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: June 9, 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
June 9, 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 12, 1998 By:/s/ Marc R. Kittner
Marc R. Kittner, Senior Vice President
and Deputy General Counsel
Q1 1998
- -------------------------------------------------------
[Washington Mutual Logo]
Piper Jaffray Conference
Minneapolis, MN
June 9, 1998
William A. Longbrake
Executive Vice President and Chief Financial Officer
Slide 1
<PAGE>
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>
WAMU Profile
Mission To Be One of the Nation's Premier
Financial Services Companies
Businesses Consumer Banking
Financial Services
Mortgage Lending
Commercial Finance
Size $103.1 Billion in Assets
Nation's Largest Savings Institution
Nation's 11th Largest Bank
Slide 3
<PAGE>
WAMU Profile
Key Strategies
Expand Businesses through Internal Growth
and Acquisitions
Maintain a High Quality Balance Sheet
Improve Operating Efficiency
Limit Sensitivity to Interest Rate Movements
Slide 4
<PAGE>
WAMU Profile
Five-Year Financial Targets: 1995 - 2000
Results
Target 3/31/98(a)
ROCE (gtr. thn) 18.00% 19.68%
EPS Growth (gtr. thn) 15.00 29.24(b)
Operating Efficiency (less thn) 50.00 46.20
NPA/Total Assets (less thn) 1.00 0.78
Common Equity/Assets (gtr. thn) 5.00 5.22
WAMU Return/S&P 500 (gtr. thn) 100.00
(a) Results based on earnings from operations which equal reported earnings
less transaction-related expenses
(b) Increase in earnings from operations from Q1 1997 to Q1 1998
Slide 5
<PAGE>
[Map of Western United States]
Deposits Deposit
State Branches (a) ($B)(b) Share(b)
California 364 $30.1 8.3%
Washington 172 7.7 14.5%
Florida 118 6.3 3.7%
Oregon 74 2.0 7.6%
Other States 43 n/a n/a
(a) Branch count as of 3/31/98 net of pending consolidations
(b) Interest bearing deposits, exclusive of government deposits, as of
December 31, 1997
Slide 6
<PAGE>
Consumer Banking
Broad Product Line
Deposit Products
Transaction Accounts
Time Deposits
Consumer Loan Products
Home Equity
Unsecured Lines
Manufactured Housing
Auto/Other
Mortgage Lending
Single-Family ARMs
Single-Family Fixed
Financial Services
Mutual Funds
Annuities
Securities Brokerage
Credit Insurance
Business Banking Products
Small Business Lending
Business Transaction Accounts
Slide 7
<PAGE>
Consumer Banking
Customer Acquisition/Cross-Selling Strategy
Strategies Offer Competitive Consumer-Oriented Products
Employ Aggressive Marketing Techniques
Increase Customer Contact Through Multiple Delivery Channels
Cross-Sell Customers
Utilize State of the Art Technology
[arrow]
Results Increase in Households Served
Increase in Checking Accounts
Increase in Fee Income
Increase in Consumer Loan Originations
Slide 8
<PAGE>
Consumer Banking
Distribution Network - As of 3/31/98
Northwest(a) CA FL Total
Traditional Branches 189 349 118 656
In-Store Branches 96 15 -- 111
Self-Service and other(c) 4 -- -- 4
ATMs 354 556 188 1,098
