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 (Date of earliest event reported): June 29, 1999
WASHINGTON MUTUAL, INC.
(Exact name of registrant as specified in its charter)
WASHINGTON 1-14667 91-1653725
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
1201 Third Avenue, Seattle,
Washington 98101 (Address of
principal executive office)
(206) 461-2000
(Registrant's telephone number including area code)
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
99.1 Presentation made by management of the registrant at an
investor conference on June 29, 1999.
SIGNATURE
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.
By: /s/ Fay L. Chapman
Fay L. Chapman
Executive Vice President and
General Counsel
Financial Summary
Bill Longbrake
Vice Chair and Chief Financial Officer
Slide 1
<PAGE>
Consumer Banking
Retail Checking Accounts(a)
[Bar Graph]
In Thousands
<TABLE>
<CAPTION>
12/31/96 12/31/97 12/31/98 3/31/99
<S> <C> <C> <C> <C>
Southwest/Southeast(b)(c) 2,612 2,596 3,004 3,060
Northwest(d) 608 766 908 941
Total 3,220 3,362 3912 4,001
Households 5,441 5,361 5,153 5,198
</TABLE>
(a) Includes interest and noninterest-bearing checking accounts with the
exception of government, commercial and pay-by-phone accounts
(b) Southwest/Southeast refers to the operations of Washington Mutual Bank,
FA (California, Florida and Texas)
(c) Inclusive of sale of Florida branches and purchase of Coast Savings by
AHM
(d) Northwest refers to the combined operations of Washington Mutual Bank
and Washington Mutual Bank fsb (Washington, Oregon, Idaho, Montana and Utah)
Slide 2
<PAGE>
Consumer Banking
Depositor and Other Retail Banking Fee Income(a)
[Bar Graph]
Dollars in Millions
<TABLE>
<CAPTION>
1996 1997 1998 Q1 1998(b) Q1 1999
<S> <C> <C> <C> <C> <C>
Southwest/Southeast $281.6 $366.7 $411.7 $85.4 $120.5
Northwest $68.5 $103.5 $147.5 $31.9 $40.4
Total $350.1 $470.2 $559.2 $117.3 $160.9
</TABLE>
(a) Does not include fees generated through the Company's consumer finance
or commercial banking businesses
(b) Inclusive of Ahmanson Florida accounts and purchase of Coast Savings by
AHM
Slide 3
<PAGE>
Consumer Banking
Net Retail Checking Account Growth
[Bar Graph]
<TABLE>
<CAPTION>
Q1 1998 Q2 1998 Q3 1998 Q4 1998 Q1 1999
<S> <C> <C> <C> <C> <C>
Southwest/Southeast 76,530(a)(b) 25,668(b) 15,374(b) 40,765 60,838
Northwest 33,056 34,020 41,050 33,560 32,765
</TABLE>
(a) Does not include 322,783 accounts acquired through Coast Savings in Q1
1998
(b) Does not include Ahmanson Florida accounts sold in Q3 1998
Slide 4
<PAGE>
Consumer Banking
Fee Income per "Free Checking" Account
[Bar Graph]
<TABLE>
<CAPTION>
Q1 1997 Q2 1997 Q3 1997 Q4 1997 Q1 1998 Q2 1998 Q3 1998 Q4 1998 Q1 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Northwest $39.59 $43.06 $48.50 $49.49 $44.90 $48.32 $49.79 $50.66 $46.71
Southwest/Southeast* $28.48 $27.48 $30.66 $42.55 $46.53 $43.24
</TABLE>
*Inclusive of acquired branches when converted (AHM/Texas converted as of 2/99)
Slide 5
<PAGE>
Consumer Banking
Transaction Accounts as a Percentage of Total Deposits*
[Bar Graph]
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996 1997 1998 Q1 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Northwest 30.0% 33.9% 39.7% 45.8% 44.9% 45.4% 51.9% 55.9% 61.0% 62.7%
Southwest/
Southeast* 32.3% 41.5% 46.7% 48.3%
</TABLE>
*End of period percentages; does not include the Company's consumer finance
or business subsidiaries; includes acquired companies only on a go-forward
basis
Slide 6
<PAGE>
Consumer Banking
Consumer Lending*
[Bar Graph]
Dollars In Millions
<TABLE>
<CAPTION>
1996 1997 1998 Q1 1998 Q1 1999
<S> <C> <C> <C> <C> <C>
Southwest/Southeast $718.5 $1,489.8 $1,759.0 $419.0 $353.8
Northwest $1,191.9 $1,400.0 $1,245.6 $252.8 $258.7
Total $1,910.4 $2,889.8 $3,004.6 $671.8 $612.5
</TABLE>
*Consumer loan originations, not including SFR loans or loans originated
through the Company's consumer finance or business subsidiaries
Slide 7
<PAGE>
Consumer Banking
Consumer Loan Production*
[Bar Graph]
Dollars in Millions
<TABLE>
<CAPTION>
Q1 1998 Q2 1998 Q3 1998 Q4 1998 Q1 1999
<S> <C> <C> <C> <C> <C>
Southwest/Southeast $419.0 $554.0 $462.6 $323.4 $353.8
Northwest $252.8 $348.3 $360.7 $283.9 $258.7
Total $671.8 $902.3 $823.3 $607.3 $612.5
</TABLE>
*Consumer loan originations, not including SFR loans or loans originated
through the Company's consumer finance or business subsidiaries
Slide 8
<PAGE>
Mortgage Banking
SFR Mortgage Loan Originations
[Bar Graph]
Dollars in Billions
<TABLE>
<CAPTION>
1996 1997 1998 Q1 1998 Q1 1999
<S> <C> <C> <C> <C> <C>
ARMs $13.4 $16.9 $18.4 $3.3 $5.2
FIXED $6.7 $8.9 $23.5 $5.3 $4.5
Total $20.1 $25.8 $41.9 $8.6 $9.7
</TABLE>
Slide 9
<PAGE>
Mortgage Banking
Loan Servicing - Servicing Expense per Loan
[Bar Graph]
<TABLE>
<CAPTION>
Q1 1997 Q2 1997 Q3 1997 Q4 1997 Q1 1998 Q2 1998 Q3 1998 Q4 1998 Q1 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Northwest $11.36 $10.96 $10.86 $11.74 $12.69 $13.90 $13.50 $12.26 $11.88
