SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: March 17, 1998.
Washington Mutual, Inc..
(Exact Name of Registrant as specified in its charter)
Washington
(State or Other Jurisdiction of Incorporation)
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)
Item 2. Acquisition or Disposition of Assets
On March 17, 1998, Washington Mutual, Inc. (the "Company") entered into an
Agreement of Merger with H. F. Ahmanson & Co. ("Ahmanson"), whereby Ahmanson
would be merged with and into the Company (the "Merger"). A summary of the terms
of the Merger is included in the press release issued to announce the
transaction which is included as Exhibit 7(c).1.
Forward-Looking Statements; Factors to Consider
Exhibit 7(c).2 includes forward-looking statements regarding Ahmanson and
the Company and the combined company following the Merger. Set forth below are
factors which may cause actual results of operations to vary materially from the
forward-looking statements contained therein.
Realization of Cost Savings; Integration of Operations. No assurance can be
given that the cost savings which are anticipated through the consolidation of
branches and of administrative functions of the Company and Ahmanson will be
achieved or will occur in the time periods anticipated. If the integration of
Ahmanson's operations into the Company takes longer than anticipated or is more
costly to achieve than presently anticipated, the forecasted cost savings may
not be achieved. In addition, when branches are consolidated or closed,
financial institutions often lose customers and deposits as a result. To the
extent that the Company loses customers or deposits significantly in excess of
the amount anticipated, the operations of the Company could be materially
adversely affected, particularly in the short term. The forward-looking
statements assume, based on Washington Mutual's historical experience following
acquisitions, that the deposit base of the Company following the Merger will
remain substantially intact during the period presented in the forward-looking
statements. To the extent that the change in ownership of Ahmanson, the
consolidation of branches or other factors result in a significant temporary or
long-term loss of deposits, actual results of operations may vary materially
from the forward-looking information presented.
Return on Incremental Cash and Capital. The forward-looking statements
estimate that the combined Washington Mutual-Ahmanson will generate incremental
cash and capital from operations in excess of that which can be utilized in the
Company's core lending business. The forward looking statements assume that such
incremental cash will be invested at a 4% after-tax return and that incremental
capital will be leveraged and deployed in a manner to result in a 60 basis point
after-tax spread. The Company believes that these returns can be generated by
purchasing loans, mortgage securities or other assets. To the extent that the
Company is unable to realize the forecasted returns, the forecasts of net income
contained in the forward-looking statements may vary materially from actual
results.
Concentration of Operations in California. Following the Merger, a
substantial portion of the Company's loan portfolio, deposits and operations
will be in California. As a result, the financial condition and results of
operations of the Company will be subject to general economic conditions, and
particularly the conditions in the single-family and multi-family residential
markets in California. If economic conditions generally, or in California in
particular, worsen or if the market for residential real estate declines, the
Company may suffer decreased net income or losses associated with higher default
rates and decreased collateral values on its existing portfolio, and may not be
able to originate the volume or type of loans or achieve the level of deposits
currently anticipated.
The forward-looking statements regarding the Company's results of
operations assume that the California economy and real estate market will remain
healthy. A worsening of current economic conditions or a significant decline in
real estate values in California could cause actual results to vary materially
from the forward-looking statements.
Entry Into New Markets. Ahmanson has more than 40 branches in Texas, a
state in which the Company does not currently conduct a banking business. No
assurance can be given that the Company's lack of experience with the Texas
markets will not adversely affect the Company's business activities following
the Merger.
Competition. Washington Mutual faces significant competition both in
attracting and retaining deposits and in making loans in all of its markets. The
most direct competition has historically come from other savings institutions,
credit unions, mortgage companies, insurance companies, commercial banks, and
other institutional lenders doing business in the Company's market areas
following the Merger of California, Washington, Oregon, Texas and Florida. As
with all banking organizations, however, the Company has experienced increasing
competition from nonbanking sources, including mutual funds, securities
brokerage companies and government-sponsored enterprises ("GSEs") such as the
Federal National Mortgage Association ("FNMA"), the Federal Home Loan Mortgage
Corporation ("FHLMC"), and the Government National Mortgage Association
("GNMA"). Some of these competitors have significantly greater financial
resources, larger market share and greater name recognition than the Company.
There can be no assurance that competition from such sources will not increase
in the future and adversely affect the Company's ability to achieve the results
of operations set forth in the forward-looking statements. In addition, the
Company's lending activities are heavily influenced by competitive factors such
as the lower cost structure of less regulated originators and the influences of
GSEs in establishing rates.
Item 7. Financial Statements and Exhibits
(c) 1. Press Release dated March 17, 1998.
2. Copies of slides presented to investment analysts
at a meeting on March 17, 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: March 17, 1998 By: /s/ Fay L. Chapman
Fay L. Chapman
Executive Vice President
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
7(c).1 Press Release dated March 17, 1998
7(c).2 Copies of slides presented to investment analysts at a
meeting on March 17, 1998
Media Contact: Washington Mutual H.F. Ahmanson
(California) Mary Trigg
Tim McGarry 626-814-7922
818-775-3658
Washington Mutual
(Media outside of California)
Libby Hutchinson
206-461-2484
Investor Contact: Washington Mutual H.F. Ahmanson
Doug Wisdorf Steve Swartz
206-461-3805 626-814-7986
For Washington Mutual
and Ahmanson: Abernathy MacGregor Frank
Mike Pascale (212) 371-5999 March 17, 1998
Ian Campbell (213) 630-6550
FOR IMMEDIATE RELEASE
WASHINGTON MUTUAL, AHMANSON TO MERGE
Enhances Growth Potential; Solidifies National Consumer
and Small Business Banking Franchise
SEATTLE and IRWINDALE, CA - Washington Mutual, Inc. (Nasdaq: WAMU) and
H.F. Ahmanson & Company (NYSE: AHM) today announced that they have signed a
definitive agreement for Washington Mutual to acquire Ahmanson in a tax-free
exchange of common stock. The merger will create the nation's seventh-largest
banking company based on total 1997 year-end assets of nearly $150 billion.
