Production FTE at WMB
[LINE GRAPH]
3/91 1.3
12/91 1.48
12/92 1.65
12/93 1.86
12/94 1.73
12/95 1.73
12/96 2.0
3/97 2.06
SLIDE 2
EXPENSE AND PRODUCTIVITY STRATEGY
Operating Expense to Core Deposits + Loans
[LINE GRAPH]
93 Q1 1.72% Q293 Pio/PFB 1.57%
94 Q1 1.59 Q2 Olympus 1.40%
95 Q1 1.35 Q4 ASB 1.32%
96 Q1 1.35
97 Q1 1.20
* Operating expenses include employee related cost, occupancy and
other recurring expenses
Note: Excludes nonbanking subsidiaries and Western Bank
<PAGE> 127
SLIDE 1
EXPENSE AND PRODUCTIVITY STRATEGY
Operating Expense to Revenue Ratio
[BAR GRAPH]
1989 74.2%
1990 63.4
1991 57.6
1992 56.0
1993 53.2
1994 52.6
1995 52.7
1996 49.4
* Operating expenses include employee related cost, occupancy and other
recurring expenses. Revenue includes net interest income, fees and other
operating income
SLIDE 2
LENDING STRATEGY
o Dominate markets
* Broad but basic product line
* Service (shorten response times, reduce errors)
o Focus - loans to individuals and small businesses
* Single family homes
* Home equity
* Manufactured housing
* Builder loans
* Multi-family
* Business
<PAGE> 128
SLIDE 1
LENDING STRATEGY
o Price to middle of the market
o Drive down origination and servicing costs
o Remix portfolio toward higher yielding
loans and reduce securities
o Sell tightly margined loans
o Increase and migrate originations to ARM
market sensitive indices
SLIDE 2
LENDING STRATEGY
Growth by Loan Originations (in Millions)
[BAR GRAPH]
Jan. - Apr. 1996 4,279
Jan. - Apr. 1997 4,953 16%
<PAGE> 129
SLIDE 1
LENDING STRATEGY
Growth in Loan Originations (in Millions)
[BAR GRAPH]
1995 9,438
1996 13,647
Hypothetical % increase in 1997 originations
@+14% 15,558
@+16% 15,831
@+18% 16,103
SLIDE 2
LENDING STRATEGY
Loan Paydown Rates
1994 15.9%
1995 11.4%
1996 18.1%
1997 est.* 16.6%
* Based on stable to rising interest rates and beginning of the year loan mix.
<PAGE> 130
SLIDE 1
LENDING STRATEGY
Net Loan Growth (in billions)
1997 Originations:
Hypothetical % Increase
from 1996 originations
1996 @+14% @+16% @+18%
- ---------------------------------------------------------------------------
Beginning loan balance $24.4 $30.7 $30.7 $30.7
Originations 13.6 15.6 15.8 16.1
Sales/Securitizations (3.0) (2.4) (2.4) (2.4)
Paydown & REO Transfer (4.4) (5.1) (5.1) (5.1)
----- ----- ----- -----
Ending loan balance $30.7 $38.8 $39.0 $39.3
===== ===== ===== =====
Net loan growth $ 6.3 $ 8.1 $ 8.3 $ 8.6
Asset growth ($) $ 6.9 $ 7.1 $ 7.4
(%) 15.5% 16.0% 16.6%
SLIDE 2
LENDING STRATEGY
Loan Mix - 1997 Q1
ASB WMB WMI
----- ----- -----
Residential 87.5% 60.2% 74.1%
Construction 0.0 4.2 2.4
Multi-Family/CRE 11.3 12.9 12.1
Business 0.0 2.6 1.3
Consumer 1.2 19.4 10.1
----- ----- -----
100.0% 100.0% 100.0%
<PAGE> 131
SLIDE 1
LENDING STRATEGY