Southwest/Southeast* $18.75 $22.30 $19.52 $16.78 $14.72 $17.69 $14.76 $13.66 $18.19
</TABLE>
*Ahmanson data included as of February 1999
Slide 10
<PAGE>
Financial Performance
Consumer, Consumer Finance and Commercial Loans to Total Loans*
[Bar Graph]
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996 1997 1998 Q1 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Northwest 35.1% 37.0% 33.5% 35.6% 32.0% 34.3% 34.1% 33.8% 29.8% 29.4%
Southwest/Southeast 13.4% 15.8% 24.5% 24.6%
</TABLE>
*End of period percentages; includes the Company's consumer finance and
business subsidiaries; includes acquired companies only on a go-forward basis
Slide 11
<PAGE>
Financial Performance
Net Interest Income
[Bar Graph]
Dollars in Millions
<TABLE>
<CAPTION>
1996 1997 1998 Q1 1998 Q1 1999
<S> <C> <C> <C> <C> <C>
Northwest 3,865.1 3,915.5 4,291.7 1,060.3 1,127.2
Net Interest Margin 2.96% 2.91% 2.88% 2.91% 2.79%
</TABLE>
Slide 12
<PAGE>
Financial Performance
Fee and Servicing Income*
[Bar Graph]
Dollars in Millions
<TABLE>
<CAPTION>
1996 1997 1998 Q1 1998 Q1 1999
<S> <C> <C> <C> <C> <C>
Depositor and retail banking fees $358.9 $478.7 $568.4 $119.5 $163.4
Loan servicing and loan related income $222.3 $231.0 $228.5 $57.4 $52.6
Securities and insurance fees and commissions $231.2 $244.4 $251.3 $59.6 $70.2
Total $812.4 $954.1 $1,048.2 $236.5 $286.2
</TABLE>
*Includes income generated through the Company's consumer finance and
business subsidiaries
Slide 13
<PAGE>
Financial Performance
Other Expense
[Bar Graph]
Dollars in Millions
<TABLE>
<CAPTION>
1996 1997 1998 Q1 1998 Q1 1999
<S> <C> <C> <C> <C> <C>
Transaction Related $782.8 $431.1 $508.3 $31.8 $23.8
Expense and SAIF
Assessment (1996)
Other Noninterest Expense $2,826.8 $2,695.6 $2,776.1 $642.9 $706.1
Total $3,609.6 $3,126.7 $3,284.4 $674.7 $729.9
</TABLE>
Slide 14
<PAGE>
Financial Performance
Operating Efficiency Ratio - Reported*
[Bar Graph]
1996 1997 1998 Q1 1998 Q1 1999
Operating 75.03% 61.84% 54.68% 49.16% 47.62%
*Excludes amortization of intangible assets
Slide 15
<PAGE>
Financial Performance
Operating Efficiency Ratio - Adjusted*
[Bar Graph]
1996 1997 1998 Q1 1998 Q1 1999
Operating 58.37% 52.00% 45.94% 46.76% 46.01%
*Excludes SAIF assessment (1996) and transaction-related charges and
amortization of intangible assets (all periods); includes sales of retail
deposit branch systems (1996-1998)
Slide 16
<PAGE>
Financial Performance
Nonperforming Assets
[Bar and Line Graph]
Dollars in Millions
12/31/96 12/31/97 12/31/98 3/31/99
NPAs $1,651.4 $1,374.9 $1,212.7 $1,183.1
NPAs/Assets 1.20% 0.96% 0.73% 0.68%
Slide 17
<PAGE>
Financial Performance
Loan Loss Reserve and Recourse Liability*
[Bar and Line Graph]
Dollars in Millions
<TABLE>
<CAPTION>
12/31/96 12/31/97 12/31/98 03/31/99
<S> <C> <C> <C> <C>
As a % of Nonaccrual Loans 93% 109% 129% 134%
Loan Loss Reserve $1,066.3 $1,047.8 $1,067.8 $1,069.7
Recourse Liability $27.9 $80.2 $144.3 $128.0
</TABLE>
*The Company records a recourse liability to cover potential losses on
loans securitized and retained in its MBS portfolio or sold to third parties
Slide 18
<PAGE>
Interest Rate Risk
Washington Mutual has effectively managed its interest rate risk to produce
a relatively stable net interest spread over the past three years, despite
unstable market interest rate
Net interest margin
1996 2.78%
1997 2.74%
1998 2.70%
Slide 19
<PAGE>
Interest Rate Risk
Asset Mix as of March 31, 1999
Loans and MBS Portfolio
Short-term ARMs:
COFI $73,673.9 47%
MTA, CMT & Other 21,051.4 13
Medium-term ARMs:
MTA 15,625.1 10
CMT, COFI & Other 6,522.8 4
Fixed-Rate Loans:
Loans 16,787.5 11
MBS 22,346.2 14
-------- --
$156,006.9 100%
========== ===
Slide 20
<PAGE>
Interest Rate Risk
Funding Book Concept
Matches comparable duration assets and liabilities into portfolio
Isolates mismatches into smaller monetary increments where they can be more
easily tracked and managed
Slide 21
<PAGE>
Interest Rate Risk
Risk inherent in the portfolio that must be actively managed (hedged)
ARM index lag effect
Lifetime time rate caps
Modest exposure from fixed-rate portfolio
Mortgage servicing asset
Slide 22
<PAGE>
Financial Performance
Total Capitalization
[Bar Graph]
Dollars in Millions
Total Equity
<TABLE>
<CAPTION>
12/31/96 12/31/97 12/31/98 3/31/99
<S> <C> <C> <C> <C>
Holding Company Debt $996 $1,117 $762 $768
Trust Preferred $249 $937 $938 $939
Nonconvertible Preferred $478 $313 0 0
Common $6,948 7,288 9,344 $9,610
Total $8,671 $9,655 $11,044 $11,317
Common Equity/Total Assets 5.06% 5.08% 5.65% 5.51%
</TABLE>
Slide 23
<PAGE>
Washington Mutual
Investor Meeting
June 29, 1999
Slide 24
<PAGE>
Washington Mutual
Investor Meeting
June 29, 1999
Slide 1
[Washington Mutual Logo]
<PAGE>
1999-2000
Strategic Direction
Kerry Killinger
Chairman, President & CEO
Slide 2
[Washington Mutual Logo]
<PAGE>
1995 - 2000 Plan
Mission
To be one of the nation's premier financial services organizations by:
providing exceptional service to customers
making our communities better places to live and work
recognizing outstanding efforts of employees
