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: October 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 October 19, 1999, Washington Mutual, Inc. issued a press release reporting
its results of operations during the three and nine months ended September 30,
1999.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
99.1 Press release dated October 19, 1999 reporting results of operations
during the three and nine months ended September 30, 1999.
<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 : October 20, 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 Oct. 19, 1999
(206) 461-3186 FOR IMMEDIATE RELEASE
---------------------
WASHINGTON MUTUAL ANNOUNCES STRONG THIRD-QUARTER EARNINGS;
HIGHER FEE INCOME, LOWER EXPENSES HIGHLIGHT QUARTER;
BOARD OF DIRECTORS INCREASES CASH DIVIDEND
SEATTLE -- Washington Mutual, Inc. (NYSE: WM) announced today earnings of
$470.0 million for the third quarter of 1999. These results compare to third-
quarter 1998 earnings of $560.5 million, which included a $171.1 million
after-tax gain on the sale of Florida branches by the former Home Savings.
Diluted earnings per share were 83 cents, as compared with 96 cents per share
(67 cents excluding the branch sale) in the third quarter of 1998.
Earnings from operations, excluding transaction-related charges, were
$477.9 million or 84 cents per diluted share in the third quarter of 1999
versus adjusted earnings, excluding both transaction-related charges and the
Florida branch sale, of $402.2 million or 69 cents per diluted share in the
third quarter of 1998.
Based on Washington Mutual's third-quarter performance and capital
position, the company's board of directors declared a cash dividend on the
common stock of 26 cents per share, an increase from the previous quarter's
cash dividend of 25 cents per share. Dividends on the common stock are
payable Nov. 15, 1999, to shareholders of record as of Oct. 29, 1999.
"Our management team is pleased with Washington Mutual's third-quarter
performance, which reflected the continuation of solid operating fundamentals
in all our business lines," said Kerry Killinger, the company's chairman,
president and chief executive officer. "Growth in the loan portfolio was
strong as adjustable-rate mortgages gained greater popularity among consumers.
Meanwhile, Washington Mutual continued to acquire new accounts at a record
pace and posted double-digit growth in noninterest income, year-over-year.
Our company also realized a reduction in operating expenses as we began to
fully integrate the former operations of H.F. Ahmanson."
- more -
<PAGE>
Washington Mutual - 2
The quarter's financial highlights included, on an operating basis, a
return on average common equity of 21.39 percent; an efficiency ratio -
excluding transaction-related charges and the amortization of goodwill -- of
44.54 percent; a 32 percent increase in depositor and other retail banking fee
income over last year's third quarter; and a 25 percent increase in securities
and insurance fees and commissions, year-over-year.
THIRD-QUARTER RESULTS
NET INTEREST AND OTHER INCOME
The company's larger loan portfolio helped produce net interest income of
$1.12 billion for the third quarter of 1999, up 5 percent from $1.06 billion a
year earlier. However, the rise of short-term interest rates placed pressure
on the spread and the margin. The spread during the quarter was 2.50 percent,
compared with 2.69 percent for the same period last year. The margin was 2.64
percent in the most recent quarter versus 2.88 percent for third quarter 1998.
Higher long-term interest rates prompted increased demand for adjustable-
rate mortgage loans, which the company generally retained in its portfolio.
As a result, the loan portfolio grew by $8.40 billion during the third
quarter. Meanwhile, mortgage-backed securities decreased by $1.73 billion in
the third quarter, primarily as a result of paydowns and sales during the
period.
For the quarter, depositor and other retail banking fees were $198.4
million, up 32 percent from $150.0 million a year earlier. Helping drive this
increase in fee income, the company added a record 131,371 net new retail
checking accounts during the third quarter of 1999.
Growth in noninterest income was also fueled by an increase in securities
and insurance fees and commissions, which were $81.4 million for the third
quarter of 1999, up 25 percent from $64.9 million for the same period one year
ago.
Reflecting the slowdown in refinancing activity and demand for fixed-rate
mortgages, mortgage banking income was $14.6 million for the most recent
quarter, as compared with $34.2 million for the third quarter one year ago.
- more -
<PAGE>
Washington Mutual - 3
LENDING
Although off from the record levels of the first half of 1999, total loan
originations remained strong at $12.76 billion for the quarter, up from $12.65
billion one year ago.
Single-family residential (SFR) loan originations (excluding residential
construction) were $10.00 billion, up from $9.66 billion one year ago. Of the
third quarter SFR originations, 86 percent were adjustable-rate mortgages, up
from 48 percent for the same period in 1998.
Originations of loans other than SFR loans, which include consumer,
commercial and residential construction loans, totaled $2.76 billion for the
most recent quarter, as compared with $2.99 billion in the third quarter of
1998. Commercial real estate loan originations for last year's third quarter
were unusually high.
