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: January 19, 1999
Washington Mutual, Inc.
(Exact Name of Registrant as specified in its charter)
Washington 0-25188 91-1653725
(State or Other Jurisdiction (Commission File Number)(IRS Identification No.)
of Incorporation)
1201 Third Avenue, Seattle, Washington 98101
Address of Principal Executive Office Postal Code
206-461-2000
Registrant's telephone number including area code
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) 1. Press Release dated January 19, 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: January 22, 1999 By:/s/ Fay L. Chapman
Executive Vice President
and General Counsel
Media Contact: Libby Hutchinson
1-800-228-9268
(206) 461-2484
Investor Contact: Doug Wisdorf
(206) 461-3805
JoAnn DeGrande January 19, 1999
(206) 461-3186 FOR IMMEDIATE RELEASE
Washington Mutual Announces Fourth-Quarter Earnings
Continued Strong Operating Fundamentals and Increased Cash Dividend
SEATTLE -- Washington Mutual, Inc. (NYSE: WM) today announced
fourth-quarter 1998 earnings of $157.1 million, or 27 cents per diluted share,
compared with $337.4 million, or 59 cents per diluted share for the same period
a year ago. Adjusted net income for the quarter, excluding charges associated
with the completion of the merger with H.F. Ahmanson & Company and applying the
effective tax rate for the entire year rather than an unusually low
fourth-quarter tax rate, was $430.0 million, or 74 cents per diluted share.
Earnings for 1998 were a record $1.49 billion, or $2.56 per diluted share,
a 68 percent increase over earnings of $885.1 million, or $1.52 per diluted
share, for the same period one year ago. (A number of merger-related and
one-time charges affecting both fourth-quarter and 1998 earnings are outlined on
page two.)
Common Stock Dividend
Based on continued strong operating fundamentals, the company's board of
directors declared an increase in the cash dividend on common stock to 23 cents
per share, up from 22 cents the previous quarter. Dividends on the common stock
are payable on Feb. 12, 1999 to shareholders of record as of Jan. 29, 1999.
"The fourth quarter of 1998 capped off one of the most significant years in
the history of Washington Mutual," said Kerry Killinger, the company's chairman,
president and chief executive officer.
- more -
<PAGE>
Washington Mutual - 2
"During the year, we successfully completed the integration of Great
Western and finalized our merger with Ahmanson. Meanwhile, operating
fundamentals remained strong throughout the year, as evidenced by our record
lending activity and significant growth in both households and checking accounts
throughout our service territory, thus establishing Washington Mutual as one of
the leading consumer banking franchises nationally."
Merger-Related and Other Items for the Quarter and the Year
Fourth-quarter earnings were significantly reduced by $472.5 million of
pre-tax charges associated with the completion of the Ahmanson transaction.
These charges were comprised of $431.5 million of transaction-related expenses,
and $41.0 million in writedowns, reserves and other Ahmanson-related charges. At
the same time, fourth-quarter earnings benefited from an unusually low tax rate
of 26.11 percent due to a favorable adjustment in the value of the company's
deferred tax assets.
In addition to the items noted above, earnings for 1998 were positively
impacted by the $289.0 million pretax gain on the sale of Ahmanson's 27 branches
on the east coast of Florida. Earnings for 1997 were significantly affected by
pretax transaction charges of $431.1 million related to the company's mergers
with Great Western Financial Corporation and American Savings Bank, and were
also impacted by the company's $100 million pretax writedown resulting from the
securitization of approximately $1.2 billion of higher-risk residential mortgage
loans originated by Great Western Bank.
Net Interest Income and Other Income
Net interest income in the fourth quarter was $1.08 billion, up from $999.1
million in the prior year's fourth quarter, primarily due to an increase in
average interest-earning assets from $137.53 billion in fourth quarter 1997 to
$153.25 billion for the same period in 1998. For the year, net interest income
was $4.29 billion, up from $3.92 billion for 1997. The spread in the fourth
quarter was 2.66 percent compared with 2.77 percent for the same period a year
earlier. The margin was 2.85 percent in the most recent quarter versus 2.94
percent in fourth quarter 1997.
- more -
<PAGE>
Washington Mutual - 3
Killinger pointed out that strong growth in fee-generating checking
accounts continues to have a favorable effect on other income. A net increase of
approximately 550,000 checking accounts, year over year, contributed to
depositor and other retail banking fees of $163.6 million for the quarter, up 30
percent over $126.0 million for the same period one year ago. For the year,
depositor and other retail banking fees totaled $568.4 million in 1998, a 19
percent increase over $478.7 million for 1997. Total other income in the fourth
quarter was $321.3 million, up from $280.4 million for last year's fourth
quarter.
