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: July 20, 1999
Washington Mutual, Inc.
(Exact Name of Registrant as specified in its charter)
Washington 1-14667 91-1653725
(State or Other Jurisdiction of (Commission File (I.R.S. Employer
Incorporation or Organization) Number) Identification No.)
1201 Third Avenue, Seattle, Washington 98101
(Address of Principal Executive Offices) (Zip Code)
(206) 461-2000
(Registrant's telephone number, including area code)
<PAGE>
ITEM 5. OTHER EVENTS.
On July 20, 1999, Washington Mutual, Inc. issued a press release reporting its
results of operations during the three months and six months ended June 30,
1999.
On July 20, 1999, Washington Mutual, Inc. issued a press release announcing an
additional share repurchase program.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
99.1 Press release dated July 20, 1999 reporting results of operations during
the three months and six months ended June 30, 1999.
99.2 Press release dated July 20, 1999 announcing an additional share
repurchase program.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WASHINGTON MUTUAL, INC.
Date : July 21, 1999 By: /s/Fay L. Chapman
-----------------------
Fay L. Chapman
Senior Executive Vice President
and General Counsel
<PAGE>
Media Contact: Libby Hutchinson
1-800-228-9268
(206) 461-2484
Investor Contacts: Doug Wisdorf
(206) 461-3805
JoAnn DeGrande
(206) 461-3186
Washington Mutual Announces Record Second-Quarter Earnings;
Board of Directors Increases Cash Dividend,
Expands Share Repurchase Initiative
SEATTLE--Washington Mutual, Inc.(NYSE:WM) announced today record
second-quarter earnings of $452.7 million, up from $398.6 million
one year ago. Diluted earnings per share were 78 cents, up 15 percent
from 68 cents per share in the second quarter of 1998.
Earnings from operations, excluding transaction-related charges,
were $475.6 million or 82 cents per diluted share in the second
quarter of 1999, a 15 percent increase from $413.7 million or 71
cents per diluted share for the same period last year.
As a result of Washington Mutual's second-quarter performance and
continued strong capital position, the company's board of directors
declared a cash dividend on the common stock of 25 cents per share,
an increase from the previous quarter's cash dividend of 24 cents per
share. Dividends on the common stock are payable August 13, 1999, to
shareholders of record as of July 30, 1999.
The board of directors also voted to authorize the company to
acquire, from time to time, up to 30 million shares of Washington
Mutual's outstanding common stock. (See related press release that
follows.) The authorization is in addition to the 20 million share
repurchase program announced in April pursuant to which the company
purchased 12.3 million shares in the second quarter.
"Washington Mutual's second-quarter was another successful period
marked by record earnings, strong loan originations, increased
depositor fee income and growth in all business lines," said Kerry
Killinger, the company's chairman, president and chief executive
officer.
The quarter's financial highlights included, on an operating
basis, an increased return on average common equity of 20.01 percent
and an improved efficiency ratio -- excluding transition charges and
the amortization of goodwill -- of 45.53 percent; and a 35 percent
increase in depositor and other retail banking fee income, year over
year.
"In addition, our company successfully completed the H.F.
Ahmanson integration, a significant milestone for Washington Mutual,"
Killinger said. "Now, as a combined company, we will shift our
complete focus to maximizing the value and performance of the
franchise we have created by operating more efficiently, crisply
executing our business plans and continuing to concentrate on our
business fundamentals."
<PAGE>
SECOND-QUARTER RESULTS
Net Interest and Other Income
Net interest income was $1.15 billion for the second quarter of
1999, up 5 percent from $1.09 billion a year earlier. The spread
during the quarter was 2.58 percent, compared with 2.72 percent for
the same period last year. The margin was 2.74 percent in the most
recent quarter versus 2.89 percent for second quarter 1998.
Higher long-term interest rates prompted renewed interest in
adjustable-rate mortgage loans, which the company generally retains
in its portfolio, offsetting the effect of prepayment activity. The
loan portfolio grew $2.87 billion during the second quarter.
Meanwhile, the company's mortgage-backed securities portfolio
decreased by $2.28 billion in the second quarter.
Total other income increased to $364.1 million, up 11 percent
from $329.4 million in last year's second quarter. The largest
component of this income was depositor and other retail banking fees
of $182.1 million, up 35 percent from $135.2 million a year earlier.
Despite the systems conversions associated with Ahmanson, the company
added more than 78,000 net new retail checking accounts -- a key
driver of depositor fee income -- during the second quarter of 1999.
Washington Mutual continues to make progress in re-mixing its
deposit base by reducing time deposits and increasing lower-cost
transaction accounts. At June 30, 1999, transaction account
balances, including checking, savings and money market deposits,
represented 54 percent of total deposits, an improvement from 50
percent at the end of the first quarter of 1999 and 49 percent at the
end of 1998.
Loan Originations
Total loan originations were $13.66 billion for the quarter,
comparable with $13.67 billion of originations one year ago.
Single-family residential (SFR) loan originations (excluding
residential construction) were $11 billion, up from $10.72 billion
one year ago. Of the second quarter SFR originations, 66 percent
were adjustable-rate mortgages, an improvement from 48 percent for
the same period in 1998 and from 54 percent in the first quarter of
1999.