(a) Includes Washington, Oregon, Idaho, Montana and Utah
(b) Net of pending consolidations
(c) Includes interactive/self-service and remote drive-up locations
[Map of Western United States and Florida]
Slide 9
<PAGE>
Consumer Banking
Retail Checking Accounts
[Bar Graph]
YEAR GW ASB WMB Total Households
1995 1.462 .232 .489 2.183 3.696
1996 1.488 .238 .608 2.334 3.736
1997 1.432 .321 .766 2.519 3.753
Q1 1998 1.501 .337 .799 2.637 3.822
CAGR 1994-1997
WMB: 24.8% ASB: 19.75
GW: (1.4)%
% Change: 1/1/98-3/31/98
WMB: 4.3% ASB: 5.1%
GW: 4.8%
Slide 10
<PAGE>
Consumer Banking
Net New Checking Accounts - Northwest Operations
[Bar Graph]
1995 1996 1997 Q1 1998
- ---- ---- ---- -------
95,202 119,318 148,815 33,317
Slide 11
<PAGE>
Consumer Banking
Net New Checking Accounts - ASB
[Bar Graph]
1996 1997 Q1 1998
---- ---- -------
5,695 83,127 16,390
Slide 12
<PAGE>
Consumer Banking
Net New Checking Accounts - GW
[Bar Graph]
Q1 1997 Q2 1997 Q3 1997 Q4 1997 Q1 1998
- ------- ------- ------- ------- -------
(46,279) (51,359) (36,400) 78,870 68,357
Florida 42% Florida 54%
California 58% California 46%
Slide 13
<PAGE>
Consumer Banking
Depositor and Other Retail Banking Fee Income
[Bar Graph]
Dollars in Millions
1995 1996 1997 Q1 1997 Q1 1998
---- ---- ---- ------- -------
Southwest/Southeast(a) $176.4 $205.2 $253.9 $60.08 $59.0
Northwest(b) $ 57.5 $ 77.3 $112 $21.9 $33.3
Total $233.9 $282.5 $365.9 $82.7 $92.3
CAGR 1994-1997
NW: 57.8% SW/SE: 17.3%
% Change: Q1 '97 - Q1 '98
NW: 52.0% SW/SE: (3.1)%
(a) Southwest/Southeast refers to the operations of Washington Mutual Bank,
FA (California and Florida
(b) Northwest refers to the combined operations of Washington Mutual Bank
and Washington Mutual Bank fsb (Washington, Oregon, Idaho, Montana and Utah)
Slide 14
<PAGE>
Consumer Banking
Consumer Lending*
[Bar Graph]
Dollars in Millions
1995 1996 1997 Q1 1997 Q1 1998
---- ---- ---- ------- -------
Southwest/Southeast $ 312.7 $ 336.2 $ 646.8 $106.6 $170.7
Northwest $ 967.3 $1,268.3 $1,506.1 $333.1 $276.1
Total $ 1,280.0 $1,604.5 $2,152.9 $439.7 $446.8
CAGR 1994-1997
NW: 14.7% SW/SE: 26.7%
% Change: Q1 '97-Q1 '98
NW: (17.1)% SW/SE: 60.1%
* Consumer loan originations, not including SFR loans or loans originated
through the company's consumer finance subsidiaries.
Slide 15
<PAGE>
Non-Banking Products
Distribution Network
[Map of Western United States]
Financial Consultants 350
Mutual Funds as of 3/31/98 $4.9B
Slide 16
<PAGE>
Non-Banking Products
Revenue Growth*
[Bar Graph]
Dollars in Millions
1995 $126.4
1996 $151.0
1997 $162.7
Q1 1997 $ 38.9
Q1 1998 $ 43.6
* Includes commission income from sales of mutual funds, annuities,
property and casualty insurance, and life insurance and fees associated with
management of the proprietary mutual fund complex; does not include commission
income generated by the Company's consumer finance subsidiary
Slide 17
<PAGE>
Mortgage Lending
Distribution System
[Map of United States indicating location of Mortgage Loan Offices