Loan Yields - 1997 Q1
[BAR GRAPH]
ASB 7.45%
WMB 8.50%
WMI 7.98%
SLIDE 2
LENDING STRATEGY
Opportunities
o Improve ARM yield at ASB
o Increase ARM production at WMB
o Implement WMB's higher margin loan
programs at ASB
<PAGE> 132
SLIDE 1
FUNDING STRATEGY
Deposits
o Build customer relationships
o Lead with aggressive marketing of free
checking
o Increase proportion of total deposits in
non-term accounts
* Checking
* Money market
* Regular savings
SLIDE 2
FUNDING STRATEGY
Transaction and Savings Accouns to Total - March 31, 1997
[BAR GRAPH]
<TABLE>
<CAPTION>
Transaction/Savings Time
------------------- --------
<S> <C> <C>
ASB 31.2% 68.8%
WMB 54.3% 45.7%
WMI 41.9% 58.1%
</TABLE>
<PAGE> 133
SLIDE 1
FUNDING STRATEGY
Borrowings
o Over $11 billion in liquidity available
o Borrowings are mostly collateralized
* Repurchase agreements
* Federal home loan bank advances
o Residential loans create additional liquidity
and borrowing capacity
SLIDE 2
FUNDING STRATEGY
Rates Paid for Deposits and Borrowings - 1997 Q1
[BAR GRAPH]
<TABLE>
<CAPTION>
Deposits Borrowings
-------- ----------
<S> <C> <C>
ASB 4.7 % 5.63%
WMB 3.98% 5.50%
WMI 4.39% 5.56%
</TABLE>
<PAGE> 134
SLIDE 1
NET INTEREST SPREAD
1997 Q1
<TABLE>
<CAPTION>
ASB WMB WMI
------ ----- -----
<S> <C> <C> <C>
Loan yield 7.45% 8.50% 7.98%
Deposit rate 4.69 3.98 4.38
----- ----- -----
Spread 2.76% 4.52% 3.60%
Loan yield 7.45% 8.50% 7.98%
Borrowing rate 5.65 5.44 5.62
----- ----- -----
Spread 1.80% 3.06% 2.36%
Deposit/Loans 77.0% 72.0% 74.5%
</TABLE>
SLIDE 2
NET INTEREST SPREAD
Return on Capital - Alternative Strategies
<TABLE>
<CAPTION>
Traditional Consumer
(ASB) Bank (WMB)
----------- ----------
<S> <C> <C>
Loan yield 7.45% 8.50%
Borrowing (95%) 5.65 5.44
Equity (5%) -0.0- -0.0-
------ -----
Spread 1.80 3.06
Margin 2.10 3.27
Credit losses (0.15) (0.23)
Servicing, fees, gain 0.30 0.30
Core expenses (1.10) (1.30)
------ ------
Return before taxes 1.15 2.04
Taxes @ 38.1% (0.44) (0.78)
------ ------
Net return 0.71% 1.26%
====== ======
ROCE 14.2% 25.2%
</TABLE>
<PAGE> 135
SLIDE 1
INTEREST RATE RISK MANAGEMENT STRATEGY
o Manage one-year GAP between 0 - (5%)
o Limit volatility of net interest income to a 100 basis point
rate change to less than 5 percent within 12 months
o Increase the percent of adjustable-rate assets
o Reduce repricing lags
o Migrate adjustable rate assets to more market
sensitive indices
SLIDE 2
INTEREST RATE RISK MANAGEMENT STRATEGY
Residential Loan Mix
<TABLE>
<CAPTION>
Dec. 31, 1996 Mar. 31, 1997
<C> <C> <C> <C> <C> <C>
74.8% 25.2% 75.3% 24.7%
Dec. 31, 1997 [est.]
78.2% 21.8%
[ ] Fixed [X] Adjustable
</TABLE>
Assumes residential loan production mix and conforming fixed rate loans sales
policy pursued during first four months of 1997 continued for entire year.