Mortgage banking income for the quarter was $31.2 million compared with
$17.5 million in fourth quarter 1997, and for the year was $133.1 million versus
a loss of $44.4 million in 1997. The loss in 1997 resulted from the company's
pretax writedown of $100 million discussed above.
Loan Originations
Continued relatively low interest rates for residential mortgages helped
the company establish a new record for total loan originations in the fourth
quarter of 1998 and for the year. Total loan originations during the most recent
quarter were $15.53 billion, up from $9.79 billion for the fourth quarter of
1997. For the year, total loan originations were $52.69 billion, compared with
$35.50 billion in 1997.
In the fourth quarter, single-family residential loan originations
(excluding residential construction) were $12.87 billion, up from $7.17 billion
a year ago. For the year, single-family residential loan originations totaled
$41.87 billion, up from $25.76 billion in 1997.
Of the single-family residential loans originated in fourth quarter 1998,
approximately 41 percent were adjustable-rate mortgages. On an annual basis,
adjustable-rate mortgages represented 44 percent of the residential loans
originated in 1998, reflecting the popularity of fixed-rate mortgages.
Consumer loan originations were $624.3 million for the current quarter
versus $679.8 million in the prior year's fourth quarter; and for the year were
$3.07 billion, up from $2.83 billion the previous year. Residential construction
originations were $446.0 million during the quarter just ended, up from $375.6
million in fourth quarter 1997; and were $1.75 billion for the current year, as
compared with $1.45 billion in 1997.
- more -
<PAGE>
Washington Mutual - 4
Efficiency Ratio
The company's operating efficiency ratio (defined as total other expense,
excluding amortization of intangible assets, as a percentage of net interest
income and other income) was 80.53 percent during the fourth quarter of 1998,
compared with 51.09 percent for the fourth quarter of 1997. Without the impact
of the previously mentioned adjustments associated with the Ahmanson and Great
Western mergers, the efficiency ratio for the fourth quarter of 1998 would have
been 46.77 percent, an improvement from 50.60 percent, during the same period
one year ago.
Killinger noted that the company is making excellent progress in achieving
cost savings from recent mergers but is incurring costs to support its strong
growth in loan originations and checking accounts.
Other expense for the fourth quarter of 1998 was $1.15 billion, including
$472.5 million in charges associated with the Ahmanson merger, as previously
discussed. For the fourth quarter of 1997, other expense was $675.9 million,
including $6.2 million in expenses related to the Great Western merger.
Credit Quality and Capital
Nonperforming assets declined by 6 percent to $1.21 billion at Dec. 31,
1998, from $1.29 billion at Sept. 30, 1998, and down from $1.37 billion at
year-end 1997. The ratio of nonperforming assets to total assets was 0.73
percent at Dec. 31, 1998, a decrease from 0.81 percent at the end of the third
quarter, and down from 0.96 percent at year-end 1997.
In the fourth quarter, the company made a $33.2 million provision for loan
losses and took $11.4 million in writedowns on loans securitized and retained.
For the quarter, net loan charge offs were $43.4 million, an improvement from
$54.6 million for the same period one year ago. Loan loss reserves and reserves
for losses on loans securitized and retained or sold aggregated $1.21 billion at
Dec. 31, 1998, and represented 129 percent of nonaccrual loans.
Assets, Stockholders' Equity and Capital Ratios
Washington Mutual's consolidated assets were $165.49 billion at Dec. 31,
1998, up from $143.52 billion at year-end 1997. The increase was primarily the
result of the retention of loans originated by the company, the purchase of
mortgage-backed securities and whole loans, and the inclusion of Coast Savings.
- more -
<PAGE>
Washington Mutual - 5
Total deposits were $85.49 billion at Dec. 31, 1998, up $958.5 million from
the end of the third quarter of 1998. Transaction accounts, which include
checking, money market, and savings accounts, rose $2.97 billion during the
fourth quarter of 1998, while time deposits declined by $2.01 billion during the
same period. The ratio of transaction accounts to total deposits stood at 49
percent at the end of 1998, an increase from 41 percent at the beginning of the
year.
At Dec. 31, 1998, stockholders' equity stood at $9.34 billion, or 5.65
percent of consolidated assets. In addition, capital ratios of the company's
banking subsidiaries continued to exceed the federal regulatory requirements for
classification as "well-capitalized" institutions, the highest regulatory
standard.
Consumer Finance
Aristar, Inc., the holding company for Washington Mutual's consumer finance
group, reported fourth-quarter net income of $11.5 million, versus $12.0 million
for the same period in 1997. For the year, Aristar generated net income of $52.9
million in 1998, up 14 percent from $46.3 million one year ago.
