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 27, 1998
Washington Mutual, Inc.
(Exact Name of Registrant as specified in its charter)
Washington 0-25188 91-1653725
(State or Other Jurisdiction (Commission File Number) (IRS Identification No.)
of Incorporation)
1201 Third Avenue, Seattle, Washington 98101
Address of Principal Executive Office Postal Code
206-461-2000
Registrant's telephone number including area code
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
Exhibit 99.1 Materials presented to investors at a conference
on May 27, 1998.
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: June 1, 1998 By: /s/ Fay L. Chapman
Fay L. Chapman,
Executive Vice President and
General Counsel
[Washington Mutual Logo]
1998 Investor
Conference
T E M P L A T E for S U C C E S S
Slide - 1
<PAGE>
[Washington Mutual Logo]
Forward-Looking Information
Statements contained in this presentation which are not historical facts and
which pertain to future operating results of Washington Mutual, Inc. and its
subsidiaries constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements involve significant risks and uncertainties. Actual results may
differ materially from the results discussed in these forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, those discussed in Form 10-K for the year ending Dec. 31, 1997, and
the Registration Statement on Form S-4, reg. No. 333-52785.
Slide - 2
<PAGE>
[Washington Mutual Logo]
NOTE: Whenever "Northwest" appears, it refers to the combined operations of
Washington Mutual Bank and Washington Mutual Bank fsb (Washington, Oregon,
Idaho, Montana and Utah).
Whenever "Southwest and Southeast" appear, they refer to the operations of
Washington Mutual Bank, FA (California and Florida).
Slide - 3
<PAGE>
[Washington Mutual Logo]
High Growth
Consumer Banking
Deanna Oppenheimer
Executive Vice President
Consumer Banking
Slide - 4
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Key Strategies
Expand base of profitable customer relationships by:
Offering national convenience with localized "high touch" customer service
Delivering a broad-based product line that can be optimally mixed for
profitability and market preferences
Increasing profitability through local control, incentive compensation and
comprehensive support systems
Building a nationally recognized consumer-focused brand
Slide - 5
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Operational Overview
Nearly 4 million customer
Households
8,000 branch employees
1,100 call center employees
35 local community-based
regional managers
7 state-based
senior managers
Slide - 6
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Distribution Channels
[Pictures]
Free standing
Home Banking
ATMs
In-Store
Telephone Banking
Slide - 7
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Distribution Channels
Strong West Coast and Florida Franchises
[Map of Western United States and Florida]
State Deposits ($B)(a) Deposit Share Rank
- ----- ---------------- ------------- ----
California $30.1 8.3% 2
Washington 7.7 14.5% 2
Oregon 2.0 7.6% 2
Florida 6.3 3.7% 5
Other States 0.4 NA NA
(a) Dec. 1997, non-public interest-bearing deposits
Slide - 8
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Distribution Channels
Financial Centers as of 3/31/98
Northwest(a) CA FL Total
Free Standing 189 349(b) 118 656
In-Store 96 15 -- 111
ATMs 354 556 188 1,098
(a) Includes Washington, Oregon, Idaho, Montana and Utah
(b) Net of recent/pending consolidations
Slide - 9
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Distribution Channels
Lynnwood
Stockton
Chatsworth
North Hollywood*
[Map of Washington, Oregon and California; map highlights Lynnwood,
Washington; Stockton, California; Chatsworth, California; and
North Hollywood*, California]
Telephone Banking -- 1,100 Telephone Representatives
* Lending center
Slide - 10
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Channel Usage - Northwest*
Distribution Channel % of Total Transactions
- -------------------- -----------------------
Financial Centers 55%
Automated Calls 22%
ATMs 17%
Agent-Assisted Calls 6%
* 1997 figures
Slide - 11
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
"High-Touch" Service
"Mystery Shop" Results (100 pt. scale)
[Bar Graph]
ASB GW NW
Q4 '97 84 77 89
Q1 '98 85 82 89
Slide - 12
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
"High-Touch" Service
Customer Service Surveys (100 pt. scale)
[Bar Graph]
ASB GW NW
Q4 '97 81 90
Q1 '98 83 80 91
Source: Washington Mutual. GW service surveys initiated in Q1 '98
Slide - 13
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Broad-based Product Line
Deposit Products Financial Services
Transaction accounts Mutual Funds
Time deposits Annuities
Consumer Loan Products Securities brokerage
Home equity Credit Insurance
Unsecured lines Business Banking Products
Manufactured housing Small business lending
Auto/other Business transaction accounts
Mortgage Lending
Single-family ARMs
Single-family fixed
Slide - 14
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Financial Center Incentive Compensation
Synchronizes corporate and individual objectives
Rewards profitable production and efficient service
Motivates over-achievement
Targets market compensation
60% base salary; 40% incentive pay
Incentive component unlimited
Slide - 15
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Financial Center Incentive Compensation
High Growth Consumer Banking Financial
Center Incentive Compensation
+ Production credits
+ Funds credits
+ Fee income
+ Other income
- Operating expenses
= Net income
divided by FTE
= Net income per FTE
Slide - 16
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Support Systems
Weekly customer in-field research guides all strategic decisions
Aggressive marketing attracts new customers and provides cross-sell
opportunities
Comprehensive training programs result in smoother
conversions and accelerated employee learning curves
Quality service department insures quick and complete
resolution to customer problems
Proactive location management ensures profitable branch coverage
Slide - 17
<PAGE>
[Washington Mutual Logo]
Results
Slide - 18
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Household Base
In thousands
[Bar Graph]
1994 3,600
1995 3,696
1996 3,736
1997 3,753
Q1 '98 3,822
Slide - 19
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Household Growth - Northwest*
[Bar Graph]
1994 23,332
1995 62,442
1996 86,616
1997 125,918
Q1 '98 25,087
*Net of acquisitions
Slide - 20
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Household Growth - Southwest/Southeast*
[Bar Graph]
Q1 '97 (140,447)
Q2 '97 (18,130)
Q3 '97 (22,040)
Q4 '97 48,587
Q1 '98 47,281
*California and Florida Operations
Slide - 21
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Checking Account Growth - Northwest*
[Bar Graph]
1994 63,867
1995 95,202
1996 119,318
1997 148,815
Q1 '98 33,317
*Net of acquisitions
Slide - 22
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Checking Account Growth - Southwest/Southeast
[Bar Graph]
Q1 '97 (14,964)
Q2 '97 (24,873)
Q3 '97 (28,693)
Q4 '97 96,489
Q1 '98 84,747 (36,288 CA; 48,459 FL)
Slide - 23
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Growing Transaction Balances - 3/31/98
Northwest Southwest/Southeast
[Pie Chart] [Pie Chart]
Transaction $7.1 billion Transaction $16.7 billion
balances* 59% balances* 43%
Time deposit $5.2 billion Time deposit $22.3 billion
balances 41% balances 57%
*Transaction balances include checking, money market and savings deposits
Slide - 24
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Deposit Sales - Q1 `98*
[Pie Chart]
Checking 53%
CDs 10%
MMA/Savings 37%
*Based on number of accounts; includes all operations
Slide - 25
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Depositor Fee Income
Dollars in millions
[Bar Graph]
Southwest/Southeast Northwest Total
1994 $157.5 $28.5 $186.0
1995 $176.4 $57.5 $233.9
1996 $205.2 $77.3 $282.5
1997 $253.9 $112.0 $365.9
Q1 '97 $60.8 $21.9 $82.7
Q1 '98 $59.0 $33.3 $92.3
Slide - 26
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Depositor Fee Income - Southwest/Southeast
[Bar Graph]
Dollars in millions
Q1 '97 Q1 `98
O/D 8 NSF Fees $34.2 $30.0
Service Fees $12.6 $9.3
ATM Fees $5.9 $4.7
Other $8.0 $5.1
Total $60.8 $59.0
Slide - 27
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Lending - Financial Center Production
Dollars in millions
[Bar Graph]
Mortgage Lending * Consumer Lending Total
1994 $1,000.7 $850.0 $1,851
1995 $1,104.1 $914.0 $2,018
1996 $1,838.7 $1,025.0 $2,864
1997 $2,016.8 $1,726.0 $3,743
Q1 '98 $951.4 $381.0 $1,332
Source: Washington Mutual "Snapshot" Reports
*Mortgage reflects Northwest production only
Slide - 28
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Consumer Lending - Southwest/Southeast
Dollars in millions
[Bar Graph]
Q1 '97 $106.7
Q1 '98 $170.7
+70% Growth
Slide - 29
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Average Financial Center Production Mix
Product Traditional Thrift(a) Washington Mutual
Checking Accounts 1,515 2,638
Checking Balances 8% 15%
Money Market/Savings 24% 38%
Time Deposits 68% 47%
Consumer Lending 3000,000 $3.8m
Mortgage Lending $0 $6.2m
Fee Income $150,000 $380,000
Direct Operating Expense $240,000 $270,000
Average FTE 6.8 8.5
March 1997 figures.
(a) American Savings financial centers
(b) WMB financial centers
Slide - 30
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Case Study: Pacific First Bank/Oregon
Acquired 1993
Traditional thrift model
New market for Washington Mutual
Slide - 31
<PAGE>
/[Washington Mutual Logo]
High Growth Consumer Banking
Case Study: Pacific First Bank/Oregon
Average Financial Center Production Mix
Product 1994 1997
Checking Accounts 1,207 2,494
Deposit Balances $26.4 m $27.9 m
Consumer Lending (Orig.) $2.9 m $4.1 m
Mortgage Lending (Orig.) $1.6 m $5.1 m
Fee Income $85,520 $307,886
Direct Operating Expense $205,486 $232,057
Average FTE 7.3 7.4
Source: Washington Mutual "Snapshot" Report
Slide - 32
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
What's Next?
Slide - 33
<PAGE>
[Washington Mutual Logo]
High Growth Consumer Banking
Next Generation Expansion
Develop new market denovo entry vehicle
Season newly acquired markets
Captivate new Free Checking customers with compelling products and services
Slide - 34
<PAGE>
[Washington Mutual Logo]
The
Washington Mutual
Customer
Lindy Friedlander, Ph.D.
Senior Vice President
Corporate Research & Development
Slide - 35
<PAGE>
[Washington Mutual Logo]
Template for Success
Historical WAMU Target Markets
1983: Cautious, frugal, saver
1989: Homeowner/Saver-investor
1995: Homeowner/Saver-investor
Entry level banking (Free Checking)
Slide - 36
<PAGE>
[Washington Mutual Logo]
Template for Success
Checking Strategy
Attract younger customers with earning potential
Cross-sell other products and fee-generating services
Retain profitable customers for life
Slide - 37
<PAGE>
[Washington Mutual Logo]
Template for Success
A Changing Age Demographic
[Bar Graph]
WAMU (WA) 1986 WAMU (WA) 1997
-------------- --------------
18-34 17% 25%
35-49 28% 31%
50+ 55% 44%
Checking
Penetration 18% 63%
Slide - 38
<PAGE>
[Washington Mutual Logo]
Template for Success
Customer Age Distribution
[Bar Graph]
WM (NW) GW (CA) ASB (CA) GW (FL)
18-34 25% 23% 7% 28%
35-49 31% 35% 25% 40%
50+ 44% 42% 68% 32%
Slide - 39
<PAGE>
[Washington Mutual Logo]
Template for Success
Customer Income Distribution
[Bar Graph]
WM (NW) GW (CA) ASB (CA) GW (FL)
$35 32% 29% 30% 33%
$35-$50 27% 20% 24% 27%
$50-$100 34% 39% 34% 33%
$100+ 7% 12% 12% 7%
Slide - 40
<PAGE>
[Washington Mutual Logo]
Template for Success
Customer Profit Segmentation
Relative Profitability Index
Match-funded spreads for all assets & liability accounts
Adjust variable/semi-variable income & expense for origination and
servicing
Present value & annualized cash flow over expected life
Household profitability equals sum for all accounts
Slide - 41
<PAGE>
[Washington Mutual Logo]
Template for Success
Customer Profit Segmentation
Profit Segments
High (above average overall - top 1/4 of Northwest base)
Moderate/low (remainder - 1/2 of Northwest base)
Unprofitable (< zero - bottom 1/4 of Northwest base)
Slide - 42
<PAGE>
[Washington Mutual Logo]
Template for Success
Northwest Household Profile
<TABLE>
<CAPTION>
Profit Profit Age Cross Sell OD/ NSF Fees Monthly Avg. Dep. & Avg. Loans % Single
Segment Contrib. Q4 '97 Branch Trans Inv. Serv.
