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: April 20, 1999
Washington Mutual, Inc.
(Exact Name of Registrant as specified in its charter)
Washington 1-14667 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
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) 99.1 Press Release dated April 20, 1999
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: April 23, 1999 By: /s/ Fay L. Chapman
------------------------------------
Fay L. Chapman
Executive Vice President and
General Counsel
Media Contact: Libby Hutchinson
1-800-228-9268
(206) 461-2484
Investor Contacts: Doug Wisdorf
(206) 461-3805
JoAnn DeGrande April 20, 1999
(206) 461-3186 FOR IMMEDIATE RELEASE
Washington Mutual Announces Increase In First-Quarter Earnings;
Board of Directors Increases Cash Dividend and
Authorizes Share Repurchase Program
SEATTLE -- Washington Mutual, Inc. (NYSE: WM) announced today record
first-quarter earnings of $444.1 million, up from $370.8 million one year ago.
Diluted earnings per share were 76 cents, up 19 percent from 64 cents per share
in the first quarter of 1998.
Earnings from operations, excluding transaction-related charges, were
$459.1 million or 79 cents per diluted share in the first quarter of 1999, up
from $389.8 million or 68 cents per diluted share for the same period last year.
As a result of Washington Mutual's first-quarter performance and continued
strong capital position, the company's board of directors declared a cash
dividend on the common stock of 24 cents per share, an increase from the
previous quarter's cash dividend of 23 cents per share. Dividends on the common
stock are payable May 14, 1999, to shareholders of record as of April 30, 1999.
The board of directors also voted to authorize the company to acquire, from
time to time, up to 20 million shares of Washington Mutual's outstanding common
stock. (See related press release that follows.)
"Washington Mutual's first-quarter results reflect our ability to
profitably grow the company by adding new customers and creating additional
account relationships with existing households," said Kerry Killinger, the
company's chairman, president and chief executive officer.
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<PAGE>
Washington Mutual - 2
The quarter's financial highlights, on an operating basis, included a
return on average common equity of 19.35 percent, an improved efficiency ratio
of 46.01 percent, and 16 percent increase in first quarter earnings per share,
year over year. "Despite our continued growth and profitability, the relatively
flat yield curve has made it challenging to fully deploy our capital
profitably," Killinger said. "Consequently, we believe a share repurchase is an
appropriate use of our capital at the present time and should benefit our
shareholders."
FIRST-QUARTER RESULTS
On Feb. 13, 1998, H.F. Ahmanson & Co. completed its acquisition of Coast
Savings, in a transaction accounted for as a purchase. Accordingly, all 1998
figures for the company in this release include only a partial quarter's worth
of Coast's operating results.
Net Interest And Other Income
A larger base of interest-earning assets helped produce net interest income
of $1.13 billion for the first quarter of 1999, up 6 percent from $1.06 billion
a year earlier. Killinger said that while Washington Mutual's loan origination
capability remains strong, the interest rate environment has inhibited growth in
the company's loan portfolio. As a result, the company continued to implement
its interim strategy of purchasing mortgage-backed securities in the first
quarter.
The spread during the quarter was 2.60 percent, compared with 2.74 percent
for the same period last year. The margin was 2.79 percent in the most recent
quarter versus 2.91 percent for first quarter 1998.
Total other income increased to $352.1 million, up from $264.4 million in
last year's first quarter. An increase in checking accounts, year over year,
increased depositor and other retail banking fees to $163.4 million in the most
recent quarter, up from $119.5 million a year earlier. The company added more
than 93,000 net new checking accounts during the first quarter of 1999.
Washington Mutual continues to make progress in re-mixing its deposit base
by replacing time deposits with lower-cost transaction accounts. At March 31,
1999, transaction account balances, including checking, savings and money market
deposits, represented 50 percent of total deposits, compared with 49 percent at
the end of 1998, and 41 percent at the end of the first quarter of 1998.
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<PAGE>
Washington Mutual - 3
Loan Originations
The company's growing franchise, relatively low interest rates and
generally healthy regional economies led to total loan originations of $11.86
billion for the quarter, up 9 percent from $10.84 billion a year ago.