<PAGE> 136
SLIDE 1
INTEREST RATE RISK MANAGEMENT STRATEGY
ARM Index Considerations
o ARM repricing lag is longer in COFI
portfolio than in CMT portfolio
* COFI lag is 3.2 months
* CMT lag is 1.7 months
o All new COFI adjustable-rate loans have a 2-month repricing lag
o Menu of alternatives include: COFI, CMT, MTA, and LAMA
SLIDE 2
INTEREST RATE RISK MANAGEMENT STRATEGY
Advantages of COFI Index
o Popular with customers
o Limits payment volatility
o Rates usually adjust monthly
o Teaser rate period limited to 1-3 months
o Negative amortization feature has had limited to no consequences
<PAGE> 137
SLIDE 1
INTEREST RATE RISK MANAGEMENT STRATEGY
Problems with COFI Index
o Declining measurement base
* 69 institutions, down from over 200
* Potential for index management
o Changing composition of funding makes
COFI less responsive to market changes
o Marketing issues
SLIDE 2
INTEREST RATE RISK MANAGEMENT STRATEGY
Problems with CMT Index
o Teaser rate periods last 1-2 years
o 2% periodic rate cap can result in significant payment shock
o Higher prepayment rates when loan fully indexes at 2.875% margin
<PAGE> 138
SLIDE 1
INTEREST RATE RISK MANAGEMENT STRATEGY
Fully Indexed Rates
<TABLE>
<CAPTION>
Stabilized
Index + Margin = Rate Rate
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
COFI 4.78 2.60 = 7.38 7.50
CMT 5.80 2.88 = 8.68 8.68
MTA 5.64 2.00 = 7.64 7.80
30-Year 8.25 8.25
</TABLE>
SLIDE 2
INTEREST RATE RISK MANAGEMENT STRATEGY
ARM Index Goals
o Customer attractiveness of COFI ARM
superior to CMT ARM
o Prepayment risk less with COFI ARM,
particularly when market rates are falling
o CMT ARM profitability invariant relative
to market
o COFI ARM profitability declining relative
to market
<PAGE> 139
SLIDE 1
INTEREST RATE RISK MANAGEMENT STRATEGY
ARM Index Goals
o MTA index combines the best of both worlds
o Current MTA margin is 200 basis points
o MTA is more profitable than COFI
o This strategy is being implemented as
quickly as possible in a way that avoids
disrupting loan production
SLIDE 2
CAPITAL MANAGEMENT STRATEGY
o Prudent to target Federal Reserve capital
requirements for bank holding companies
Well capitalized
----------------
Leverage ratio 5%
Tier 1 Risk ratio 6
Tier 2 Risk ratio 10
o Exceed FDIC & OTS well-capitalized requirements
for banking subsidiaries
<PAGE> 140
SLIDE 1
CAPITAL MANAGEMENT STRATEGY
Hypothetical Model [in millions]
o Loan Growth Rate 14% 18%
o Implied Asset Growth $6,903 $7,388
o Required Capital @ 5% $345 $369
o Retained Equity @ 19.4% ROCE* 303 303
------ ------
o Prospective Capital "Shortfall" $42 $66
* Assumes 1997 Q1 ROCE adjusted for 30% dividend payout
SLIDE 2
FINANCIAL MANAGEMENT OPPORTUNITIES
Potential Margin Enhancements
o Increase percent of deposits in transaction +
accounts
o Increase percent of assets in higher yielding loans +
o Price competitively ARM loans with favorable
indices +
o Reduce low-yielding securities +
o Increase percent of borrowings -
o Result: Stable/increased interest margin
<PAGE> 141
SLIDE 1
FINANCIAL MANAGEMENT OPPORTUNITIES
Fee Income Prospects
o Rises rapidly as free checking strategy gathers momentum at ASB
o Annual increases should range from 15% to 30%
SLIDE 2
FINANCIAL MANAGEMENT OPPORTUNITIES
Operating Expense Prospects
o Investment in implementing our consumer banking strategy raises
expenses in 1997
o Consolidation economies from ASB will take full effect in the second
half of 1997
o Productivity improvements will contain costs over time
o Overall we expect expenses to rise about half as fast as asset growth
<PAGE> 142
SLIDE 1
INVESTOR CONFERENCE
do the math
SLIDE 2
APPENDIX - LENDING STRATEGY
Estimated Paydown Rates by Loan Type
Single family:
COFI ARM 12%
Treasury ARM 15
Fixed rate 10
--
12
Construction:
Custom 15
Builder 175
Multi family 16
<PAGE> 143
SLIDE 1
APPENDIX - LENDING STRATEGY
Estimated Paydown Rates by Loan Type
Business 80%
Consumer:
Home Equity 33
Manufactured Housing 12
Other 50
----
28
----
Total Paydown Rate 16.6%
SLIDE 2
APPENDIX - LENDING STRATEGY
Asset Growth (in millions)
Hypothetical % Increase in originations
@+14% @+16% @+18%
1996 1997 1997 1997
- --------------------------------------------------------------------------------
Cash & equivalents $831 $613 $616 $619
Investment securities 1,506 1,739 1,748 1,756
MBS 10,467 9,106 9,106 9,106
Loans, net 30,331 38,437 38,669 38,900
Other assets 1,418 1,560 1,560 1,560
------ ------ ------ ------
Total assets 44,553 51,455 51,699 51,941
Asset growth $ 6,902 $ 7,146 $ 7,388
15.5% 16.0% 16.6%
Assumptions: Cash and equivalents - adjusted down for excess cash; grows at
same rate as total assets
Investment securities - grows at same rate as total assets
MBS - paydowns are 13%; other assets grow at 10%
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