Q4 `97
<S> <C> <C> <C> <C> <C> <C> <C> <C>
High 85% 50 2.9 $46 3.4 $36K $66K 27%
Moderate 17% 46 2.1 $7 2.3 $9K $16K 45%
Unprof. -2% 36 1.9 $1 3.5 $3K -- 44%
Total 100% 44 2.2 $16 2.9 $14K $25K 40%
As of 12/31/97. Cross-sell ratio excludes ATM cards. Multiple accounts of the
same type count as one service.
</TABLE>
Slide - 43
<PAGE>
[Washington Mutual Logo]
Template for Success
New Free Checking Household Profile
<TABLE>
<CAPTION>
Profit Profit Age Cross Sell OD/ NSF Fees Monthly Avg. Dep. & Avg. Loans % Single
Segment Contrib. Q4 '97 Branch Trans Inv. Serv.
Q4 `97
<S> <C> <C> <C> <C> <C> <C> <C> <C>
High 84% 35 2.9 $154 5.2 $6K $25K 11%
Moderate 24% 34 2.5 $20 3.6 $3K $3K 16%
Unprof. -8% 33 2.0 $1 3.5 $1K -- 35%
Total 100% 34 2.3 $33 3.8 $2K $5K 24%
As of 12/31/97. Cross-sell ratio excludes ATM cards. Multiple accounts of the
same type count as one service.
</TABLE>
Slide - 44
<PAGE>
[Washington Mutual Logo]
Template for Success
New Free Checking Household Profile
A younger household base
[Bar Graph]
New Free Checking HHs General Population
<30 48% 23%
30-34 15% 11%
35-44 19% 20%
45+ 18% 46%
Weighted-average for all WM markets
Slide - 45
<PAGE>
[Washington Mutual Logo]
Template for Success
Free Checking Household Survey/NW
"My previous bank was . . ."
[Pie Chart]
First-timers 12%
First Security 12%
Seafirst/B of A 13%
US Bank 14%
Other Banks 49%
New Free Checking households that joined WM in Dec. 1997
Slide - 46
<PAGE>
[Washington Mutual Logo]
Template for Success
Free Checking Household Survey/NW
"At my previous bank I was . . ."
[Bar Graph]
Never Satisfied Recently Dissatisfied Always Satisfied
Seafirst/B of A 40% 40% 20%
US Bank 35% 39% 27%
First Security 45% 45% 10%
All other 26% 22% 52%
New Free Checking households that joined WM in Dec. 1997
Slide - 47
<PAGE>
[Washington Mutual Logo]
Template for Success
Free Checking Household Survey/NW
"My previous bank was . . ."
[Pie Chart]
First-timers 22%
Wells 16%
B of A 14%
Other Banks 48%
New Free Checking households that joined WM in Dec. 1997
Slide - 48
<PAGE>
[Washington Mutual Logo]
Template for Success
Free Checking Household Survey/CA
"At my previous bank I was . . ."
[Bar Graph]
Never Satisfied Recently Dissatisfied Always Satisfied
B of A 52% 30% 18%
Wells 34% 41% 25%
All other 21% 24% 55%
New Free Checking households that joined WM in Dec. 1997
Slide - 49
<PAGE>
[Washington Mutual Logo]
Template for Success
Free Checking Household Survey/FL
"My previous bank was . . ."
[Pie Chart]
First-timers 27%
Nations 11%
First Union 9%
Barnett 8%
Other Banks 45%
New Free Checking households that joined WM in Dec. 1997
Slide - 50
<PAGE>
[Washington Mutual Logo]
Template for Success
Free Checking Household Survey/FL
"At my previous bank I was . . ."
[Bar Graph]
Never Satisfied Recently Dissatisfied Always Satisfied
Nations 29% 48% 24%
First Union 33% 33% 33%
Barnett 13% 73% 13%
All other 16% 33% 51%
New Free Checking households that joined WM in Dec. 1997
Slide - 51
<PAGE>
[Washington Mutual Logo]
Is Free Checking
Profitable?
Slide - 52
<PAGE>
[Washington Mutual Logo]
YES!
Slide - 53
<PAGE>
[Washington Mutual Logo]
Template for Success
Free Checking Profitability
More Profitable than new non-Free Checking deposit relationships
19% more profitable in their first 6 months
34% more profitable after 2 years
More profitable than prior new non-interest checking households*
54% more profitable in their first 6 months
7% more profitable after 3 years
*Prior to launch of Free Checking
Slide - 54
<PAGE>
[Washington Mutual Logo]
Template for Success
Free Checking Profitability
Customers who said they incurred overdrafts in the past year
[Bar Graph]
New Free Checking(a) General Population(b)
3.7 ODs 3.3 ODs
43% 29%
(a) Survey of new Free Checking households that joined WM in 12/97. All WM
markets.
(b) April 1998 WM Research Survey. All WM markets.
Slide 55
<PAGE>
[Washington Mutual Logo]
Template for Success
Free Checking Profitability
Profitability grows with time
[Bar Graph]
Year 1 Year 2 Year 3
------ ------ ------
Income OD/NSF Fees 56% 47% 42%
(18% Growth) (36% Growth)
New Northwest Free Checking customers that joined WM in 10/94.
Growth rates reflect profit increase over year 1.
Slide - 56
<PAGE>
[Washington Mutual Logo]
Template for Success
Free Checking Profitability
Cross-sale of products and services
[Bar Graph]
New Free Checking Other New Deposit
Households Households
2.4 services 1.6 services
77% 35%
Accounts opened between 10/94-12/97; Northwest households only.
Slide - 57
<PAGE>
[Washington Mutual Logo]
Template for Success
Free Checking Profitability
Contribution to profit by product
[Bar Graph]
Year 1 Year 2 Year 3
------ ------ ------
Loans 37% 38% 45%
Dep./Inv. 9% 9% 8%
Checking 57% 53% 47%
New Northwest Free Checking customers that joined WM in 10/94.
Slide - 58
<PAGE>
[Washington Mutual Logo]
Template for Success
Free Checking Profitability
Additional Cross-sell Opportunities
Deposit/Investment/ Checking Services Have Want
Savings Account 56% 32%
Brokerage Investment 30% 33%
IRA 24% 26%
Plus Package 40%* 44%
Pay-by-Phone 6%* 33%
* Where offered,
Survey of new Free Checking households that joined WM in 12/97. All WM markets.
Slide - 59
<PAGE>
[Washington Mutual Logo]
Template for Success
Free Checking Profitability
Additional Cross-sell Opportunities
Loan/Debit Products Have Want
Check Card 83% 4%
Credit Card 72% 30%
Personal Line 40% 27%
Car Loan 38% 26%
Mortgage Loan 22% 23%
Survey of new Free Checking households that joined WM in 12/97. All WM markets.
Slide - 60
<PAGE>
[Washington Mutual Logo]
Template for Success
New Checking Household Retention
[Bar Graph]
Year 1 Year 2 Year 3
------ ------ ------
New Classic (non-interest)
Checking HH (Oct. '91) 77% 83% 86%
New Free Checking HH
(Oct. '94) 70% 84% 88%
Industry Average Approx. 76% Approx. 79% Approx. 80%
Industry Average Source: Council on Financial Competition retention
database. Northwest households only.
Slide - 61
<PAGE>
[Washington Mutual Logo]
Template for Success
Average Monthly Delivery Channel Use
WA/OR customer perceptions compared with non-customers
[Bar Graph]
Free Checking Customer(a) Non-Customer <50(b)
ATM 5.56 5.88
Branch 3.47 2.09
Drive-Thru 2.78 2.68
Phone/IVR 2.22 2.53
Phone/Live Rep. 0.71 0.58
(a) Survey of new Free Checking households that joined WM in 12/97. All WM
markets.
(b) April 1997 WM survey of non-customers under age 50.
Slide - 62
<PAGE>
[Washington Mutual Logo]
Template for Success
Quarterly Branch Use Over Time
[Bar Graph]
After Opening 97%
Year 1 89%
Year 2 84%
Year 3 81%
Northwest new Free Checking households since launch in 10/94
Slide - 63
<PAGE>
[Washington Mutual Logo]
Template for Success
Consumer Research
What's important
to consumers?
Slide - 64
<PAGE>
[Washington Mutual Logo]
Template for Success
Consumer Research
Consumers want their bank to:
Be trustworthy
Provide fast service
Treat them like a person, not a number
Be flexible and responsive to their needs
Give them a good deal
Slide - 65
<PAGE>
[Washington Mutual Logo]
Template for Success
Consumer Research
[Bar Graph]
WM Customers Major Competitors
Trustworthy 92% 82%
Fast Service 83% 79%
Treats You Like a Person 89% 73%
Flexible/Responsive 83% 69%
Good Deal 86% 63%
8/97 WM Research Survey. All WM markets.
Slide - 66
<PAGE>
[Washington Mutual Logo]
Template for Success
Consumer Research
How California customers rate their bank.
WM Customers Major Competitors
Trustworthy 86% 73%
Fast Service 67% 60%
Treats You Like a Person 80% 72%
Flexible/Responsive 68% 57%
Good Deal 65% 51%
8/97 WM research survey. All WM markets.
Slide - 67
<PAGE>
[Washington Mutual Logo]
Template for Success
Consumer Research
How Florida customers rate their bank
[Bar Graph]
WM Customers Major Competitors
Trustworthy 83% 81%
Fast Service 63% 71%
Treats You Like a Person 63% 72%
Flexible/Responsive 65% 68%
Good Deal 67% 57%
8/97 WM research survey. All WM markets.
Slide - 68
<PAGE>
[Washington Mutual Logo]
Template for Success
Summary
Free Checking is profitable and has helped make the Washington Mutual
customer base younger
New Free Checking customers are immediately profitable, and have terrific
long-term potential
Washington Mutual customers are generally more satisfied than other bank
customers
Non-customers want what Washington Mutual offers
Slide - 69
<PAGE>
[Washington Mutual Logo]
Corporate Marketing
Brad Davis
Senior Vice President
Corporate Marketing
Slide - 70
<PAGE>
[Washington Mutual Logo]
The Washington
Mutual Band
Slide - 71
<PAGE>
[Washington Mutual Logo]
Disney
[Picture] = Entertainment!
Slide - 72
<PAGE>
[Washington Mutual Logo]
Volvo
[Picture of Car] = Safety!
Slide - 73
<PAGE>
[Washington Mutual Logo]
Competitive Research
How the competition is viewed:
Automated
Mechanized [Picture]
Overworked
Source: Washington Mutual research
Slide - 74
<PAGE>
[Washington Mutual Logo]
Competitive Research
How the competition is viewed:
Stiff
Arrogant [Picture]
Cold
Source: Washington Mutual research
Slide - 75
<PAGE>
[Washington Mutual Logo]
Washington Mutual
A Distinct Brand Image
How Washington Mutual is viewed:
Casual
Comfortable [Picture]
At home
Source: Washington Mutual research
Slide - 76
<PAGE>
[Washington Mutual Logo]
Washington Mutual
A District Brand Image
How Washington Mutual is viewed:
Caring
Warm [Picture]
Personal
Slide - 77
<PAGE>
[Washington Mutual Logo]
Washington Mutual
A Distinct Brand Image
"Real People Talking to Real People"
Human/genuine
Approachable
Non "Bank-like"
Slide - 78
<PAGE>
[Washington Mutual Logo]
[Washington Mutual logo here]
Slide - 79
<PAGE>
[Washington Mutual Logo]
Marketing
[advertisement] "Keeping the Northwest Safe for Free Checking"
Slide - 80
<PAGE>
[Washington Mutual Logo]
Marketing
[Picture]
Slide - 81
<PAGE>
[Washington Mutual Logo]
Marketing
[Picture]
Slide - 82
<PAGE>
[Washington Mutual Logo]
Marketing
[advertisement]
Keeping the Northwest safe for truth, justice and Free Checking
Slide - 83
<PAGE>
[Washington Mutual Logo]
[Washington Mutual logo here]
Slide - 84
<PAGE>
[Washington Mutual Logo]
Advertising
[advertisement]
"Wanted poster"
Slide - 85
<PAGE>
[Washington Mutual Logo]
Washington Mutual
In the News
[Pictures of Newspaper Clippings]
Slide - 86
<PAGE>
[Washington Mutual Logo]
[Washington Mutual logo here]
Slide - 87
<PAGE>
[Washington Mutual Logo]
Marketing
Bank Advertising Recall (First Mention Awareness)
[Bar Graph]
Wells Fargo 6%
B of A 18%
WAMU 50%
Internal advertising effectiveness study 11/97
Slide - 88
<PAGE>
[Washington Mutual Logo]
Advertising Awareness
Pacific Northwest First Mention
[Line Graph]
First Mention
Ad Awareness
1995 15%
1996 28%
1997 50%
Advertising effectiveness study 5/95 - 5/97
Slide - 89
<PAGE>
[Washington Mutual Logo]
Cost Per Checking Account
Pacific Northwest First Mention
Total Marketing Including Salaries and Benefits
[Bar and Line Graph]
Cost Per Account Ad Awareness
1995 $179.84 15%
1996 $165.13 28%
1997 $157.86 50%
"ED" (WM) data base system and internal advertising effectiveness study 5/97
Slide - 90
<PAGE>
[Washington Mutual Logo]
Washington Mutual
A Distinct Brand Image
How Washington Mutual is viewed:
Caring
Warm [Picture]
Personal
Source: Washington Mutual research
Slide - 91
<PAGE>
[Washington Mutual Logo]
Marketing
Brand Awareness Service Product Positioning
[Washington Mutual logo here]
Slide - 92
<PAGE>
[Washington Mutual Logo]
Product Positioning
Slide - 93
<PAGE>
[Washington Mutual Logo]
Marketing
["Do the Math" ad here]
Slide - 94
<PAGE>
[Washington Mutual Logo]
Marketing
[a different "Do the Math" ad here]
Slide - 95
<PAGE>
[Washington Mutual Logo]
Marketing
[a different "Do the Math" ad here]
Slide - 96
<PAGE>
[Washington Mutual Logo]
Net New Checking Accounts
Northwest Operations
[Bar Graph]
1994 63,867
1995 95,202
1996 119,318
1997 148,815
Investor relations quarterly report
Slide - 97
<PAGE>
[Washington Mutual Logo]
Net New Checking Accounts
American Savings Bank
[Bar Graph]
1996 5,695
1997 83,127
Slide - 98
<PAGE>
[Washington Mutual Logo]
Net New Checking Accounts
Great Western
[Bar Graph]
Q1 '97 (46,279)
Q2 '97 (51,359)
Q3 '97 (36,400)
Q4 '97 78,870 (58% CA; 42% FL.)