Single-family residential loan originations (excluding residential
construction) were $9.67 billion, up from $8.62 billion one year ago. Of the
first quarter SFR originations, 54 percent were adjustable-rate mortgages, an
improvement from 39 percent for the same period in 1998 and 41 percent in the
fourth quarter last year.
Originations of loans other than single-family residential loans, which
included consumer, commercial and residential construction loans, totaled $2.19
billion for the most recent quarter, comparable with the first quarter of 1998.
Efficiency Ratio
Growth in revenues and the company's continued integration of its recent
mergers improved 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 47.62 percent, as compared with 49.16 for
the first quarter of 1998. Excluding transaction-related charges for both
periods, the operating efficiency ratio was 46.01 percent versus 46.76 percent a
year ago. Higher revenues more than offset the additional expenses required to
support Washington Mutual's growth during the past year.
"As a growth company, Washington Mutual is committed to being among the
industry leaders in operating efficiency," Killinger said. "We anticipate
additional improvement in our efficiency ratio as 1999 progresses, particularly
during the second half of the year after the operations of Ahmanson are fully
combined with ours."
Credit Quality
Credit quality remained strong during the quarter. "Consistent with our
goal of maintaining solid credit quality, we continue to apply our underwriting
standards with the long-term goal of keeping the ratio of nonperforming assets
to total assets below 1 percent," Killinger said.
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<PAGE>
Washington Mutual - 4
Total nonperforming assets were $1.18 billion at March 31, 1999, compared
with $1.21 billion at Dec. 31, 1998. Nonperforming assets were 0.68 percent of
total assets, compared with 0.73 percent at Dec. 31, 1998.
In the quarter, the company made a $41.7 million provision for loan losses,
versus $50.0 million for the same period in the previous year. Net loan charge
offs were $45.0 million, compared with $51.7 million a year earlier. In
addition, the company took $5.1 million as a provision for recourse liability in
the first quarter of this year, as compared with $15.2 million for the same
period one year ago. At March 31, 1999, loan loss reserves and the reserve for
recourse liability totaled $1.20 billion, and represented 134 percent of
nonaccrual loans.
Assets, Stockholders' Equity and Capital Ratios
Consolidated assets at March 31, 1999, were $174.30 billion, up from
$165.49 billion at Dec. 31, 1998. Total deposits declined, primarily in time
deposits, to $84.20 billion, from $85.49 billion at the end of 1998.
Stockholders' equity at March 31, 1999, was $9.61 billion, or 5.51 percent of
assets, and capital ratios of the company's banking subsidiaries continued to
exceed the FDIC's requirements for classification as "well-capitalized," the
highest regulatory standard.
Commercial Banking, Consumer Finance and Financial Services
For the quarter, at Western Bank, the company's commercial banking
division, average loan balances increased 28 percent to $1.7 billion, as
compared with $1.3 billion for the same period one year ago. Average deposit
balances grew by 22 percent to $ 1.3 billion, versus $1.0 billion for the first
quarter of 1998.
Aristar, Inc., the holding company for Washington Mutual's consumer finance
group, reported first quarter net income of $14.9 million, versus $12.7 million
for the same period one year ago. Net loans outstanding were $2.5 billion at the
end of the first quarter of 1999, up from $2.2 billion at Mar. 31, 1998.
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<PAGE>
Washington Mutual - 5
The company's financial services subsidiaries increased securities and
insurance fees and commissions to $70.2 million for the first quarter, as
compared with $59.6 million for the same period one year ago.
Company Updates
In March, Washington Mutual entered into a strategic alliance with Internet
mortgage aggregator, Keystroke Financial, Inc. of Seattle. The agreement will
enable the company to use Keystroke's online mortgage lending technology on
Washington Mutual's web site. It is anticipated that online mortgage
applications will be available at www.wamu.com by the end of the third quarter.
In addition, Washington Mutual will be among the featured lenders on Keystroke's
web site.
During the weekend of February 20, Washington Mutual successfully completed
the deposit conversion at 48 Texas branches. Those locations officially began
operating under the Washington Mutual name on Monday, Feb. 22. The Texas
conversion was the first of a three-phased initiative to convert all former
Ahmanson branches to the Washington Mutual system. Locations in Northern and
Central California will convert later this month, followed by the Southern
California conversion in May.