Ahmanson Merger Update
"We've made significant progress in the integration of Ahmanson over the
last three months and we remain on-track to complete our systems conversions by
the middle of 1999," Killinger said. That progress included:
Completing the merger with Ahmanson, effective Oct. 1, 1998;
Reinforcing the company's corporate values, strategies and culture through
personal meetings with Ahmanson employee groups by Killinger throughout
California and Texas;
Comprehensive computer and sales training of Texas consumer banking
employees in preparation for the upcoming systems conversion;
Technical training for lending managers and loan support employees at
former Ahmanson lending offices;
Merging Griffin Financial Services (Ahmanson's broker/dealer subsidiary)
with WM Financial Services, effective Jan. 1, 1999; and
Combining the commercial real estate lending operations of the former Home
Savings of America and Washington Mutual. This brings together California's top
two multi-family lenders.
- more -
<PAGE>
Washington Mutual - 6
Year 2000 Update
Washington Mutual's Year 2000 team is following a disciplined, five-phase
process recommended by the Federal Financial Institutions Examination Council
(FFIEC). During the fourth quarter, the company made excellent progress in
testing key operating systems and continues to progress on schedule.
Other News
On Dec. 9, 1998, the company's common stock began trading on the New York
Stock Exchange (NYSE) under the ticker symbol "WM." Washington Mutual ranks
among the top 5 percent of NYSE listed companies on a market capitalization
basis.
Outlook
"During the past two years, we've successfully brought acquired companies
together under a unified culture and strategy. The result has been the formation
of a financial powerhouse," Killinger said. "As we move forward, our priority is
to continue building profitable relationships with both new and existing
customers and establishing Washington Mutual as one of the nation's most
efficient providers of financial services."
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 Dec. 31, 1998, Washington
Mutual and its subsidiaries had assets of $165.49 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 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
www.businesswire.com/cnn/wm.htm
<PAGE>
Washington Mutual, Inc.(1)
Consolidated Statements of Income
(dollars in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended Year Ended
Dec. 31, Dec. 31,
- -------------------------------------------------------------------------------------------------------------------------------
1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Income
Loans $2,064,500 $1,961,445 $ 8,166,769 $ 7,520,760
Available-for-sale securities 466,815 390,365 1,707,874 1,674,375
Held-to-maturity securities 265,172 221,055 1,175,334 791,242
FHLB dividends and other interest income 40,884 63,636 171,491 216,154
- -------------------------------------------------------------------------------------------------------------------------------
Total interest income 2,837,371 2,636,501 11,221,468 10,202,531
Interest Expense
Deposits 866,479 901,497 3,588,015 3,645,542
Borrowings 892,535 735,890 3,341,728 2,641,496
- -------------------------------------------------------------------------------------------------------------------------------
Total interest expense 1,759,014 1,637,387 6,929,743 6,287,038
- -------------------------------------------------------------------------------------------------------------------------------
Net interest income 1,078,357 999,114 4,291,725 3,915,493
Provision for loan losses 33,223 55,430 161,968 246,642
- -------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 1,045,134 943,684 4,129,757 3,668,851
Other Income
Depositor and other retail banking fees 163,631 125,971 568,376 478,700
Securities and insurance fees and commissions 61,534 60,815 251,328 244,406
Loan servicing income 26,215 34,989 117,356 141,278
Mortgage banking income (loss) 31,212 17,515 133,084 (44,368)
Gain on sale of retail deposit branch systems - - 289,040 57,566
Gain on sale of other assets 3,502 23,865 26,966 41,179
Write down of loans securitized and retained (11,435) (16,697) (52,871) (76,636)
Other operating income 46,658 33,964 190,869 154,037
- -------------------------------------------------------------------------------------------------------------------------------
Total other income 321,317 280,422 1,524,148 996,162
Other Expense
Salaries and employee benefits 294,256 288,816 1,190,679 1,168,604
Occupancy and equipment 130,723 129,456 498,126 500,119
Telecommunications and outsourced information services 65,143 56,428 255,644 213,372
Regulatory assessments 14,634 14,808 63,204 59,887
Transaction-related expense 431,539 6.239 508,286 431,125
Amortization of intangible assets 26,693 22,229 104,252 89,351
Foreclosed asset expense 6,003 12,887 23,445 80,704
Other operating expense 184,873 145,018 640,812 583,582
- -------------------------------------------------------------------------------------------------------------------------------
Total other expense 1,153,864 675,881 3,284,448 3,126,744
- -------------------------------------------------------------------------------------------------------------------------------
Income before provision for income taxes 212,587 548,225 2,369,457 1,538,269
Provision for income taxes 55,500 210,831 882,525 653,151
- -------------------------------------------------------------------------------------------------------------------------------
Net Income $ 157,087 $ 337,394 $ 1,486,932 $ 885,118
===============================================================================================================================
Net Income Attributable to Common Stock $ 157,087 $ 325,371 $ 1,470,990 $ 830,087
===============================================================================================================================
Net income per common share:
Basic $0.27 $0.61 $2.61 $1.56
Diluted 0.27 0.59 2.56 1.52
(1) All data contained in this schedule and the attached schedules have
been restated to reflect the merger with H. F. Ahmanson & Company.