delivering a superior long-term return to shareholders
Slide 3
<PAGE>
1995 - 2000 Plan
Profile
$174 billion in assets
Nation's largest savings institution
Nation's 8th-largest banking company
Slide 4
[Washington Mutual Logo]
<PAGE>
1995 - 2000 Plan
Business Segments
Consumer Banking
Financial Services
Mortgage Banking
Commercial Banking and Commercial Real Estate
Consumer Finance
Slide 5
[Washington Mutual Logo]
<PAGE>
1995 - 2000 Plan
Key Strategies
Profitably expand businesses through internal growth and acquisitions
Maintain a high quality balance sheet
Improve operating efficiency
Limit sensitivity to interest rate movement
Slide 6
[Washington Mutual Logo]
<PAGE>
1995 - 2000 Plan
Successes to Date
Built California franchise
Developed national mortgage franchise
Acquired national consumer finance franchise
Acquired and expanded regional commercial bank franchise
Delivered strong returns to shareholders
Slide 7
[Washington Mutual Logo]
<PAGE>
1995 - 2000 Plan
Challenges to Date
Remixing a thrift-like balance sheet
Managing a much larger company
Deferring reengineering/technology initiatives
Slide 8
[Washington Mutual Logo]
<PAGE>
1995 - 2000 Plan
Financial Targets
Target Result (3/31/99)
ROCE Greater than 18.00% 19.35%(a)
EPS Growth Greater than 15.00 16.18(a)(b)
Operating Efficiency Less than 50.00 46.01(a)(c)
NPA/Total Assets Less than 1.00 0.68
Common Equity/Assets Greater than 5.00 5.51
WM Return/S&P 500 Greater than 100.0
(a) Results based on first quarter earnings from operations which equal
reported earnings less transaction-related expenses
(b) Increase in earnings from operations from Q1 '98 to Q1'99
(c) Excludes amortization of intangible assets
Slide 9
[Washington Mutual Logo]
<PAGE>
Results
Operating EPS Growth*
[Bar Graph]
<TABLE>
<CAPTION>
1996 1997 1998 1999
--------------------------- ---------------------------- ------------------------- -----------------
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
15% EPS Growth $.46 $.48 $.49 $.51(1) $.53 $.55 $.57(2) $.59 $.61 $.63 $.65 $.68(3) $.70
Target
Operating EPS $.49 $.51 $.51 $.65 $.62 $.64 $.56 $.63 $.69 $.73 $.76 $.74 $.79
</TABLE>
* Excludes transaction-related expenses; includes acquired companies only
on a go-forward basis; and Q3 1996 earnings exclude SAIF assessment
(1) American Savings Acquisition
(2) Great Western Acquisition
(3) Ahmanson Acquisition
Slide 10
[Washington Mutual Logo]
<PAGE>
Results
WM Shareholder Return 1990 - Q1 `99
[Line Graph]
3`90 9`90 12`90 6`91 9`91 3`92 6'92 12'92 3'93 9'93
VM $100 $66 $77 $160 $229 $211 $255 $331 $315 $406
S&P 500 $100 $92 $100 $114 $120 $128 $130 $141 $147 $152
index
3'94 6'94 12'94 3'95 9'95 12'95 6'96 12'96 3'97 9'97
VM $292 $316 $264 $316 $424 $465 $489 $717 $804 $1170
S&P 500 $150 $150 $158 $173 $204 $216 $238 $266 $273 $344
index
12'97 6'98 9'98 3'99
VM $1075 $1107 $865 $1060
S&P 500 $354 $417 $375 $478
index
Assumes $100 invested 3/31/90 and compounded on a quarterly basis
Source: Bloomberg
Slide 11
[Washington Mutual Logo]
<PAGE>
Results
WM Shareholder Return
[Bar Graph]
C WM CMB WFC FTU AXP
- ---- ---- ---- ---- ---- ----
35.9% 30.1% 29.2% 27.9% 26.7% 23.9%
BAC FLT JPM ONE SPX GDW BT
- ----- ---- ---- ---- ---- ---- ----
19.3% 19.2% 19.0% 18.9% 18.9% 15.8% 15.7%
Source: Bloomberg. Total annual return peer comparison 4/1/90-3/31/99
Slide 12
[Washington Mutual Logo]
<PAGE>
Results
WM Shareholder Return 1995 - Q1 '99
[Line Graph]
Mar-95 Jun-95 Sep-95 Dec-95 Mar-96 Jun-96
WM $100.00 $120.17 $142.07 $161.48 $177.31 $183.95 $186.20
S&P 500 $100.00 $109.74 $120.21 $129.77 $137.58 $144.96 $151.47
Index
Sep-96 Dec-96 Mar-97 Jun-97 Sep-97 Dec-97 Mar-98
WM $233.62 $273.19 $306.13 $380.60 $446.03 $409.73 $462.58
S&P 500 $156.15 $169.17 $173.70 $204.03 $219.31 $225.60 $257.08
Index
Jun-98 Sep-98 Dec-98 Mar-99
WM $422.06 $329.62 $376.99 $403.75
S&P 500 $265.56 $239.15 $290.08 $304.43
Index
Assumes $100 invested 1/1/95 and compounded on a quarterly basis
Source: Bloomberg
Slide 13
[Washington Mutual Logo]
<PAGE>
Results
WM Shareholder Return 1998 - Q1 '99
[Line Graph]
12 `97 3 `98 6 `98 9 `98 12 `98 3 `99
WM $100.00 $112.90 $103.00 $80.44 $92.00 $98.52
S&P 500 Index $100.00 $113.95 $117.71 $106.01 $128.58 $134.99
Assumes $100 invested 1/1/98 and compounded on a quarterly basis
Source: Bloomberg
Slide 14
[Washington Mutual Logo]
<PAGE>
Results
1998 Stock Performance
General under-performance by financial stocks
Acquisition dilution/execution uncertainty
Thrift-like balance sheet
Flat yield curve
Purchase of mortgage-backed securities
No stock repurchase option
Slide 15
[Washington Mutual Logo]
<PAGE>
Opportunities
P/E Peer Comparison*
[Bar Graph]
SPX AXP C JPM BT WFC
- ---------------------------------------------------------------------------
26.12 21.84 17.74 17.43 16.81 15.79
CMB BAC ONE FTU FLT GDW WM
- -------------------------------------------------------------------------------
15.73 15.03 13.98 13.39 13.11 12.18 11.99
* Based on 3/31/99 closing prices and 1999 First Call earnings estimates.