Originations of loans other than single-family residential loans,
which included consumer, commercial and residential construction
loans, totaled $2.66 billion for the most recent quarter, compared
with $2.94 billion in the second quarter of 1998.
Efficiency Ratio
Growth in revenues and the company's integration of its recent
mergers helped improve Washington Mutual's overall efficiency,
Killinger noted. The company's efficiency ratio (defined as other
expenses, excluding amortization of intangible assets arising from
acquisitions, as a percentage of net interest income and other
income) improved to 47.95 percent, as compared with 49.43 percent for
the second quarter of 1998. Excluding transaction-related charges
for both periods, the operating efficiency ratio was 45.53 percent
versus 47.71 percent a year ago.
<PAGE>
"The Ahmanson integration is now behind us," Killinger said.
"Going forward, our priorities are to refine our operations to gain
greater efficiencies and reduce those expenses that do not add
material value to our company."
Credit Quality
While the regional economies in which Washington Mutual operates
are strong, the company continues to carefully monitor the major real
estate markets it serves to protect and maintain its asset quality.
Total nonperforming assets were $1.10 billion at June 30, 1999,
compared with $1.18 billion at March 31, 1999. Nonperforming assets
were 0.63 percent of total assets, compared with 0.68 percent at
March 31, 1999.
In the quarter, the company had a $42.9 million provision for
loan losses, versus $44.4 million for the same period in the previous
year. Net loan charge offs for the second quarter were $59.0
million, compared with $42.0 million a year earlier, due to the
charge offs for four commercial real estate properties. At June 30,
1999, loan loss reserves combined with the reserve for recourse
liability totaled $1.18 billion, and represented 138 percent of
nonaccrual loans.
Assets, Stockholders' Equity and Capital Ratios
Consolidated assets at June 30, 1999, were $175.04 billion, up
from $174.30 billion at March 31, 1999. Total deposits were $83.13
billion, as compared with $84.18 billion at the end of the first
quarter of 1999. Stockholders' equity at June 30, 1999, was $9.06
billion, or 5.18 percent of assets, and capital ratios of the
company's banking subsidiaries continued to exceed regulatory
requirements for classification as "well-capitalized," the highest
regulatory standard.
Commercial Banking, Consumer Finance and Financial Services
For the quarter, the company's Commercial Banking Group increased
average loan balances by 28 percent to $1.84 billion, as compared
with $1.43 billion for the same period one year ago. Average deposit
balances grew by 23 percent to $1.40 billion, versus $1.14 billion
for the second quarter of 1998.
Washington Mutual's Consumer Finance Group, reported second
quarter net income of $17.3 million, a 26 percent increase from $13.7
million for the same period one year ago. Net loans outstanding were
$2.65 billion at the end of the second quarter of 1999, up 18 percent
from $2.24 billion at June 30, 1998.
The company's Financial Services Group increased securities and
insurance fees and commissions to $79.6 million for the second
quarter, up 22 percent from $65.3 million for the same period one
year ago.
<PAGE>
Internet Strategy
The company's online banking service, available at
www.washingtonmutual.com., is adding 750-1,000 customers per day,
without the benefit of advertising or marketing support. Customers
using online banking can check account balances, schedule bill
payments and transfer funds, among many other features.
In conjunction with Washington Mutual's previously announced
equity investment in Keystroke Financial, Inc., the company's branded
mortgage origination site, www.wamumortgage.com., will be launched by
late summer. The site, which will be linked to the company's main
website, will feature the full range of Washington Mutual mortgage
products. Customers will be able to use online applications and
mortgage calculators, as well as several other functions.
Killinger said that the company is exploring additional
partnerships and equity investments. "We are committed to being an
active player in e-commerce and view the Internet as a significant
complement to our existing channels of distribution and an important
vehicle for expansion."
Long Beach Financial Merger Update
On May 19, Washington Mutual announced that the company signed a
definitive agreement to purchase Orange, California-based Long Beach
Financial Corp. (Nasdaq:LBFC). The purchase of Long Beach
Financial will expand Washington Mutual's presence in the specialty
residential mortgage market. The company's main subsidiary, Long
Beach Mortgage, originates, purchases, sells and services mortgages
in 50 states through a network of approximately 12,500 independent
loan brokers.
The transaction requires the approvals of certain state
regulators and Long Beach Financial shareholders. Washington Mutual
has made the required Hart-Scott-Rodino filing, and the company's
request for early termination of the waiting period has been granted.
The transaction is expected to close by the beginning of this year's
fourth quarter.
The combination is anticipated to be accretive to Washington
Mutual's earnings per share, without revenue enhancements or cost
savings, shortly following the close of the transaction.
Company Updates
-- On June 30, the company completed the last of some 50 systems
conversions related to its merger with Ahmanson. In total, the
conversions involved nearly 2.8 million deposit accounts,
approximately 1.1 million ATM/VISA debit cards, and more than 634,500
loan accounts. At the same time, 162 overlapping California branch
locations were consolidated into existing financial centers.
Washington Mutual's network in California now totals more than 550
financial centers and 102 retail and wholesale lending offices.