The company's commercial business loan portfolio increased during the
third quarter of 1999 by 22 percent to $1.31 billion, as compared with $1.08
billion for the same period one year ago. The consumer finance loan portfolio
reported $2.89 billion at the end of the third quarter of 1999, up 19 percent
from $2.43 billion at Sept. 30, 1998.
EFFICIENCY RATIO
Strong operating revenues, combined with effective expense management,
led to an operating efficiency ratio (defined as other expenses, excluding
amortization of intangible assets, as a percentage of net interest income and
other income) of 45.39 percent for the most recent quarter. The ratio in last
year's third quarter was 41.88 percent, which included the previously
mentioned gain on the sale of Florida branches. Excluding transaction-related
charges for both periods and the sale of Florida branches in the third quarter
of 1998, the operating efficiency ratio was 44.54 percent for the most recent
quarter versus 49.15 percent a year ago.
CREDIT QUALITY
The company continues to carefully monitor the major real estate markets
it serves to maintain asset quality. Total nonperforming assets were $1.06
billion at Sept. 30, 1999, unchanged from June 30, 1999. Nonperforming assets
were 0.58 percent of total assets, compared with 0.61 percent at June 30,
1999.
- more -
<PAGE>
Washington Mutual - 4
Reflecting the third quarter's loan growth, the company's provision for
loan losses was $40.8 million, versus $34.4 million for the same period in
the previous year. Net loan charge offs for the third quarter were $43.0
million, compared with $38.4 million a year earlier. At Sept. 30, 1999, loan
loss reserves totaled $1.05 billion, and represented 126 percent of nonaccrual
loans.
BALANCE SHEET AND CAPITAL MANAGEMENT
Consolidated assets at Sept. 30, 1999, were $180.80 billion, up from
$175.04 billion at June 30, 1999. Stockholders' equity at Sept. 30, 1999, was
$8.91 billion and capital ratios of the company's banking subsidiaries
continued to exceed regulatory requirements for classification as "well-
capitalized," the highest regulatory standard.
At Sept. 30, 1999, transaction account balances, including checking,
savings and money market deposits, represented 55 percent of total deposits,
up from 54 percent at the end of the second quarter of 1999 and 49 percent at
the end of 1998. Total deposits were $81.62 billion at the end of the current
quarter, as compared with $83.13 billion at the end of the second quarter of
1999.
Killinger noted that the company continued deploying capital during the
third quarter by purchasing nearly 8.7 million shares of its common stock at
an average price of $34.16. Approximately 6.3 million of these shares were
purchased in conjunction with Washington Mutual's merger with Long Beach
Financial Corp.
COMPANY UPDATES
--On October 1, Washington Mutual completed its acquisition of Orange,
California-based Long Beach Financial, parent of Long Beach Mortgage Co. The
purchase expands Washington Mutual's presence in the specialty residential
mortgage market.
Long Beach Mortgage originates, purchases, sells and services subprime
residential home mortgage loans. These loans are generated through the
company's relationships with a nationwide network of mortgage brokers in 68
offices. Long Beach Mortgage will retain its name and operate as a wholly
owned subsidiary of Washington Mutual, Inc. At Sept. 30, 1999, Long Beach had
$522.3 million in assets.
- more -
<PAGE>
Washington Mutual - 5
--On September 2, the company announced a strategic alliance with Fannie
Mae, under which the company will sell most of its fixed-rate conforming
mortgage loans to the nation's largest secondary market provider of mortgage
funds.
--The company entered the final phase of its Y2K preparedness plans and
remains confident that it is ready to meet the new year without any material
disruption in service, Killinger said.
--During the quarter, the company launched a new mortgage application
site, www.wamumortgage.com, which allows prospective customers to complete
loan applications online. The mortgage site is linked to the company's
corporate site, www.wamu.com, which also provides access to PC Banking. The
PC Banking service is now adding over 1,000 new customers per day.
OUTLOOK
"Entering the final quarter of this millennium, Washington Mutual is
well-positioned for success in the year 2000 and beyond," Killinger said.
"Going forward, we anticipate continued momentum in new account growth and
noninterest income, strong loan originations and additional efficiencies as we
proceed with our follow-up integration activities. Meanwhile, we expect to
continue to repurchase our common stock as it provides an attractive
alternative for capital deployment, particularly at current market prices."