Source for SPX: Bloomberg
Slide 16
[Washington Mutual Logo]
<PAGE>
Opportunities
Initiatives
Successfully complete Ahmanson integration
Achieve financial targets
Re-mix balance sheet
Carry out share repurchase program
Aggressively communicate with capital markets
Slide 17
[Washington Mutual Logo]
<PAGE>
Opportunities
Operating Environment
Economy
Interest rates
Stock market
Competition
Federal legislation
State/local politics
Slide 18
[Washington Mutual Logo]
<PAGE>
Opportunities
Capital Deployment
Alternatives
Loan growth
Acquisitions
Share repurchase
Wholesale asset purchases
Slide 19
[Washington Mutual Logo]
<PAGE>
Future Initiatives
Internet
Considerations:
Advertising
Distribution
Communications
Pricing
Margins
Business Model
Slide 20
[Washington Mutual Logo]
<PAGE>
Future Initiatives
Internet
Expand Internet banking
Develop Internet mortgage origination
Explore new business models
Create new management information/communications systems
Explore acquisition/joint venture opportunities
Slide 21
[Washington Mutual Logo]
<PAGE>
Future Initiatives
Organizational Changes
Adjust management structure to reflect expanded size, scope and complexity
Balance of business unit and corporate functional responsibilities
Matrix management
Slide 22
[Washington Mutual Logo]
<PAGE>
WM Management
Senior management team expanded three-fold over past 3 years
66 senior managers
18 in place 3 years ago
13 promoted from within
20 from acquisitions
15 recruited
Executive development program
Slide 23
[Washington Mutual Logo]
<PAGE>
Today's Washington Mutual
Strong competitive position
Geographic and business line diversity
Track record of delivering superior shareholder returns
Reasonable P/E multiple suggests room for long-term appreciation
Slide 24
[Washington Mutual Logo]
<PAGE>
Washington Mutual
Investor Meeting
June 29, 1999
Slide 25
[Washington Mutual Logo]
<PAGE>
Developing E-business
at Washington Mutual
Liane Wilson
Vice Chair,
Corporate Technology
Slide 26
[Washington Mutual Logo]
<PAGE>
Updates
Ahmanson Conversion
5,100 workstations
1.1 million ATM/VISA debit cards
2.8 million deposit accounts
634,500 loan accounts
Slide 27
[Washington Mutual Logo]
<PAGE>
Updates
Year 2000
Mission-critical systems compliant: 12/31/98
End-to-end testing: 1/1/99-12/31/99
Contingency plan validation: 6/30/99-12/31/99
Manage millennium rollover via Command Center: 12/31/99-3/31/2000
Slide 28
[Washington Mutual Logo]
<PAGE>
A Brief History
Four Generations of Technology
1990s Networked PCs
1980s PCs
1970s Inquiry Screens
1960s Mainframe
Slide 29
[Washington Mutual Logo]
<PAGE>
Current Technology
"The Net"
[4 photo flow chart showing internet connection with Washington Mutual,
home and work]
Slide 30
[Washington Mutual Logo]
<PAGE>
Current Technology
Net Benefits
Readily accessible information
"Open" 24 x 7
Consumer acceptance of instability
Slide 31
[Washington Mutual Logo]
<PAGE>
E-business at WM
Vision
[photo background]
E-business = Customer Self Service
Slide 32
[Washington Mutual Logo]
<PAGE>
E-business at WM
Internal Customers
Collaborative processing
Information access
Self-servicing
Slide 33
[Washington Mutual Logo]
<PAGE>
E-business at WM
External Customers
Self-serve account opening
Pay bills, transaction inquiries
New channels for service
Slide 34
[Washington Mutual Logo]
<PAGE>
E-business at WM
Corporate Benefits
Increased efficiency
Opportunities to attract new business
Enhance competitive position
Slide 35
[Washington Mutual Logo]
<PAGE>
Developing E-business
How it Works
[flow chart linking Internet with:
- other Companies/Information Sources
- PalmPilots/Cell Phones
- PC/Operating System
- Proprietary Network (Internet) [shown being connected with
Washington Mutual Information]
- Washington Mutual Information
Slide 36
[Washington Mutual Logo]
<PAGE>
Developing E-business
Required Re-engineering
New process information flows
New Call Center system
Data interchange with business partners
Slide 37
[Washington Mutual Logo]
<PAGE>
Developing E-business
The People Side
[photo of men shaking hands]
Slide 38
[Washington Mutual Logo]
<PAGE>
Washington Mutual
Investor Meeting
June 29, 1999
Slide 39
[Washington Mutual Logo]
<PAGE>
Consumer Banking
Kim Kahmer
Senior Vice President & CFO
Consumer Banking Group
Slide 40
[Washington Mutual Logo]
<PAGE>
Strategic Rationale
High-growth financial centers are the corporate flagship to Washington
Mutual's consumer-oriented brand
Efficient distribution of broad-based product line, particularly
higher-margin loans and fee-generating products
Competitive advantage:
high-touch community banking with a
national franchise
Slide 41
[Washington Mutual Logo]
<PAGE>
Business Line Overview
Consumer-Oriented Products
Transaction accounts
Liquid and time deposits
Annuities
Home equity
Consumer loans
Manufactured housing loans
Mortgage loans
Small business banking
Referral point for other business lines
Slide 42
[Washington Mutual Logo]
<PAGE>
Business Line Overview
Distribution Network
[maps of states listed below]
State Branches(a) ATMs(a) Deposit Share(b) Rank(b)
California 703(c) 973 19.0% 1
Washington 180 213 18.2 2
Florida 122 189 3.9 4
Oregon 79 147 12.7 2
Texas 48 64 1.7 12
Other States 44 50 n/a n/a
Total 1,176(c) 1,636
(a) As of 3/31/99
(b) Interest-bearing deposits, exclusive of IRA/Keogh and government
deposits, as of 6/30/98
(c) Includes 161 branches to be consolidated in California
Slide 43
[Washington Mutual Logo]
<PAGE>
Business Line Overview
Automated Teller Machines
[photo of ATM machine]
ATM Network* =
1,636 Machines
*Does not include Q2 '99 consolidations
Slide 44
[Washington Mutual Logo]
<PAGE>
Business Line Overview