Killinger noted that in addition to the consolidated branches, the
company's operations in St. Louis, Mo., and the City of Industry,
Calif., have closed and the St. Louis property has been subleased.
In addition, Ahmanson's former Irwindale, Calif., campus will be
closed by the end of the third quarter.
<PAGE>
-- As previously noted, the company purchased 12.3 million shares
of its common stock during the second quarter at an average price of
$37.21. Primarily due to the timing of the repurchase activity, the
weighted average shares for the quarter declined by 2.2 million.
-- As of June 30, the company completed its Year 2000 "end to
end" testing of all internal mission-critical systems. All testing
criteria were met. The company's Year 2000 Team will continue
refining its vendor coordination and contingency planning through the
remainder of the year.
-- On June 22, the company announced the realignment of certain
management functions. For example, some areas that were previously
directed centrally will be managed within the company's two largest
business lines, Consumer Banking and Mortgage Banking, so that these
units have more oversight of the direct administrative and
operational support expenses that affect their profitability. These
moves, in turn, will help improve the company's efficiency and
execution over time, Killinger said.
-- Mary Pugh, president and chief investment officer of
Seattle-based Pugh Capital Management, Inc., joined the company's
Board of Directors on June 1.
Outlook
"During the last three years, Washington Mutual has assembled a
superb banking franchise," Killinger said. "Now that our merger
activities are completed, we can intensify our focus on enhancing
shareholder value by reducing expenses and gaining efficiencies
through re-engineering our operations, generating additional revenues
and effectively deploying our capital. We intend to accomplish these
goals by applying the same energy and skill to managing our company
that we successfully used in building it."
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 June 30, 1999, Washington Mutual and its subsidiaries had
consolidated assets of $175.04 billion. The company operates more
than 1,800 offices throughout the nation.
EDITORS' NOTE: Washington Mutual's press releases are available
at no charge through the company's 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/wm.htm
<PAGE>
Washington Mutual, Inc.
Consolidated Statements of Income
(dollars in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
- ----------------------------------------------------------------------
1999 1998 1999 1998
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Income
Loans $2,013,372 $2,059,908 $4,041,874 $4,050,105
Available-for-sale
securities 646,322 430,389 1,185,334 810,982
Held-to-maturity
securities 258,416 305,922 505,793 621,965
Other interest income 41,512 46,364 80,739 86,767
- ----------------------------------------------------------------------
Total interest
income 2,959,622 2,842,583 5,813,740 5,569,819
Interest Expense
Deposits 792,694 927,429 1,606,321 1,831,225
Borrowings 1,018,220 825,457 1,931,516 1,588,595
- ----------------------------------------------------------------------
Total interest
expense 1,810,914 1,752,886 3,537,837 3,419,820
- ----------------------------------------------------------------------
Net interest
income 1,148,708 1,089,697 2,275,903 2,149,999
Provision for loan
losses 42,857 44,394 84,557 94,369
- ----------------------------------------------------------------------
Net interest
income after
provision for
loan losses 1,105,851 1,045,303 2,191,346 2,055,630
Other Income
Depositor and other
retail banking fees 182,114 135,216 345,531 254,696
Securities fees and
commissions 69,364 51,701 128,886 98,486
Insurance fees and
commissions 10,269 13,586 20,939 26,377
Loan servicing income 23,881 30,926 49,912 63,273
Loan related income 26,859 30,161 53,406 55,252
Mortgage banking
income 28,021 40,614 66,383 67,662
Gain on sale of
other assets 4,392 13,640 16,325 14,787
Provision for recourse
liability -- (10,314) (5,142) (25,519)
Other operating income 19,218 23,873 40,022 38,751
- ----------------------------------------------------------------------
Total other income 364,118 329,403 716,262 593,765
Other Expense
Salaries and employee
benefits 302,120 305,407 603,729 596,638
Occupancy and equipment 137,160 126,366 272,064 246,583
Telecommunications and
outsourced information
services 67,180 66,729 137,244 126,290
Regulatory assessments 14,840 16,635 30,203 32,891
Transaction-related
expense 36,569 24,473 60,371 56,282
Amortization of
intangible assets 23,262 26,241 48,635 49,825
Foreclosed asset
(income) expense (869) 10,345 729 19,228
Other operating
expense 168,362 151,552 325,516 274,756
- ----------------------------------------------------------------------
Total other expense 748,624 727,748 1,478,491 1,402,493
- ----------------------------------------------------------------------
Income before
income taxes 721,345 646,958 1,429,117 1,246,902
Income taxes 268,671 248,357 532,325 477,527
- ---------------------------------------------------------------------
Net Income $ 452,674 $ 398,601 $ 896,792 $ 769,375
======================================================================
Net Income
Attributable to
Common Stock $ 452,674 $ 393,761 $ 896,792 $ 755,811
======================================================================
Net income per common share:
Basic $0.78 $0.70 $1.54 $1.37
Diluted 0.78 0.68 1.54 1.33
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
- ----------------------------------------------------------------------
1999 1998 1999 1998