As part of the systems conversions, the company will consolidate 162
branches in California. In addition, Ahmanson's operational and administrative
centers in Irwindale and the City of Industry, Calif., and St. Louis, Mo. will
be consolidated into Washington Mutual by the end of the third quarter.
As of Jan. 1, the company had completed its Year 2000 testing of all
internal "mission-critical" systems and all testing criteria were met. The
company's Y2K initiative remains on schedule to continue end-to-end testing of
the "mission-critical" internal systems through the first half of this year.
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<PAGE>
Washington Mutual - 6
Outlook
"Washington Mutual's operating fundamentals are in excellent shape and our
company is well positioned for further growth and profitability in 1999 and
beyond," Killinger said. "We are committed to our strategy of profitably
expanding all areas of our business and to doing so with ever increasing
efficiency."
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 March 31, 1999, Washington Mutual and its subsidiaries had consolidated
assets of $174.3 billion. The company operates more than 2,000 offices
throughout the nation.
# # #
Editor's 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
Mar. 31,
- ----------------------------------------------------------------------------------------------------------------------------
1999 1998
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest Income
Loans $2,028,502 $1,990,197
Available-for-sale securities 539,012 380,593
Held-to-maturity securities 247,377 316,043
Other interest income 39,227 40,403
- ----------------------------------------------------------------------------------------------------------------------------
Total interest income 2,854,118 2,727,236
Interest Expense
Deposits 813,627 903,796
Borrowings 913,296 763,138
- ----------------------------------------------------------------------------------------------------------------------------
Total interest expense 1,726,923 1,666,934
- ----------------------------------------------------------------------------------------------------------------------------
Net interest income 1,127,195 1,060,302
Provision for loan losses 41,700 49,975
- ----------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 1,085,495 1,010,327
Other Income
Depositor and other retail banking fees 163,417 119,480
Securities fees and commissions 59,522 46,785
Insurance fees and commissions 10,670 12,791
Loan servicing income 26,031 32,347
Loan related income 26,547 25,091
Mortgage banking income 38,362 27,048
Gain on sale of other assets 11,933 1,147
Provision for recourse liability (5,142) (15,205)
Other operating income 20,804 14,878
- ----------------------------------------------------------------------------------------------------------------------------
Total other income 352,144 264,362
Other Expense
Salaries and employee benefits 301,609 291,231
Occupancy and equipment 134,904 120,217
Telecommunications and outsourced information services 70,064 59,561
Regulatory assessments 15,363 16,256
Transaction-related expense 23,802 31,809
Amortization of intangible assets 25,373 23,584
Foreclosed asset expense 1,598 8,883
Other operating expense 157,154 123,204
- ----------------------------------------------------------------------------------------------------------------------------
Total other expense 729,867 674,745
- ----------------------------------------------------------------------------------------------------------------------------
Income before income taxes 707,772 599,944
Income taxes 263,654 229,170
- ----------------------------------------------------------------------------------------------------------------------------
Net Income $444,118 $370,774
============================================================================================================================
Net Income Attributable to Common Stock $444,118 $362,050
============================================================================================================================
Net income per common share:
Basic $0.76 $0.66
Diluted 0.76 0.64
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended
Mar. 31,
- -----------------------------------------------------------------------------------------------------------------------------
1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Data Used To Compute Per Share Amounts
Net income $444,118 $370,774
Preferred stock dividends:
Nonconvertible - (4,468)
Convertible - (4,256)
- -----------------------------------------------------------------------------------------------------------------------------
Net income attributable to basic common stock $444,118 $362,050
=============================================================================================================================
Net income $444,118 $370,774
Preferred stock dividends, nonconvertible - (4,468)
- -----------------------------------------------------------------------------------------------------------------------------
Net income attributable to diluted common stock $444,118 $366,306
=============================================================================================================================
Average common shares used to calculate earnings per share:
Basic 581,939,740 545,115,410
Common stock equivalents 2,640,443 24,216,786
- -----------------------------------------------------------------------------------------------------------------------------
Diluted 584,580,183 569,332,196
Financial Ratios
Return on average assets 1.08% 0.99%
Return on average equity 18.72 18.10
Return on average common equity 18.72 18.28
Efficiency ratio:
Including amortization of intangible assets 49.34 50.94
Excluding amortization of intangible assets 47.62 49.16
Weighted Average Interest Rates
Yield on loans 7.43% 7.82%
Yield on mortgage-backed securities ("MBS") 6.78 7.26
Yield on investment securities 5.56 6.13
- -----------------------------------------------------------------------------------------------------------------------------
Yield on interest-earning assets 7.20 7.63
Cost of deposits 3.91 4.25
Cost of borrowings 5.44 5.96
- -----------------------------------------------------------------------------------------------------------------------------
Cost of interest-bearing liabilities 4.60 4.89
Net interest spread 2.60 2.74
Net interest margin 2.79 2.91
Average Balances
Loans $109,289,268 $101,912,526
MBS 45,765,022 37,234,969
Investment securities 3,606,580 4,041,704
- -----------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 158,660,870 143,189,199
Deposits 84,289,648 86,293,066
Borrowings 68,015,000 51,900,360
- -----------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 152,304,648 138,193,426
Total assets 164,220,074 149,137,681
Stockholders' equity 9,488,284 8,194,071
</TABLE>
<PAGE>
Washington Mutual, Inc.