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended Year Ended
Dec. 31, Dec. 31,
- ------------------------------------------------------------------------------------------------------------------------------
1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Data Used To Compute Per Share Amounts
Net income $157,087 $337,394 $1,486,932 $885,118
Preferred stock dividends:
Nonconvertible - (7,741) (6,673) (37,812)
Convertible - (4,282) (9,269) (17,219)
- ------------------------------------------------------------------------------------------------------------------------------
Net income attributable to basic common stock $157,087 $325,371 $1,470,990 $830,087
==============================================================================================================================
Net income $157,087 $337,394 $1,486,932 $885,118
Preferred stock dividends, nonconvertible - (7,741) (6,673) (37,812)
- ------------------------------------------------------------------------------------------------------------------------------
Net income attributable to diluted common stock $157,087 $329,653 $1,480,259 $847,306
==============================================================================================================================
Average common shares used to calculate earnings per share:
Basic 581,286,242 531,641,681 564,420,541 532,412,178
Common stock equivalents 1,896,694 24,793,236 14,141,764 24,346,845
- ------------------------------------------------------------------------------------------------------------------------------
Diluted 583,182,936 556,434,917 578,562,305 556,759,023
Financial Ratios
Return on average assets 0.39% 0.95% 0.96% 0.63%
Return on average equity 6.61 17.78 16.62 11.73
Return on average common equity 6.61 18.25 16.67 11.95
Efficiency ratio:
Including amortization of intangible assets 82.44 52.82 56.47 63.66
Excluding amortization of intangible assets 80.53 51.09 54.68 61.84
Weighted Average Interest Rates
Yield on loans 7.62% 7.85% 7.73% 7.77%
Yield on investments 6.88 7.19 7.03 7.14
- ------------------------------------------------------------------------------------------------------------------------------
Yield on interest-earning assets 7.40 7.67 7.53 7.59
Cost of deposits 4.04 4.27 4.15 4.27
Cost of borrowings 5.70 5.97 5.85 6.04
- ------------------------------------------------------------------------------------------------------------------------------
Cost of interest-bearing liabilities 4.74 4.90 4.83 4.87
Net interest spread 2.66 2.77 2.70 2.72
Net interest margin 2.85 2.94 2.88 2.89
Average Balances
Loans $108,308,802 $ 99,897,693 $105,595,302 $ 96,824,787
Investments 44,936,531 37,629,969 43,481,623 37,560,324
- ------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 153,245,333 137,527,662 149,076,925 134,385,111
Deposits 85,047,378 83,728,890 86,430,382 85,345,158
Borrowings 62,180,217 48,900,846 57,152,872 44,358,746
- ------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 147,227,595 132,629,736 143,583,254 129,703,904
Total assets 159,340,139 142,340,922 155,121,396 139,961,182
Stockholders' equity 9,505,740 7,592,124 8,947,229 7,543,211
</TABLE>
<PAGE>
Washington Mutual, Inc.