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Data Used To Compute
Per Share Amounts
Net income $452,674 $398,601 $896,792 $769,375
Preferred stock dividends:
Nonconvertible -- (936) -- (5,404)
Convertible -- (3,904) -- (8,160)
- ----------------------------------------------------------------------
Net income
attributable to basic
common stock $452,674 $393,761 $896,792 $755,811
======================================================================
Net income $452,674 $398,601 $896,792 $769,375
Preferred stock
dividends,
nonconvertible -- (936) -- (5,404)
- ----------------------------------------------------------------------
Net income attributable
to diluted common
stock $452,674 $397,665 $896,792 $763,971
======================================================================
Average common shares used
to calculate earnings
per share:
Basic 580,214,730 560,688,632 581,072,470 553,053,350
Common stock
equivalents 2,179,938 22,787,039 2,387,996 23,416,731
- ----------------------------------------------------------------------
Diluted 582,394,668 583,475,671 583,460,466 576,470,081
Financial Ratios
Return on average
assets 1.05% 1.02% 1.06% 1.01%
Return on average
equity 19.04 18.02 18.91 18.11
Return on average common
equity 19.04 18.08 18.91 18.23
Efficiency ratio:
Including amortization
of intangible assets 49.49 51.28 49.41 51.12
Excluding amortization
of intangible assets 47.95 49.43 47.79 49.30
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Weighted Average Interest Rates
<S> <C> <C> <C> <C>
Yield on loans 7.36% 7.79% 7.40% 7.80%
Yield on mortgage-backed
securities ("MBS") 6.61 7.12 6.68 7.19
Yield on investment
securities 5.54 6.28 5.55 6.21
- ------------------------------------------------------------------------
Yield on interest-
earning assets 7.07 7.57 7.14 7.60
Cost of deposits 3.79 4.18 3.85 4.21
Cost of borrowings 5.26 5.89 5.34 5.93
- ------------------------------------------------------------------------
Cost of interest-bearing
liabilities 4.49 4.85 4.54 4.87
Net interest spread 2.58 2.72 2.60 2.73
Net interest margin 2.74 2.89 2.76 2.90
Average Balances
Loans $109,523,390 $105,844,558 $109,400,323 $103,889,404
MBS 54,227,044 40,323,676 50,019,420 38,787,855
Investment
securities 3,681,555 4,116,370 3,646,188 4,079,243
- ------------------------------------------------------------------------
Total interest-
earning assets 167,431,989 150,284,604 163,065,931 146,756,502
Deposits 83,920,105 88,979,283 84,103,172 87,643,595
Borrowings 77,666,546 56,170,181 72,861,536 54,047,066
- ------------------------------------------------------------------------
Total interest-bearing
liabilities 161,586,651 145,149,464 156,964,708 141,690,661
Total assets 173,205,859 156,435,935 168,748,350 152,806,969
Stockholders'
equity 9,509,791 8,847,867 9,483,253 8,496,603
</TABLE>
<PAGE>
Washington Mutual, Inc.
Consolidated Statements of Financial Condition
(dollars in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
June 30, 1999 Dec. 31, 1998
- ----------------------------------------------------------------------
<S> <C> <C>
Assets
Cash $ 1,642,285 $ 2,695,454
Cash equivalents 64,669 61,520
Trading securities 29,899 39,068
Available-for-sale securities:
Mortgage-backed securities ("MBS") 39,663,120 32,399,591
Investment securities 405,992 517,462
Held-to-maturity securities:
MBS 14,145,918 13,992,235
Investment securities 138,135 137,247
Loans:
Loans held in portfolio 111,142,106 107,612,197
Loans held for sale 824,494 1,826,549
Reserve for loan losses (1,053,589) (1,067,840)
- ----------------------------------------------------------------------
Total loans 110,913,011 108,370,906
Investment in Federal Home Loan
Banks ("FHLBs") 2,419,151 2,030,027
Foreclosed assets 244,188 274,767
Premises and equipment 1,530,636 1,421,162
Intangible assets 960,091 1,009,666
Mortgage servicing rights 492,619 461,295
Other assets 2,391,700 2,082,881
- ----------------------------------------------------------------------
Total assets $175,041,414 $165,493,281
======================================================================
Liabilities
Deposits:
Checking accounts $ 13,546,078 $ 13,460,731
Savings accounts and money
market deposit accounts 31,499,804 28,285,868
Time deposit accounts 38,079,432 43,745,542
- ----------------------------------------------------------------------
Total deposits 83,125,314 85,492,141
Federal funds purchased and
commercial paper 3,448,525 2,482,830
Securities sold under agreements
to repurchase 26,286,536 17,519,538
Advances from FHLBs 46,223,504 39,748,613
Other borrowings 4,894,603 5,449,508
Other liabilities 2,001,370 5,456,251
- ----------------------------------------------------------------------
Total liabilities 165,979,852 156,148,881
Stockholders' Equity 9,061,562 9,344,400
- ----------------------------------------------------------------------
Total liabilities and
stockholders' equity $175,041,414 $165,493,281
======================================================================
Common shares outstanding at end
of period 582,765,123 593,408,525
Book value per common share $15.88 $16.07
Tangible book value per common share 14.53 14.66
Full-time equivalent employees at
end of period 28,108 27,957
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
Note: The following analysis of reported and operating earnings is
based upon the Company's opinion and is intended to provide the
user additional information about the Company's operations. It
is not intended to replace traditional financial statement
disclosures in accordance with generally accepted accounting
principles and may not be comparable to similarly titled
measures reported by other companies.