The combined company will have deposits of $86.3 billion, and will
serve nearly 6 million households through more than 2,000 consumer banking
branches, loan offices, consumer finance locations and commercial banking
branches. Additionally, the combined company will be the nation's leading
adjustable-rate mortgage lender and will further strengthen its position as the
West Coast's number one mortgage lender. The transaction expands Washington
Mutual's consumer banking reach into Texas where Ahmanson currently operates
more than 40 branches.
- More -
WAMU/AHM - 2
Terms of the transaction call for the tax-free exchange of 1.12 shares
of Washington Mutual common stock for each of Ahmanson's outstanding common
shares. This ratio represents a price of $80.36 per share for Ahmanson common
stock, based on Washington Mutual's closing price on March 16, 1998. At that
price, the transaction would have an initial value of $9.9 billion, and the
combined company would have a market capitalization of over $27 billion.
"With this transaction, we are creating a premier institution that will
have the size and scope of the largest banks yet continue its focus on consumers
and small business. It further distinguishes our company from the competition,"
said Kerry Killinger, chairman, president and chief executive officer of
Washington Mutual. "Our combination strengthens Washington Mutual's platform for
high growth, creating additional shareholder value and enabling us to better
serve our communities. We look forward to adding the many talented Ahmanson
employees to the already strong team at Washington Mutual."
"The combination of our two companies will create a West Coast-based
financial institution competitive with the nation's largest banking companies,"
said Charles R. Rinehart, chairman and chief executive officer of Ahmanson. "The
people of Ahmanson and Home Savings have substantially transformed our company
over the last several years, in order to meet our customers' needs in today's
competitive banking environment. I am especially proud of them. Their
extraordinary efforts have been a major factor in bringing us to this point in
our history. Because of its strong balance sheet, its tradition of
consumer-friendly service, and its well known commitment to community needs, I
believe Washington Mutual is clearly the best partner for Ahmanson's
shareholders, customers, and the communities we have served for many years."
Additional Terms of the Transaction
The definitive agreement has been unanimously approved by the boards of
directors of Washington Mutual and Ahmanson. The transaction is subject to the
approval of the shareholders of both companies and the Office of Thrift
Supervision. The transaction will be structured as a tax-free exchange, and will
be accounted for as a pooling of interests. Closing is expected to take place
late in the third quarter of 1998. Any proceeds from Ahmanson's goodwill lawsuit
will be shared by the shareholders of the combined company.
As part of the agreement, Ahmanson has agreed to pay a $275 million
break-up fee to Washington Mutual if the merger agreement is terminated under
certain circumstances. The break-up fee is payable either in cash or through
exercise of an option to purchase up to 19.9 percent of Ahmanson's common stock.
In addition, as part of the transaction, Washington Mutual will incur a
transaction-related charge of $370 million ($254 million after-tax).
Administration and operations areas will be combined by the summer of 1999.
- More -
WAMU/AHM - 3
Three current Ahmanson directors will join the Washington Mutual board of
directors upon completion of the merger, increasing to 19 the size of that
board. Killinger will continue in his present role in the combined company,
which will be called Washington Mutual, Inc.
Strong California Presence
"With this transaction, we have significantly strengthened our
competitive position in California, the nation's most populous state," said
Killinger. "The combination of the Home Savings, Great Western, American Savings
and Coast Savings franchises makes California integral to Washington Mutual's
future. Consequently, we intend to continue to be closely and personally
involved with our California communities as we are in all of our other markets,
while continuing to offer consumer banking and home mortgage expertise to better
serve the financial needs of low- and moderate-income families and individuals."
Following completion of the merger, Washington Mutual will become
California's second-largest depository institution with a 17 percent market
share. It will serve the state with 700 financial centers (retail branches). The
company will be among the top three institutions, based on deposit market share,
in every major metropolitan market in California. The combined company's
California operations will be managed from its current Chatsworth, Irvine,
Stockton locations and from Washington Mutual's headquarters in Seattle.
Integration
Washington Mutual and Ahmanson will immediately begin planning the
integration of the two companies' operations. "A smooth integration of Great
Western remains our immediate priority for the first half of 1998. Once that
integration has been completed, we will turn our focus on the integration of
Ahmanson," said Killinger. "Conversion of Ahmanson's systems will occur in two
phases: Texas in the fourth quarter of 1998 and California in the second quarter
of 1999."
"Having completed 21 mergers and acquisitions in the last decade, our
company has successfully managed multiple integrations in the past," said
Killinger. "Our recent integration of American Savings, completed last July, was
conducted while the planning for the conversion of Great Western was underway."
"While in a transaction of this magnitude it is inevitable that
positions will be eliminated, the actual number of job losses should be
significantly lessened as a result of strong growth and natural attrition,"
Killinger said. "The company anticipates that approximately 3,000-3,500
positions will be consolidated as a result of the merger, due to both branch
consolidations and redundant administrative functions.
- More -
WAMU/AHM - 4
Washington Mutual anticipates that between 160-170 branches will be
consolidated as a result of the transaction. In those branches, the company will
give special consideration to the needs of low- and moderate-income communities,
Killinger said.