Consolidated Statements of Income
(dollars in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended
- --------------------------------------------------------------------------------------------------------------------------------
Dec. 31, Sept. 30, June 30, Mar. 31,
1998 1998 1998 1998
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Income
Loans $2,064,500 $2,052,164 $2,059,908 $1,990,197
Available-for-sale securities 466,815 430,077 430,389 380,593
Held-to-maturity securities 265,172 288,197 305,922 316,043
FHLB dividends and other interest income 40,884 43,840 46,364 40,403
- --------------------------------------------------------------------------------------------------------------------------------
Total interest income 2,837,371 2,814,278 2,842,583 2,727,236
Interest Expense
Deposits 866,479 890,311 927,429 903,796
Borrowings 892,535 860,598 825,457 763,138
- --------------------------------------------------------------------------------------------------------------------------------
Total interest expense 1,759,014 1,750,909 1,752,886 1,666,934
- --------------------------------------------------------------------------------------------------------------------------------
Net interest income 1,078,357 1,063,369 1,089,697 1,060,302
Provision for loan losses 33,223 34,376 44,394 49,975
- --------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision or loan losses 1,045,134 1,028,993 1,045,303 1,010,327
Other Income
Depositor and other retail banking fees 163,631 150,049 135,216 119,480
Securities and insurance fees and commissions 61,534 64,931 65,287 59,576
Loan servicing income 26,215 27,868 30,926 32,347
Mortgage banking income 31,212 34,210 40,614 27,048
Gain on sale of retail deposit branch system - 289,040 - -
Gain on sale of other assets 3,502 8,677 13,640 1,147
Write down of loans securitized and retained (11,435) (15,917) (10,314) (15,205)
Other operating income 46,658 50,208 54,034 39,969
- --------------------------------------------------------------------------------------------------------------------------------
Total other income 321,317 609,066 329,403 264,362
Other Expense
Salaries and employee benefits 294,256 299,785 305,407 291,231
Occupancy and equipment 130,723 120,820 126,366 120,217
Telecommunications and outsourced information services 65,143 64,211 66,729 59,561
Regulatory assessments 14,634 15,679 16,635 16,256
Transaction-related expense 431,539 20,465 24,473 31,809
Amortization of intangible assets 26,693 27,734 26,241 23,584
Foreclosed asset expense (income) 6,003 (1,786) 10,345 8,883
Other operating expense 184,873 181,183 151,552 123,204
- --------------------------------------------------------------------------------------------------------------------------------
Total other expense 1,153,864 728,091 727,748 674,745
- --------------------------------------------------------------------------------------------------------------------------------
Income before provision for income taxes 212,587 909,968 646,958 599,944
Provision for income taxes 55,500 349,498 248,357 229,170
- --------------------------------------------------------------------------------------------------------------------------------
Net Income $ 157,087 $ 560,470 $ 398,601 $ 370,774
================================================================================================================================
Net Income Attributable to Common Stock $ 157,087 $ 558,092 $ 393,761 $ 362,050
================================================================================================================================
Net income per common share:
Basic $0.27 $0.98 $0.70 $0.66
Diluted 0.27 0.96 0.68 0.64
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended
- ---------------------------------------------------------------------------------------------------------------------------------
Dec. 31, Sept. 30, June 30, Mar. 31,
1998 1998 1998 1998
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Data Used To Compute Per Share Amounts
Net income $157,087 $560,470 $398,601 $370,774
Preferred stock dividends:
Nonconvertible - (1,269) (936) (4,468)
Convertible - (1,109) (3,904) (4,256)
- ---------------------------------------------------------------------------------------------------------------------------------
Net income attributable to basic common stock $157,087 $558,092 $393,761 $362,050
=================================================================================================================================
Net income $157,087 $560,470 $398,601 $370,774
Preferred stock dividends, nonconvertible - (1,269) (936) (4,468)
- ---------------------------------------------------------------------------------------------------------------------------------
Net income attributable to diluted common stock $157,087 $559,201 $397,665 $366,306
=================================================================================================================================
Average common shares used to calculate earnings per share:
Basic 581,286,242 571,589,704 560,688,632 545,115,410
Common stock equivalents 1,896,694 11,759,104 22,787,039 24,216,786
- ---------------------------------------------------------------------------------------------------------------------------------
Diluted 583,182,936 583,348,808 583,475,671 569,332,196
Weighted Average Interest Rates
Yield on loans 7.62% 7.72% 7.79% 7.82%
Yield on investments 6.88 7.05 7.05 7.15
- ---------------------------------------------------------------------------------------------------------------------------------
Yield on interest-earning assets 7.40 7.53 7.56 7.63
Cost of deposits 4.04 4.14 4.18 4.25
Cost of borrowings 5.70 5.87 5.89 5.96
- ---------------------------------------------------------------------------------------------------------------------------------
Cost of interest-bearing liabilities 4.74 4.84 4.84 4.89
Net interest spread 2.66 2.69 2.72 2.74
Net interest margin 2.85 2.88 2.89 2.91
Average Balances
Loans $108,308,802 $106,237,972 $105,844,558 $101,912,526
Investments 44,936,531 43,235,725 44,440,046 41,276,673