<TABLE>
<CAPTION>
Quarter Ended
- ----------------------------------------------------------------------
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
1999 1999 1998 1998 1998
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Reported Financial Results
Net income $452,674 $444,118 $157,087 $560,470 $398,601
Net income per
diluted common
share $0.78 $0.76 $0.27 $0.96 $0.68
Financial ratios on reported financial results:
Return on average
assets 1.05% 1.08% 0.39% 1.44% 1.02%
Return on average
equity 19.04 18.72 6.61 23.95 18.02
Return on average
common equity 19.04 18.72 6.61 24.00 18.08
Efficiency
ratio (excluding
amortization of
intangible assets) 47.95 47.62 80.53 41.88 49.43
Earnings from Operations
Reported pretax
income $721,345 $707,772 $212,587 $909,968 $646,958
Transaction/
transition-related
expense 36,569 23,802 472,549(1) 20,465 24,473
- ------------------------------------------------------------------------
Adjusted pretax
income 757,914 731,574 685,136 930,433 671,431
Provision for income
tax benefit 282,291 272,521 255,185 357,152 257,698
- ------------------------------------------------------------------------
Earnings from
operations $475,623 $459,053 $429,951 $573,281 $413,733
========================================================================
Earnings per diluted
common share:
Reported net income $0.78 $0.76 $0.27 $0.96 $0.68
Transaction/
transition-related
expense 0.04 0.03 0.47(1) 0.02 0.03
- ------------------------------------------------------------------------
Earnings from
operations $0.82 $0.79 $0.74 $0.98 $0.71
========================================================================
Financial ratios
on earnings from
operations:
Return on average
assets 1.10% 1.12% 1.08% 1.48% 1.06%
Return on average
equity 20.01 19.35 18.09 24.49 18.70
Return on average
common equity 20.01 19.35 18.09 24.55 18.77
Efficiency ratio
(excluding
amortization of
intangible assets) 45.53 46.01 46.77 40.65 47.71
Amortization of Intangible Assets
Total amortization
of intangible assets
during the period $23,262 $25,373 $26,693 $27,734 $26,241
Tax benefit (2) 4,619 5,093 4,933 5,192 4,912
- ------------------------------------------------------------------------
Amortization of
intangible assets,
net of tax benefit $18,643 $20,280 $21,760 $22,542 $21,329
========================================================================
(1) Fourth quarter 1998 consisted of transaction/transition-related
expense and other charges associated with the completion of the
Ahmanson merger. The tax rate on these items was consistent with
the company's tax rate of 37.25% for the full year.
(2) A tax benefit was included on approximately 53% (1999) and 48%
(1998) of the amortization of intangible assets.
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(unaudited)
<TABLE>
<CAPTION>
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
1999 1999 1998 1998 1998
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Capital Adequacy
Stockholders'
equity/total assets 5.18% 5.51% 5.65% 5.93% 5.75%
Common stockholders'
equity/total assets 5.18 5.51 5.65 5.93 5.72
Tangible stockholders'
equity/total tangible
assets 4.76 5.09 5.18 5.42 5.22
Tangible stockholders'
equity (including
trust preferred
securities)/total tangible
assets 5.30 5.63 5.75 6.01 5.82
Retail Checking Accounts (1)
WMB and WMBfsb 966,135 940,842 908,077 874,517 833,467
WMB, FA 3,113,036 3,059,707 2,998,810 2,958,132 2,942,983
- ----------------------------------------------------------------------
Total retail
checking
accounts 4,079,171 4,000,549 3,906,887 3,832,649 3,776,450
======================================================================
Retail Checking Account Activity (1)
Net accounts opened during the quarter:
WMB and WMBfsb 25,293 32,765 33,560 41,050 34,020
WMB, FA 53,329 60,897 40,678 (45,297) 25,376
- ----------------------------------------------------------------------
Net new retail
checking accounts 78,622 93,662 74,238 (4,247) 59,396
======================================================================
Accounts sold during
the quarter (2) -- -- -- 60,446 --
(1) Retail checking accounts exclude commercial business
accounts. The information provided refers to the number of
accounts, not dollar volume.
(2) The east coast Florida branches of Home Savings were sold
during third quarter 1998.