The company projects cost savings equal to approximately 40 percent of
Ahmanson's existing cost structure. Annual savings of $330 million are expected
to be realized by 2000. Washington Mutual expects the transaction to be
accretive to earnings per share in the year 2000. Commitment to the Community
Washington Mutual's banking subsidiaries and Ahmanson's banking
subsidiaries have "outstanding" ratings under the Community Reinvestment Act
(CRA).
"Throughout its history, Washington Mutual has demonstrated a strong
commitment to serving the financial needs of its local communities," said
Killinger. "In consultation with a wide variety of community-based
organizations, we will listen carefully to the needs of their constituents. We
are seeking to expand our relationships as our presence in California and other
areas grows. We will continue to strive to be the leader in meeting the
financial requirements of low to moderate income individuals and families."
"At a time when large bank mergers have sometimes come under attack for
the depersonalization of customer service and civic involvement, Washington
Mutual has consciously built a company that combines all the conveniences of
large commercial banks with the highly personalized services that reflect the
communities it serves," Killinger continued. "As we go forward with our new
partners at Ahmanson, we intend to build on the commitments to community that
have grown out of our prior expansions."
With a history dating back to 1889, Washington Mutual is a financial
services company that provides a diversified line of products and services to
consumers and small- to mid-sized businesses. At Dec. 31, 1997, Washington
Mutual and its subsidiaries had assets of $97.0 billion. The company operates
more than 1,600 offices throughout the nation.
Ahmanson, with more than $52.5 billion in assets, is the parent company
of Home Savings of America, one of the nation's largest full-service consumer
and small business banks.
###
Editor's Note: Washington Mutual's press releases are available at no charge
through the News On Demand Plus System. For a menu of Washington Mutual press
releases or to retrieve a specific release, call 1-800-329-6236. On the
Internet, press releases may be accessed at
http://www.businesswire.com/cnn/wamu.htm
This press release contains forward-looking statements regarding the benefits of
the merger of Washington Mutual and Ahmanson, including cost savings to be
realized, earnings accretion, transaction charges and additional loan-loss
reserves and revenue enhancement opportunities following the merger. Actual
results may vary from the forward-looking statements as described in Washington
Mutual's Current Report on Form 8-K dated March 17, 1998, to which reference is
made. These factors include without limitation possible delays in integration of
Ahmanson's operations into Washington Mutual's, competitive factors which could
adversely affect consumer banking strategy and general economic conditions which
could negatively impact the volume of loan originations and the amount of loan
losses.
[Washington Mutual Logo]
Washington Mutual/H.F. Ahmanson
At-A-Glance
December 31, 1997 figures (all dollar figures in thousands, except per share
prices.) Financial ratios reflect year-to-date figures. Ahmanson figures reflect
the acquisition of Coast Savings. Pro Forma numbers include adjustments for
transaction charges and other pro forma adjustments.
<TABLE>
<CAPTION>
Washington Ahmanson Pro Forma
Mutual
<S> <C> <C> <C>
Total Assets $96,981.1 $52,511.2 $149,176.3
Total Deposits $50,986.0 $35,386.6 $ 86,372.6
Total Loans $67,140.2 $36,405.8 $103,546.0
Net Income $481.8* $413.8 $895.6
Nonperforming Assets $806.6 $694.6 $1,501.2
Nonperforming Assets/Assets 0.83% 1.32% 1.01%
Reserves $670.5 $484.3 $1,154.8
Reserves/Nonperforming Loans 112% 99% 106%
Stockholders' Equity/Assets 5.47% 5.95% 5.47%
Book Value Per Share $20.80 $25.87 $20.91
Closing Stock Price Per Share (3/16/98) $71.75 $65.50
Market Capitalization (billions) (3/16/98) $17.9 $7.9 $27.6
Retail Branches 892 409 1,252
Loan Offices 187 120 307
Commercial Bank Offices 54 0 54
Consumer Finance Offices 502 0 502
Total ATM Locations +1,000 541 +1,541
Total Banking Locations 2,635 1,070 3,705
Households Served (mm) 3.9 2.0 5.9
Employees 22,000 9,380 31,380
</TABLE>
* includes one-time restructuring and other charges associated with the
Great Western transaction
WASHINGTON MUTUAL, INC.
[WASHINGTON MUTUAL LOGO] MERGER WITH [H.F. AHMANSON & CO. LOGO]
H.F. AHMANSON & CO.
HIGH GROWTH CONSUMER BANKING
MARCH 17, 1998
<PAGE>
FORWARD-LOOKING INFORMATION
This presentation contains estimates of future operating results for 1998,
1999 and 2000 for both Washington Mutual, Inc. and H.F. Ahmanson & Co. on a
stand-alone and pro forma combined basis, as well as estimates of financial
condition and transaction synergies on a combined basis. These estimates
constitute forward-looking statements (within the meaning of the Private
Securities Litigation Reform Act of 1995), which involve significant risks and
uncertainties. Actual results may differ materially from the results discussed
in these forward-looking statements. Factors that might cause such a difference
include, but are not limited to, those discussed in WAMU's Current Report on
Form 8-K dated March 17, 1998, as filed with the Securities and Exchange
Commission, to which reference is hereby made.