Slide - 99
<PAGE>
[Washington Mutual Logo]
Service
[Washington Mutual Logo]
Caring
Warm [Picture]
Personal
Slide - 100
<PAGE>
[Washington Mutual Logo]
Would Refer Their Bank to Friends
[Bar Graph]
WAMU 90%
Wells Fargo 46%
B of A 42%
Source: Washington Mutual research
Slide - 101
<PAGE>
[Washington Mutual Logo]
[Washington Mutual logo here]
Slide - 102
<PAGE>
[Washington Mutual Logo]
Financial Services
Craig Davis
Executive Vice President
Lending &
Financial Service
Slide - 103
<PAGE>
[Washington Mutual Logo]
Financial Services
Overview
WM Financial Services
WM Group of Funds
Washington Mutual Insurance Services
Slide - 104
<PAGE>
[Washington Mutual Logo]
Financial Services
Commission/Fee Income Growth (Revenue)
Dollars in millions
[Bar Graph]
Broker/Dealer Funds Insurance Total
1995 $82 $35.5 $8.5 $126
1996 $101 $41 $9 $151
1997 $112 $40.5 $10.5 $163
1998 Goal $130 $50 $9 $189
Slide - 105
<PAGE>
[Washington Mutual Logo]
Financial Service
WM Financial Services
Broker/Dealer (Murphey Favre, ASB Financial Services, GW Financial
Securities)
Stocks, Bonds, Mutual Funds, Annuities, Life Insurance
Distribution through Financial Centers (FCs)
Financial Consultants (Series 7)
Platform (Fixed annuities)
Slide - 106
<PAGE>
[Washington Mutual Logo]
WM Financial Services
Strategy
Build financial services powerhouse
Leverage bank relationship
Common distribution strategy (series 7/LPFRs)
Achieve business source mix of 1/3, 1/3, 1/3 through:
FC referrals
working existing customers
bringing in new customers
Slide - 107
<PAGE>
[Washington Mutual Logo]
WM Financial Services
Strategy
Expand packaged product sales
Recruit and retain top performing FCs and support staff
Provide exceptional FC support
Combine (WMB, ASB, GW) back offices - increase operating efficiencies
Operate with consistent compliance policies and procedures
Slide - 108
<PAGE>
[Washington Mutual Logo]
WM Financial Services
Distribution
[Map of United States]
7 States
350 Financial Consultants
217 Licensed PFRs
Slide - 109
<PAGE>
[Washington Mutual Logo]
WM Financial Services
Distribution by State
[Pie Chart]
CA 64%
WA 18%
FL 14%
OR 3%
LPFR 1%
Slide - 110
<PAGE>
[Washington Mutual Logo]
WM Financial Services
Product Mix
[Pie Chart]
Mutual Funds 34%
Variable Annuities 33%
Fixed Annuities 13%
Proprietary Mutual Funds 10%
General Securities 9%
Life Insurance 1%
Slide - 111
<PAGE>
[Washington Mutual Logo]
Top Banks/Thrifts in Investment Sales
Fourth Quarter, 1997
Institution Billions
1. Chase Manhattan $1.174
2. First Union $1.160
3. Bankers Trust $1.091
4. Citicorp $1.084
5. Wells Fargo $1.012
6. National City $0.913
7. Banc One $0.688
8. Nations $0.627
9. Keycorp $0.565
10. Washington Mutual $0.549
*Singer Report April/May 1998
Slide - 112
<PAGE>
[Washington Mutual Logo]
Financial Services
WM Group of Funds
Proprietary mutual fund complex (Composite, Sierra)
228,000 shareholder accounts
$4.87 billion assets
24 funds, 18 variable annuities
Slide - 113
<PAGE>
[Washington Mutual Logo]
WM Group of Funds
Strategy
Emphasis on conservative, "value based" portfolio management, asset
allocation and prudent risk management
Distribution of funds to WAMU customer base through WM Financial Services
Grow assets with creative marketing ...emphasizing our investment
philosophy and dedication to helping our shareholders attain their financial
goals
Slide - 114
<PAGE>
[Washington Mutual Logo]
WM Group of Funds
Performance
Above Average Internally Advise
Performance 1997 March, 1998
1 Year 5 of 8 4 of 8
3 Year 5 of 8 5 of 8
Sub-Advised
1 Year 2 of 5 2 of 5
3 Year 3 of 5 3 of 5
Slide - 115
<PAGE>
[Washington Mutual Logo]
WM Group of Funds
Growing Assets
Dollars in billions
[Bar Graph]
Composite Sierra WM Group Total
Dec. '95 $1.30 $3.31 $4.61
Dec. '96 $1.50 $3.35 $4.85
Dec. '97 1.82 $3.00 $4.82
April '98 $4.87
Slide - 116
<PAGE>
[Washington Mutual Logo]
Financial Services
Washington Mutual Insurance
Captive insurance agency (ASBIS, GWFIA)
P&C (homeowners) and mortgage life products
Direct mail, internal and third party sales
Slide - 117
<PAGE>
[Washington Mutual Logo]
Washington Mutual Insurance Services
Strategy
Support mortgage lending with highly rated hazard insurance products to
expedite closing process for borrowers
Cross sell insurance products to the existing mortgage portfolio base
strengthening the borrower relationship
Provide direct response insurance products to consumer bank customers that
create a strong added-value relationship
Slide - 118
<PAGE>
[Washington Mutual Logo]
Washington Mutual Insurance Services
Product Mix
[Pie Chart]
Mass Marketed* 72%
Property & Casualty 22%
Life 6%
*Mass Marketed includes: AD&D, Mortgage Life & Disability
Slide - 119
<PAGE>
[Washington Mutual Logo]
Washington Mutual Insurance Services
Premium Growth
Dollars in millions
[Bar Graph]
1995 $33.60
1996 $37.30
1997 $41.40
1998 Goal $44.30
Slide - 120
<PAGE>
[Washington Mutual Logo]
Financial Services:
Pre-Tax Net Income: 1997 vs. 1998
Dollars in millions
1997 1998 %
Actual Goal Change
WM Financial Services $18.9 $31.7 68%
WM Group of Funds 3.9 6.7 73
Washington Mutual Ins. Svs. 7.2 7.6 5
Total $30.0 $46.0 53%
Slide - 121
<PAGE>
[Washington Mutual Logo]
Financial Services:
Pre-Tax Net Income (April YTD)
Dollars in millions
[Bar Graph]
WMFS WM Group WMIS Total
April '97 $5,608 $1,447 $1,507 $8,562
April '98 $9,672 $2,226 $2,338 $14,236
Slide - 122
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Craig Davis
Executive Vice President
Lending & Financial Services
Slide - 123
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Distribution
[Map of United States]
29 States
190 Offices
700 Loan Consultants
85 Accounts Managers
Slide - 124
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Residential Volume
Dollars in billions
[Bar Graph]
1995 $14.9
1996 $17.3
1997 $23.4
Slide - 125
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
1997
#4 Residential Lender in the United States(a)
#1 West Coast Residential Lender
#1 Portfolio/ARM Originator with 9.5% share(b)
Sources: (a) Inside Mortgage Finance
(b) Based on material published by Fannie Mae
Slide - 126
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Mortgage Origination Strategy
Broad product/lender of choice
Decentralized support
Multiple distribution channels
Market share: 10%+
Low cost originator
Recruit/retain top performers
Moving Treasury Average (MTA) ARM focus
Slide - 127
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
MTA Option ARM Features
Low initial payments
Stable index
Monthly rate adjustments
7 1/2% payment adjustment CAP
Lifetime interest rate CAP
Slide - 128
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
MTA Option ARM Features
Four payment options:
1) minimum payment due
2) interest only
3) fully amortized principal and interest
4) additional payment at customer's option
Slide - 129
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Why Do We Want Option ARMs?
Achieve ROE targets (18%)
Reduce interest rate risk
Exploit market niches
Build Realtor/broker relationships
Slide - 130
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
But . . . Why Would a Borrower Want One?
Control of payment levels
Improve cash flow
pay off higher cost consumer debt
make high-yield investments
Financial planning
tax deductibility of deferred interest
Slide - 131
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Residential Volume - 1997 vs. 1998
Dollars in billions
[Bar and Line Graph]
January February March April
1997 $1.40 $1.33 $1.59 $2.19
1998 $1.63 $2.39 $3.20 $3.16
1998 Plan Approx. $1.63 Approx. $1.70 Approx. $2.20 Approx. $2.30
Slide - 132
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Refinance vs. Purchase - 1997 vs. 1998
[Bar and Line Graph]
January February March April
ARM Fundings 55% 42% 46% 55%
ARM Apps. 43% 43% 56% 59%
% Refi Approx. 58% Approx. 69% Approx. 64% Approx. 56%
Slide - 133
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Distribution by Channel - April '98 YTD
[Pie Chart]
HLCs 45.9%
Wholesale 39.8%
FCs 14.3%
Slide - 134
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Retail Lending Strategy
Build long-term profitable relationships with Realtors
Promote local underwriting and appraisal to support "Portfolio Power"
Increase number of HLCs in major US markets with propensity for ARMs
Increase niche and construction lending volume in appropriate markets
Slide - 135
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Wholesale Lending Strategy
The Wholesale Lending Division serves the mortgage broker community
Currently mortgage brokers are responsible for approximately 60% of
nationwide mortgage originations
The Premier Broker program builds franchise value
Exclusive relationships
High quality originations
Target portfolio ARM originations and purchase transactions
71% portfolio ARM April '98 YTD
46% purchased April '98 YTD
Slide - 136
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Financial Center Strategy
First mortgage loans originated through financial centers
Low cost resource to originate loans from existing customer base
Important distribution during "refi mania"
Allows 100% commissioned sales personnel to concentrate on purchase
business
Will expand to California and Florida in Q3 '98
Slide - 137
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Distribution by State - April '98 YTD
[Pie Chart]
CA 41.5%
WA 23%
OR 9.6%
UT 3.4%
IL 3%
FL 3%
MA 2.5%
AZ 1.6%
CT 1.6%
CO 1.5%
Other 9.4%
Slide - 138
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Construction Lending
Dollars in millions
[Bar Graph]
1995 $.922
1996 $1.286
1997 $1.449
April '98 YTD $.454
Slide - 139
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Construction Lending Strategy
"Custom" construction provides long-term financing to borrowers who
contract with a builder to build a home on the borrower's lot
"Interim" construction loans to builders
Short-term loans
Originated and processed in local HLCs by certified
construction loan specialists
Currently lending to builders in the Northwest and in California
Expansion plans for Nevada, Arizona and Colorado
Builder take-out program
Slide - 140
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Niche Lending
Dollars in millions
[Bar Graph]
1995* $35
1996 $240
1997 $298
April '98 YTD $80
*Aug. '95 to Dec. '95
Slide - 141
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Niche Lending Strategy
Further enhances our broad product strategy
Reinforces Realtor/broker relationships
Creates additional origination opportunities
Generates higher margins
Reduces fallout increasing lending efficiencies
Successful program in the Northwest
Expanding to California and Florida
Slide - 142
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Profitability - Achieving 18% ROE
Portfolio lending provides opportunities to generate higher yields
Low cost originator: streamlined origination process/productive workforce
Credit risk management - a proven track record in minimizing loan losses
Shift to MTA from COFI
Slide - 143
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Productivity - Fundings per FTE
[BAR GRAPH]
Residential Wholesale
(units) (units)
1995 Approx. 7.5 Approx. 18.0
1996 Approx. 10.0 Approx. 26.0
1997 Approx. 11.0 Approx. 30.0
April '98 YTD Approx. 12.5 Approx. 32.5
Slide - 144
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Productivity - Fundings per Loan Consult./Acct. Mgr.