and Wholesale Mortgage Offices]
States 29
Lending Offices 190
Loan Consultants 700
Account Managers 85
Slide 18
<PAGE>
Mortgage Lending
SFR Loan Origination Market Share - 1997
[Bar Graphs]
Washington Oregon California
WAMU 17.01% WAMU 13.06% WAMU 7.43%
Norwest 6.27% Norwest 5.50% B of A 6.74%
Countrywide 2.74% Countrywide 3.66% Countrywide 3.12%
Source: Experian
Slide 19
<PAGE>
Mortgage Lending
Operations - HLC Lending Channel
[Bar Graph]
"All-in" basis point cost per loan origination
Q1 1997 Q2 1997 Q3 1997 Q4 1997 Q1 1998
------- ------- ------- ------- -------
Southwest/Southeast 264 191 189 167 171
Northwest 130 116 123 123 117
Slide 20
<PAGE>
Mortgage Lending
SFT Mortgage Loan Originations
[Bar Graph]
Dollars in Billions
1995 1996 1997 Q1 1997 Q1 1998
---- ---- ---- ------- -------
Fixed $ 3.6 $ 4.9 $ 6.7 $1.4 $4.0
ARMs $10.4 $11.1 $15.3 $2.6 $2.9
Total $14.0 $16.0 $22.0 $4.0 $6.9
Slide 21
<PAGE>
Mortgage Lending
SFR Loan Prepayment Activity
Annualized Prepayments
----------------------------------------------
% Quarter Month Ended
of Ended ------------------------------------
Category Portfolio 12/31/97 1/31/98 2/28/98 3/31/98 4/30/98
Short-Term ARMs
Payment Capped 62% 13.0% 12.8% 17.6% 22.1% 22.8%
Rate Capped 9 28.4 23.9 31.0 40.2 34.4
Intermediate ARMS 11 15.7 14.1 25.8 28.1 25.9
Fixed Rate 18 9.1 8.9 17.4 19.4 17.9
Total 100% 14.3% 13.5% 19.7% 24.0% 23.5%
Slide 22
<PAGE>
Mortgage Lending
Credit Quality - Improving Trends
Total Delinquencies Declining
NPAs at Lowest Levels in Years
Reduced REO Levels
Increasing Recoveries from Sales of REO
Slide 23
<PAGE>
Mortgage Lending
Credit Quality - SFR Loan Nonaccrual By Region
[Bar Graph]
Percentage as of 3/31/98
WAMU Market
California 1.06 1.19
Northwest 0.47 0.53
Northeast 0.91 1.26
Florida 1.04 1.35
Other 0.71 0.86
Source: Mortgage Information Corp. Database 2/98 (market data)
Slide 24
<PAGE>
Mortgage Lending
Operations - HLC Lending Channel
[Bar Graph]
"All-in" basis point cost per loan origination
Q1 1997 Q2 1997 Q3 1997 Q4 1997 Q1 1998
------- ------- ------- ------- -------
Southwest/Southeast 264 191 189 167 171
Northwest 130 116 123 123 117
Slide 25
<PAGE>
Mortgage Lending
Loan Servicing - Annualized Servicing Cost Per Loan
[Bar Graph]
In dollars
Goal Goal Goal
Q1 1997 Q2 1997 Q3 1997 Q4 1997 Q1 1998 Q2 1998 Q3 1998 Q4 1998
------- ------- ------- ------- ------- ------- ------- -------
Southwest/
Southeast 75 89 78 67 59 59 56 53
Northwest 45 43 43 46 48 48 48 46
Target 50 50 50 50 50 50 50 50
Slide 26
<PAGE>
Community-Based Commercial Banking
Higher Margin Business
[Map of Washington, Oregon, Idaho and Utah]
Locations
Full-Service Offices 46 [indicated by a circle on above map]
Business Banking Centers 24 [indicated by a square on above map]
Shared Transaction and
Referral Financial Center 142 [indicated by a star on above map]
Assets as of 3/31/98 $1.4B
1997 Net Income $16.3M
Q1 1998 Net Income $4.2M
Slide 27
<PAGE>
Community-Based Commerical Banking