- --------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 153,245,333 149,473,697 150,284,604 143,189,199
Deposits 85,047,378 85,426,522 88,979,283 86,293,066
Borrowings 62,180,217 58,235,865 56,170,181 51,900,360
- ---------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 147,227,595 143,662,387 145,149,464 138,193,426
Total assets 159,340,139 155,456,034 156,435,935 149,137,681
Stockholders' equity 9,505,740 9,361,631 8,847,867 8,194,071
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
Note: The following analysis of reported and adjusted 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
- ------------------------------------------------------------------------------------------------------------------------------------
Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31,
1998 1998 1998 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Reported Financial Results
Net income $157,087 $560,470 $398,601 $370,774 $337,394
Net income per diluted common share $0.27 $0.96 $0.68 $0.64 $0.59
Financial ratios on reported financial results:
Return on average assets 0.39% 1.44% 1.02% 0.99% 0.95%
Return on average equity 6.61 23.95 18.02 18.10 17.78
Return on average common equity 6.61 24.00 18.08 18.28 18.25
Efficiency ratio (excluding amortization of intangible
assets) 80.53 41.88 49.43 49.16 51.09
Adjusted Net Earnings
Reported pretax income $212,587 $909,968 $646,958 $599,944 $548,225
Adjustments 472,549 (1) 20,465 24,473 31,809 6,239
- ------------------------------------------------------------------------------------------------------------------------------------
Adjusted pretax income 685,136 930,433 671,431 631,753 554,464
Provision for income tax benefit 255,185 357,152 257,698 241,976 213,305
- ------------------------------------------------------------------------------------------------------------------------------------
Adjusted net earnings $429,951 $573,281 $413,733 $389,777 $341,159
====================================================================================================================================
Earnings per diluted common share:
Reported net income $0.27 $0.96 $0.68 $0.64 $0.59
Adjustments (0.47) (1) (0.02) (0.02) (0.03) (0.01)
Adjusted net earnings $0.74 $0.98 $0.70 $0.67 $0.60
====================================================================================================================================
Financial ratios on adjusted net earnings:
Return on average assets 1.08% 1.48% 1.06% 1.05% 0.96%
Return on average equity 18.09 24.49 18.70 19.03 17.97
Return on average common equity 18.09 24.55 18.77 19.23 18.46
Efficiency ratio (excluding amortization of intangible
assets) 46.77 40.65 47.71 46.76 50.60
Amortization of Intangible Assets
Total amortization of intangible assets during the period $26,693 $27,734 $26,241 $23,584 $22,229
Tax benefit (2) 4,933 5,192 4,912 4,415 6,589
- ------------------------------------------------------------------------------------------------------------------------------------
Amortization of intangible assets, net of tax benefit $21,760 $22,542 $21,329 $19,169 $15,640
====================================================================================================================================
(1) Adjustments for fourth quarter 1998 consisted of transaction-related
expenses and other charges associated with the completion of the Ahmanson
transaction. The tax on this quarter was computed at the rate of 37.25%, the
company's rate for the full year.
(2) A tax benefit was included on approximately 48% (1998) and 76% (1997)
of the amortization of intangible assets.
</TABLE>
<PAGE>
Washington Mutual, Inc.
Consolidated Statements of Financial Position
(dollars in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Dec. 31, 1998 Dec. 31, 1997
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash $ 2,695,454 $ 1,889,019
Cash equivalents 61,520 830,978
Trading securities 39,068 23,364
Available-for-sale securities:
Mortgage-backed securities ("MBS") 32,399,591 18,624,163
Investment securities 517,462 1,193,063
Held-to-maturity securities:
MBS 13,992,235 17,085,036
Investment securities 137,247 122,818
Loans:
Loans held in portfolio 107,612,197 97,530,826
Loans held for sale 1,826,549 1,141,367
Reserve for loan losses (1,067,840) (1,047,845)
- ------------------------------------------------------------------------------------------------------------------------
Total loans 108,370,906 97,624,348
Investment in Federal Home Loan Banks ("FHLBs") 2,030,027 1,471,469
Foreclosed assets 274,767 340,582
Premises and equipment 1,421,162 1,301,824
Intangible assets 1,009,666 636,946
Mortgage servicing rights 461,295 311,480
Other assets 2,082,881 2,067,308
- ------------------------------------------------------------------------------------------------------------------------
Total assets $165,493,281 $143,522,398
========================================================================================================================
Liabilities
Deposits:
Checking accounts $ 13,460,731 $ 11,185,954
Savings accounts and money market deposit accounts 28,285,868 22,928,816
Time deposit accounts 43,745,542 49,314,663
- ------------------------------------------------------------------------------------------------------------------------
Total deposits 85,492,141 83,429,433
Federal funds purchased and commercial paper 2,482,830 3,732,282
Securities sold under agreements to repurchase 17,519,538 13,954,040
Advances from FHLBs 39,748,613 25,114,776
Other borrowings 5,449,508 7,175,279
Other liabilities 5,456,251 2,515,503
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities 156,148,881 135,921,313
Stockholders' Equity 9,344,400 7,601,085
- -----------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $165,493,281 $143,522,398
========================================================================================================================
Common shares outstanding at end of period 593,408,525 589,789,725
Book value per common share $16.07 $12.61
Tangible book value per common share 14.66 11.84
</TABLE>
<PAGE>
Washington Mutual, Inc.