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 Sept. 30, 1999, Washington
Mutual and its subsidiaries had consolidated assets of $180.80 billion. The
company operates nearly 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 Nine Months Ended
- --------------------------------------------------------------------------------------------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
1999 1999 1998 1999 1998
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INTEREST INCOME
Loans $2,126,725 $2,013,372 $2,052,164 $6,168,599 $6,102,269
Available-for-sale securities 644,262 646,322 430,077 1,829,596 1,241,059
Held-to-maturity securities 239,199 258,416 288,197 744,992 910,162
Other interest income 49,330 41,512 43,840 130,069 130,607
- --------------------------------------------------------------------------------------------------------
Total interest income 3,059,516 2,959,622 2,814,278 8,873,256 8,384,097
INTEREST EXPENSE
Deposits 775,800 792,694 890,311 2,382,121 2,721,536
Borrowings 1,164,050 1,018,220 860,598 3,095,566 2,449,193
- --------------------------------------------------------------------------------------------------------
Total interest expense 1,939,850 1,810,914 1,750,909 5,477,687 5,170,729
- --------------------------------------------------------------------------------------------------------
Net interest income 1,119,666 1,148,708 1,063,369 3,395,569 3,213,368
Provision for loan losses 40,799 42,857 34,376 125,356 128,745
- --------------------------------------------------------------------------------------------------------
Net interest income after
provision for loan losses 1,078,867 1,105,851 1,028,993 3,270,213 3,084,623
OTHER INCOME
Depositor and other retail banking fees 198,360 182,114 150,049 543,891 404,745
Securities fees and commissions 70,781 69,364 50,856 199,667 149,342
Insurance fees and commissions 10,571 10,269 14,075 31,510 40,452
Loan servicing income 23,871 23,881 27,868 73,783 91,141
Loan related income 24,586 26,859 28,135 77,992 83,387
Mortgage banking income 14,642 28,021 34,210 81,025 101,872
Gain on sale of retail deposit branch systems -- -- 289,040 -- 289,040
Gain on sale of other assets 6,547 4,392 8,677 22,872 23,464
Provision for recourse liability -- -- (15,917) (5,142) (41,436)
Other operating income 20,161 19,218 22,073 60,183 60,824
- --------------------------------------------------------------------------------------------------------
Total other income 369,519 364,118 609,066 1,085,781 1,202,831
OTHER EXPENSE
Salaries and employee benefits 294,323 302,120 299,785 898,052 896,423
Occupancy and equipment 139,237 137,160 120,820 411,301 367,403
Telecommunications and outsourced
information services 70,862 67,180 64,211 208,106 190,501
Regulatory assessments 14,621 14,840 15,679 44,824 48,570
Transaction-related expense 12,673 36,569 20,465 73,044 76,747
Amortization of intangible assets 23,447 23,262 27,734 72,082 77,559
Foreclosed asset (income) expense (7,043) (869) (1,786) (6,314) 17,442
Other operating expense 151,336 168,362 181,183 476,852 455,939
- --------------------------------------------------------------------------------------------------------
Total other expense 699,456 748,624 728,091 2,177,947 2,130,584
- --------------------------------------------------------------------------------------------------------
Income before income taxes 748,930 721,345 909,968 2,178,047 2,156,870
Income taxes 278,950 268,671 349,498 811,275 827,025
- --------------------------------------------------------------------------------------------------------
NET INCOME $ 469,980 $ 452,674 $ 560,470 $1,366,772 $1,329,845
========================================================================================================
NET INCOME ATTRIBUTABLE TO COMMON STOCK $ 469,980 $ 452,674 $ 558,092 $1,366,772 $1,313,903
========================================================================================================
Net income per common share:
Basic $0.83 $0.78 $0.98 $2.37 $2.35
Diluted 0.83 0.78 0.96 2.37 2.29
</TABLE>
<PAGE>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
- ---------------------------------------------------------------------------------------------------------
Sept. 30, June 30, Sept.30, Sept. 30, Sept. 30,
1999 1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DATA USED TO COMPUTE PER SHARE AMOUNTS
Net income $469,980 $452,674 $560,470 $1,366,772 $1,329,845
Preferred stock dividends:
Nonconvertible -- -- (1,269) -- (6,673)
Convertible -- -- (1,109) -- (9,269)
- ---------------------------------------------------------------------------------------------------------
Net income
attributable to basic common stock $469,980 $452,674 $558,092 $1,366,772 $1,313,903
=========================================================================================================