Call Centers
[maps showing location of Bothell, WA and Chatsworth, CA]
Estimated Calls in 1999 = 200 million
Sales calls = 200,000
Slide 45
[Washington Mutual Logo]
<PAGE>
Business Line Overview
Internet Banking
[photo of a PC]
Integrion partnership brings industry standards with customer ownership
Rolled out to California, Texas and Florida - all markets by fall
Upgrade in test for summer rollout
Slide 46
[Washington Mutual Logo]
<PAGE>
Competitive Advantages
Net Retail Checking Account Growth
[Bar Graph]
Q1 `98 Q2 `98 Q3 `98 Q4 `98 Q1 `99
Northwest 33,056 34,020 41,050 33,560 32,765
Southwest/Southeast 76,530(a)(b) 25,668(b) 15,374)b) 40,765 60,838
(a) Does not include 322,783 accounts acquired through Coast in Q1 '98
(b) Does not include Ahmanson Florida accounts sold in Q3 `98
Slide 47
[Washington Mutual Logo]
<PAGE>
Competitive Advantages
Free Checking
Profitable for company, generating an average of $176 per account in net
fee income
Drives in households
Opened 93,603 net new checking accounts during Q1 `99
Added 45,024 net new households during Q1 `99
WM recognized as bank with free checking by more than
two-thirds of Northwest customers
Slide 48
[Washington Mutual Logo]
<PAGE>
Competitive Advantages
Depositor and Other
Retail Banking Fee Income(a)
[Bar Graph]
Dollars in millions
1996 1997 1998 Q1 `98 Q1 `99
Northwest $68.5 $103.5 $147.5 $31.9 $40.4
Southwest/Southeast $281.6 $366.7 $411.7(b) 85.4 120.5
Total $350.1 $470.2 $559.2 $117.3 $160.9
(a) Does not include fees generated through the Company's consumer finance
or commercial banking businesses
(b) Inclusive of Ahmanson Florida accounts and purchase of Coast Savings by
AHM
Slide 49
[Washington Mutual Logo]
<PAGE>
Competitive Advantages
Distinct Market Position
[Bar Graph]
Customers who would refer their friends to their bank
WM Wells Fargo B of A
87% 53% 53%
Source: WM Research Nov. 1998. Figures reflect responses within
longest-standing markets.
Slide 50
[Washington Mutual Logo]
<PAGE>
Competitive Advantages
Strong West Coast Franchise
Over 5 million households served
More than one-quarter of all West Coast banking households have a deposit
product with Washington Mutual
[photo of house]
Source: PSI, Washington Mutual Research
Slide 51
[Washington Mutual Logo]
<PAGE>
Competitive Advantages
"Top of Mind" Brand
[photos of Seattle, Portland and Salt Lake City with "#1" by each photo]
Source: WM Research Nov. 1998
Slide 52
[Washington Mutual Logo]
<PAGE>
Competitive Advantages
"Top of Mind" Brand
[photos of San Francisco (#1), Los Angeles (#2), San Diego (#2), Miami (#1)
with number beside each photo as indicated]
Source: WM Research Nov. 1998
Slide 53
[Washington Mutual Logo]
<PAGE>
Competitive Advantages
Franchise Mentality
Compensation program
Synchronizes corporate and individual objectives
Motivates over-achievement
Incentive component unlimited
Localized marketing
Flexibility to tailor sales efforts and staffing for individual markets
[photo of meeting between three people]
Slide 54
[Washington Mutual Logo]
<PAGE>
Competitive Advantages
Same-store Comparison
Product Q1 `98 Q1 `99 Increase
- -------------------------------------------------------------------
Lending $336,669 $950,721 182%
Checking Acct 3,935 4,370 11%
Fee Income $113,755 $176,538 55%
Operating Exp $84,055 $87,462 4%
FTE 10.1 10.2 1%
Note: Former ASB and GW average financial centers
Slide 55
[Washington Mutual Logo]
<PAGE>
Opportunities
Move customers up the profitability scale by cross-selling the full product
line
Utilize Internet banking and new branching strategy to take franchise
national
Slide 56
[Washington Mutual Logo]
<PAGE>
Opportunities
Continue to implement changes to increase revenue and lower expense
Re-engineer staff positions
Streamline procedures
Easy reference guides
New Visual Banker platform
Acquire customers/employees who feel disenfranchised with other banks
Slide 57
[Washington Mutual Logo]
<PAGE>
Future Initiatives
Customer segmentation -- enhance revenues by realigning products and
targeting them to specific households
Better understand our customer base
Enhance our direct mail and marketing efforts
Further build brand identity among customers
Slide 58
[Washington Mutual Logo]
<PAGE>
Future Initiatives
Enhance revenues by further developing Internet banking product
80% of new Internet banking customers would recommend WM's product to their
friends
Next generation web site includes product applications that will increase sales
Slide 59
[Washington Mutual Logo]
<PAGE>
Future Initiatives
Continue promotion of Washington Mutual's brand
Build on reputation of being trustworthy, friendly, caring and community
minded
July launch of new advertising campaign
Slide 60
[Washington Mutual Logo]
<PAGE>
Future Initiatives
Introduce a new de novo strategy
Enter market through simultaneous openings of de novo financial centers
Bring WM brand alive with retail store concept
Test operations that increase customer service and lower costs
[photo of WM de novo financial center]
Slide 61
[Washington Mutual Logo]
<PAGE>
Washington Mutual
Investor Meeting
June 29, 1999
Slide 62
[Washington Mutual Logo]
<PAGE>
Mortgage Banking
Craig Davis
President
Mortgage Banking and
Financial Services Groups
Slide 63
[Washington Mutual Logo]
<PAGE>
Strategy
Five-year strategy focuses on building nationwide lending capacity and is
designed to generate growth and income through:
Leveraging portfolio lending strength
Building critical credit risk management
Investing in direct channels-Internet & call center
Investing in technology
Slide 64
[Washington Mutual Logo]
<PAGE>
Distribution Network
[map of the U.S.]