Consolidated Statements of Financial Position
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Dec. 31, 1998 Sept. 30, 1998 June 30, 1998 Mar. 31, 1998
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Cash $ 2,695,454 $ 1,879,010 $ 1,682,286 $ 1,769,791
Cash equivalents 61,520 169,784 401,289 263,979
Trading securities 39,068 38,452 36,024 130,912
Available-for-sale securities:
Mortgage-backed securities ("MBS") 32,399,591 27,070,604 24,129,275 25,161,533
Investment securities 517,462 567,469 730,193 1,204,617
Held-to-maturity securities:
MBS 13,992,235 15,113,334 16,403,671 16,799,287
Investment securities 137,247 133,202 129,469 126,793
Loans:
Loans held in portfolio 107,612,197 105,830,184 104,795,730 103,781,522
Loans held for sale 1,826,549 1,668,586 1,569,945 2,162,436
Reserve for loan losses (1,067,840) (1,151,486) (1,156,347) (1,153,921)
- -------------------------------------------------------------------------------------------------------------------------------
Total loans 108,370,906 106,347,284 105,209,328 104,790,037
Investment in FHLBs 2,030,027 1,946,267 1,749,922 1,625,122
Foreclosed assets 274,767 281,086 314,627 354,493
Premises and equipment 1,421,162 1,443,988 1,440,715 1,386,254
Intangible assets 1,009,666 1,077,188 1,097,149 1,126,670
Mortgage servicing rights 461,295 405,261 386,778 350,772
Other assets 2,082,881 2,279,788 2,342,546 2,367,832
- -------------------------------------------------------------------------------------------------------------------------------
Total assets $165,493,281 $158,752,717 $156,053,272 $157,458,092
===============================================================================================================================
Liabilities
Deposits:
Checking accounts $ 13,460,731 $ 11,941,954 $ 12,623,882 $ 12,653,030
Savings accounts and money market deposit accounts 28,285,868 26,835,529 24,976,990 24,547,565
Time deposit accounts 43,745,542 45,756,161 50,387,287 52,525,681
- -------------------------------------------------------------------------------------------------------------------------------
Total deposits 85,492,141 84,533,644 87,988,159 89,726,276
Federal funds purchased and commercial paper 2,482,830 5,353,523 4,758,298 5,002,718
Securities sold under agreements to repurchase 17,519,538 15,966,989 16,750,651 16,439,500
Advances from FHLBs 39,748,613 32,999,263 28,928,043 26,653,445
Other borrowings 5,449,508 5,690,820 6,032,211 6,304,544
Other liabilities 5,456,251 4,792,522 2,619,660 4,772,410
- -------------------------------------------------------------------------------------------------------------------------------
Total liabilities 156,148,881 149,336,761 147,077,022 148,898,893
Stockholders' Equity 9,344,400 9,415,956 8,976,250 8,559,199
- -------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $165,493,281 $158,752,717 $156,053,272 $157,458,092
===============================================================================================================================
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31,
1998 1998 1998 1998 1997
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Capital Adequacy
Stockholders' equity/total assets 5.65% 5.93% 5.75% 5.44% 5.30%
Common stockholders' equity/total assets 5.65 5.93 5.72 5.40 5.08
Tangible stockholders' equity/total tangible assets 5.18 5.42 5.22 4.89 5.01
Tangible stockholders' equity (including
trust preferred securities)/total tangible assets 5.75 6.01 5.82 5.49 5.66
Retail Checking Accounts (1)
WMB and WMBfsb 908,077 874,516 833,467 799,447 766,391
WMB,FA 2,990,823 2,950,684 2,997,227 2,974,762 2,582,858
- --------------------------------------------------------------------------------------------------------------------------------
Total retail checking accounts 3,898,900 3,825,200 3,830,694 3,774,209 3,349,249
================================================================================================================================
Retail Checking Account Activity (1)
Net accounts opened during the quarter:
WMB and WMBfsb 33,561 41,049 34,020 33,056 31,882
WMB,FA 40,139 13,903 22,465 69,121 89,505
- --------------------------------------------------------------------------------------------------------------------------------
Net new retail checking accounts 73,700 54,952 56,485 102,177 121,387
================================================================================================================================
Accounts acquired (sold) during the quarter (2) - (60,446) - 322,783 (1,554)
(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>
<TABLE>
<CAPTION>
Quarter Ended Year Ended
Dec. 31, Dec. 31,
- -------------------------------------------------------------------------------------------------------------------------------
1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Consumer Finance Operations