[Washington Mutual Logo] 2 [H.F. Ahmanson & Company Logo]
<PAGE>
Transaction Summary
Fixed Exchange Ratio: 1.12x
Implied Value Per AHM Share: $80.36(a)
Caps/Collars: None
Consideration: 100% common stock
Accounting/Tax Treatment: Pooling of interests/Tax-free exchange
Options/Breakup Fee: 19.9%/$275 million
Assumed Closing: Late 3rd Quarter 1998
Board Composition: Three AHM Directors to join WAMU Board
Supervisory Goodwill Lawsuit: To be retained by the combined Company's
shareholders
(a) Based on WAMU's closing price of $71.75 as of 3/16/98
[Washington Mutual Logo] 3 [H.F. Ahmanson & Company Logo]
<PAGE>
STRATEGIC RATIONALE
Compelling strategic fit
Completes formation of a powerhouse consumer banking franchise, with solid
#2 market share in CA, WA and the West coast
Creates strength, scale and customer base enabling WAMU to compete
aggressively across business lines
Exploits franchise potential through leverage of WAMU's skills in mortgage
lending, consumer banking and systems/technology
Financially attractive transaction
Accretive to EPs
Enhances continued strong operating performance and earnings growth
Conservative assumptions
Low risk execution
In-market consolidation transaction
Clean, well-managed company with strong operating trends
Proven integration skills
[Washington Mutual Logo] 4 [H.F. Ahmanson & Company Logo]
<PAGE>
COMPELLING STRATEGIC FIT
[Washington Mutual Logo] 5 [H.F. Ahmanson & Company Logo]
<PAGE>
CREATES A POWERHOUSE COMBINATION
<TABLE>
<CAPTION>
($ in billions) At 12/31/97
-------------------------------------------------
WAMU AHM(a) Pro Forma
<S> <C> <C> <C>
Assets $97.0 $52.5 $149.2
Deposits $51.0 $35.4 $86.4
Equity $5.3 $3.1 $8.2
Market Capitalization at 3/16/98 $17.9 $7.9 $27.6
Depository Branches 815(b) 380(c) 1,195
Lending/Other Offices 742 116(d) 858
Households (mm) 3.8 2.0 5.8
1997 Single Family Mortgage
Originations $22.0 $5.5 $27.5
1997 Total Loan Originations $29.6 $7.6 $37.3
Total Loans Serviced $113.8 $67.4 $181.2
Mutual Funds Under Management $4.8 $0.9 $5.7
(a) Pro forma for acquisition of Coast Savings Financial, sale of Florida
branches and redemption of Series C Preferred Stock
(b) Net of 86 consolidations scheduled for 1998 as part of GW/WAMU
integration. Includes 51 WM branches doing business as Western Bank
(c) Net cost of consolidations completed for 1998. Also excludes sale of 27
Florida branches
(d) As of 3/7/98. Source: AHM press release
</TABLE>
[Washington Mutual Logo] 6 [H.F. Ahmanson & Company Logo]
<PAGE>
MAJOR U.S. DEPOSITORY INSTITUTIONS
<TABLE>
<CAPTION>
Total Assets(a) Market Capitalization(b)
Rank Institution Assets Rank Institution Mkt. Cap
<S> <C> <C> <C> <C> <C>
1 Chase Manhattan Corp. $365.5 1 NationsBank Corp. $67.1
2 Citicorp 310.9 2 Citicorp 63.4
3 NationsBank Corp. 308.6 3 BankAmerica Corp. 58.3
4 J.P. Morgan & Co. 262.2 4 First Union Corp. 55.3
5 BankAmerica Corp. 260.2 5 Chase Manhattan Corp. 54.0
6 First Union Corp 204.9 6 Banc One Corp. 43.2
-------------------------------------------------------
7 WAMU/AHM 149.2 7 Norwest Corp. 32.9
-------------------------------------------------------
8 Bankers Trust NY Corp. 140.1 8 U.S. Bancorp 29.4
9 Banc One Corp. 125.4 9 Wells Fargo & Co. 28.2
-----------------------------------------------------------
10 First Chicago 114.1 10 WAMU/AHM 27.6
-----------------------------------------------------------
</TABLE>
Pro forma for major pending acquisitions
(a) Ranking based on data as of 12/31/97
(b) Based on closing prices as of 3/16/98
[Washington Mutual Logo] 7 [H.F. Ahmanson & Company Logo]
<PAGE>
Premier Player in the Western U.S.
<TABLE>
<CAPTION>
Rank Name Total Deposits(a) Total Assets Market Value(b)
<S> <C> <C> <C> <C>
1 BankAmerica Corp. $97.1 $260.2 $58.3
- -------------------------------------------------------------------------------------------------------
WAMU/AHM 79.9 149.2 27.6
- -------------------------------------------------------------------------------------------------------
2 Wells Fargo & Co. 60.4 97.5 28.2
3 Washington Mutual, Inc. 46.1 97.0 17.9
4 H.F. Ahmanson & Co. 33.8 52.5 7.9
5 U.S. Bancorp 25.6 71.3 29.4
6 Golden State Bancorp(c) 25.3 51.3 4.1
7 UnionBanCal Corp. 20.7 30.6 5.2
8 Golden West Financial Corp. 13.7 39.6 5.4
9 KeyCorp 8.7 73.7 16.2
10 First Security Corp. 8.4 17.3 4.0
Source: SNL Securities. Western U.S. includes the states of CA, ID, MT, OR,
UT, and WA. Total assets as of 12/31/97
(a) Western U.S. deposits from SNL branch migration database as of 6/30/97
pro forma for pending acquisitions as of 3/13/98