[Bar Graph]
Residential Wholesale
(units) (units)
1995 Approx. 5.5 Approx. 31.0
1996 Approx. 6.5 Approx. 37.0
1997 Approx. 6.5 Approx. 39.0
April '98 YTD Approx. 10.25 Approx. 55.0
Slide - 145
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Decaffeinating COFI
[Line Graph]
MTA COFI
1995 0% 72%
1996 0% 63%
1997 11% 50%
1998* 75% 8%
* Through April
Slide - 146
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Market Share - 1997
[Bar Graph]
Washington Oregon California
WAMU 17.01% 13.06% 7.43%
Norwest 6.25% 5.50% 6.74%
Countrywide 2.74% 3.66% 3.12%
Source: Experion
Slide - 147
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Market Share - ARM vs. Fixed - 1997
[Bar Graph]
WA OR CA
Fixed 13.38% 11.13% 2.10%
ARM 23.48% 15.85% 15.03%
Source: Experion
Slide - 148
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Pricing Comparison - 30-Year Fixed, Conforming*
<TABLE>
<CAPTION>
Washington California
Lender Rate Points Eff. Yield Lender Rate Points Eff. Yield
<S> <C> <C> <C> <C> <C> <C> <C>
Countrywide 7.000 0.750 6.963 Home 7.000 0.875 6.984
US Bancorp 7.000 0.875 6.984 Countrywide 7.000 1.125 7.026
B of A 7.000 1.125 7.026 B of A 7.000 1.250 7.047
WAMU 7.125 0.875 7.109 Norwest 7.125 0.875 7.109
Norwest 7.250 0.875 7.234 WAMU 7.125 0.875 7.109
</TABLE>
* As of 5/4/98
Slide - 149
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Pricing Comparison - 5/1 Jumbo ARM*
Lender Rate Points Margin Index Effective Yield
Washington
US Bancorp 6.500 0.875 2.750 CMT 6.814
B of A 6.750 1.000 2.750 CMT 7.042
Countrywide 6.750 1.000 2.750 CMT 7.042
WAMU 6.875 1.000 2.875 MTA 7.185
California
B of A 6.750 1.000 2.750 CMT 7.042
Countrywide 6.750 1.000 2.750 CMT 7.042
WAMU 6.875 1.000 2.875 MTA 7.185
Norwest 7.125 0.875 2.750 CMT 7.311
* As of 5/4/98
Slide - 150
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Pricing Comparison - 3-Month Option ARM*
Lender Start Points Margin Index Effective Yield
Home 3.95 1.000 1.75 MTA 7.114
B of A 4.63 1.000 2.00 MTA 7.385
WAMU 3.95 1.000 2.05 MTA 7.397
World 4.50 1.000 2.25 MTA 7.614
Downey 4.95 1.000 2.55 Cofi 7.327
World 4.50 1.000 2.60 Cofi 7.350
WAMU 4.95 1.000 2.60 Cofi 7.374
Home 5.95 1.000 2.80 Cofi 7.619
* As of 5/4/98
Slide - 151
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
Asset Quality - SFR Delinquency
[Line Graph]
2 Payments Past Due Non-Accrual
9/95 1.84% 1.13%
12/95 1.83% 1.11%
3/96 1.85% 1.10%
6/96 1.79% 1.05%
9/96 2.07% 1.07%
12/96 1.64% 0.77%
3/97 1.64% 0.86%
6/97 1.56% 0.75%
9/97 1.61% 0.75%
12/97 1.46% 0.71%
3/98 1.47% 0.70%
4/98 1.40% 0.67%
Slide - 152
<PAGE>
[Washington Mutual Logo]
Mortgage Lending
What Drives Customers to WAMU?
Developing the Washington Mutual Brand as "the lender of choice" for
Realtors, Premier Brokers and consumers
A wide variety of products to serve all borrower needs
"Portfolio Power" flexibility to put people in loans
Service to get the deal closed when they need it
Advertising and marketing efforts focus on delivering the branding message
while generating phone calls
Focus on relationships - Realtors & brokers
Slide - 153
<PAGE>
[Washington Mutual Logo]
Lending Administration
Steve Freimuth
Executive Vice President
Lending Administration
Slide - 154
<PAGE>
[Washington Mutual Logo]
Lending Administration
Credit Quality
Lending Operations
Loan Servicing
Slide - 155
<PAGE>
[Washington Mutual Logo]
Credit Quality
Improving Trends
Total delinquencies declining
NPAs at lowest levels in years
Reduced R.E.O. levels
Increasing recoveries from sale of R.E.O.
Slide - 156
<PAGE>
[Washington Mutual Logo]
Credit Quality
SFR Total Delinquencies*
Percentage
[Bar Graph]
12/95 1.83
3/96 1.85
6/96 1.79
9/96 2.07
12/96 1.64
3/97 1.64
6/97 1.56
9/97 1.61
12/97 1.46
3/98 1.47
4/98 1.40
*2+ Payments Due
Slide - 157
<PAGE>
[Washington Mutual Logo]
Credit Quality
Nonperforming Assets
NPAs as a percentage of assets
[Bar Graph]
1993 1.99
1994 1.46
1995 1.14
1996 .92
1997 .83
Q1 '98 .78
April '98 .73
Slide - 158
<PAGE>
[Washington Mutual Logo]
Credit Quality
Residential/Commercial REO
Dollars in thousands
[Bar Graph]
SFR CRE TOTAL
6/96 218 82 298
9/96 203 68 271
12/96 155 72 227
3/97 113 61 174
6/97 132 44 176
9/97 161 41 202
12/97 160 41 201
3/98 158 35 193
4/98 141 35 176
Slide - 159
<PAGE>
[Washington Mutual Logo]
Credit Quality
SFR REO Recovery Rates*
[Bar Graph]
1995 68%
1996 72%
Q1 '97 75%
Q2 '97 75%
Q3 '97 80%
Q4 '97 83%
Q1 '98 84%
*Percentage of loan value recovered at REO sale
Slide - 160
<PAGE>
[Washington Mutual Logo]
Credit Quality
ARM Loans Indicate Excellent Credit Standards
Geographic diversification improving
84% of SFR is adjustable rate
Higher percent of portfolio is recent production
Portfolio has lower than market average L.T.V.s
Slide - 161
<PAGE>
[Washington Mutual Logo]
Credit Quality
SFR Portfolio by Geography
As of March 31, 1998
[Pie Chart]
California 56%
Northwest 22%
Other 14%
Florida 4%
Northeast 4%
Slide - 162
<PAGE>
[Washington Mutual Logo]
Credit Quality
SFR Portfolio ARMs vs. Fixed
As of March 31, 1998
[Pie Chart]
ARMs 84%
Fixed 16%
Slide - 163
<PAGE>
[Washington Mutual Logo]
Credit Quality
SFR Portfolio by Vintage
As of March 31, 1998
Percentage
[Bar Graph]
1991 and earlier 16.8%
1992 5.4%
1993 8.2%
1994 11.6%
1995 12.1%
1996 14.5%
1997 23.8%
1998 7.6%
Note: 10.7% of portfolio from years '89 - '91
Slide - 164
<PAGE>
[Washington Mutual Logo]
Credit Quality
SFR by Original LTV
As of March 31, 1998
Percentage
[Bar Graph]
WMI Market
to 60% 11.7 19.1
60.01 to 70% 16.3 13.3
70.01 to 75% 17.4 13.0
75.01 to 80% 34.1 20.7
80.01 to 90% 16.1 14.3
90.01 to 95% 3.0 9.6
over 95% 1.4 10.0
Source of market data: Mortgage Information Corp. Database 2/98
Slide - 165
<PAGE>
[Washington Mutual Logo]
Credit Quality
Outperforms Market
Regional
Product type
Vintage
Loan to value
Sub prime
Slide - 166
<PAGE>
[Washington Mutual Logo]
Credit Quality
SFR Loan Nonaccrual by Region
As of March 31, 1998
Percentage
[Bar Graph]
WMI Market
California 1.06 1.19
Northwest .47 .53
Northeast .91 1.26
Florida 1.04 1.35
Other .71 .86
Source of market data: Mortgage Information Corp. Database 2/98
Slide - 167
<PAGE>
[Washington Mutual Logo]
Credit Quality
SFR Nonaccrual by ARMs vs. Fixed
As of March 31, 1998
Percentage
[Bar Graph]
WMI Market
Fixed .33 .96
ARMs .75 1.65
Total .69 1.06
Source of market data: Mortgage Information Corp. Database 2/98
Slide - 168
<PAGE>
[Washington Mutual Logo]
Credit Quality
SFR ARM Nonaccrual by Vintage Compared to ARM Market
As of March 31, 1998
As a % of vintage year
WMI Market
1991 and earlier 1.68 2.55
1992 1.54 2.11
1993 1.11 2.09
1994 .88 2.17
1995 .74 2.21
1996 .35 1.30
1997 .09 .35
Source of market data: Mortgage Information Corp. Database 2/98 ARMs Loans
Slide - 169
<PAGE>
[Washington Mutual Logo]
Credit Quality
SFR Nonaccrual by Vintage Compared to Total Market
As of March 31, 1998
As a % of vintage year
[Bar Graph]
WMI Market
1991 and earlier 1.63 2.69
1992 1.40 .95
1993 .90 .69
1994 .85 1.27
1995 .71 1.34
1996 .38 .79
1997 .10 .16
Source of market data: Mortgage Information Corp. Database 2/98
Slide - 170
<PAGE>
[Washington Mutual Logo]
Credit Quality
SFR by Nonaccrual by LTV Compared to Total Market
As of March 31, 1998
% of LTV range
[Bar Graph]
WMI Market
to 60% .28 .24
60.01 to 70% .62 .49
70.01 to 75% .58 .69
75.01 to 80% .67 .58
80.01 to 90% 1.21 1.06
90.01 to 95% .80 1.35
over 95% .56 3.45
Source of market data: Mortgage Information Corp. Database 2/98
Slide - 171
<PAGE>
[Washington Mutual Logo]
Credit Quality
SFR by Credit Class (Niche)
As of March 31, 1998
Dollars in millions
[Bar Graph]
1 $363 Total Portfolio = $600
2 $147 Average yield premium =
3 $67 117 bp
4 $16 1 = A- credit
5 $7 5 = C credit
Slide - 172
<PAGE>
[Washington Mutual Logo]
Credit Quality
SFR Credit Class Nonaccrual (Niche)
As of March 31, 1998
[Bar Graph]
1 = A- credit/5 = C credit
WMI Market
1 .88% 2.68%
2 1.04% 2.68%
3 1.93% 6.43%
4 2.82% 6.43%
5 2.53% 6.43%
Market source: MIC B-C Mortgage Database 2/98 A- through C stats
Slide - 173
<PAGE>
[Washington Mutual Logo]
Lending Operations
Improving Operating Efficiency
Cost to originate a loan decreasing
Conversion to Loan Works
Automated underwriting process
Streamlined appraisal process
Reduce loan servicing costs
Slide - 174
<PAGE>
[Washington Mutual Logo]
Lending Operations
HLC Lending Channel
"All-in" basis point cost per loan origination
Northwest Southwest/Southeast
Q1 '97 130 264
Q2 '97 116 191
Q3 '97 123 189
Q4 '97 123 167
Q1 '98 117 171
Slide - 175
<PAGE>
[Washington Mutual Logo]
Lending Operations
Wholesale Lending Channel
"All-in" basis point cost per loan origination
[Bar Graph]
Northwest Southwest/Southeast
Q1 '97 164 197
Q2 '97 152 168
Q3 '97 156 173
Q4 '97 150 166
Q1 '98 149 168
Slide - 176
<PAGE>
[Washington Mutual Logo]
Lending Operations
Loan Works Deployment
Conversion Schedule
Northwest - Fully deployed June 1997
ASB - Converted Q1 '98
GW - Planned Conversion June-Sept. 1998
Productivity Gains
Credit scoring capability
Electronic transfer of loan files
Reduced cycle times
Slide - 177
<PAGE>
[Washington Mutual Logo]
Lending Operations
Automated Underwriting Efficiencies
Loans per underwriter
[Bar Graph]
Northwest Southwest/Southeast
5/97 138 55
6/97 143 54
7/97 149 47
8/97 157 46
9/97 169 49
10/97 178 54
11/97 175 42
12/97 183 54
1/98 158 45
2/98 260 70
3/98 380 99
4/98 338 90
Slide - 178
<PAGE>
[Washington Mutual Logo]
Lending Operations
Appraisal Philosophy
Measurements: Vital Few
Quality of appraisals and property values
Turn times and customer service
Profitability as a business unit
Slide - 179
<PAGE>
[Washington Mutual Logo]
Lending Operations
Appraisal Costs
Per loan
[Bar Graph]
Oct. '97
GW - $394
ASB - $375
WMB - $177
Mar. '98
Combined - $211
Slide - 180
<PAGE>
[Washington Mutual Logo]
Loan Servicing
Strategy
Convert all systems to Alltel
WMB - Sept. 1996
ASB - Sept. 1997
GW - April 1998
Combined management under one senior manager
Chatsworth is main loan servicing facility
Stockton satellite providing file storage