Net income $469,980 $452,674 $560,470 $1,366,772 $1,329,845
Preferred stock dividends,
nonconvertible -- -- (1,269) -- (6,673)
- ---------------------------------------------------------------------------------------------------------
Net income attributable
to diluted common stock $469,980 $452,674 $559,201 $1,366,772 $1,323,172
=========================================================================================================
Average common shares used
to calculate earnings per share:
Basic 565,360,141 580,214,730 571,589,704 575,777,473 558,830,010
Common stock equivalents 1,333,556 2,179,938 11,759,104 1,997,716 19,588,600
- ---------------------------------------------------------------------------------------------------------
Diluted 566,693,697 582,394,668 583,348,808 577,775,189 578,418,610
FINANCIAL RATIOS
Return on average assets 1.06% 1.05% 1.44% 1.06% 1.15%
Return on average equity 21.03 19.04 23.95 19.58 20.19
Return on average common equity 21.03 19.04 24.00 19.58 20.30
Efficiency ratio:
Including amortization of
intangible assets 46.97 49.49 43.53 48.60 48.24
Excluding amortization of
intangible assets 45.39 47.95 41.88 46.99 46.49
</TABLE>
<PAGE>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
- ---------------------------------------------------------------------------------------------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
1999 1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
WEIGHTED AVERAGE INTEREST RATES
Yield on loans 7.35% 7.36% 7.72% 7.38% 7.78%
Yield on mortgage-backed
securities ("MBS") 6.70 6.61 7.15 6.69 7.18
Yield on investment securities 5.62 5.54 5.96 5.58 6.13
- ---------------------------------------------------------------------------------------------------------
Yield on interest-earning assets 7.11 7.07 7.53 7.13 7.57
Cost of deposits 3.73 3.79 4.14 3.81 4.19
Cost of borrowings 5.47 5.26 5.87 5.39 5.90
- ---------------------------------------------------------------------------------------------------------
Cost of interest-bearing liabilities 4.61 4.49 4.84 4.57 4.85
Net interest spread 2.50 2.58 2.69 2.56 2.72
Net interest margin 2.64 2.74 2.88 2.72 2.89
AVERAGE BALANCES
Loans $115,584,502 $109,523,390 $106,237,972 $111,504,519 $104,680,863
MBS 52,239,151 54,227,044 39,482,647 50,767,461 39,021,997
Investment securities 4,101,172 3,681,555 3,753,078 3,799,978 3,969,327
- ---------------------------------------------------------------------------------------------------------
Total interest-earning assets 171,924,825 167,431,989 149,473,697 166,071,958 147,672,187
Deposits 82,511,343 83,920,105 85,426,522 83,566,677 86,896,450
Borrowings 84,500,292 77,666,546 58,235,865 76,795,776 55,458,676
- ---------------------------------------------------------------------------------------------------------
Total interest-bearing
liabilities 167,011,635 161,586,651 143,662,387 160,362,453 142,355,126
Total assets 178,181,044 173,205,859 155,456,034 171,959,382 153,699,694
Stockholders' equity 8,938,658 9,509,791 9,361,631 9,307,584 8,782,311
</TABLE>
<PAGE>
WASHINGTON MUTUAL, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Sept. 30, 1999 June 30, 1999 Dec. 31, 1998
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash $ 2,406,198 $ 1,642,285 $ 2,695,454
Cash equivalents 60,911 64,669 61,520
Trading securities 30,740 29,899 39,068
Available-for-sale securities:
MBS 37,483,437 39,663,120 32,399,591
Investment securities 455,474 405,992 517,462
Held-to-maturity securities:
MBS 12,967,231 14,145,918 13,992,235
Investment securities 138,043 138,135 137,247
Loans:
Loans held in portfolio 119,541,616 111,142,106 107,612,197
Loans held for sale 304,418 824,494 1,826,549
Reserve for loan losses (1,051,369) (1,053,589) (1,067,840)
- --------------------------------------------------------------------------------------------------
Total loans 118,794,665 110,913,011 108,370,906
Investment in Federal Home Loan Banks ("FHLBs") 2,669,898 2,419,151 2,030,027
Foreclosed assets 222,689 244,188 274,767
Premises and equipment 1,544,342 1,530,636 1,421,162
Intangible assets 936,433 960,091 1,009,666
Mortgage servicing rights 489,037 492,619 461,295
Other assets 2,600,806 2,391,700 2,082,881
- --------------------------------------------------------------------------------------------------
Total assets $180,799,904 $175,041,414 $165,493,281
==================================================================================================
LIABILITIES
Deposits:
Checking accounts $ 13,542,197 $ 13,546,078 $ 13,460,731
Savings accounts and money market deposit
accounts ("MMDAs") 31,127,144 31,499,804 28,285,868
Time deposit accounts 36,955,147 38,079,432 43,745,542
- --------------------------------------------------------------------------------------------------
Total deposits 81,624,488 83,125,314 85,492,141