(b) Stock prices as of 3/16/98
(c) Pro Forma for the merger with First Nationwide
</TABLE>
[Washington Mutual Logo] 8 [H.F. Ahmanson & Company Logo]
<PAGE>
CONSOLIDATES LEADERSHIP IN CALIFORNIA
<TABLE>
<CAPTION>
Rank Institution CA Deposits(a) Market Share Branches Deposits Per Branch
<S> <C> <C> <C> <C> <C>
1 BankAmerica $81.3 B 20.6% 1,049 $77.5 mm
------------- ------------------- ------------------ ----------------- --------------- ----------------------------
2 WAMU/AHM 67.1 17.0 700(b) 95.9
------------- ------------------- ------------------ ----------------- --------------- ----------------------------
3 Wells Fargo 54.2 13.7 970 55.9
4 Golden State 25.3 6.4 390 64.9
5 UnionBanCal 20.3 5.1 246 82.5
(a) Source: SNL Securities. Deposits as of 6/30/97, pro forma for pending
acquisitions. Excludes credit unions
(b) Combined WAMU/AHM branch count nets out all pending consolidations
associated with the integration of GW into WAMU and Coast into Home Savings of
America
</TABLE>
[Washington Mutual Logo] 9 [H.F. Ahmanson & Company Logo]
<PAGE>
STRONG SHARE IN THROUGHOUT CALIFORNIA
California MSA Market Share Analysis
($ in billions)
<TABLE>
<CAPTION>
Number of Markets Deposits % of MSA Deposits Cumulative % of MSA Deposits
<S> <C> <C> <C> <C>
#1 Market Rank 11 $47.5 71.8% 71.8%
#2 Market Rank 5 10.9 16.5 88.3
#3 Market Rank 3 6.8 10.2 98.5
Other 6 1.0 1.5 100.0
</TABLE>
[Washington Mutual Logo] 10 [H.F. Ahmanson & Company Logo]
<PAGE>
LEADING WEST COAST FRANCHISE
[Logos of maps of the states of California, Washington, Oregon, Florida and
other states in close proximity to these states]
[Logo of a triangle indicating "WAMU" on the map logos listed above] [Logo
of a circle indicating "AHM" on the map logos listed above]
<TABLE>
<CAPTION>
Deposits Deposit
State Branches ($B) Share Rank
<S> <C> <C> <C> <C>
California 700(a) $67.1 17.0% 2
Washington 170 9.2 17.1% 2
Oregon 118 2.9 10.1% 3
Florida 118(b) 7.0 3.8% 5
Texas 44 2.6 1.3% 14
Other States 45 0.6 - -
------ ------
Total 1,195 $89.4
Source: SNL 6/30/97 Branch Migration database pro forma for pending
acquisitions. Excludes credit unions
(a) Net of 86 consolidations in 1998 as part of WAMU/GW integrations
(b) Excludes 27 branches to be sold
</TABLE>
[Washington Mutual Logo] 11 [H.F. Ahmanson & Company Logo]
<PAGE>
CALIFORNIA ECONOMIC RECOVERY
<TABLE>
<CAPTION>
Home Sales % Change
(units): 1996-1997
<S> <C>
California(a) 9.9%
U.S. 3.1%
- ------------------------------------------
Median Home Prices
California 5.2%
Los Angeles County 2.1%
Orange County 7.7%
San Diego County 6.2%
San Francisco Bay Area 9.7%
- -------------------------------------------
(a) Highest level since 1989
</TABLE>
[Washington Mutual Logo] 12 [H.F. Ahmanson & Company Logo]
<PAGE>
ATTRACTIVE GROWTH MARKETS
<TABLE>
<CAPTION>
Expected 1998 Expected 1998
Population Employment
State 1997 Population Growth Rate Growth Rate
<S> <C> <C> <C>
California 32.3 mm 1.4% 2.5%
Washington 5.6 2.0 3.0
Oregon 3.2 1.5 2.7
Utah 2.1 2.0 3.8
Florida 14.7 3.1 2.6
Texas 19.5 1.7 2.4
------ ---- ---
Total/Average 77.4 2.0 2.8
U.S. 267.6 1.0 2.2
</TABLE>
Source: 1997 Population - Bureau of Census
Employment & Population Growth - Western Bureau Chip Forecast, December
1998; University of Florida; Washington
Economic Revenue Forecast, October 1997
[Washington Mutual Logo] 13 [H.F. Ahmanson & Company Logo]
<PAGE>
SINGLE FAMILY MORTGAGE LEADERSHIP
[Bar Graph]
<TABLE>
<CAPTION>
1997 Originations(a)
Washington Oregon California West Coast (b)
<S> <C> <C> <C>
16.3% 13.2% 10.2% 11.2%
AHM 0.3% AHM 0.7% WAMU 3.0% WAMU 2.4%
WAMU 16.0% WAMU 12.5% AHM 7.2% AHM 8.8%
NOB 5.4% NOB 4.9% BAC 6.8% BAC 6.4%
BAC 4.9% BAC 4.6% CCR 3.6% NOB 3.6%
(a) As of YTD 12/97. Includes first and second mortgages
(b) Includes Washington, Oregon and California Source: Experian Marketrac
for California. Rocky Mountain Statistics for Washington and Oregon
</TABLE>
[Washington Mutual Logo] 14 [H.F. Ahmanson & Company Logo]
<PAGE>
LEADING ARM MARKET SHARE
AHM strengthens WAMU's leading U.S. ARM market share to 11%
AHM complements retail origination sales force in major U.S. ARM markets
(i.e., CA, IL, CT, NY)
Sales force will be expanded by 400 retail loan consultants to 1,050
experienced in ARM origination
Adding WAMU's broad product line and proprietary loan origination system
("Loanworks") will improve productivity and expand and strengthen realtor
relationships
[Washington Mutual Logo] 15 [H.F. Ahmanson & Company Logo]
<PAGE>
COMPREHENSIVE PRODUCT LINE
Consumer Loan Products Business Banking Products