Seattle will operate as a satellite for the Northwest
Slide - 181
<PAGE>
[Washington Mutual Logo]
Loan Servicing
Reduced Costs to Service a Loan
Combined companies onto Alltel
Combined work groups and facilities
Favorable vendor contracts
Efficiency measurements
$50 cost per loan
1400 loans per employee
Slide - 182
<PAGE>
[Washington Mutual Logo]
Loan Servicing
Annualized Servicing Cost Per Loan
In dollars
[Bar Graph]
Target - 50
Northwest Southwest/Southeast
Q1 '97 45 75
Q2 '97 43 89
Q3 '97 43 78
Q4 '97 46 67
Q1 '98 50 59
Projection:
Q2 '98 50 59
Q3 '98 48 56
Q4 '98 46 53
Slide - 185
<PAGE>
[Washington Mutual Logo]
Loan Servicing
Loans Serviced per Employee
[Bar Graph]
Target - 1400
Northwest Southwest/Southeast
Q1 '97 1419 934
Q2 '97 1450 989
Q3 '97 1445 998
Q4 '97 1429 994
Q1 '98 1339 1014
Projection:
Q2 '98 1447 1124
Q3 '98 1508 1239
Q4 '98 1485 1301
Slide - 184
<PAGE>
[Washington Mutual Logo]
Acquisition Integration
& Technology
Liane Wilson
Executive Vice President
Chief Information Officer
Corporate Operations
Slide - 187
<PAGE>
[Washington Mutual Logo]
Template for Success
Acquisition Integration
Ongoing business process
Groundwork laid at due diligence
Areas/constituents addressed:
Financial/asset quality
Customer base composition
Systems compatibility
Customers/employees/shareholders
Sales/corporate culture
Successfully repeated 22.6675 times since 1985
Slide - 186
<PAGE>
[Washington Mutual Logo]
Template for Success
Great Western Integration
3/6/97 - Announced Definitive Agreement
7/1/97 - Transaction Closed
8/1/97 - Initial Integration Planning
9/1/97 - Tactical Integration Planning
10/1/97 - Detailed Integration Plans
Slide - 187
<PAGE>
[Washington Mutual Logo]
Template for Success
Great Western Integration
10/1/97 - WAMU Product Marketing Strategy Introduced
11/1/97 - Investment Portfolio Converted to WAMU Platform
1/1/98 - Payroll/Human Resources Systems Conversion
1/1/98 - Network Technology Hardware Installation Began
Slide - 188
<PAGE>
[Washington Mutual Logo]
Template for Success
Great Western Integration
Began 1/4/98 - Deposit Systems Conversion Test
1/5/98 - Sales/Employee Training Began
2/14/98 - WAMU Technical Environment to Chatsworth Data Center (plus ASB)
Slide - 189
<PAGE>
[Washington Mutual Logo]
Template for Success
Florida Conversion
3/9/98 - Account Conversion Materials Mailed to Customers
4/18/98 - Deposit Accounts Conversion
4/20/98 - New Teller, Upgraded Investment Technology Goes On-Line (120 FC)
Total Accounts Converted = 1.5 Million
Time = 50 Hours
5/4/98 - Mortgage Loan Servicing Conversion
Slide - 190
<PAGE>
[Washington Mutual Logo]
Template for Success
Northern California Conversion
4/6/98 - Account Conversion Materials Mailed to Customers
5/16/98 - Deposit Accounts Conversion
5/18/98 - New Teller Upgraded Investment Technology Goes On-Line (128 FCs)
Time = 45.5 hours
Total Accounts Converted = 1,408,414
Slide - 191
<PAGE>
[Washington Mutual Logo]
Template for Success
Southern California Conversion
6/13/98 - Deposit Accounts Conversion
6/15/98 - New Teller, Upgraded Investment (127 FC)
6/26/98 - Consumer Works
8/31/98 - Loanworks Deployed 85 Locations
9/5/98 - IRAs
Slide - 192
<PAGE>
[Washington Mutual Logo]
Template for Success
Growing Infrastructure Support
6/15/98
6/30/96 7/7/97 5/30/98 (est.
w/S. Cal.)
Deposit Accounts (est.) 1,300,000 2,430,000 4,641,000 5,641,000
Retail Branches 248 431 687 807
Retail branch figures include closing ASB locations.
Slide - 193
<PAGE>
[Washington Mutual Logo]
Template for Success
Project Plan: Ahmanson
3/16/98 - Strategic Plan
3/17/98 - Transaction Announced
5/15/98 - Initial Tactical Plans
7/8/98 - Detailed Tactical Plans (TX)
9/2/98 - Detailed Tactical Plans (CA)
Q4 '98 - FC Conversion (TX)
Q2 '99 - FC Conversion (CA)
Slide - 194
<PAGE>
[Washington Mutual Logo]
Template for Success
Year 2000 Project
Environmental
Power
Telecommunications
Facilities
Transportation
Commerce
Slide - 195
<PAGE>
[Washington Mutual Logo]
Template for Success
Year 2000 Project
Information Infrastructure
Mainframe
Hardware
Software
Alternative Platform Infrastructure
Hardware
Software
Slide - 196
<PAGE>
[Washington Mutual Logo]
Template for Success
Year 2000 Project
External Data Flows
Customer
Bank Regulatory Agencies
Financial Markets
ATM Networks
Service Providers
Credit Bureaus
Slide - 197
<PAGE>
[Washington Mutual Logo]
Template for Success
Year 2000 Project
Internal Processes
Financial Centers
Call Centers
Corporate Departments
Customer Accounts
Slide - 198
<PAGE>
[Washington Mutual Logo]
Template for Success
Year 2000 Project
Status of the project
Timeline
1990 - 1995: Technology enhancements (ongoing)
2/97 - Initial management seeking methodology/partnership
6/97 - Selected IBM for project phase I (assessment and methodology)
assessed in house
surveyed vendors
8/97 - Project office opened
9/97 - Core team identified and leaders chosen
- Method of renovation chosen
Slide - 199
<PAGE>
[Washington Mutual Logo]
Template for Success
Year 2000 Project
1/98 - Identified and implemented steering committee
2/98 - Completed assessment and established budget
- Selected partner to aid in remediation (IBM lab)
3/98 - Commenced:
- Renovation/vendor monitoring
- Testing
3/98 - First applications renovated and returned to
production
Slide - 200
<PAGE>
[Washington Mutual Logo]
Template for Success
Year 2000 Project
10/1/98 - 3/31/99: Deployment of applications/hardware to be replaced
1/99 - 6/99: End-to-end integration testing
9/1/1999 - 3/31/2000: Establish staff and manage corporate command center to:
- manage the issues
- institute contingency plans as needed
- restore normal operations as needed
Slide - 201
<PAGE>
[Washington Mutual Logo]
Template for Success
WAMU Project Management
Consistent with WAMU management methodology for large projects
Plan/Process Management
- Strategic
- Tactical
- Detailed Tactical
- Test
- Change Management
Successful acquisition integrations
- Acquisition integration equals dismantling a bank
and all components
- Testing is the key (over 50% of Y2K effort is testing)
Slide - 202
<PAGE>
[Washington Mutual Logo]
Template for Success
Mainframe
System Software and Application Providers
Status Date
Paperless Entry Processing (PEP) Install rel (6/98) 9/98
Infrastructure (IBM) Ready 10/98
Deposit System (Hogan) Ready 10/98
Customer Information Hogan) Ready 10/98
Transaction Router (Hogan) Repair 10/98
Consumer Line of Credit (Cardpac) Replace 10/98
Financial Control Systems (FCS) Install rel (7/98) 11/98
Electronic Mail (Wizmail) Install rel (10/98) 12/98
End-to-End Testing 6/30/99
Slide - 203
<PAGE>
[Washington Mutual Logo]
Template for Success
Alternative Platform
System Software and Application Providers
Status Date
HOA Infrastructure Install Rel 7/31/98
- Microsoft Packages
- Novell
- Oracle
Fed Wire (Fed Plus) Ready 11/19/98
Human Resources (Peoplesoft) Ready 11/98
- employee records Replace 5/29/98
- benefits Replace 8/14/98
- payroll Replace 1/1/99
Slide - 204
<PAGE>
[Washington Mutual Logo]
Template for Success
Alternative Platform
System Software and Application Providers
Status Date
Sec. Trades (Geopac with Infostation) Replace 10/98
Call Center Platform (Tracm) Repair 10/98
Financial Center Platform (VB4.0) Ready 10/98
- deploy to rest of California
- -deploy to Northwest
- back office deployment
Corporate Data & Reporting (ED) Install Rel (9/98) 12/98
Mort. Loan Origination (Loan Works) Enhance 12/98
Loan Works Enhanced Deployment 3/31/99
Call Centers
- call routing (Aspect) Repair 2/1/99
- automated service (VRUs) Repair 3/31/99
Slide - 205
<PAGE>
[Washington Mutual Logo]
Template for Success
Vendor Services
System Software and Application Providers
Status Date
Loan Coupons/Billings (Checkprinters) ATM Monitor 7/30/98
- STAR Monitor 9/30/98
- Transalliance Monitor
- Honor Monitor
Item Processing/Lockbox (EDS) Monitor 10/30/98
Network & Desktop Management Monitor 12/31/98
Servicing (Alltel) Monitor 1/30/99
Slide - 206
<PAGE>
[Washington Mutual Logo]
Template for Success
Vendor Services
System Software and Application Providers
Status Date
Credit Card (MBNA) Ready 6/30/98
Check Vendors Monitor 6/30/98
- Harland
- Deluxe
Couriers Monitor 6/30/98
Credit Bureaus Monitor 9/30/98
- TRW
- Equifax
- Chase
Home Banking (Integrion) Ready 12/31/98
Facilities Management (C.B. Richard Ellis) Repair 12/31/98
Slide - 207
<PAGE>
[Washington Mutual Logo]
Commercial Banking
Sally Jewell
Executive Vice President
Commercial Banking Division
Slide - 208
<PAGE>
[Washington Mutual Logo]
Commercial Banking Division
Commercial Real Estate
- Multi-family, shelter-based permanent loans
- Commercial construction finance
Western bank
- Full-service commercial banking
- Small-to-medium-sized business focus
Slide - 209
<PAGE>
[Washington Mutual Logo]
Commercial Banking
Strategic Fit
Higher margins/returns
Market strength in multi-family lending
Low-cost deposits
Cross referrals and higher combined market share
Consistent, high quality customer service
Diversification of assets and earnings
Slide - 210
<PAGE>
[Washington Mutual Logo]
Commercial Banking
Business and Commercial Real Estate Owners Want: [Pictures]
Reliability and predictability
- "Be there when I need you"
Stability
- "Give me a banker who understands my business"
Accuracy and timeliness
- "Make the service hassle-free"
Slide - 211
<PAGE>
[Washington Mutual Logo]
Commercial Banking
Shifting Customer Loyalties
Traditionally, customers were loyal to an institution
[picture]
Today, loyalty is directged more toward individuals
Small business clients and commercial real estate
owners are more willing to move with their bankers
Slide - 212
<PAGE>
[Washington Mutual Logo]
Commercial Banking
Vital Few
Attract and retain the best bankers in the business
Deliver high value client service and sales
Become the preferred financial partner for clients
Integrate into WAMU's array of financial services
Demonstrate exceptional financial performance.