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
- ----------------------------------------------------------------------
1999 1998 1999 1998
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Loan Originations
Single-family residential
("SFR"):
Adjustable rate
("ARMs") $ 7,224.8 $ 5,131.5 $12,399.3 $ 8,461.4
Fixed rate 3,774.5 5,591.8 8,270.1 10,878.4
SFR - construction 570.7 505.2 951.3 807.4
Manufactured housing 61.4 81.9 111.8 137.5
Second mortgage and
other consumer 651.5 850.8 1,224.3 1,490.3
Commercial business 303.7 276.3 602.1 524.2
Apartment buildings 427.0 552.7 751.7 919.5
Other commercial
real estate 63.0 109.5 122.0 209.0
Consumer finance 578.9 568.3 1,078.8 1,082.0
- ----------------------------------------------------------------------
Total loan
originations $13,655.5 $13,668.0 $25,511.4 $24,509.7
======================================================================
As a percentage of
total loan
originations:
SFR, excluding SFR
construction 81% 78% 81% 79%
All other 19 22 19 21
SFR Loan Originations
Short-term ARMs:
MTA $ 2,790.3 $ 2,674.8 $ 4,736.7 $ 3,829.0
COFI 150.5 211.1 276.2 572.2
CMT 0.8 18.3 0.8 151.8
Other 1.4 44.1 6.9 130.9
- ----------------------------------------------------------------------
Total short-term
ARMs 2,943.0 2,948.3 5,020.6 4,683.9
Medium-term ARMs:
MTA 4,281.7 2,152.1 7,378.4 3,155.1
CMT 0.1 31.1 0.3 440.0
Other -- -- 0.1 182.4
- ----------------------------------------------------------------------
Total medium-term
ARMs 4,281.8 2,183.2 7,378.8 3,777.5
Fixed-rate mortgages 3,774.5 5,591.8 8,270.0 10,878.4
- ----------------------------------------------------------------------
Total SFR loan
originations $10,999.3 $10,723.3 $20,669.4 $19,339.8
======================================================================
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Change from
Mar. 31, 1999
to June 30, June 30, Mar. 31,
1999 1999 1999
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Loans and MBS by Property Type
Loans held in portfolio:
SFR $ 2,776.7 $ 82,469.1 $ 79,692.4
SFR - construction 64.4 1,067.1 1,002.7
Manufactured
housing, second
mortgage and other
consumer 614.3 6,036.2 5,421.9
Commercial business 99.6 1,248.8 1,149.2
Apartment buildings (108.3) 14,405.8 14,514.1
Other commercial
real estate (363.4) 3,173.1 3,536.5
Consumer finance 116.6 2,742.0 2,625.4
- ----------------------------------------------------------------------
Total loans held
in portfolio 3,199.9 111,142.1 107,942.2
Loans securitized
and retained as
MBS (1,258.9) 24,282.1 25,541.0
- ----------------------------------------------------------------------
Total loans held
in portfolio and
loans
securitized and
retained as MBS 1,941.0 135,424.2 133,483.2
Loans held for sale (347.2) 824.5 1,171.7
Less: reserve for
loan losses 16.1 (1,053.6) (1,069.7)
- ----------------------------------------------------------------------
Total loans and
loans securitized
and retained as
MBS 1,609.9 135,195.1 133,585.2
Purchased MBS (1,021.7) 29,526.9 30,548.6
- ----------------------------------------------------------------------
Total loans and MBS $ 588.2 $164,722.0 $164,133.8
======================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Dec. 31, Sept. 30, June 30,
1998 1998 1998
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Loans and MBS by Property Type
Loans held in portfolio:
SFR $ 79,275.2 $ 77,409.9 $ 76,457.0
SFR - construction 1,020.1 973.7 925.6
Manufactured
housing, second
mortgage and other
consumer 5,478.3 5,575.0 5,514.6
Commercial business 1,129.3 1,076.7 1,018.7
Apartment buildings 14,558.7 14,733.1 14,786.1
Other commercial
real estate 3,576.2 3,628.6 3,774.7
Consumer finance 2,574.4 2,433.2 2,319.0
- ----------------------------------------------------------------------
Total loans held
in portfolio 107,612.2 105,830.2 104,795.7
Loans securitized
and retained as
MBS 25,524.6 27,789.1 29,702.4
- ----------------------------------------------------------------------
Total loans held
in portfolio and
loans
securitized and
retained as MBS 133,136.8 133,619.3 134,498.1
Loans held for sale 1,826.5 1,668.6 1,570.0
Less: reserve for
loan losses (1,067.8) (1,151.5) (1,156.3)
- ----------------------------------------------------------------------
Total loans and
loans securitized
and retained as
MBS 133,895.5 134,136.4 134,911.8
Purchased MBS 20,867.2 14,394.8 10,830.5
- ----------------------------------------------------------------------
Total loans and MBS $154,762.7 $148,531.2 $145,742.3
======================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
1999 1999 1998 1998 1998
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Change in Loans
and Loans Securitized
and Retained as MBS
Loans held
in portfolio:
Loans
originated $ 11,563.0 $ 8,962.6 $ 10,110.4 $ 8,466.9 $ 8,999.1
Loans
purchased or
acquired 1,605.2 1,300.8 1,329.2 1,043.4 617.1
Loans
securitized (530.0) (1,805.5) -- -- (509.9)