Home Equity** Small Business Lending**
Consumer Finance** Business Checking**
Manufactured Housing* Community Banking*
Auto/Other
Retail Banking Products
Non-Banking Services Transaction Accounts**
Mutual Funds** Certificates/Savings**
Annuities**
Securities Brokerage** Mortgage Lending
Credit Insurance** Single Family**
Multi-Family**
Residential Construction*
* Indicates that the Washington Mutual logo is present beside this category
in the slide
** Indicates that the Washington Mutual logo and the H.F. Ahmanson logo are
present in this category in the slide
[Washington Mutual Logo] 16 [H.F. Ahmanson & Company Logo]
<PAGE>
FINANCIALLY ATTRACTIVE
TRANSACTION
[Washington Mutual Logo] [H.F. Ahmanson & Company Logo]
<PAGE>
OVERVIEW
Appropriate valuation
Conservative pro forma assumptions
Accretive to EPS
3% in Year 2000
IRR of 16%
Substantially exceeds WAMU's cost of capital
Improves financial and operating performance
EPS growth
Return on common equity
Operating efficiencies
Strong, low risk balance sheet
[Washington Mutual Logo] 18 [H.F. Ahmanson & Company Logo]
<PAGE>
CONSERVATIVE FINANCIAL ASSUMPTIONS
40% cost savings
$330 million pre-tax in 2000 (fully phased-in)
No operating revenue/fee enhancements assumed
Adjustments to incremental cash/capital: suspension of
AHM stock buyback, cost savings, Florida branch sale, net transaction
charge
Incremental cash reinvested at 4% after-tax
Incremental capital deployed at 60bp
after-tax net spread
[Washington Mutual Logo] 19 [H.F. Ahmanson & Company Logo]
<PAGE>
PRO FORMA EPS ACCRETION
<TABLE>
<CAPTION>
1998E(a) 1999E 2000E
<S> <C> <C> <C>
WAMU Estimated Net Income(b) $1,178 $1,422 $1,635
AHM Estimated Net Income(b) 472 522 546
Total Estimated Net Income 1,650 1,944 2,181
Cost Savings 13 121 201
Earnings on Incremental Cash/Capital(c) 31 114 224
----- ------- -----
Pro Forma Net Income 1,693 2,179 2,607
Stand Alone EPS $4.68 $5.65 $6.50
Pro Forma EPS(d) $5.60 $6.69
% Accretion/(Dilution) to First Call -1.0% 3.0%
% EPS Growth 20% 20%
ROACE 21.2% 21.7%
(a) Excludes anticipated transaction related costs
(b) First Call estimates for 1998 and 1999. 2000 estimates based on EPS
growth rate of 15% and 11% for WAMU and AHM, respectively (c) See page 24 (d)
Based on 388.8 million pro forma fully diluted shares outstanding in 1998 and
389.4 million in 1999 and 2000
</TABLE>
[Washington Mutual Logo] 20 [H.F. Ahmanson & Company Logo]
<PAGE>
COST SAVINGS BREAKDOWN
<TABLE>
<CAPTION>
($ in millions)
2000 % of AHM
Cost Savings 1998 G&A
<S> <C> <C>
Corporate Operations $166 47%
Administration/Finance 37 54
Lending 58 63
Retail Banking 69 22
Total Pretax Cost Savings $330 40
After-tax Cost Savings $201
</TABLE>
[Washington Mutual Logo] 21 [H.F. Ahmanson & Company Logo]
<PAGE>
SIGNIFICANT BRANCH OVERLAP IN CALIFORNIA
AHM Branches within
Range of ASB / GW Branch
<TABLE>
<CAPTION>
less than 0.5 Miles 0.5 - 1 Mile 1 - 2 Miles
<S> <C> <C> <C>
Branches (Cumulative) 120 168 236
% of Total(a) 36% 50% 70%
Estimated Closures 160-170
(a) Reflects percent of AHM branches in California
</TABLE>
[Washington Mutual Logo] 22 [H.F. Ahmanson & Company Logo]
<PAGE>
PROJECTED TRANSACTION CHARGES
<TABLE>
<CAPTION>
($ in millions)
<S> <C>
Severance and Management Payments $165
Facilities, Equipment & Contracts 157
Advisory/Professional Fees 48
----
Total Expenses 370
Tax Effect 116
----
After-tax Expenses $254
====
</TABLE>
[Washington Mutual Logo] 23 [H.F. Ahmanson & Company Logo]
<PAGE>
EARNINGS ON INCREMENTAL CASH/CAPITAL
<TABLE>
<CAPTION>
1998E 1999E 2000E
<S> <C> <C> <C>
Average Incremental Cash/Capital Resulting From:
Suspension of AHM Stock Buyback Program(a) $200 $675 $1,200
Gain on Sale of Florida Branches 41 165 165
Pro Forma Cost Savings 2 73 234
Other Items Including Transaction Charge (50) (200) (200)
---- ----- ------
Total Incremental Cash/Capital 193 713 1,399
After-tax Earnings on:
Deployment of Incremental Capital(b) 23 86 168
Reinvestment of Incremental Cash(c) 8 28 56
--- ----- ----
Total Earnings on Incremental Cash/Captial $31 $114 $224
=== ===== ===
(a) Based on analyst estimates of Ahmanson buyback program
(b) Deployed at 60bp after-tax net spread
(c) Reinvested at 4% after-tax
</TABLE>
[Washington Mutual Logo] 24 [H.F. Ahmanson & Company Logo]
<PAGE>
CONTINUED GENERATION OF SURPLUS CAPITAL
[Washington Mutual Logo] 25 [H.F. Ahmanson & Company Logo]
<PAGE>
ADDITIONAL OPPORTUNITIES
Conservative consolidation savings
Additional operating revenue opportunities:
Customer growth
Increased fee income
Margin expansion
Deployment of surplus capital
Additional value