Slide - 213
<PAGE>
[Washington Mutual Logo]
Commercial Banking
Delivery Network - 2/96
[logo of state maps]
WM-CRE
3 Locations
Enterprise Bank
1 Branch - Bellevue
Western Bank
41 Branches - Oregon
Slide - 214
<PAGE>
[Washington Mutual Logo]
Commercial Banking
Delivery Network - Today
[logo of state maps]
10 Commercial Real Estate Locations
46 Full Service Commercial Bank Branches
24 Business Banking Centers
Slide - 215
<PAGE>
[Washington Mutual Logo]
Commercial Banking
Loan Portfolio Summary*
Dollars in billions
Western Bank Division $1.4
CRE - Northwest 1.6
CRE - California 4.5
----
Total Commercial $7.5
* as of 3/31/98
Slide - 216
<PAGE>
[Washington Mutual Logo]
Washington Mutual
Commercial Real Estate
Slide - 217
<PAGE>
[Washington Mutual Logo]
Commercial Real Estate
Focus
Multi-family
Owner occupied commercial
Relationship driven R.E. investors
Selective construction financing
FNMA
Slide - 218
<PAGE>
[Washington Mutual Logo]
Commercial Real Estate
[Pictures of Washington Mutual brochures]
Slide - 219
<PAGE>
[Washington Mutual Logo]
Commercial Real Estate
Production Growth
Dollars in millions
[Bar Graph]
Northwest California Combined Total
1995 $137 $255 $392
1996 $275 $321 $596
1997 $354 $543 $897
Slide - 220
<PAGE>
[Washington Mutual Logo]
Commercial Real Estate
Credit Quality Charge-offs as % of Total Loans
[Bar Graph]
1996 .51%
1997 .32%
Slide - 221
<PAGE>
[Washington Mutual Logo]
Commercial Real Estate
Loan Spread Trends
Banks 1997 1998
Apartments n/a 1.71% - 2.58%
Comm. Prop. 2.43%-3.05% 2.26%-3.01%
Conduits
Apartments 1/.85%-2.57% 1.33%-2.29%
Comm. Prop. 1.90% - 3.28% 1.39%-2.44%
Source: Crittenden income property rates 1/6/97, 1/12/98
The spread was extrapolated from 10-year Treasury rate
Slide - 222
<PAGE>
[Washington Mutual Logo]
Commercial Real Estate
Portfolio by Property Type
[Pie Graph]
Apartments 67%
Office Bldgs 8%
Other 7%
Mobile Home Parks 6%
Retail Bldgs 5%
Hotels/Motels 4%
Industrial 3%
Does not include Western Bank Division
Slide - 223
<PAGE>
[Washington Mutual Logo]
Commercial Real Estate
Portfolio by State
[Pie Graph]
California 70%
Washington 14%
Other 7%
Oregon 6%
Utah 2%
Idaho 1%
Does not include Western Bank Division
Slide - 224
<PAGE>
[Washington Mutual Logo]
Commercial Real Estate
Strategies
Continue primary focus on multi-family lending
Expand relationship with FNMA
Encourage long-term relationships with owners and developers
Streamline systems for exceptional service
Monitor markets and react early to increased risk
Evaluate asset sales as opportunities arise
Slide - 225
<PAGE>
[Washington Mutual Logo]
Western Bank Division
Commercial Banking
Slide - 226
<PAGE>
[Washington Mutual Logo]
Western Bank
[Picture of advertisement "Western Bank. We know the territory."]
Slide - 227
<PAGE>
[Washington Mutual Logo]
Western Bank
Business Banking Center Start-up Example
15-MONTH PROGRESSION FROM OPENING 1/97
Boise, Nampa & Twin Falls, Idaho BBCs
1st Half 2nd Half Q1
1997 1997 1998
Combined Totals ($ in 000's)
Average Loans $36,426 $88,137 $101,218
Average Deposits $2,544 $8,342 $14,409
Contribution* ($212) $433 $319
*After tax contribution before administrative overhead
(Loans funded with overnight rates)
Slide - 228
<PAGE>
[Washington Mutual Logo]
Western Bank
[Picture of advertisement "Western is big enough to handle our business,
and small enough to care."]
Slide - 229
<PAGE>
[Washington Mutual Logo]
Western Bank
Business Banking Center Start-up Example
15-MONTH PROGRESSION FROM OPENING 1/97
Boise, Nampa & Twin Falls, Idaho BBCs
1st Half 2nd Half Q1
1997 1997 1998
Period Averages
ROA (1.16%) (.97%) 1.25%
ROE (14.51%) 12.14% 15.65%
Efficiency Ratio 101.49% 52.62% 46.99%
Net Interest Margin 4.81% 4.84% 5.17%
Slide - 230
<PAGE>
[Washington Mutual Logo]
Western Bank
Annual Average Loans
Dollars in millions
[Bar Graph]
Branches BBCs Combined Total
1994: $413 $ 79 $ 492
1995: $471 $ 94 $ 565
1996: $573 $172 $ 745
1997: $730 $411 $1,141
Q1 '98 Average $780 $557 $1,337
Slide - 231
<PAGE>
[Washington Mutual Logo]
Western Bank
Average Loan Balances
Dollars in millions
[Bar graph]
Q1 '97 $ 957
Q1 '98 $1,337
Slide - 232
<PAGE>
[Washington Mutual Logo]
Western Bank
Credit Quality Net Charge-offs as % of Total Loans
[Bar graph]
Commercial Division Peer Group*
[Peer Group is illustrated with a
Line Graph within this Bar Graph]:
1995 0.10% 0.37%
1996 0.09% 0.58%
1997 0.13% 0.44*
Q1 '98 0.14%
*Western U.S. banks $5-25 billion in assets
Slide - 233
<PAGE>
[Washington Mutual Logo]
Western Bank
Annual Average Deposits
Dollars in millions
[Bar graph]
Branches BBCs Combined Total
1994 $641 $109 $ 750
1995 $671 $120 $ 791
1996 $754 $142 $ 896
1997 $835 $171 $1,006
Q1 '98 $892 $194 $1,086
Slide - 234
<PAGE>
[Washington Mutual Logo]
Western Bank
Quarterly Average Deposits
Dollars in millions
[Bar graph]
Q1 '97 $ 953
Q1 '98 $1,086
Slide - 235
<PAGE>
[Washington Mutual Logo]
Western Bank
Deposit Makeup
[Pie graph]
Time Deposits 29%
Money Market 25%
Non-Interest Bearing Demand 25%
Savings 11%
Interest-Bearing Demand 10%
Slide - 236
<PAGE>
[Washington Mutual Logo]
Western Bank
Net Interest Margin
[Bar graph]
1996 5.96%
1997 6.59%
1998 6.51%
Prior year restated for comparable equity structure
Slide - 237
<PAGE>
[Washington Mutual Logo]
Western Bank
Net Income
Dollars in millions
[Bar graph]
1996 $12.4
1997 $12.2
1998 $16.3
Prior year restated for comparable equity structure
Slide - 238
<PAGE>
[Washington Mutual Logo]
Western Bank
Net Income
Dollars in Millions
[Bar graph]
Q1 '97 $3.2
Q1 '98 $4.2
Prior year restated for comparable equity structure
Slide - 239
<PAGE>
[Washington Mutual Logo]
Western Bank
[Picture of Western Bank brochures]
Slide - 240
<PAGE>
[Washington Mutual Logo]
Western Bank
Strategies
Expand into California
Grow in the Northwest
Streamline deposit processes
Enhance cash management sales
Evaluate strategic acquisitions
Slide - 241
<PAGE>
[Washington Mutual Logo]
Commercial Banking
[Picture of brochures]
Slide - 242
<PAGE>
[Washington Mutual Logo]
Commercial Banking
Future
Dominant multi-family lener
Fully developed CRE secondary market alternatives
Full service relationships with R/E and busines clients
Business banking centers in select markets
Slide - 243
<PAGE>
[Washington Mutual Logo]
Commercial Banking
Future
Effective referrals and cross sales throughout WAMU
High credit quality and effective risk management
Key contributor to WAMU's future financial success
Slide - 244
<PAGE>
[Washington Mutual Logo]
Consumer Finance
Craig Tall
Executive Vice President
Corporate Development
Commercial Banking &
Consumer Finance
Slide - 245
<PAGE>
[Washington Mutual Logo]
Aristar
Overview
Solid Company
Historically strong ROA
Well positioned branch franchise
Long tenured, experienced personnel
Leadership void
Needs new strategic vision
Changing competitive landscape
Growth prospects
Slide - 246
<PAGE>
[Washington Mutual Logo]
Aristar
Distribution Network
[Map of United States]
Locations 493
Assets $2.5 billion
1997 After-tax profits $46 million
Slide - 247
<PAGE>
[Washington Mutual Logo]
Aristar
Consumer Finance Business Fit
Complementary to core banking and lending business
Attractive financial characteristics
Capable of making an important earnings contribution
Potential to add significant shareholder value
Slide - 248
<PAGE>
[Washington Mutual Logo]
Aristar
Opportunity for Added Value
Balance sheet capacity to compete against securitizers
Funding enhancements
Alternative capital structures
Referral potential
Slide - 249
<PAGE>
[Washington Mutual Logo]
Aristar
Goals for Consumer Finance
Long-term goals are to meet or exceed corporate financial objectives
18% return on equity
15% annual earnings growth
Slide - 250
<PAGE>
[Washington Mutual Logo]
Aristar
Management Update
Announced Craig Chapman as new Aristar CEO on May 13th
Chapman to lead development of strategic plan
provide long-term vision
develop growth and expansion strategy
Improve financial performance
Chapman to be based in Tampa
Slide - 251
<PAGE>
[Washington Mutual Logo]
Aristar Craig Chapman
Built AMERESCO from start-up to a top ten home equity originator
Re-positioned Household Canada into consumer finance operation.
Improved profitability more than fourfold
"Fixed" Household Australia and returned to profitability
Major contributor to Household's marketing, customer service and
efficiency improvements
Slide - 252
<PAGE>
[Washington Mutual Logo]
ARISTAR
Financial Review
Slide - 253
<PAGE>
[Washington Mutual Logo]
Aristar - Financial Review
Q1 '98 Highlights
Reported net income of $12.3 million compared to $10.7 million in Q1 '97
Advances in ROA, ROE, efficiency ratio
Sharp decline in 60+day delinquencies from year end
Lending volume up 11% from 1997 (including renewals)
Slide - 254
<PAGE>
[Washington Mutual Logo]
Aristar - Financial Review
Earnings
Percentage
Quarter Ending
3/97 3/98
Return on Assets 1.82% 1.97%
Return on Equity 11.94 11.72
Efficiency Ratio 51.05 48.42
Net Interest Margin 10.95 11.01
Slide - 255
<PAGE>
[Washington Mutual Logo]
Aristar - Financial Review
Lending Volumes*
Dollars in millions
Quarter Ending
3/31/97 3/31/98 %Change
Real Estate $123 $158 28%
Personal Loans 238 273 15
Sales Finance 103 83 (19)
--- -- ----
Total Loans $464 $514 11%
* Includes renewals
Slide - 256
<PAGE>
[Washington Mutual Logo]
Aristar - Financial Review
Porfolio
Dollars in millions
3/31/97 12/31/97 3/31/98
Real Estate $903 $971 $996
Personal Loans 909 1,016 989
Sales Finance 342 323 287
--- --- ---
Total Loans $2,153 $2,309 $2,272
Slide - 257
<PAGE>
[Washington Mutual Logo]
Aristar - Financial Review
60+ day Delinquencies
[Line graph]
Personal Loans Sales Finance Overall Real Estate
3/97 4.1%* 3.7%* 2.7%* 0.7%*
6/97 4.1%* 3.3%* 2.7%* 0.7%*
9/97 4.3%* 2.9%* 2.6%* 0.8%*
12/97 4.1%* 3.9%* 2.6%* 0.6%*
*approximate percentage point, as illustrated on line graph
Slide - 258
<PAGE>
[Washington Mutual Logo]
Aristar - Financial Review
Charge-offs
[Line graph]
Personal Loans Sales Finance Overall Real Estate
3/97 6.0%* 3.2%* 3.3%* 0.2%*
6/97 5.9%* 3.5%* 3.5%* 0.1%*
9/97 6.0%* 3.8%* 3.1%* 0.2%*
12/97 6.2%* 4.7%* 3.7%* 0.3%*
3/98 6.0%* 2.9%* 3.1%* 0.3%*
*approximate percentage point, as illustrated on line graph
Slide - 259
<PAGE>
[Washington Mutual Logo]
Aristar
Summary
Exciting new leadership
Significant growth opportunities
Significant financial opportunities
Slide - 260
<PAGE>
[Washington Mutual Logo]
Financial Overview
William Longbrake
Executive Vice President
&Chief Financial Officer
Slide - 261
<PAGE>
[Washington Mutual Logo]
Financial Overview
Five-Year Financial Targets: 1995-2000
Target Results
(3/31/98)(a)
ROCE >18.00% 19.68%
EPS Growth >15.00 29.24(b)
Efficiency Ratio <50.00 46.20
Common Equity/Assets > 5.00 5.22
(a) Results based on earnings from operations which equal
reported earnings less transaction related expense
(b) Increase in earnings from operations from Q1 ` 97 to Q1 '98
Slide - 262
<PAGE>
[Washington Mutual Logo]
Financial Overview
The Opportunity: Substantial Profit Growth
Successful and profitable consumer financial services in the Northwest
Objective: extend to recently acquired companies
Implementation and realization of financial opportunity takes time
Systems conversions
Employee learning curve
Attracting customers and building relationships
Some expenses occur in advance of revenues, such as
advertising and account origination
Slide - 263
<PAGE>
[Washington Mutual Logo]
Financial Overview
Return on Average Assets - Q1 '98
Northwest Southwest/
Southeast
Interest income 7.48% 7.06%
Interest expense (4.43) (4.35)
------ ------
Net Interest income 3.05% 2.71%
Provision for loan losses (.06) (.14)
------ ------
Net int. inc. after prov. 2.99% 2.57%
Other income .83 .57
Other expense (1.75) (1.47)
Transaction related expense (.01) (.04)
------- -------
Net expense (.93) (.94)
Income taxes (.81)% (.63)%
Net income 1.26% 1.00%
Adjusted net income (a) 1.20% .94%
(a) Holding company net income allocated proportionally to
subsidiaries' total assets
Slide - 264
<PAGE>
[Washington Mutual Logo]
Financial Overview
Profit Improvement Opportunities
Southwest/Southeast Financial Centers
Increase higher yielding consumer loan originations
Initiate residential mortgage loan originations
Aggressively market free checking accounts
Increase proportion of deposits in lower cost transaction accounts
Slide - 265
<PAGE>
[Washington Mutual Logo]
Financial Overview
Profit Improvement Opportunities
Southwest/Southeast Financial Centers
Expand consumer cross sales
Increase fee income, particularly depositor fees and nonbanking product
sales.