Consolidated Statements of Financial Condition
(dollars in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Mar. 31, 1999 Dec. 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash $1,856,741 $2,695,454
Cash equivalents 51,179 61,520
Trading securities 29,757 39,068
Available-for-sale securities:
Mortgage-backed securities ("MBS") 41,425,579 32,399,591
Investment securities 574,118 517,462
Held-to-maturity securities:
MBS 14,663,994 13,992,235
Investment securities 137,918 137,247
Loans:
Loans held in portfolio 107,942,189 107,612,197
Loans held for sale 1,171,720 1,826,549
Reserve for loan losses (1,069,719) (1,067,840)
- ----------------------------------------------------------------------------------------------------------------------------
Total loans 108,044,190 108,370,906
Investment in Federal Home Loan Banks ("FHLBs") 2,207,034 2,030,027
Foreclosed assets 287,154 274,767
Premises and equipment 1,439,547 1,421,162
Intangible assets 980,233 1,009,666
Mortgage servicing rights 482,873 461,295
Other assets 2,114,735 2,082,881
============================================================================================================================
Total assets $174,295,052 $165,493,281
============================================================================================================================
Liabilities
Deposits:
Checking accounts $ 13,079,328 $ 13,460,731
Savings accounts and money market deposit accounts 29,381,930 28,285,868
Time deposit accounts 41,718,368 43,745,542
- ----------------------------------------------------------------------------------------------------------------------------
Total deposits 84,179,626 85,492,141
Federal funds purchased and commercial paper 2,424,302 2,482,830
Securities sold under agreements to repurchase 24,483,163 17,519,538
Advances from FHLBs 42,775,203 39,748,613
Other borrowings 4,613,294 5,449,508
Other liabilities 6,209,938 5,456,251
- ----------------------------------------------------------------------------------------------------------------------------
Total liabilities 164,685,526 156,148,881
Stockholders' Equity 9,609,526 9,344,400
============================================================================================================================
Total liabilities and stockholders' equity $174,295,052 $165,493,281
============================================================================================================================
Common shares outstanding at end of period 594,566,383 593,408,525
Book value per common share $16.50 $16.07
Tangible book value per common share 15.15 14.66
Full-time equivalent employees at end of period 28,363 27,330
</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
- -----------------------------------------------------------------------------------------------------------------------------------
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
1999 1998 1998 1998 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Reported Financial Results
Net income $444,118 $157,087 $560,470 $398,601 $370,774
Net income per diluted common share $0.76 $0.27 $0.96 $0.68 $0.64
Financial ratios on reported financial results:
Return on average assets 1.08% 0.39% 1.44% 1.02% 0.99%
Return on average equity 18.72 6.61 23.95 18.02 18.10
Return on average common equity 18.72 6.61 24.00 18.08 18.28
Efficiency ratio (excluding amortization of intangible assets) 47.62 80.53 41.88 49.43 49.16
Earnings from Operations
Reported pretax income $707,772 $212,587 $909,968 $646,958 $599,944
Transaction/transition-related expense 23,802 472,549 (1) 20,465 24,473 31,809
- -----------------------------------------------------------------------------------------------------------------------------------
Adjusted pretax income 731,574 685,136 930,433 671,431 631,753
Provision for income tax benefit 272,521 255,185 357,152 257,698 241,976
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings from operations $459,053 $429,951 $573,281 $413,733 $389,777
===================================================================================================================================
Earnings per diluted common share:
Reported net income $0.76 $0.27 $0.96 $0.68 $0.64
Transaction/transition-related expense 0.03 0.47 (1) 0.02 0.02 0.04
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings from operations $0.79 $0.74 $0.98 $0.70 $0.68
===================================================================================================================================
Financial ratios on earnings from operations:
Return on average assets 1.12% 1.08% 1.48% 1.06% 1.05%
Return on average equity 19.35 18.09 24.49 18.70 19.03
Return on average common equity 19.35 18.09 24.55 18.77 19.23
Efficiency ratio (excluding amortization of intangible assets) 46.01 46.77 40.65 47.71 46.76
Amortization of Intangible Assets