Federal funds purchased and commercial paper 1,574,706 3,448,525 2,482,830
Securities sold under agreements to repurchase 28,649,976 26,286,536 17,519,538
Advances from FHLBs 52,531,731 46,223,504 39,748,613
Other borrowings 5,850,417 4,894,603 5,449,508
Other liabilities 1,662,606 2,001,370 5,456,251
- --------------------------------------------------------------------------------------------------
Total liabilities 171,893,924 165,979,852 156,148,881
STOCKHOLDERS' EQUITY 8,905,980 9,061,562 9,344,400
- --------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $180,799,904 $175,041,414 $165,493,281
==================================================================================================
Common shares outstanding at end of period 574,428,172 582,765,123 593,408,525
Book value per common share $15.83 $15.88 $16.07
Tangible book value per common share 14.50 14.53 14.66
Full-time equivalent employees at end of period 26,967 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 Nine Months Ended
- ------------------------------------------------------------------------------------------------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
1999 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REPORTED FINANCIAL RESULTS
Net income $469,980 $452,674 $560,470 $1,366,772 $1,329,845
Net income per diluted common share $0.83 $0.78 $0.96 $2.37 $2.29
Financial ratios on reported financial results:
Return on average assets 1.06% 1.05% 1.44% 1.06% 1.15%
Return on average equity 21.03 19.04 23.95 19.58 20.19
Return on average common equity 21.03 19.04 24.00 19.58 20.30
Efficiency ratio (excluding amortization of
intangible assets) 45.39 47.95 41.88 46.99 46.49
OPERATING FINANCIAL RESULTS
Earnings from operations $477,932 $475,623 $573,281 $1,412,608 $1,376,791
Earnings per diluted common share $0.84 $0.82 $0.98 $2.44 $2.38
Financial ratios on earnings from operations:
Return on average assets 1.07% 1.10% 1.48% 1.10% 1.19%
Return on average equity 21.39 20.01 24.49 20.24 20.90
Return on average common equity 21.39 20.01 24.55 20.24 21.02
Efficiency ratio (excluding amortization of
intangible assets) 44.54 45.53 40.65 45.36 44.75
CASH OPERATING FINANCIAL RESULTS
Cash earnings from operations $496,724 $494,266 $595,823 $1,470,323 $1,439,831
Cash earnings per diluted common share $0.88 $0.85 $1.02 $2.54 $2.49
Financial ratios on earnings from cash operations:
Return on average assets 1.12% 1.14% 1.53% 1.14% 1.25%
Return on average equity 22.23 20.79 25.46 21.06 21.86
Return on average common equity 22.23 20.79 25.52 21.06 21.98
EARNINGS FROM OPERATIONS
Reported pretax income $748,930 $721,345 $909,968 $2,178,047 $2,156,870
Transaction/transition-related expense 12,673 36,569 20,465 73,044 76,747
- ------------------------------------------------------------------------------------------------------------
Adjusted pretax income 761,603 757,914 930,433 2,251,091 2,233,617
Provision for income taxes 283,671 282,291 357,152 838,483 856,826
- ------------------------------------------------------------------------------------------------------------
Earnings from operations $477,932 $475,623 $573,281 $1,412,608 $1,376,791
============================================================================================================
CASH EARNINGS FROM OPERATIONS
Earnings from operations $477,932 $475,623 $573,281 $1,412,608 $1,376,791
Amortization of intangible assets, net of tax 18,792 18,643 22,542 57,715 63,040
- ------------------------------------------------------------------------------------------------------------
Cash earnings from operations $496,724 $494,266 $595,823 $1,470,323 $1,439,831
============================================================================================================
AMORTIZATION OF INTANGIBLE ASSETS
Total amortization of intangible assets
during the period $23,447 $23,262 $27,734 $72,082 $77,559
Tax benefit (1) 4,655 4,619 5,192 14,367 14,519
- ------------------------------------------------------------------------------------------------------------
Amortization of intangible assets, net of tax benefit $18,792 $18,643 $22,542 $57,715 $63,040
============================================================================================================
(1) 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>
Sept. 30, June 30,
1999 1999
- ---------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL ADEQUACY
Stockholders' equity/total assets 4.93% 5.18%
Stockholder's equity(excluding unrealized loss on
available-for-sale securities)/total assets 5.25 5.40
Sept. 30, June 30, Sept. 30,
1999 1999 1998
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
RETAIL CHECKING ACCOUNTS (1)
WMB and WMBfsb 995,725 966,135 874,517
WMB, FA 3,214,817 3,113,036 2,958,132
- ---------------------------------------------------------------------------------------