Loans Outstanding
[Bar Graph]
Dollars in Millions
12/31/95 $ 608
12/31/96 $ 897
12/31/97 $1,301
3/31/98 $1,357
Annual Growth Rate
12/31/96 48%
12/31/97 45%
Slide 28
<PAGE>
Consumer Finance
National Franchise
[Map of United States with certain states highlighted]
Locations 493
Assets as of 3/31/98 $2.5B
1997 Net Income $45.5M
Q1 1998 Net Income $12.3M
Slide 29
<PAGE>
Financial Performance
Net Income(a)
[Bar Graph]
Dollars in Millions
Certain Charges Total
Net Income and Expenses Net Income EPS
1995 $550.9 0 $550.9 $1.44
-----
1996 $230.1 $413.7 $643.8(b) $0.54/$1.70
-----------
1997 $481.8 $388.1 $869.9(b) $1.24/$2.29
-----------
Q1 1997 $179.8 $ 22.9 $202.7(b) $0.47/$0.54
-----------
Q1 1998 $265.5 $ 5.3 $261.8(b) $0.68/$0.69
-----------
(a) EPS figures adjusted for 3-for-2 stock split distributed 6/1/98
(b) Excludes SAIF assessment, transaction-related expenses and increase in
credit provision in conneciton with acquisitions
Slide 30
<PAGE>
Financial Performance
Net Interest Income
[Bar Graph]
Dollars in Millions
Net Interest Income Net Interest Margin*
1995 $2,298.4 2.88%
1996 $2,572.9 3.11%
1997 $2,656.5 3.01%
Q1 1997 $656.5 3.08%
Q1 1998 $712.9 2.96%
* Calculation of net interest margin has been revised to exclude the loan loss
reserve from average interest-earning assets
Slide 31
<PAGE>
Financial Performance
Net Interest Spread - Q1 1998
WMB WMB, FA
Loan Yield* 8.43% 7.37%
Cost of Deposits 3.87 4.16
---- ----
Spread 4.56% 3.21%
Loan Yield* 8.43% 7.37%
Cost of Borrowings 5.77 5.85
---- ----
Spread 2.66% 1.52%
Aggregate Spread* 3.17% 2.75%
*Calculation of loan yield and aggregate spread have been revised to exclude
loan loss reserve from average loans
Slide 32
<PAGE>
Financial Performance
Operating Efficiency
[Bar Graph]
Other Expenses Total Other Expenses
(Not including (Including (a) and
(a) and (b) below) (b) below) Efficiency Ratio
1995 $1,732.3
$68.6(a)
$2.0(b) $1,802.9 59.7%
1996 $1,892.5
$65.4(a)
$470.7(b) $2,428.6 58.6%
1997 $1,766.9
$63.6(a)
$431.1(b) $2,261.6 50.9%
Q1 1997 $445.6
$15.8(a)
$33.7(b) $495.1 52.6%
Q1 1998 $418.9
$14.7(a)
$8.6(b) $442.2 46.2%
(a) Goodwill Amortization
(b) SAIF assessment, transaction-related expenses and increase in credit
provision in connection with acquisitions
Slide 33
<PAGE>
Financial Performance
Nonperforming Assets
[Bar Graph]
NPAs NPA/Assets
1995 $991.6 1.14%
1996 $805.1 0.92%
1997 $806.6 0.83%
Q1 1998 $802.6 0.78%
Slide 34
<PAGE>
Financial Performance
Reserve for Loan Losses
LLRs LLR/Nonaccrual Loans
1995 $598.1 85%
1996 $677.1 118%
120%*
1997 $670.5 112%
119%*
Q1 1998 $673.2 111%
119%*
* Nonaccrual loans include loans that have been securitized, which the company
retains the credit risk. Coverage for losses on these obligations is
provided through adjustment to the balance of mortgage backed securities
or contingent liabilities. The total "loss coverage" ratio includes the
balance of these adjustments, along with the reserve for loan losses.