Total amortization of intangible assets during the period $25,373 $26,693 $27,734 $26,241 $23,584
Tax benefit (2) 5,093 4,933 5,192 4,912 4,415
- -----------------------------------------------------------------------------------------------------------------------------------
Amortization of intangible assets, net of tax benefit $20,280 $21,760 $22,542 $21,329 $19,169
===================================================================================================================================
(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>
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
1999 1998 1998 1998 1998
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Capital Adequacy
Stockholders' equity/total assets 5.51% 5.65% 5.93% 5.75% 5.44%
Common stockholders' equity/total assets 5.51 5.65 5.93 5.72 5.40
Tangible stockholders' equity/total tangible assets 5.09 5.18 5.42 5.22 4.89
Tangible stockholders' equity (including trust preferred
securities)/total tangible assets 5.63 5.75 6.01 5.82 5.49
Retail Checking Accounts (1)
WMB and WMBfsb 940,842 908,077 874,516 833,467 799,447
WMB, FA 3,064,763 3,003,925 2,950,684 2,997,227 2,974,762
- ---------------------------------------------------------------------------------------------------------------------------------
Total retail checking accounts 4,005,605 3,912,002 3,825,200 3,830,694 3,774,209
=================================================================================================================================
Retail Checking Account Activity (1)
Net accounts opened during the quarter:
WMB and WMBfsb 32,765 33,561 41,049 34,020 33,056
WMB, FA 60,838 53,241 13,903 22,465 69,121
- ---------------------------------------------------------------------------------------------------------------------------------
Net new retail checking accounts 93,603 86,802 54,952 56,485 102,177
=================================================================================================================================
Accounts acquired (sold) during the quarter (2) - - (60,446) - 322,783
(1) Retail checking accounts exclude commercial business accounts. The
information provided refers to the number of accounts, not dollar volume.
(2) Coast Savings Financial, Inc. was acquired during first quarter 1998
and 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
- ------------------------------------------------------------------------------------------------------------------------------
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
1999 1998 1998 1998 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Loan Originations
Single-family residential ("SFR"):
Adjustable rate ("ARMs") $ 5,174.5 $ 5,282.7 $ 4,598.7 $ 5,131.5 $ 3,329.9
Fixed rate 4,495.5 7,586.0 5,062.4 5,591.8 5,286.6
SFR - construction 380.6 446.0 494.9 505.2 302.2
Manufactured housing 50.4 59.7 83.8 81.9 55.5
Second mortgage and other consumer 572.9 569.1 755.8 850.8 639.6
Commercial business 298.4 262.6 224.8 276.3 247.9
Apartment buildings 324.7 488.8 606.5 552.7 366.8
Other commercial real estate 58.9 165.1 97.6 109.5 99.5
Consumer finance 499.9 670.4 725.0 568.3 513.6
- ------------------------------------------------------------------------------------------------------------------------------
Total loan originations $11,855.8 $15,530.4 $12,649.5 $13,668.0 $10,841.6
==============================================================================================================================
As a percentage of total loan originations:
SFR, excluding SFR construction 82% 83% 76% 78% 79%
All other 18 17 24 22 21
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended March 31,
- -----------------------------------------------------------------------------------------------------------------------------
1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
Amount % of category % of total Amount % of category % of total
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SFR Loan Originations
Short-term ARMs:
MTA $1,946.4 94% 20% $1,154.2 66% 13%
COFI 125.7 6 2 361.2 21 4
CMT - - - 133.5 8 2
Other 5.5 * * 86.8 5 1
- -----------------------------------------------------------------------------------------------------------------------------
Total short-term ARMs 2,077.6 100% 22 1,735.7 100% 20
Medium-term ARMs:
MTA 3,096.7 100% 32 1,002.9 63% 12
CMT 0.1 * * 408.9 26 5
Other 0.1 * * 182.4 11 2
- -----------------------------------------------------------------------------------------------------------------------------
Total medium-term ARMs 3,096.9 100% 32 1,594.2 100% 19
Fixed-rate mortgages 4,495.5 46 5,286.6 61
- -----------------------------------------------------------------------------------------------------------------------------
Total SFR loan originations $9,670.0 100% $8,616.5 100%
=============================================================================================================================
* Less than 1%.