Slide - 266
<PAGE>
[Washington Mutual Logo]
Financial Overview
Profit Improvement Opportunities
Southwest/Southeast
Improve productivity
Initiate residential construction and manufactured home loan originations
Reduce credit losses
Slide - 267
<PAGE>
[Washington Mutual Logo]
Financial Overview
Profit Improvement Opportunities
Northwest
Increase ARM residential loan originations
Increase fee income, particularly depositor fees and nonbanking
product sales
Continue to improve productivity
Slide - 268
<PAGE>
[Washington Mutual Logo]
Financial Overview Loan Mix - March 31, 1998
Loan Mix - March 31, 1998
Northwest Southwest/
Southeast
Residential(a) 64.6% 91.0%
Other loans:
Construction 4.4 .0
Multi-family/Commercial R.E. 10.7 7.5
Business 3.4 .2
Consumer 16.9 1.3
---- ---
Total 35.4% 9.0
Yield on loan (Q1 '98)(b) 8.44% 7.37%
(a) Includes loans securitized and retained as MBS
(b) Does not include loans securitized and retained as MBS
Slide - 269
<PAGE>
[Washington Mutual Logo]
Financial Overview
FC Consumer Loan Originations Per H/H - Q1 '98
[Bar graph]
Northwest $207
Southwest $ 64
Southeast $ 36
Slide - 270
<PAGE>
[Washington Mutual Logo]
Financial Overview
FC Mortgage Loan Originations per H/H - Q1 '98
[Bar graph]
Northwest $914
Southwest $ 0
Southeast $ 0
Slide - 271
<PAGE>
[Washington Mutual Logo]
Financial Overview
Deposit Mix - March 31, 1998
Northwest Southwest/
Southeast
Transaction deposit(a) 59.2% 42.8%
Time deposits 40.8% 57.2%
Cost of deposits - Q1 '98(b) 3.89% 4.16%
(a) Transaction deposits include money market, checking and
savings deposits
(b) Cost of deposits includes cost of associated derivatives
Slide - 272
<PAGE>
[Washington Mutual Logo]
Financial Overview
Deposit Mix - Transaction Deposits to Total Deposits(a)
[Line graph]
1/97 41.0%*
3/97 42.3%*
5/97 42.6%*
7/97 42.8%*
9/97 43.8%*
11/97 44.3%*
1/98 45.1%*
3/98 46.2%*
* approximate percentage points, as illustrated on line graph
(a) Transaction deposits include all wholesale and retail
checking, savings and money market deposit
Slide - 273
<PAGE>
[Washington Mutual Logo]
Financial Overview
Newly Acquired Franchise - Cons. Mortg. Origination
Case Study: Pacific First Bank/Oregon
Dollars in millions per financial center
[Bar Graph]
Consumer Loans Mortgage
1993 $0.9 $0.0
1994 $2.9 $1.6
1995 $3.0 $2.3
1996 $3.4 $4.9
1997 $4.1 $5.1
Slide - 274
<PAGE>
[Washington Mutual Logo]
Financial Overview
Newly Acquired Franchise - Fee Inc. & Operating Exp.
Case Study: Pacific First Bank/Oregon
Dollars in thousands per financial center
[Bar graph]
Fee Income Operating Expenses
1994 $ 85.5 $205.5
1995 $144.3 $200.8
1996 $197.7 $204.9
1997 $307.9 $232.1
Slide - 275
<PAGE>
[Washington Mutual Logo]
Financial Overview
Newly Acquired Franchise -Res. Mortgage Market Share
Case Study: Pacific First Bank/Oregon(a)
[Bar graph]
1993 5.3%
1994 5.1%
1995: 7.5%
1996: 10.2%
1997: 13.0%
(a) Washington Mutual Bank had one home loan center in Oregon prior to the
acquisition of Pacific First Bank in 1993
Slide - 276
<PAGE>
[Washington Mutual Logo]
Financial Overview
Mature Franchise - Res. Mortgage Market Share
Case Study: Washington Mutual Bank Washington
[Bar graph]
1988 6.7%
1989 8.8%
1990 9.7%
1991 9.0%
1992 9.8%
1993 9.8%
1994 9.6%
1995 11.3%
1996 14.6%
1997 16.9%
Slide - 277
<PAGE>
[Washington Mutual Logo]
Financial Overview
Product Profitability - Checking in the Northwest
Acquisition cost per Account
Free Interest
Marketing/Advertising $20.28 $20.28
Financial Centers 46.04 45.35
Telephone Banking 4.48 4.48
Corporate Support .59 .59
------ -----
Total $71.39 $70.70
Total After Taxes @ 39% $43.55 $43.13
Expected Life 5 years 7.5 years
Slide - 278
<PAGE>
[Washington Mutual Logo]
[blank page]
Slide - 279
<PAGE>
[Washington Mutual Logo]
Financial Overview
Product Profitability - Checking in the Northwest
Overdraft and ATM fees per account are rising 12.9% annually due to
increased activity and higher per transaction fees
The number of Free Checking Accounts grew 35.8% in the 12 months ending
march 31, 1998
Slide - 280
<PAGE>
[Washington Mutual Logo]
Financial Overview
Product Profitability - Checking in the Northwest
VISA debit transactions per checking account are rising 38% annually
Customer convenience
Generates fee income
Avoids check processing costs
55.8% of checking accounts have VISA debit cards
65.5% of VISA debit cards had at least one transaction within the last
three months.
Slide - 281
<PAGE>
[Washington Mutual Logo]
Financial Overview
Product Profitability - Checking in the Northwest
About 18% of outstanding checking accounts have the "Plus Package" of
services, but approximately 50% of new accounts opened opt for the "Plus
Package"
About 9% of outstanding checking accounts have the "Pay-by-Phone" service
In March 1998 the checking account cross-sell service ratio was 2.81,
much higher than the average household.
Slide - 282
<PAGE>
[Washington Mutual Logo]
Financial Overview
Product Profitability - No Frills Checking Fees
[BAR GRAPH]
Big Bank Small Bank WMB-NW
MONTHLY
MAINTENANCE FEE $3.73 $3.49 $0.00
(on a scale of
$7.00 to $0.00)
AVERAGE ANNUAL
FEE INCOME $152.80 $134.43 $182.22
(on a scale of
$200.00 to $0.00)
[table within above Bar Graph]
Limit on number of checks processed per month:
Big Bank 8.7
Small Bank 8.5
WMB-NW Unlimited
Source: 1997 U.S. Public Interest Research Group
Slide - 283
<PAGE>
[Washington Mutual Logo]
Financial Overview
Res. Loan Profitability - Key Assumptions
Loan profitability is calculated in terms of return on common equity
assuming:
5% common equity funding allocation
50% risk weight for regulatory capital purposes
average economic return (rather than periodic accounting return) over the
expected life of an average loan
Slide - 284
<PAGE>
[Washington Mutual Logo]
Financial Overview
Res. Loan Profitability - Key Assumptions
Northwest origination and servicing costs are assumed
During Q1 '98 origination expenses for home loan offices (HLCs) were 53
basis points lower in the Northeast compared to the Southwest/Southeast
Origination expenses for the wholesale channel were 19 basis points lower
Slide - 285
<PAGE>
[Washington Mutual Logo]
Financial Overview
Res. Loan Profitability - Key Assumptions
The interest rate for all ARMs is the MTA (12-month moving average of the
one-year Treasury rate)
Prepayment assumptions are based on stable interest rates
Q1 '98 actual origination mix is used to calculate average loan size,
average initial interest rate, average gross yields, average margins and average
life caps
Slide - 286
<PAGE>
[Washington Mutual Logo]
Financial Overview
Res. Loan Profitability - Sale of SFR FR Mortgages
Washington Mutual sells approximately 70% of all fixed-rate single family
residential loans in the secondary market
Fixed-rate loans retained generally carry higher interest rates and are a
good interest rate risk match against non-interest checking balances
Sale of single family fixed-rate mortgages results in two impacts on
earnings
Gain on sale
Servicing income over the loan's life
Slide - 287
<PAGE>
[Washington Mutual Logo]
Financial Overview
Res. Loan Profitability - Sale of SFR FR Mortgages
Gain on sale results in the capitalization of mortgage servicing rights
(MSRs) which are amortized over the loan's servicing life
MSRs carry a 100% regulatory risk weight
In the analysis that follows, it is assumed that MSRs are supported by 5%
equity financing and 5% debt financing that qualifies as Tier II regulatory
capital.
The analysis is based on the sale of $1,000,000 par value of fixed rate
mortgage loans
Slide - 288
<PAGE>
[Washington Mutual Logo]
Financial Overview
Res. Loan Profitability - Sale of SFR FR Mortgages
Gain on sale
Amount Percentage
Par value @ 100% ($1,000,000) (100.00%)
Net deferred fees 5,600 .56
MSRs 9,830 .98
----- ---------
Net book value ($984,570) (98.46)
Market price at 99% 990,000 99.00
Buy-up fees 2,500 .25
----- ---------
Pre-tax gain $7,930 .79
Taxes @ 39% (3,093) (.31)
------- ---------
Gain on sale $4,837 .48%
Slide - 289
<PAGE>
[Washington Mutual Logo]
Financial Overview
Res. Loan Profitability - Sale of SFR FR Mortgages
Servicing Income
Yr 1 Yr 5 Yr 10 PV @10%
Servicing revenue $2,335 $1,265 $573 $9,541
Other revenue 374 214 104 1,604
Servicing expense (561) (321) (156) (2,406)
MSR amortization (1,421) (781) (364) (5,896)
MSR fin. cost (496) (263) (114) (1,978)
Pretax net inc. $231 $114 $43 $865
Taxes @39% (90) (44) (17) (337)
Net income $141 $70 $26 $528
Avg. MSR value $9,110 $4,824 $2,084
ROA 1.55% 1.44% 1.26%
ROCE @5% 31.00% 28.80% 25.20%
Slide - 290
<PAGE>
[Washington Mutual Logo]
Financial Overview
Res. Loan Profitability - Sale of SFR FR Mortgages
Gain on sale $ 4,837
PV of servicing income 528
---
$ 5,365
Initial value of MSRs $ 9,830
Initial required common equity @5% $ 292
Slide - 291
<PAGE>
[Washington Mutual Logo]
Financial Overview
Consumer Loan Profitability - Key Assumptions
Northwest origination and servicing costs
Standard pricing for basic products instead of average pricing for Q1 '98
actual origination mix
Prepayment rates based on stable interest rates
Regulatory capital risk weights affects funding cost:
home equity - 50%
manufactured housing - 100%
auto - 100%
Slide - 292
<PAGE>
[Washington Mutual Logo]
Financial Overview
Cons. Loan Profitability - Q1 `98 Northwest FC Orig.