Loans sold (15.2) (9.5) (23.6) (6.1) (10.0)
Loan payments
and other (9,423.1) (8,118.4) (9,634.0) (8,469.7) (8,082.1)
- ---------------------------------------------------------------------------
Change in loans
held in
portfolio 3,199.9 330.0 1,782.0 1,034.5 1,014.2
Change in
loans
securitized
and retained
as MBS (1,258.9) 16.4 (2,264.5) (1,913.3) (1,409.3)
- ---------------------------------------------------------------------------
Change in
loans held
in portfolio
and loans
securitized
and retained
as MBS 1,941.0 346.4 (482.5) (878.8) (395.1)
Loans held
for sale:
Loans
originated 2,092.5 2,893.2 5,420.0 4,182.6 4,668.9
Loans sold (2,439.7) (3,548.0) (5,262.1) (4,084.0) (5,261.3)
- ---------------------------------------------------------------------------
Change in
loans held
for sale (347.2) (654.8) 157.9 98.6 (592.4)
Change in
reserve for
loan losses 16.1 (1.9) 83.7 4.8 (2.4)
- ---------------------------------------------------------------------------
Total change
in loans and
loans
securitized
and
retained as
MBS $ 1,609.9 $ (310.3) $ (240.9) $ (775.4) $ (989.9)
===========================================================================
As a percentage of
total loans and
loans securitized
and retained as
MBS at beginning
of quarter 1.2% (0.2)% (0.2)% (0.6)% (0.7)%
As a percentage of
total assets at
beginning
of quarter 0.9 (0.2) (0.2) (0.5) (0.6)
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Change from
Mar. 31, 1999 June 30, Mar. 31,
to June 30, 1999 1999 1999
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Real Estate Loans and MBS
Short-term ARMs:
COFI $(7,470.3) $ 66,203.7 $ 73,674.0
MTA 229.7 9,981.0 9,751.3
CMT 1,129.6 5,911.4 4,781.8
Other (1,563.7) 4,954.6 6,518.3
- ------------------------------------------------------------------------
Total short-term ARMs (7,674.7) 87,050.7 94,725.4
Medium-term ARMs:
MTA 4,870.2 20,495.3 15,625.1
CMT (445.9) 3,384.7 3,830.6
COFI 40.9 777.3 736.4
Other (39.9) 1,915.9 1,955.8
- ------------------------------------------------------------------------
Total medium-term ARMs 4,425.3 26,573.2 22,147.9
Fixed-rate loans held in portfolio 1,481.9 17,097.7 15,615.8
Fixed-rate loans held for sale (347.2) 824.5 1,171.7
Fixed-rate MBS 1,856.3 24,202.5 22,346.2
- ------------------------------------------------------------------------
Total real estate loans and MBS $ (258.4) $155,748.6 $156,007.0
========================================================================
Loans Serviced for Others $ 10.6 $ 52,434.8 $ 52,424.2
========================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Dec. 31, Sept. 30, June 30,
1998 1998 1998
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Real Estate Loans and MBS
Short-term ARMs:
COFI $ 76,373.4 $ 75,762.3 $ 85,677.8
MTA 8,731.2 10,539.4 8,081.6
CMT 5,213.0 7,063.1 7,882.2
Other 7,151.8 11,583.6 7,560.6
- ----------------------------------------------------------------------
Total short-term ARMs 97,469.4 104,948.4 109,202.2
Medium-term ARMs:
MTA 12,073.4 5,347.8 3,269.5
CMT 4,321.5 3,751.7 3,992.1
COFI 889.2 903.2 959.4
Other 2,233.6 2,658.5 2,551.6
- ----------------------------------------------------------------------
Total medium-term ARMs 19,517.7 12,661.2 10,772.6
Fixed-rate loans held in portfolio 14,226.7 12,710.3 11,870.7
Fixed-rate loans held for sale 1,826.5 1,668.6 1,569.9
Fixed-rate MBS 13,608.2 8,609.3 4,630.9
- ----------------------------------------------------------------------
Total real estate loans and MBS $146,648.5 $140,597.8 $138,046.3
======================================================================
Loans Serviced for Others $ 51,849.0 $ 50,493.7 $ 49,761.8
======================================================================
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
1999 1999 1998 1998 1998
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Reserve for Loan Losses
Balance, beginning
of quarter $1,069.7 $1,067.8 $1,151.5 $1,156.3 $1,153.9
Provision for
loan losses 42.9 41.7 33.2 34.4 44.4
Reserves added through
business combinations -- -- 0.1 -- --
Reserves transferred
to recourse liability -- (7.5) (73.6) (0.8) --
Reserves transferred
from other liabilities -- 12.7 -- -- --
Loans charged off:
SFR and SFR construct-
ion (8.5) (11.1) (13.6) (13.5) (17.1)
Manufactured housing,
second mortgage and
other consumer (10.4) (13.4) (8.1) (7.3) (9.1)
Commercial
business (1.3) (2.5) (1.2) (1.4) (1.4)
Commercial real
estate (22.9) (3.9) (6.6) (5.8) (9.2)
Consumer finance (22.8) (23.8) (24.5) (21.9) (21.6)
- ----------------------------------------------------------------------
Total loans
charged off (65.9) (54.7) (54.0) (49.9) (58.4)
Recoveries of loans
previously charged off:
SFR and SFR construct-
ion 0.2 2.1 3.9 5.9 5.6
Manufactured housing,
second mortgage and
other consumer 0.7 0.6 0.4 0.5 0.5
Commercial business 0.2 0.2 0.5 0.2 0.1
Commercial real
estate 1.7 2.7 2.2 1.2 5.5
Consumer finance 4.1 4.1 3.6 3.7 4.7