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Change from
Dec. 31, 1998 Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
to Mar. 31, 1999 1999 1998 1998 1998 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Loans and MBS by Property Type
Loans held in portfolio:
SFR $ 417.2 $79,692.4 $79,275.2 $77,409.9 $76,457.0 $75,638.6
SFR - construction (17.4) 1,002.7 1,020.1 973.7 925.6 874.1
Manufactured housing, second mortgage
and other consumer (56.4) 5,421.9 5,478.3 5,575.0 5,514.6 5,319.6
Commercial business 19.9 1,149.2 1,129.3 1,076.7 1,018.7 885.6
Apartment buildings (44.6) 14,514.1 14,558.7 14,733.1 14,786.1 14,935.1
Other commercial real estate (39.7) 3,536.5 3,576.2 3,628.6 3,774.7 3,856.8
Consumer finance 51.0 2,625.4 2,574.4 2,433.2 2,319.0 2,271.7
- ----------------------------------------------------------------------------------------------------------------------------------
Total loans held in portfolio 330.0 107,942.2 107,612.2 105,830.2 104,795.7 103,781.5
Loans securitized and retained as MBS 16.4 25,541.0 25,524.6 27,789.1 29,702.4 31,111.7
- ----------------------------------------------------------------------------------------------------------------------------------
Total loans held in portfolio and loans
securitized and retained as MBS 346.4 133,483.2 133,136.8 133,619.3 134,498.1 134,893.2
Loans held for sale (654.8) 1,171.7 1,826.5 1,668.6 1,570.0 2,162.4
Less: reserve for loan losses (1.9) (1,069.7) (1,067.8) (1,151.5) (1,156.3) (1,153.9)
- ----------------------------------------------------------------------------------------------------------------------------------
Total loans and loans securitized and
retained as MBS (310.3) 133,585.2 133,895.5 134,136.4 134,911.8 135,901.7
Purchased MBS 9,681.4 30,548.6 20,867.2 14,394.8 10,830.5 10,849.1
- ----------------------------------------------------------------------------------------------------------------------------------
Total loans and MBS $9,371.1 $164,133.8 $154,762.7 $148,531.2 $145,742.3 $146,750.8
==================================================================================================================================
Change in Loans and Loans Securitized
and Retained as MBS
Loans held in portfolio:
Loans originated $8,962.6 $ 10,110.4 $8,466.9 $8,999.1 $6,323.0
Loans purchased or acquired (1) 1,300.8 1,329.2 1,043.4 617.1 6,064.6
Loans securitized (1,810.2) - - (509.9) (244.6)
Loans sold (9.5) (23.6) (6.1) (10.0) (8.5)
Loan payments and other (8,113.7) (9,634.0) (8,469.7) (8,082.1) (5,883.8)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in loans held in portfolio 330.0 1,782.0 1,034.5 1,014.2 6,250.7
Change in loans securitized and retained as MBS 16.4 (2,264.5) (1,913.3) (1,409.3) 1,340.6
- ----------------------------------------------------------------------------------------------------------------------------------
Change in loans held in portfolio and loans
securitized and retained as MBS 346.4 (482.5) (878.8) (395.1) 7,591.3
Loans held for sale:
Loans originated 2,893.2 5,420.0 4,182.6 4,668.9 4,518.6
Loans sold (3,548.0) (5,262.1) (4,084.0) (5,261.3) (3,497.6)
- ----------------------------------------------------------------------------------------------------------------------------------
Change in loans held for sale (654.8) 157.9 98.6 (592.4) 1,021.0
Change in reserve for loan losses (1.9) 83.7 4.8 (2.4) (106.1)
- ----------------------------------------------------------------------------------------------------------------------------------
Total change in loans and loans securitized
and retained as MBS $ (310.3) $ (240.9) $ (775.4) $ (989.9) $8,506.2
==================================================================================================================================
As a percentage of total loans and loans securitized
and retained as MBS at beginning of quarter (0.2)% (0.2)% (0.6)% (0.7)% 6.7%
As a percentage of total assets at beginning of quarter (0.2) (0.2) (0.5) (0.6) 5.9
(1) First quarter 1998 includes acquisition of $6.04 billion in loans from
Coast Savings.