Total retail checking accounts 4,210,542 4,079,171 3,832,649
=======================================================================================
RETAIL CHECKING ACCOUNT ACTIVITY (1)
Net accounts opened during the quarter:
WMB and WMBfsb 29,590 25,293 41,050
WMB, FA 101,781 53,329 (45,297)
- ---------------------------------------------------------------------------------------
Net new retail checking accounts 131,371 78,622 (4,247)
=======================================================================================
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 Nine Months Ended
- ----------------------------------------------------------------------------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
1999 1999 1998 1999 1998
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LOAN ORIGINATIONS
Single-family residential ("SFR"):
Adjustable rate ("ARMs") $ 8,585.6 $ 7,224.8 $ 4,598.7 $20,984.9 $13,060.1
Fixed rate 1,413.5 3,774.5 5,062.4 9,683.5 15,940.8
SFR - construction 581.9 570.7 494.9 1,533.2 1,302.3
Manufactured housing 76.1 61.4 83.8 187.9 221.3
Second mortgage and other consumer 694.7 651.5 755.8 1,919.1 2,246.2
Commercial business 219.0 303.7 224.8 821.1 748.9
Apartment buildings 473.5 427.0 606.5 1,225.1 1,526.0
Other commercial real estate 78.2 63.0 97.6 200.2 306.6
Consumer finance 637.9 578.9 725.0 1,716.7 1,806.9
- ----------------------------------------------------------------------------------------
Total loan originations $12,760.4 $13,655.5 $12,649.5 $38,271.7 $37,159.1
========================================================================================
As a percentage of total loan originations:
SFR, excluding SFR construction 78% 81% 76% 80% 78%
All other 22 19 24 20 22
SFR LOAN ORIGINATIONS
Short-term ARMs:
Treasury index $4,149.0 $ 2,791.1 $2,361.4 $ 8,886.5 $ 6,342.2
COFI 212.7 150.5 104.0 488.9 676.3
Other 1.6 1.4 9.3 8.5 140.1
- ----------------------------------------------------------------------------------------
Total short-term ARMs 4,363.3 2,943.0 2,474.7 9,383.9 7,158.6
Medium-term ARMs:
Treasury index 4,222.3 4,281.8 2,066.8 11,600.9 5,661.9
COFI -- -- 57.2 -- 57.2
Other -- -- -- 0.1 182.4
- ----------------------------------------------------------------------------------------
Total medium-term ARMs 4,222.3 4,281.8 2,124.0 11,601.0 5,901.5
Fixed-rate mortgages 1,413.5 3,774.5 5,062.4 9,683.5 15,940.8
- ----------------------------------------------------------------------------------------
Total SFR loan originations $9,999.1 $10,999.3 $9,661.1 $30,668.4 $29,000.9
========================================================================================
</TABLE>
<PAGE>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Change from
June 30, 1999 Sept. 30, June 30, Sept. 30,
to Sept. 30, 1999 1999 1999 1998
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LOANS AND MBS BY PROPERTY TYPE
Loans held in portfolio:
SFR $ 7,815.7 $ 90,284.8 $ 82,469.1 $ 77,409.9
SFR - construction 105.4 1,172.5 1,067.1 973.7
Manufactured housing, second mortgage and other consumer 110.5 6,146.7 6,036.2 5,575.0
Commercial business 64.1 1,312.9 1,248.8 1,076.7
Apartment buildings 217.5 14,623.3 14,405.8 14,733.1
Other commercial real estate (63.7) 3,109.4 3,173.1 3,628.6
Consumer finance 150.0 2,892.0 2,742.0 2,433.2
- ------------------------------------------------------------------------------------------------------------
Total loans held in portfolio 8,399.5 119,541.6 111,142.1 105,830.2
Loans securitized and retained as MBS (1,630.1) 22,652.0 24,282.1 27,789.1
- ------------------------------------------------------------------------------------------------------------
Total loans held in portfolio and loans
securitized and retained as MBS 6,769.4 142,193.6 135,424.2 133,619.3
Loans held for sale (520.1) 304.4 824.5 1,668.6
Less: reserve for loan losses 2.2 (1,051.4) (1,053.6) (1,151.5)
- ------------------------------------------------------------------------------------------------------------
Total loans and loans securitized and retained as MBS 6,251.5 141,446.6 135,195.1 134,136.4
Purchased MBS (1,728.2) 27,798.7 29,526.9 14,394.8
- ------------------------------------------------------------------------------------------------------------
Total loans and MBS $ 4,523.3 $169,245.3 $164,722.0 $148,531.2
============================================================================================================
Change from Change from
June 30, 1999 Sept 30, 1998
to Sept. 30, 1999 to Sept. 30, 1998
- ------------------------------------------------------------------------------------------------------------
CHANGE IN LOANS AND LOANS SECURITIZED
AND RETAINED AS MBS
Loans held in portfolio:
Loans originated and purchased $15,282.2 $50,153.4
Loans securitized -- (2,340.2)
Loans sold (5.8) (54.1)
Loan payments and other (6,876.9) (34,047.7)