29 states and District of Columbia
Retail
190 home loan centers
1,200 loan consultants
1,000 consumer bank financial centers
(7 states)
Wholesale
23 wholesale offices
120 account managers
Slide 65
[Washington Mutual Logo]
<PAGE>
Mortgage Banking
Distribution*
[pie chart]
Wholesale Retail FCs HLCs
42% 58% 13% 45%
* 3/31/99
Slide 66
[Washington Mutual Logo]
<PAGE>
Mortgage Banking
Geographic Mix
[pie chart]
WA NY FL IL UT MA CO AZ CT OR TX Other CA
- -- -- -- -- -- -- -- -- -- -- -- ----- --
15% 2% 4% 4% 2% 2% 2% 2% 1% 6% 1% 7% 52%
Slide 67
[Washington Mutual Logo]
<PAGE>
Mortgage Banking
Loan Originations
[Bar Graph]
Dollars in billions
1995 1996 1997 1998 Q1 `98 Q1 `99
$20.1 $21.4 $27.2 $43.6 $8.2 $10.1
Slide 68
[Washington Mutual Logo]
<PAGE>
Origination and Market Share
Top 5 Nationwide Originators, 1998
Dollars in billions
Volume Share
1. Wells (Norwest) $109 7.7%
2. Countrywide 87 6.1
3. Chase Manhattan 85 6.0
4. Bank of America 79 5.5
5. Washington Mutual 43 3.0
Slide 69
[Washington Mutual Logo]
<PAGE>
National Mortgage Portfolio
Lending Strategy
Be the national portfolio lender of choice by leveraging multiple channels,
superior credit risk management, technology and strong portfolio management to
achieve superior and consistent profitability
Slide 70
[Washington Mutual Logo]
<PAGE>
National Mortgage Portfolio
Retail Lending Strategy
Build long-term profitable relationships with Realtors
Promote local underwriting and appraisal to support "Portfolio Power"
Increase number of HLCs in major US markets with propensity for ARMs
Increase niche and construction lending volume in appropriate markets
Slide 71
[Washington Mutual Logo]
<PAGE>
National Mortgage Portfolio
Wholesale Lending Strategy
The Wholesale Lending Division serves the mortgage broker community
Currently mortgage brokers are responsible for approximately 60% of
nationwide mortgage originations
Slide 72
[Washington Mutual Logo]
<PAGE>
National Mortgage Portfolio
Wholesale Lending Strategy
The Premiere Broker program builds franchise value
Exclusive relationships
High quality originations
Target portfolio ARM originations and purchase transactions
Slide 73
[Washington Mutual Logo]
<PAGE>
National Mortgage Portfolio
Financial Center Strategy
First mortgage loans originated through financial centers
Low cost resource to originate loans from existing customer base
Important distribution during "refi mania"
Allows 100% commissioned sales personnel to concentrate on purchase business
Expanded to California and Florida in Q3 `98
Slide 74
[Washington Mutual Logo]
<PAGE>
The Environment
Changing Rules of the Game
Major changes in
Customer priorities
Technology
Secondary/ongoing changes relating to
Regulatory/government
Economic environment
Competitors
Slide 75
[Washington Mutual Logo]
<PAGE>
Changing Customer Preferences
WM Mortgage Survey
[Bar Graph]
In the next few years many people will get their mortgage loan via . . .
<TABLE>
<CAPTION>
ATM Phone with Video Kiosk Mail In-store Branch Rep.@ Your Phone with Internet Bank or Mort.
Auto. System Home live Rep Co Office
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WM mortgage 6% 12% 14% 15% 21% 28% 28% 47% 56%
customers
Non-WM Mortgage 4% 16% 16% 20% 12% 33% 27% 50% 44%
Customer
</TABLE>
Source: Mercer Consulting Group
Slide 76
[Washington Mutual Logo]
<PAGE>
Importance of Internet
Online Mortgage Originations
[Bar Graph]
Customer preferences & technologies are changing...
1997 1998 2003/5
---- ---- ------
$ 5B Other
$ 4B E-Loan
$70M Quicken
$30M IMX
Total $276M $10B $25B + ?
Source: Mercer Consulting Group
Slide 77
[Washington Mutual Logo]
<PAGE>
Retail/Wholesale Opportunities
Current distribution channels have significant opportunity for expansion
1998 Volume WM Volume WM Mkt Share WM Rank WM ARM Share
California $275 $20.9 7.7% 2 18.5%
Illinois 65 1.2 1.9 7 4.9
Florida 60 1.4 2.3 7 5.9
Michigan 60 0.1 .3 49 .5
New York 55 0.7 1.4 11 1.9
Dollars in billions
Slide 78
[Washington Mutual Logo]
<PAGE>
Retail/Wholesale Opportunities
Current distribution channels have significant opportunity for expansion
1998 Volume WM Volume WM Mkt Share WM Rank WM ARM Share
Texas $55 $0.8 1.5% 8 3.9%
Ohio 55 0.0 .0 N/A .0
Massachusetts 45 0.6 1.4 11 1.5
New Jersey 40 0.2 .6 24 2.9
Washington 33 5.0 14.9 1 24.2
Dollars in billions
Slide 79
[Washington Mutual Logo]
<PAGE>
Technology
Technology and systems development is needed to support a significant
number of stakeholders
Customers
Business partners
Strategic partners
Internal
Slide 80
[Washington Mutual Logo]
<PAGE>
Conclusion/Next Steps
Mortgage Banking has the opportunity to be a strong engine of value growth
over the next five years
Strategy leverages position as largest non-GSE portfolio lender
Growth in SFR portfolio increases volume of high-value mortgage products to
replace lower yielding purchased assets
Slide 81
[Washington Mutual Logo]
<PAGE>
Conclusion/Next Steps
(cont.)