Goodwill lawsuit
Improving real estate outlook for REI portfolio
[Washington Mutual Logo] 26 [H.F. Ahmanson & Company Logo]
<PAGE>
FRANCHISE POTENTIAL OF AHMANSON
[Bar Graph]
($ in millions; accounts in thousands)
RETAIL CHECKING ACCOUNTS
(CAGR: 6.7%, 8.3%)
- -------------------------------------------
1994: 2,723
AHM 651
WAMU 2,072
1995: 2,833
AHM 650
WAMU 2,183
1996: 3,207
AHM 873
WAMU 2,334
1997: 3,347
AHM 828
WAMU 2,519
DEPOSITOR FEE INCOME
(CAGR: 24.2%, 25.3%)
- -------------------------------------------
1994: $246
AHM 60
WAMU 186
1995: $290
AHM 56
WAMU 234
1996: $361
AHM 78
WAMU 283
1997: $481
AHM 115
WAMU 366
[Washington Mutual Logo] 27 [H.F. Ahmanson & Company Logo]
<PAGE>
STRONG ASSET QUALITY AND RESERVES
<TABLE>
<CAPTION>
At December 31, 1997
WAMU AHM(a) Pro Forma
<S> <C> <C> <C>
Non-Accrual Loans $601 $489 $1,090
Real Estate Owned 205 206 411
----- ----- ------
NPAs $806 $695 $1,501
===== ===== ======
NPAs/Assets 0.83% 1.24% 1.01%
Loan Loss Reserves $671 $484 $1,155
Reserves/NPLs 1.12x 0.99x 1.06x
</TABLE>
(a) Pro forma for acquisition of Coast Savings Financial.
[Washington Mutual Logo] 28 [H.F. Ahmanson & Company Logo]
<PAGE>
PRO FORMA CAPITAL BASE
<TABLE>
<CAPTION>
At December 31, 1997
WAMU AHM(a) Adj.(b) Pro Forma
<S> <C> <C> <C> <C>
Trust Preferred $800 $148 - $948
Preferred Equity 118 - (69) 49
Convertible Preferred Equity - 284 (284) -
Common Equity 5,191 2,842 84 8,117
Total Equity $5,309 $3,126 $(269) $8,166
Book Value Per Share $20.80 $25.87 $20.91
Tangible Book Value Per Share $19.61 $20.50 $18.45
Tangible Equity/Assets 5.18% 4.78% 4.87%
Common Equity/Assets 5.35 5.41 5.25
Total Equity/Assets 5.47 5.95 5.47
Total Tangible Equity +
Trust Preferred/Assets 6.01 5.06 5.51
(a) Pro forma for acquisition of Coast Savings Financial
(b) Pro forma for redemption of WAMU series C preferred stock, conversion
of AHM series D convertible preferred and transaction charge net of tax benefit
on stock options
</TABLE>
[Washington Mutual Logo] 29 [H.F. Ahmanson & Company Logo]
<PAGE>
LOW RISK EXECUTION
[Washington Mutual Logo] [H.F. Ahmanson & Company Logo]
<PAGE>
PROVEN ACQUISITION TRACK RECORD
21 transactions completed over past 10 years
Proven consolidation track record
GW transaction in final stages of conversion
Integration team and operating systems fully in place to assimilate
Ahmanson
[Washington Mutual Logo] 31 [H.F. Ahmanson & Company Logo]
<PAGE>
INTEGRATION ACTIVITIES NEARLY COMPLETE
ASB integration completed on time
GW integration on track for June completion
Strengthening of middle and line management
Substantial customer growth at ASB, GW
[Washington Mutual Logo] 32 [H.F. Ahmanson & Company Logo]
<PAGE>
TRANSACTION INTEGRATION PLANS/ISSUES
Closing anticipated by end of Q3-98
Texas to be converted by end of Q4-98
California to be converted by Q2-99
Operational infrastructure capable of handling AHM without material change
Relative scale of integration easier than recent acquisitions (ASB, GW)
Y2K planning and testing proceeding on target
Expect minimal additional capital investment
Mortgage servicing systems are compatible
[Washington Mutual Logo] 33 [H.F. Ahmanson & Company Logo]
<PAGE>
CONCLUSIONS
[Washington Mutual Logo] [H.F. Ahmanson & Company Logo]
<PAGE>
STOCK MARKET OUTPERFORMANCE
[Bar Graph]
TOTAL ANNUAL RETURN PEER COMPARISON(a)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30.5% 30.3% 28.4% 25.0% 23.0% 22.2% 21.5% 19.9% 17.5% 17.4% 17.1% 15.1% 14.9%
WAMU NOB USB BAC FTU KEY CCI WFC ONE CMB GDW NB SPX
Price/98 15.0x 21.5x 19.2x 16.8x 14.6x 15.6x 14.4x 15.7x 16.4x 13.0x 14.0x 14.9x 25.9x
EPS(b)
(a) For the period 1/1/90 to 3/13/98
(b) Stock Price and IBES estimates as of 3/13/98
(c) Price/Cash EPS shown
</TABLE>
[Washington Mutual Logo] 35 [H.F. Ahmanson & Company Logo]
<PAGE>
STRATEGIC RATIONALE
Compelling strategic fit
Completes formation of a powerhouse consumer banking franchise, with
solid #2 market share in CA, WA and the West coast
Creates strength, scale and customer base enabling WAMU to compete
aggressively across business lines
Exploits franchise potential through
leverage of WAMU's skills in mortgage lending, consumer banking and
systems/technology
Financially attractive transaction
Accretive to EPS
Enhances continued strong operating performance and earnings growth
Conservative assumptions
Low risk execution
In-market consolidation transaction
Clean, well-managed company with strong operating trends
Proven integration skills
[Washington Mutual Logo] 36 [H.F. Ahmanson & Company Logo]
<PAGE>
<PAGE>
WASHINGTON MUTUAL, INC.