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Change from
Dec. 31, 1998
to Mar. 31, 1999 Mar. 31, 1999 Dec. 31, 1998
- -------------------------------------------------------------------------------------------------------------------------------
Amount % of total Amount % of total
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Real Estate Loans and MBS
Short-term ARMs:
COFI $ (2,699.4) $73,673.9 47% $76,373.3 52%
MTA 1,020.1 9,751.3 6 8,731.2 6
CMT (431.2) 4,781.8 3 5,213.0 3
Other (633.5) 6,518.3 4 7,151.8 5
- ------------------------------------------------------------------------------------------------------------------------------
Total short-term ARMs (2,744.0) 94,725.3 60 97,469.3 66
Medium-term ARMs:
MTA 3,551.7 15,625.1 10 12,073.4 8
CMT (490.9) 3,830.6 2 4,321.5 3
COFI (152.8) 736.4 1 889.2 1
Other (277.8) 1,955.8 1 2,233.6 1
- ------------------------------------------------------------------------------------------------------------------------------
Total medium-term ARMs 2,630.2 22,147.9 14 19,517.7 13
Fixed-rate loans held in portfolio 1,389.1 15,615.8 11 14,226.7 11
Fixed-rate loans held for sale (654.8) 1,171.7 1 1,826.5 1
Fixed-rate MBS 8,738.0 22,346.2 14 13,608.2 9
- ------------------------------------------------------------------------------------------------------------------------------
Total real estate loans and MBS $ 9,358.5 $156,006.9 100% $146,648.4 100%
==============================================================================================================================
Loans Serviced for Others $ 1,959.6 $53,697.3 $51,737.7
==============================================================================================================================
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
1999 1998 1998 1998 1998
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Reserve for Loan Losses
Balance, beginning of quarter $1,067.8 $1,151.5 $1,156.3 $1,153.9 $1,047.8
Provision for loan losses 41.7 33.2 34.4 44.4 50.0
Reserves added through business combinations - 0.1 - - 107.8
Reserves transferred to recourse liability (7.5) (73.6) (0.8) - -
Reserves transferred from other liabilities 12.7 - - - -
Loans charged off:
SFR and SFR construction (11.1) (13.6) (13.5) (17.1) (22.0)
Manufactured housing, second mortgage and
other consumer (13.4) (8.1) (7.3) (9.1) (9.2)
Commercial business (2.5) (1.2) (1.4) (1.4) (1.3)
Commercial real estate (3.9) (6.6) (5.8) (9.2) (9.8)
Consumer finance (23.8) (24.5) (21.9) (21.6) (22.1)
- ---------------------------------------------------------------------------------------------------------------------------------
Total loans charged off (54.7) (54.0) (49.9) (58.4) (64.4)
Recoveries of loans previously charged off:
SFR and SFR construction 2.1 3.9 5.9 5.6 3.1
Manufactured housing, second mortgage and
other consumer 0.6 0.4 0.5 0.5 0.5
Commercial business 0.2 0.5 0.2 0.1 0.1
Commercial real estate 2.7 2.2 1.2 5.5 4.7
Consumer finance 4.1 3.6 3.7 4.7 4.3
- ---------------------------------------------------------------------------------------------------------------------------------
Total recoveries of loans previously charged off 9.7 10.6 11.5 16.4 12.7
- ---------------------------------------------------------------------------------------------------------------------------------
Net charge offs (45.0) (43.4) (38.4) (42.0) (51.7)
- ---------------------------------------------------------------------------------------------------------------------------------
Balance, end of quarter $1,069.7 $1,067.8 $1,151.5 $1,156.3 $1,153.9
=================================================================================================================================
Specific and allocated reserves:
Commercial real estate $95.5 $ 133.1 $ 133.5 $ 136.8 $ 145.5
Commercial business 8.4 9.7 9.0 9.3 5.2
Builder construction 0.8 0.9 0.9 1.9 2.0