- ------------------------------------------------------------------------------------------------------------
Change in loans held in portfolio 8,399.5 13,711.4
Change in loans securitized and retained as MBS (1,630.1) (5,137.1)
- ------------------------------------------------------------------------------------------------------------
Change in loans held in portfolio and
loans securitized and retained as MBS 6,769.4 8,574.3
Loans held for sale:
Loans originated 922.0 11,327.7
Loans sold (1,442.1) (12,691.9)
- ------------------------------------------------------------------------------------------------------------
Change in loans held for sale (520.1) (1,364.2)
Change in reserve for loan losses 2.2 100.1
- ------------------------------------------------------------------------------------------------------------
Total change in loans and loans securitized
and retained as MBS $ 6,251.5 $ 7,310.2
============================================================================================================
As a percentage of total loans and loans securitized
and retained as MBS at beginning of period 4.6% 5.4%
As a percentage of total assets at beginning of period 3.6 4.6
</TABLE>
<PAGE>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Change from
June 30, 1999 Sept. 30, % of June 30, % of Sept. 30, % of
to Sept. 30, 1999 1999 total 1999 total 1998 total
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
REAL ESTATE LOANS AND MBS
Short-term ARMs:
COFI $(6,286.1) $ 59,917.6 37% $ 66,203.7 43% $ 75,762.3 54%
Treasury index 5,888.1 21,780.5 14 15,892.4 10 17,602.5 13
Other 1,093.5 6,048.1 4 4,954.6 3 11,583.6 8
- -------------------------------------------------------------------------------------------------------------
Total short-term ARMs 695.5 87,746.2 55 87,050.7 56 104,948.4 75
Medium-term ARMs:
Treasury index 5,339.4 29,219.4 18 23,880.0 15 9,099.5 6
COFI (29.9) 747.4 1 777.3 1 903.2 1
Other (134.2) 1,781.7 1 1,915.9 1 2,658.5 2
- -------------------------------------------------------------------------------------------------------------
Total medium-term ARMs 5,175.3 31,748.5 20 26,573.2 17 12,661.2 9
Fixed-rate loans held in portfolio 467.2 17,564.9 11 17,097.7 11 12,710.3 9
Fixed-rate loans held for sale (520.1) 304.4 - 824.5 1 1,668.6 1
Fixed-rate MBS (1,621.4) 22,581.1 14 24,202.5 15 8,609.3 6
- -------------------------------------------------------------------------------------------------------------
Total real estate loans and MBS $ 4,196.5 $159,945.1 100% $155,748.6 100% $140,597.8 100%
=============================================================================================================
LOANS SERVICED FOR OTHERS $ (528.5) $ 51,906.3 $ 52,434.8 $ 50,493.7
=============================================================================================================
Sept. 30, 1999 June 30, 1999
- -------------------------------------------------------------------------------------------------------------
Balance Term Balance Term
- -------------------------------------------------------------------------------------------------------------
(in months) (in months)
<S> <C> <C> <C> <C>
DEPOSITS, BORROWINGS AND DERIVATIVES
OUTSTANDING AND CONTRACTUAL TERMS
Deposits:
Noninterest bearing checking accounts $ 7,391.5 NA $ 7,528.8 NA
Interest bearing checking accounts,
savings accounts and MMDAs 37,277.8 NA 37,517.1 NA
Time deposit accounts 36,955.2 8 38,079.4 7
- -------------------------------------------------------------------------------------------------------------
Total deposits 81,624.5 83,125.3
Borrowings:
Adjustable 52,827.9 15 45,864.6 16
Short-term fixed 27,031.5 4 27,303.0 3
Long-term fixed 8,747.4 68 7,685.6 71
- -------------------------------------------------------------------------------------------------------------
Total borrowings 88,606.8 80,853.2
- -------------------------------------------------------------------------------------------------------------
Total deposits and borrowings $170,231.3 $163,978.5
=============================================================================================================
Notional amount of derivatives:
Matched against assets $ 300.0 2 $ 300.0 5
Matched against deposits 1,519.1 20 1,621.3 21
Matched against borrowings 19,113.0 18 17,263.0 12
- -------------------------------------------------------------------------------------------------------------
Total derivatives $20,932.1 $19,184.3
=============================================================================================================
</TABLE>
<PAGE>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended
- ----------------------------------------------------------------------------------------------------------
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
1999 1999 1999 1998 1998
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVE FOR LOAN LOSSES