Dollars in millions
Home Equity* $ 72.9 33.8%
Home Equity LOCs 45.9 21.3
Mfd Housing* 57.0 26.4
Vehicle* 14.0 6.5
Personal Unsecured 23.0 10.7
Collateral 2.9 1.3
Total $215.7 100.0%
*Selected for profitability analysis
Slide - 293
<PAGE>
[Washington Mutual Logo]
Financial Overview
Financial Center Productivity
Rapid checking account growth leverages financial center infrastructure
Technology enhancements reduce service times and permit employees to spend
more time on sales
Availability of many products increases cross-selling opportunities
higher average household net income
increased household loyalty and retention
Slide - 294
<PAGE>
[Washington Mutual Logo]
Financial Overview
Financial Center Productivity
Mortgage and consumer loans increase financial center profitability
consumer lending tends to decline during home loan
refinancing episodes
financial centers can reallocate staff from
consumer to mortgage lending easily, maintaining
efficient use of resources
Customer visits to financial centers are declining and use of electronic
banking (telephone) is increasing
expands financial center's capacity to
handle more business with the same resources
Slide - 295
<PAGE>
[Washington Mutual Logo]
Financial Overview
Financial Center Productivity - Northwest
Deposit related fees per employee*
[Line graph]
(on a scale of $3,000 to $5,500)
1/97 $3,300**
3/97 $3,300**
3/97 $3,800**
7/97 $4,300**
9/97 $4,500**
11/97 $4,300**
1/98 $4,200**
3/98 $4,450**
(**approximate)
*Adjusted for number of days in the month
Slide - 296
<PAGE>
[Washington Mutual Logo]
Financial Overview
Financial Center Productivity - Northwest
Checking transactions per employee, per month*
[Line graph]
(on a scale of 1,000 to 1,700)
1/96 1,180**
4/96 1,380**
7/96 1,320**
10/96 1,300**
1/97 1,325**
4/97 1,390**
7/97 1,350**
10/97 1,320**
1/98 1,295**
*Adjusted for number of days in the month]
(**approximate)
Slide - 297
<PAGE>
[Washington Mutual Logo]
Financial Overview
Financial Center Productivity - Northwest
Customer financial center use, per month*
[Line graph]
(on a scale of 2.50 to 3.75)
4/96 3.49**
7/96 3.40**
10/96 3.19**
1/97 3.23**
4/97 3.23**
7/97 2.98**
10/97 3.05**
1/98 2.80**
*Adjusted for number of days in the month
(**approximate)
Slide - 298
<PAGE>
[Washington Mutual Logo]
Financial Overview
Financial Center Productivity - Northwest
Deposit-related fees are rising at a 25% annual rate per employee
Checking transactions per employee are rising at a 7.4% annual rate
Customer financial center use is declining at a 6.1% annual rate
Slide - 299
<PAGE>
[Washington Mutual Logo]
Financial Overview
Financial Center Productivity - Northwest
Telephone banking calls per household
[Line graph]
(on a scale of 1.00 to 2.25)
1/97 1.27**
3/97 1.58**
5/97 1.45**
7/97 1.75**
9/97 1.73**
11/97 1.65**
1/98 1.90**
3/98 2.05**
(**approximate)
Slide - 300
<PAGE>
[Washington Mutual Logo]
Financial Overview
Financial Center Productivity - Northwest
Banking telephone calls per household are rising approximately 40%
annually
voice response calls are rising about 45%
employee assisted calls are rising about 20%
voice response calls as a percentage of total calls
averaged 82% in 1997
voice response calls cost $.45 per call or about
19% as much as employee serviced calls
Slide - 301
<PAGE>
[Washington Mutual Logo]
Financial Overview
Financial Center Activity - Northwest
Technology/broad product line foster flexible market response Percentage of
total hours spent on activities*
Mature Market Growing Market In-Store
Deposits 65.1% 42.6% 67.3%
Consumer Loans 13.7 31.1 10.4
Mortgage Loans 4.1 11.9 7.0
Nonbanking Products 1.2 1.2 0.4
Administration 15.9 13.2 14.9
*Source: 1998 Arthur Andersen study of three NW FCs
Slide - 302
<PAGE>
[Washington Mutual Logo]
Financial Overview
Financial Center Activity - Northwest
Technology/broad product line foster flexible market response Percentage
of total hours spent on activities*
Mature Market Growing Market In-Store
Sales 28.5% 49.5% 20.6%
Servicing 55.6 37.3 64.5
Administration 15.9 13.2 14.9
*Source: 1998 Arthur Andersen study of three NW FCs
Slide - 303
<PAGE>
[Washington Mutual Logo]
Financial Overview
Financial Center Activity - Northwest
Technology/broad product line foster flexible market response Q1 '98 activity
per dedicated employee*
Mature Market Growing Market In-Store Entire Bank
Checking Acct. Serv. (#) 3,677 3,468 3,001 3,087
Checking Acct. Open (#) 70 106 67 74
Plus Acct. Serv. (#) 401 492 822 213
Plus Acct. Open (#) 22 27 23 11
Consumer Loans (000) $ 1,400 $ 812 $1,492
Mortgage Loans (000) $11,082 $7,192 $5,736
*Source: 1998 Arthur Andersen study of three NW FCs
Slide - 304
<PAGE>
[Washington Mutual Logo]
Financial Overview
Financial Center Profitability
Net income per FTE - Q1 `98
[Bar graph]
Northwest 152.3%
Southwest 78.7%
Southeast 135.2%
Bank 100.0%
Slide - 305
<PAGE>
[Washington Mutual Logo]
Financial Overview
Deployment of Capital - Assumptions
ROCE 20%
Dividend Payout Ratio 30%
Common Equity to Total Assets Ratio 5%
Implied Earning Assets Growth Rate 14%
Slide - 306
<PAGE>
[Washington Mutual Logo]
Financial Overview
Deployment of Capital - RE Loan Orig. Strategy
Extend residential originations to Southwest and Southeast FCs
During first four months of 1998, Northwest FCs originated residential
loans at an annual rate $4.2 billion, 14.3% of total originations
On a comparable per FC basis, potential to attain additional annual
originations of approximately $7.5 billion in Southwest and Southeast,
a 25% increase in total originations
Will take 2 to 3 years to develop capability
Slide - 307
<PAGE>
[Washington Mutual Logo]
Financial Overview
Deployment of Capital - RE Loan Orig. Strategy
Bring acquired Great Western residential lending capacity to
productivity levels comparable to the rest of the company
Build market share through branding and top-notch service
Slide - 308
<PAGE>
[Washington Mutual Logo]
Financial Overview
Deployment of Capital - Non-RE Loan Orig. Strategy
Bring Southwest and Southeast FCs' consumer lending to levels comparable to
Northwest FCs
Potential additional $1 - $2 billion in annual originations
Will take 2 years to develop capability
Extend builder and custom construction lending to new market
Will take 3 to 4 years to accomplish
$2 billion potential increase
Slide - 309
<PAGE>
[Washington Mutual Logo]
Financial Overview
Deployment of Capital - Non-RE Loan Orig. Strategy
Continue to open Business Banking Centers and increase business loans
Maintain strong multi-family lending capacity
Expand Aristar's consumer finance originations
Slide - 310
<PAGE>
[Washington Mutual Logo]
Financial Overview
Deployment of Capital - Overall Strategy
Short-Term
Build origination capacity
If necessary, purchase liquid short-term MBSs as temporary measure
Long-Term
Sell narrow-spread liquid securities
Sell lower margin loans; retain higher margin loans
Slide - 311
<PAGE>
[Washington Mutual Logo]
Financial Overview
Deployment of Capital - 14% Asset Growth Model Assumptions
Residential loan origination mix
1997 - 70% ARM; 30% fixed
1998 - 55% ARM; 45% fixed - affected by refinancing
1999/2000 - 60% ARM; 40% fixed - affected by continued flat yield curve
75% of fixed rate residential loans assumed to be sold during 1998 -
2000 compared to 68% in 1997
Slide - 312
<PAGE>
[Washington Mutual Logo]
Financial Overview
Deployment of Capital - 14% Asset Growth Model Assumptions
Loan and other payments as a percent of starting total assets
1997 - 14.8%
1998 - 19.0% (Q1 annualized)
1999/2000 - 17.0% - reflecting flatter yield curve
Loan origination growth slows in 1999 as refinancings ebb
and accelerates in 2000 as origination capability matures in all
channels
If loan originations exceed required levels, securities and
narrow margin loans will be sold
Slide - 313
<PAGE>
[Washington Mutual Logo]
Financial Overview
Deployment of Capital - 14% Asset Growth Model
Dollars in billions
1997 1998 1999 2000
Beginning Assets $87.4 $97.0 $110.6 $126.0
Payments (12.9) (18.4)a (18.8) (21.4)
Loans Sold (4.6) (10.0)b (9.5) (13.0)
Net Sec. & Other (2.5) 3.0 c 0.0 0.0
----- ---- ---- ----
$67.4 $71.6 $82.3 $91.6
Loan Orig. 29.6 39.0 43.7 52.1
---- ---- ---- ----
Ending Assets $97.0 $110.6 $126.0 $143.7
Jan. - Apr. Orig. $8.3 $12.1
% of Annual 28% 31%
(a) Q1 '98 annualized
(b) Jan. - Apr. 1998 annualized
(c) Estimated
Slide - 314
<PAGE>
[Washington Mutual Logo]
Financial Overview
Deployment of Capital - 1998 Wholesale Asset Purchases
Dollars in billions
Book Value Margin to Funding(a) ROCE @5%
Securities:
ARMs $3.2 1.08% 13.2%
Fixed Rate(b) 2.9 1.18 14.4
Loans .6 1.67 20.4
-- ---- ----
$6.7 1.18% 14.4%
(a) Funding is assumed to be 95% 1-month LIBOR and 5% equity; hedging
interest-rate risk on fixed rate costs 11 basis points
(b) Durations range from 2.2 to 3.4 years
Slide - 315
<PAGE>
[Washington Mutual Logo]
Financial Overview
Deployment of Capital - 1998 Wholesale Asset Purchases
Available for sale securities increased $5.1 billion through April
Assuming refinancing activity continues to decline and loan
originations remain strong, further asset purchases should be limited
Available for sale securities could decline during the remainder of the
year as principal is repaid
Slide - 316
<PAGE>
[Washington Mutual Logo]
Financial Overview
Deployment of Capital - Residential Loan Prepayments Have Peaked
Q4 `97 Q1 `98 March 1998 April 1998
Short-Term ARMs
Pmt. Capped 13.0% 17.5% 22.1% 22.8%
Rate Capped 28.4 31.7 40.2 34.4
Intermediate ARMs 15.7 22.7 28.1 25.9
Fixed Rate 9.1 15.2 19.4 17.9
--- ---- ---- ----
Total 14.3% 19.0% 24.0% 23.5%
Slide - 317
<PAGE>
[Washington Mutual Logo]
Financial Overview
Deployment of Capital
Res. ARM Loan Apps. and Fundings
As percentage of total
[Bar Graph]
Fundings Applications
3/98 40.3% 50.8%
4/98 45.7% 54.0%
5-1-98/5-15-99 51.3% 54.9%
YTD through 5/15/98 44.5% -
Slide - 318
<PAGE>
[Washington Mutual Logo]
Financial Overview
Deployment of Capital - Net Interest Margin
Assuming stable interest rates, the 14% asset growth model has several
implications:
Assets
remixing loans toward higher yielding loans should have a small favorable
impact
increasing the portion of loans relative to securities should have a small
favorable impact
overall, asset yields could rise as much as 10 basis points over the next
two years
Slide - 319
<PAGE>
[Washington Mutual Logo]
Financial Overview
Deployment of Capital - Net Interest Margin
Liabilities
remixing deposits toward transactions accounts should reduce deposit costs
by up to 15 basis points over the next two years
however, the overall cost of funds rises as the portion of assets funded by
borrowings rises
Slide - 320
<PAGE>
[Washington Mutual Logo]
Financial Overview
Deployment of Capital - Net Interest Margin
The net impact on the margin could be a decrease by as much as 10 basis
points over the next two years
The impact on the margin could be less
unfavorable, if:
deposits increase
transaction accounts increase more
loan originations are stronger (reduce amount of lower yielding
securities)
higher yielding loan originations are higher (strong
performance of financial centers and Aristar)
Slide - 321