- ---------------------------------------------------------------------------------------------------------------------------------
Total specific and allocated reserves 104.7 143.7 143.4 148.0 152.7
Unallocated reserves 965.0 924.1 1,008.1 1,008.3 1,001.2
- ---------------------------------------------------------------------------------------------------------------------------------
Total reserve for loan losses $1,069.7 $1,067.8 $1,151.5 $1,156.3 $1,153.9
=================================================================================================================================
Reserve for loan losses as a percentage of:
Nonaccrual loans 119% 114% 114% 107% 103%
Nonperforming assets 90 88 89 83 78
Changes in the liability for losses on loans securitized with recourse and
retained or sold, included in "other liabilities," were as follows:
Recourse Liability
Balance, beginning of quarter $144.3 $ 72.6 $74.0 $77.7 $80.2
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 (1.3) (1.9) (2.2) (3.7) (2.5)
- ---------------------------------------------------------------------------------------------------------------------------------
Balance, end of quarter $128.0 $144.3 $72.6 $74.0 $77.7
=================================================================================================================================
The total loss coverage represents the reserve for loan losses and recourse
liability as a percentage of nonaccrual loans:
Total loss coverage percentage 134% 129% 121% 114% 110%
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
1999 1998 1998 1998 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonperforming Assets ("NPAs")
Nonaccrual loans:
SFR and SFR construction $ 733.2 $ 761.4 $ 849.0 $ 909.5 $ 940.0
Manufactured housing, second mortgage and
other consumer 45.9 39.0 36.5 28.9 27.3
Commercial business 7.0 7.4 3.0 2.1 2.5
Apartment buildings and other commercial real estate 57.1 76.7 68.4 86.8 105.5
Consumer finance 52.7 53.4 55.0 51.1 48.7
- -----------------------------------------------------------------------------------------------------------------------------------
Total nonaccrual loans 895.9 937.9 1,011.9 1,078.4 1,124.0
Foreclosed assets:
SFR and SFR construction 220.5 215.2 215.7 233.7 279.0
Manufactured housing, second mortgage and
other consumer 12.2 10.5 10.4 8.7 6.8
Apartment buildings and other commercial real estate 52.0 46.4 53.0 73.3 69.8
Consumer finance 2.5 2.7 2.0 2.0 2.0
Reserve for losses on foreclosed assets - - - (3.1) (3.1)
- -----------------------------------------------------------------------------------------------------------------------------------
Net foreclosed assets 287.2 274.8 281.1 314.6 354.5
- -----------------------------------------------------------------------------------------------------------------------------------
Total NPAs $1,183.1 $1,212.7 $1,293.0 $1,393.0 $1,478.5
===================================================================================================================================
NPAs by property type:
SFR and SFR construction $ 953.7 $ 976.6 $1,064.7 $1,143.2 $1,219.0
Manufactured housing, second mortgage and
other consumer 58.1 49.5 46.9 37.6 34.1
Commercial business 7.0 7.4 3.0 2.1 2.5
Apartment buildings 59.5 70.3 80.9 101.7 98.1
Other commercial real estate 49.6 52.8 40.5 58.4 77.2
Consumer finance 55.2 56.1 57.0 53.1 50.7
Reserve for losses on foreclosed assets - - - (3.1) (3.1)
- -----------------------------------------------------------------------------------------------------------------------------------
Total NPAs $1,183.1 $1,212.7 $1,293.0 $1,393.0 $1,478.5
===================================================================================================================================
NPAs as a percentage of :
Total loans 1.10% 1.12% 1.22% 1.32% 1.41%
Total assets 0.68 0.73 0.81 0.89 0.94
</TABLE>