[WASHINGTON MUTUAL LOGO] MERGER WITH [H.F. AHMANSON & CO. LOGO]
H.F. AHMANSON & CO.
HIGH GROWTH CONSUMER BANKING
MARCH 17, 1998
[Washington Mutual Logo] [H.F. Ahmanson & Company Logo]
<PAGE>
APPENDIX
[Washington Mutual Logo] [H.F. Ahmanson & Company Logo]
<PAGE>
TRANSACTION PRICING
<TABLE>
<CAPTION>
Acquisition Comparable Transactions Current
of AHM Banks(d) Thrifts(e) WAMU
<S> <C> <C> <C> <C>
Price/Share $80.36(a) - - $71.75
Total Value $9.9B - - $17.9B
Multiples to:
1998P EPS(b) 20.1x 21.6x 22.3x 15.3x
1999P EPS(b) 17.5x 19.7x 20.3x 12.7x
1999 Adjusted EPS(c) 12.8x 15.5x 14.5x -
Book Value 2.97x(f) 3.91x 3.34x 3.45x
Tangible Book Value 3.85x(f) 4.26x 3.34x 3.70x
Deposit Premium 21.9% 40.0% 32.0% 28.9%
(a) Based on WAMU closing price of $71.75 on March 16, 1998
(b) Based on First Call estimates as of March 13, 1998
(c) Includes fully phased in merger synergies
(d) Based on median of all bank deals since June 30, 1997 with deal values
greater than $1 billion
(e) Based on median of all thrift deals since June 30, 1997 with deal
values greater than $500 million
(f) Pro forma for sale of Florida branches including gain on sale
</TABLE>
[Washington Mutual Logo] 39 [H.F. Ahmanson & Company Logo]
<PAGE>
DEPOSIT COMPOSITION
<TABLE>
<CAPTION>
($ in millions)
December 31, 1997
AHM(a) WAMU Pro Forma
------------------------------- ------------------------- --------------------------
Deposits % of Total Deposits % of Total Deposits % of Total
<S> <C> <C> <C> <C> <C> <C>
Checking $3,956 11.2% $7,914 15.5% $11,871 13.7%
Money Market 6,720 19.0% 11,672 22.9% 18,392 21.3%
Savings 1,178 3.3% 3,268 6.4% 4,446 5.2%
CDs 23,532 66.5% 28,132 55.2% 51,664 59.8%
Jumbo CDs
Total Deposits $35,387 100.0% $50,986 100.0% $86,373 100.0%
============ =========== ===============
(a) Pro forma for acquisition of Coast Savings Financial
</TABLE>
[Washington Mutual Logo] 40 [H.F. Ahmanson & Company Logo]
<PAGE>
LOAN AND MBS PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
AHM(a) WAMU Pro Forma
Loans % of Total Loans % of Total Loans % of Total
<S> <C> <C> <C> <C> <C> <C>
One-to-Four Family $23,247 62.5% $53,431 78.8% $76,678 73.1%
Multifamily 10,891 30.0% 4,188 6.2% 15,078 14.5%
Commercial Real Estate 1,572 4.3% 2,426 3.6% 3,998 3.8%
Construction - 0.0% 877 1.3% 877 0.8%
Consumer 1,063 2.9% 2,725 4.0% 3,788 3.6%
Consumer Finance - 0.0% 2,309 3.4% 2,309 2.2%
Business 69 0.2% 772 1.1% 841 0.8%
Other 45 0.1% 1,081 1.6% 1,126 1.1%
------- ----- ------- ----- ======= ------
Gross Loans $36,887 100.0% $67,811 100.0% $104,695 100.0%
Mortgage Backed ======= ======= ========
Securities $14,902 $22,847 $37,819
(a) Pro forma for acquisition of Coast Savings Financial
</TABLE>
<PAGE>
1997 ORIGINATIONS
<TABLE>
<CAPTION>
($ in millions)
WAMU AHM(a) Combined
<S> <C> <C> <C>
Real Estate:
SFR - Fixed Rate $ 6,798 $2,094 $8,892
SFR - ARMs 15,167 3,456 18,623
Total Single Family Residential 21,965 5,550 27,515
Multi-Family 692 1,166 1,858
Construction 1,449 - 1,449
Commercial 495 - 495
Total Real Estate 24,601 6,716 31,317
Consumer:
Consumer Finance 2,179 -- 2,179
Second Mortgage and Other 2,153 843 2,996
Total Consumer 4,332 843 5,175
Business and Other 670 90 760
Total Loan Originations $ 29,603 $7,649 $37,252
======== ====== =======
(a) Pro forma for acquisition of Coast Savings Financial
</TABLE>
[Washington Mutual Logo] 42 [H.F. Ahmanson & Company Logo]
<PAGE>
AHM 3-YEAR TRENDS
[Bar Graph]
Total Assets ($B)
1995 $50.5
1996 $49.9
1997 $46.7
NPAs/Assets
1995 1.88%
1996 1.70%
1997 1.28%
ROAA
1995 0.41%
1996 0.59%
1997 0.80%
Efficiency Ratio
1995 58.9%
1996 52.2%
1997 49.8%
Original annual data, not restated for acquisitions; excludes nonrecurring
items
[Washington Mutual Logo] 43 [H.F. Ahmanson & Company Logo]