Requires investment in direct channels and technology
Requires expansion of HLC & Wholesale channels
Detailed planning and implementation for national portfolio lending
strategy has begun
Slide 82
[Washington Mutual Logo]
<PAGE>
Financial Services
Craig Davis
President
Mortgage Banking and
Financial Services Group
Slide 83
[Washington Mutual Logo]
<PAGE>
Financial Services
WM Financial Services
WM Group of Funds
Washington Mutual Insurance Services
Slide 84
[Washington Mutual Logo]
<PAGE>
Strategy
WM Financial Services
Bank Broker/Dealer
Follow Consumer Bank/leverage relationships
500 financial consultants in over 1,000 financial centers
Focus on packaged products (funds/annuities)
Higher profit margins
Lower risk/account maintenance
Slide 85
[Washington Mutual Logo]
<PAGE>
Strategy
WM Financial Services
Personal service including technology at point-of-sale
Primary channel for sale of WM Group of Funds
Slide 86
[Washington Mutual Logo]
<PAGE>
WM Financial Services Commission Income
1996 1997 1998 Q1 `99
Total Commissions $104m $118.12m $120.38m $37.70m
Avg. Per Financial
Consultant per Month $19,100 $21,000 $23,000 $26,300
Slide 87
[Washington Mutual Logo]
<PAGE>
Consumer Bank Annuity Program
[Bar and line graph]
Volume in millions
Commissions in millions
Q1 `98 Q2 `98 Q3 `98 Q4 `98 Q1 `99
Commissions .202 .321 .224 .496 2.215
Volume 4.340 7.340 5.117 11.652 47.802
Q1 `98 Q2 `98 Q3 `98 Q4 `98 Q1 `99
Licensed
Bank
Employees 76 76 180 272 530
Slide 88
[Washington Mutual Logo]
<PAGE>
WM Financial Services
Product Mix*
[pie chart]
Life Insurance - 2%
Fixed Annuities - 9%
Securities - 7%
Mutual Funds - 38%
Variable Annuities 44%
*As of 3/31/99
Slide 89
[Washington Mutual Logo]
<PAGE>
WM Group of Funds
Improved Fund Sales
Funds repackaged/new collateral system
Built wholesaling organization
Financial Center product merchandising & FC promotions
Launched new variable annuity
Slide 90
[Washington Mutual Logo]
<PAGE>
WM Group of Funds
Percentage of Sales
[Line graph]
<TABLE>
<CAPTION>
Q4 '97 Q1 `98 Q2 `98 Q3 `98 Q4 `98 Q1 `99
<S> <C> <C> <C> <C> <C> <C>
Mutual Funds 32% 40% 44% 41% 42% 40%
Variable
Annuities 3% 3% 5% 5% 22% 22%
</TABLE>
Slide 91
[Washington Mutual Logo]
<PAGE>
Washington Mutual Insurance Services
Strategy
Low cost/efficient provider of quality insurance products
Homeowners
Life and disability
Auto
Commercial
Leverage mortgage banking and consumer banking relationships
Increases customer retention by increasing product sales per household
Slide 92
[Washington Mutual Logo]
<PAGE>
Pre-Tax Net Income*
Dollars in millions
<TABLE>
<CAPTION>
1996 1997 1998 Q1 '98 Q1 '99
<S> <C> <C> <C> <C> <C>
WMIS 7,331 8,614 10,469 1.90 3.59
WM Group 5,337 4,634 8,986 1.28 1.50
WMFS 15,606 22,133 46,556 7.98 17.94
Total $28.27 $35.38 $66.01 $11.16 $23.03
</TABLE>
* Includes Murphey Favre, ASBFS, GWFSC, Griffin
Slide 93
[Washington Mutual Logo]
<PAGE>
Opportunities
WM Financial Services
Increase customer penetration
5% of WM deposit customers use WMFS
50% of WM deposit customers currently have investments
Only 37% of WM deposit customers are aware that WM has an investment firm
in the branches
Leverage platform sales (CBAP)
Develop online trading capabilities
Slide 94
[Washington Mutual Logo]
<PAGE>
Opportunities
Washington Mutual Insurance Services
Mortgage Banking
Internet (automated quotation for homeowners and mortgage life)
Consumer Banking
Credit Life Insurance - Integrate with consumer lending products/sales
Slide 95
[Washington Mutual Logo]
<PAGE>
Financial Services
Summary
Growth strategy will focus on building profitable alliances with Consumer and
Mortgage Banking to:
Increase referrals and cross-sell complementary products
Train sales force, when appropriate, for direct product sales, like the
successful CBAP initiative
Slide 96
[Washington Mutual Logo]
<PAGE>
Financial Services
Summary
Increased penetration of WM's current customer base is the key to growth
Technology - sales platform and Internet - is critical to growth and
product line. Can effectively leverage WM's Internet banking strategy
Slide 97
[Washington Mutual Logo]
<PAGE>
Financial Services
Summary
Financial Services is an important element of WM's long-term strategy
Product line diversifies revenue base by increasing fee income
Cross-selling multiple products maximizes customer retention
By successfully leveraging acquisitions, Financial Services' subsidiaries are
more efficient and profitable and ready for growth
Slide 98
[Washington Mutual Logo]
<PAGE>
Washington Mutual
Investor Meeting
June 29, 1999
Slide 99
[Washington Mutual Logo]
<PAGE>
Corporate Services
Steve Freimuth
Sr. Executive Vice President,
Corporate Services
Slide 100
[Washington Mutual Logo]
<PAGE>
Corporate Services
Corporate Re-engineering
Formation of cross-divisional team of senior managers
Organize and prioritize work processes
Identify opportunities to improve efficiency, customer service, cycle times
Specific focus on processes having significant effect on revenues, expenses and
customer service levels
Slide 101
[Washington Mutual Logo]
<PAGE>
Corporate Services
Corporate Credit Overview
Economic climate is very positive
Real estate values increasing in
all markets
Delinquencies continue to trend down
REO sales are brisk
Loss severity decreasing significantly
Slide 102
[Washington Mutual Logo]
<PAGE>
Total Nonperforming Loans
As a Percent of Total Loans
[Bar Graph]
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 3/31/99
1.36% 1.33% 1.02% .87% .70% .65%
Slide 103
[Washington Mutual Logo]
<PAGE>
Single Family Loans
Nonperforming Loans
As a Percent of Total Loans
[Bar Graph]
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 3/31/99
1.37% 1.46% 1.11% .91% .71% .67%
Slide 104
[Washington Mutual Logo]
<PAGE>
Apartment and Other CRE
Nonperforming Loans
As a Percent of Loan Type
[Bar Graph]
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 3/31/99
1.59% .90% .54% .55% .42% .32%