- ----------------------------------------------------------------------
Total recoveries of
loans previously
charged off 6.9 9.7 10.6 11.5 16.4
- ----------------------------------------------------------------------
Net charge offs (59.0) (45.0) (43.4) (38.4) (42.0)
- ----------------------------------------------------------------------
Balance, end of
quarter $1,053.6 $1,069.7 $1,067.8 $1,151.5 $1,156.3
======================================================================
Specific and allocated reserves:
Commercial real
estate $ 85.0 $ 112.1 $ 125.7 $ 133.5 $ 136.8
Commercial
business 18.2 16.1 17.2 9.0 9.3
Builder construct-
ion 3.6 0.8 0.8 0.9 1.9
- ----------------------------------------------------------------------
Total specific and
allocated
reserves 106.8 129.0 143.7 143.4 148.0
Unallocated
reserves 946.8 940.7 924.1 1,008.1 1,008.3
- ----------------------------------------------------------------------
Total reserve
for loan
losses $1,053.6 $1,069.7 $1,067.8 $1,151.5 $1,156.3
======================================================================
Reserve for loan losses as a percentage of:
Nonaccrual
loans 124% 119% 114% 114% 107%
Nonperforming
assets 96 90 88 89 83
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Changes in the liability for losses on loans securitized with
recourse and retained or sold, included in "other liabilities,"
were as follows:
<S> <C> <C> <C> <C> <C>
Recourse Liability
Balance, beginning
of quarter $128.0 $144.3 $ 72.6 $74.0 $77.7
Transfer of reserve on
HTM REMIC
securities -- (22.5) -- -- --
Transfer from reserve
for loan losses -- 7.5 73.6 0.8 --
Charge offs, net of
provision for
losses (6.0) (1.3) (1.9) (2.2) (3.7)
- ----------------------------------------------------------------------
Balance, end of
quarter $122.0 $128.0 $144.3 $72.6 $74.0
======================================================================
The total loss coverage represents the reserve for loan losses
and recourse liability as a percentage of nonaccrual loans:
Total loss coverage
percentage 138% 134% 129% 121% 114%
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
1999 1999 1998 1998 1998
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonperforming Assets
("NPAs")
Nonaccrual loans:
SFR and SFR
construction $ 693.4 $ 733.2 $ 761.4 $ 849.0 $ 909.5
Manufactured housing,
second mortgage and
other consumer 46.7 45.9 39.0 36.5 28.9
Commercial business 7.0 7.0 7.4 3.0 2.1
Apartment buildings and
other commercial
real estate 51.4 57.1 76.7 68.4 86.8
Consumer finance 53.7 52.7 53.4 55.0 51.1
- ----------------------------------------------------------------------
Total nonaccrual
loans 852.2 895.9 937.9 1,011.9 1,078.4
Foreclosed assets:
SFR and SFR
construction 181.3 220.5 215.2 215.7 233.7
Manufactured housing,
second mortgage and
other consumer 14.2 12.2 10.5 10.4 8.7
Apartment buildings and
other commercial
real estate 46.8 52.0 46.4 53.0 73.3
Consumer finance 1.9 2.5 2.7 2.0 2.0
Reserve for losses
on foreclosed assets -- -- -- -- (3.1)
- ----------------------------------------------------------------------
Net foreclosed
assets 244.2 287.2 274.8 281.1 314.6
- ----------------------------------------------------------------------
Total NPAs $1,096.4 $1,183.1 $1,212.7 $1,293.0 $1,393.0
======================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NPAs by property
type:
<S> <C> <C> <C> <C> <C>
SFR and SFR
construction $ 874.7 $ 953.7 $ 976.6 $1,064.7 $1,143.2
Manufactured housing,
second mortgage and
other consumer 60.9 58.1 49.5 46.9 37.6
Commercial business 7.0 7.0 7.4 3.0 2.1
Apartment buildings 57.1 59.5 70.3 80.9 101.7
Other commercial
real estate 41.1 49.6 52.8 40.5 58.4
Consumer finance 55.6 55.2 56.1 57.0 53.1
Reserve for losses
on foreclosed assets -- -- -- -- (3.1)
- ----------------------------------------------------------------------
Total NPAs $1,096.4 $1,183.1 $1,212.7 $1,293.0 $1,393.0
======================================================================
NPAs as a percentage of:
Total loans 0.99% 1.10% 1.12% 1.22% 1.32%
Total assets 0.63 0.68 0.73 0.81 0.89
</TABLE>
<PAGE>
Media Contact: Libby Hutchinson
1-800-228-9268
(206) 461-2484
Investor Contacts: Doug Wisdorf
(206) 461-3805
JoAnn DeGrande
(206) 461-3186
Washington Mutual Announces Additional 30 Million
Share Repurchase Program
SEATTLE--Washington Mutual, Inc. (NYSE: WM)
announced that the company's Board of Directors has
approved a share repurchase program to acquire, from
time to time, up to 30 million shares of Washington
Mutual's common stock. The shares to be repurchased
would be in addition to the company's previously
announced program to buy back up to 20 million
shares. The company had approximately 582 million
shares outstanding, as of June 30, 1999.
The shares, to be purchased at market price,
will be retired.
At June 30, 1999, Washington Mutual and its
subsidiaries had consolidated assets of $175.04
billion. The company operates more than 1,800
offices throughout the nation.