Balance, beginning of quarter $1,053.6 $1,069.7 $1,067.8 $1,151.5 $1,156.3
Provision for loan losses 40.8 42.9 41.7 33.2 34.4
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 construction (9.9) (8.5) (11.1) (13.6) (13.5)
Manufactured housing, second mortgage and
other consumer (12.2) (10.4) (13.4) (8.1) (7.3)
Commercial business (0.7) (1.3) (2.5) (1.2) (1.4)
Commercial real estate (3.4) (22.9) (3.9) (6.6) (5.8)
Consumer finance (23.6) (22.8) (23.8) (24.5) (21.9)
- ----------------------------------------------------------------------------------------------------------
Total loans charged off (49.8) (65.9) (54.7) (54.0) (49.9)
Recoveries of loans previously charged off:
SFR and SFR construction 0.5 0.2 2.1 3.9 5.9
Manufactured housing, second mortgage and
other consumer 1.0 0.7 0.6 0.4 0.5
Commercial business 0.1 0.2 0.2 0.5 0.2
Commercial real estate 1.4 1.7 2.7 2.2 1.2
Consumer finance 3.8 4.1 4.1 3.6 3.7
- ----------------------------------------------------------------------------------------------------------
Total recoveries of loans previously charged off 6.8 6.9 9.7 10.6 11.5
- ----------------------------------------------------------------------------------------------------------
Net charge offs (43.0) (59.0) (45.0) (43.4) (38.4)
- ----------------------------------------------------------------------------------------------------------
Balance, end of quarter $1,051.4 $1,053.6 $1,069.7 $1,067.8 $1,151.5
==========================================================================================================
Net charge offs as a percentage of average loans 0.15% 0.22% 0.16% 0.16% 0.14%
</TABLE>
<PAGE>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Sept. 30, June 30, Sept. 30,
1999 1999 1998
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
RESERVE FOR LOAN LOSSES
Specific and allocated reserves:
Commercial real estate $ 74.6 $ 85.0 $ 133.5
Commercial business 18.4 18.2 9.0
Builder construction 4.7 3.6 0.9
- ---------------------------------------------------------------------------------------
Total specific and allocated reserves 97.7 106.8 143.4
Unallocated reserves 953.7 946.8 1,008.1
- ---------------------------------------------------------------------------------------
Total reserve for loan losses $1,051.4 $1,053.6 $1,151.5
=======================================================================================
Reserve for loan losses as a percentage of:
Nonaccrual loans 126% 128% 114%
Nonperforming assets 99 99 89
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 $122.0 $128.0 $74.0
Transfer from reserve for loan losses -- -- 0.8
Charge offs, net of provision for losses (5.0) (6.0) (2.2)
- ---------------------------------------------------------------------------------------
Balance, end of quarter $117.0 $122.0 $72.6
=======================================================================================
The total loss coverage represents the reserve for loan losses and recourse liability
as a percentage of nonaccrual loans:
Total loss coverage percentage 140% 143% 121%
</TABLE>
<PAGE>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Sept. 30, June 30, Sept. 30,
1999 1999 1998
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
NONPERFORMING ASSETS ("NPAS")
Nonaccrual loans:
SFR and SFR construction $ 661.8 $ 661.6 $ 849.0
Manufactured housing, second mortgage and
other consumer 45.6 46.7 36.5
Commercial business 12.5 7.0 3.0
Apartment buildings and other commercial real estate 57.8 51.4 68.4
Consumer finance 57.1 53.7 55.0
- ----------------------------------------------------------------------------------------
Total nonaccrual loans 834.8 820.4 1,011.9
Foreclosed assets:
SFR and SFR construction 172.7 181.3 215.7
Manufactured housing, second mortgage and
other consumer 9.5 14.2 10.4
Apartment buildings and other commercial real estate 37.7 46.8 53.0
Consumer finance 2.8 1.9 2.0
- ----------------------------------------------------------------------------------------
Net foreclosed assets 222.7 244.2 281.1
- ----------------------------------------------------------------------------------------
Total NPAs $1,057.5 $1,064.6 $1,293.0
========================================================================================
NPAs by property type:
SFR and SFR construction $ 834.5 $ 842.9 $1,064.7
Manufactured housing, second mortgage and
other consumer 55.1 60.9 46.9
Commercial business 12.5 7.0 3.0
Apartment buildings 47.0 57.1 80.9
Other commercial real estate 48.5 41.1 40.5
Consumer finance 59.9 55.6 57.0
- ----------------------------------------------------------------------------------------
Total NPAs $1,057.5 $1,064.6 $1,293.0
========================================================================================
NPAs as a percentage of:
Total loans 0.89% 0.96% 1.22%
Total assets 0.58 0.61 0.81
</TABLE>
<PAGE>