Slide 35
<PAGE>
<TABLE>
<CAPTION>
Common Preferred Trust Preferred Senior Debt Total Equity Common Equity/Total Assets
<S> <C> <C> <C> <C> <C> <C>
1995 $4,812 $632* $100 $1,186 $6,730 5.56%
1996 $4,710 $283 $100 $1,175 $6,268 5.39%
1997 $5,191 $118 $800 $822 $6,931 5.35%
Q1 1998 $5,388 $49 $800 $822 $7,059 5.22%
</TABLE>
* Includes $80 million of preferred stock issued by second-tier holding
company
Slide 36
<PAGE>
Successful Growth Through Acquisitions
Acquired Institution Assets Branches
(In Millions)
1988-92 10 Acquisitions $ 2,041.2 84
1993 Pioneer* 926.5 17
1993 Pacific First 5,861.3 129
1994-96 6 Acquisitions 1,674.4 66
1996 American* 21,893.5 224
1997 United Western 404.1 16
1997 Great Western* 43,769.8 636
Pending H.F. Ahmanson* 52,511.2 529
*Pooling transaction
Slide 37
<PAGE>
Successful Growth Through Acquisitions
Acquisition Criteria
Accretive to Earnings Per Share
Consistent with Business Strategy
No Undue Operational Risks
Capital and Asset Quality Remain Strong
Slide 38
<PAGE>
Successful Growth Through Acquisitions
[Two United States Maps; one with Washington State shades,
the other with a few midwestern States shaded]
[Map of United States [Map of United States highlighting
highlighting Washington] all states except Wyoming,
Nebraska, Arkansas, Iowa, Maine
Wisconsin, North dakota, South
Dakota and Vermont]
12/31/87 3/31/98
Assets $5.7 bn Assets $103.1 bn
Equity 316.9 mm Equity 5.4 bn
Stock Price $6.28 Stock Price $71.72
Market Cap 211.9 mm Market Cap 17.9 bn
Slide 39
<PAGE>
Stock Market Outperformance
Dividends Paid to Shareholders*
[Line Graph]
1986 1987 1988 1989 1990 1991 1992 1993
- ---- ---- ---- ---- ---- ---- ---- ----
$0.10 $0.13 $0.16 $0.16 $0.19 $0.23 $0.33 $0.50
1994 1995 1996 1997 Q1 1998
- ---- ---- ---- ---- -------
$0.77 $0.77 $0.90 $1.16 $1.20
* Adjusted for 50% stock dividends in 1986, 1987, 1992 and 1993
Slide 40
<PAGE>
Stock Market Outperformance
Cumulative Total Return Comparison*
(Assumes reinvestment of dividends)
[Line Graph]
TOTAL SHAREHOLDER RETURNS
(Dividends Reinvested)
ANNUAL RETURN PERCENTAGE
Years Ending
Company/Index Dec-83 Dec-84 Dec-85 Dec-86 Dec-87 Dec-88 Dec-89
------------- ------ ------ ------ ------ ------ ------ ------
Washington Mutual Inc. 8.00 -12.27 47.34 105.23 -6.12 1.75 36.04
S&P 500 Index 11.35 6.22 31.64 18.62 5.18 16.50 31.59
S&P Financial Index -0.82 9.39 42.53 8.01 -16.77 18.14 32.61
Company/Index
-------------
Washington Mutual Inc. Dec-90 Dec-91 Dec-92 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97
S&P 500 Index ------ ------ ------ ------ ------ ------ ------ ------
S&P Financial Index
-32.93 185.15 52.55 9.96 -27.59 77.31 54.07 49.98
-3.12 30.34 7.61 10.08 1.32 37.58 22.96 33.36
-21.42 50.56 23.30 11.10 -3.54 54.02 35.17 48.11
INDEXED RETURNS
Years Ending
Base
Period
Company/Index Mar-83 Dec-83 Dec-8 Dec-85 Dec-86 Dec-87 Dec-88
Washington Mutual Inc.(**) 100 106.00 92.99 137.02 281.20 263.99 268.61
S&P 500 Index 100 111.35 118.2 155.70 184.69 194.26 226.31
S&P Financial Index 100 99.18 108.49 154.84 167.02 139.02 164.23
Dec-89 Dec-90 Dec-91 Dec-92 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97
365.43 245.10 698.89 1066.19 1172.34 848.84 1505.11 2318.92 3477.93
297.80 288.51 378.04 404.86 445.45 451.33 620.93 763.50 1018.22
217.79 171.14 257.65 317.68 352.94 340.45 524.37 708.78 1049.76
(**) 1983 Return uses an IPO price of $12.50, as provided by the company.
Standard and Poor's Compustat
Slide 41
<PAGE>
Stock Market Outperformance
Total Annual Return Peer Comparison 4/1/90 - 3/31/98
[Bar Graph]
WAMU 36.7%
USB 36.7%
NOB 34.4%
FTU 31.0%
CMB 29.9%
CCI 28.9%
BAC 28.6%
KEY 26.5%
AHM 25.5%
WFC 25.2%
ONE 23.2%
NB 22.0%
SPX 19.0%
GDW 17.9%
Source: Bloomberg
Slide 42