Slide 105
[Washington Mutual Logo]
<PAGE>
2nd Mortgage
& other Consumer Loans
Nonperforming Loans
As a Percent of Loan Type
[Bar Graph]
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 3/31/99
.32% .32% .58% .62% .71% .85%
Slide 106
[Washington Mutual Logo]
<PAGE>
Consumer Finance Loans
Nonperforming Loans
As a Percent of Loan Type
[Bar Graph]
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 3/31/99
1.07% 1.21% 2.09% 1.97% 2.07% 2.01%
Slide 107
[Washington Mutual Logo]
<PAGE>
Commercial Business
Nonperforming Loans
As a Percent of Loan Type
[Bar Graph]
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 3/31/99
.39% .46% .32% .32% .66% .61%
Slide 108
[Washington Mutual Logo]
<PAGE>
REO Trends
Commercial
[Line Graph]
Dollars in millions
5'98 6'98 7'98 8'98 9'98 10'98 11'98 12'98 1'99 2'99 3'99
$72 $73 $63 $57 $53 $48 $49 $46 $44 $41 $52
Slide 109
[Washington Mutual Logo]
<PAGE>
REO Trends
Residential
[Line Graph]
Dollars in millions
5'98 6'98 7'98 8'98 9'98 10'98 11'98 12'98 1'99 2'99 3'99
$274 $255 $243 $242 $236 $239 $237 $217 $223 $227 $223
Slide 110
[Washington Mutual Logo]
<PAGE>
Loss Severity
Residential (Q1 `98 - Q1 `99)
[Line Graph]
Q1 `98 Q2 `98 Q3 `98 Q4 `98 Q1 `99
15.60% 12.90% 12.50% 11.00% 10.50%
* Does not include the company's consumer finance subsidiaries; negative
number indicates basis gain on sale(s)
Slide 111
[Washington Mutual Logo]
<PAGE>
Loss Severity
Commercial (Q1 `98 - Q1 `99)
Q1 `98 Q2 `98 Q3 `98 Q4 `98 Q1 `99
21.30% 28.10% 10.30% 16.00% 12.00%
* Does not include the company's consumer finance subsidiaries; negative
number indicates basis gain on sale(s)
Slide 112
[Washington Mutual Logo]
<PAGE>
Washington Mutual
Investor Meeting
June 29, 1999
Slide 113
[Washington Mutual Logo]
<PAGE>
Aristar [logo]
A Washington Mutual Company
Slide 114
[Washington Mutual Logo]
<PAGE>
Company Profile
Headquartered in Tampa, Florida
Founded in 1927
Portfolio lender - no securitization
$2.8 billion in assets
498 offices in 24 states
2,600 employees
as of 3/31/99
Slide 115
[Aristar Logo]
[Washington Mutual Logo]
<PAGE>
Product Profile and Mix
Personal unsecured (45%)
Average balance, $2,078
Real estate (45%)
60% firsts and 40% seconds
Average loan-to-value approximately 70%
Average balance, $26,648
Sales finance (10%)
8,767 dealerships in 25 states
Average balance, $797
Slide 116
[Aristar Logo]
[Washington Mutual Logo]
<PAGE>
Receivables
12/31/98
[Map of United States highlighting states listed below]
Texas 13.4%
Tennessee 10.6
Colorado 9.2
North Carolina 9.0
California 6.0
South Carolina 5.7
Virginia 5.1
Louisiana 4.9
Mississippi 4.3
Florida 4.2
Other States 27.6
Slide 117
[Aristar Logo]
[Washington Mutual Logo]
<PAGE>
Customer
Demographic Profile
Forty-four year old blue collar or lower-white collar worker
Individual income of $30,000 and family income of $70,000
Over 65% home owners
Low net worth
Slide 118
[Aristar Logo]
[Washington Mutual Logo]
<PAGE>
Customer
Psycho-graphic
Cash flow borrowers
Intimidated by business with a bank
Payment borrowers
Want to be treated with dignity and respect
Slide 119
[Aristar Logo]
[Washington Mutual Logo]
<PAGE>
Customer-Mission
To become a premier financial services company that provides a superior return
to its shareholders by:
Focusing on our high margin core products
Become the low cost producer
Superior execution
Slide 120
[Aristar Logo]
[Washington Mutual Logo]
<PAGE>
Financial targets
ROA 3.0%
ROE greater than 18.0
EPS Growth 15.0
Efficiency Ratio less than 40.0
Net Charge-off 2.8
Slide 121
[Aristar Logo]
[Washington Mutual Logo]
<PAGE>
A Strong Fit
With Washington Mutual's Growth Strategy
Both companies' focus is on high-service consumer lending
WM has traditionally been an "A" lender but is now generating potential
sub-prime customers through its "free checking" marketing programs
Slide 122
[Aristar Logo]
[Washington Mutual Logo]
<PAGE>
A Strong Fit
With Washington Mutual's
Growth Strategy
WM has excess capital it would like to deploy in its core businesses like
consumer lending - recently announced a share repurchase program
WM has historically been an acquirer and consolidator of financial services
companies and that continues to be part of its strategic focus
Slide 123
[Aristar Logo]
[Washington Mutual Logo]
<PAGE>
Competitive Advantage
"The Franchise" - customer relationship
Number one position in small to mid-size markets
Speed of service
Flexibility of packaging
Slide 124
[Aristar Logo]
[Washington Mutual Logo]
<PAGE>
Strategy
Nurture the Franchise
Leveraging existing customer base by
focusing on core products
up-selling and cross-selling
Promote a sales culture to improve the historically slow receivables growth rate
Eliminate unprofitable ancillary products
Slide 125
[Aristar Logo]
[Washington Mutual Logo]
<PAGE>
Strategy
Nurture the Franchise
Enhance credit risk capabilities
Become the low-cost producer
Manage business mix
Develop segmentation and target marketing capabilities
Slide 126
[Aristar Logo]
[Washington Mutual Logo]
<PAGE>
Strategy
Expand the Franchise
Expand national "Franchise"
Reinforce our dominant position in small to mid-size markets
Rationalize and expand branch network to new markets
Diversify distribution beyond retail branch network
Pursue acquisitions
Slide 127
[Aristar Logo]
[Washington Mutual Logo]
<PAGE>
Improving Credit Quality
While Achieving Strong Loan Growth
Record level organic growth over the past 10 months
Credit quality not sacrificed
Delinquency percentage at three-year low
Credit standards tightened for newly originated business
Strong improvements in underlying credit quality trends
"At risk" portfolio managed aggressively
Only major consumer finance company to exclusively use contractual terms as
measure for delinquencies and charge offs
Slide 128
[Aristar Logo]
[Washington Mutual Logo]
<PAGE>
Washington Mutual
Investor Meeting
June 29, 1999
Slide 129
[Aristar Logo]
[Washington Mutual Logo]