Net interest income $76,536 $66,415 $283,191 $247,205
Provision for loan losses 21,660 19,400 79,760 66,600
Other income 7,037 6,908 27,147 26,555
Other expense 42,817 34,544 142,991 131,129
- -------------------------------------------------------------------------------------------------------------------------------
Income before provision for income 19,096 19,379 87,587 76,031
taxes
Provision for income taxes 7,600 7,344 34,700 29,744
- -------------------------------------------------------------------------------------------------------------------------------
Net income $11,496 $12,035 $ 52,887 $ 46,287
================================================================================================================================
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended Dec. 31, Year Ended Dec. 31,
- -------------------------------------------------------------------------------------------------------------------------------
1998 1997 % Change 1998 1997 % Change
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Loan Originations
Single-family residential ("SFR"):
Adjustable rate ("ARMs") $ 5,282.7 $4,192.9 26% $18,342.9 $16,871.4 9%
Fixed rate 7,586.0 2,977.6 155 23,526.8 8,892.3 165
SFR - custom construction 261.7 240.7 9 1,017.2 883.2 15
SFR - builder construction 184.3 134.9 37 731.1 565.3 29
Apartment buildings 488.7 484.7 1 2,014.8 1,857.9 8
Other commercial real estate 165.1 130.2 27 471.7 495.0 (5)
Commercial business 262.6 224.0 17 1,011.5 759.5 33
Manufactured housing 59.7 76.9 (22) 281.0 324.6 (13)
Second mortgage and other consumer 564.6 602.9 (6) 2,792.3 2,505.0 11
Consumer finance 675.0 723.0 (7) 2,500.3 2,345.4 7
- -------------------------------------------------------------------------------------------------------------------------------
Total loan originations $15,530.4 $9,787.8 59% $52,689.6 $35,499.6 48%
===============================================================================================================================
As a percentage of total loan originations:
SFR, excluding SFR construction 83% 73% 79% 73%
All other 17 27 21 27
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended Dec. 31, 1998 Year Ended Dec. 31, 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 $ 1,632.5 90% 13% $ 7,809.5 87% 19%
COFI 175.9 9 1 852.2 9 2
CMT 9.3 1 - 174.5 2 1
Other 2.8 - - 143.0 2 -
- ---------------------------------------------------------------------------------------------------------------------------------
Total short-term ARMs 1,820.5 100% 14 8,979.2 100% 22
Medium-term ARMs:
MTA 3,390.1 98% 26 8,819.7 94% 21
CMT 72.1 2 1 544.0 6 1
- ---------------------------------------------------------------------------------------------------------------------------------
Total medium-term ARMs 3,462.2 100% 27 9,363.7 100% 22
Fixed-rate mortgages 7,586.0 59 23,526.8 56
- ---------------------------------------------------------------------------------------------------------------------------------
Total SFR loan originations $12,868.7 100% $41,869.7 100%
=================================================================================================================================
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Change from
Sept. 30, 1998 Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31,
to Dec. 31, 1998 1998 1998 1998 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Loans and MBS by Property Type
Loans held in portfolio:
SFR $1,865.3 $ 79,275.2 $ 77,409.9 $ 76,457.0 $ 75,638.6 $ 71,019.3
SFR - custom construction 34.6 515.4 480.8 462.9 453.2 476.6
SFR - builder construction 11.8 504.7 492.9 462.7 420.9 400.9
Apartment buildings (174.4) 14,558.7 14,733.1 14,786.1 14,935.1 14,021.9
Other commercial real estate (52.4) 3,576.2 3,628.6 3,774.7 3,856.8 3,550.9
Commercial business 52.6 1,129.3 1,076.7 1,018.7 885.6 838.4
Manufactured housing, second
mortgage and other consumer (107.1) 5,037.8 5,144.9 5,127.2 4,997.2 4,640.2
Consumer finance 151.6 3,014.9 2,863.3 2,706.4 2,594.1 2,582.6
- ------------------------------------------------------------------------------------------------------------------------------------
Total loans held in portfolio 1,782.0 107,612.2 105,830.2 104,795.7 103,781.5 97,530.8
Loans securitized and retained as MBS (2,264.5) 25,524.6 27,789.1 29,702.4 31,111.7 29,771.1
- ------------------------------------------------------------------------------------------------------------------------------------
Total loans held in portfolio and loans
securitized and retained as MBS (482.5) 133,136.8 133,619.3 134,498.1 134,893.2 127,301.9
Loans held for sale 157.9 1,826.5 1,668.6 1,570.0 2,162.4 1,141.4
Less: reserve for loan losses 83.7 (1,067.8) (1,151.5) (1,156.3) (1,153.9) (1,047.8)
- ------------------------------------------------------------------------------------------------------------------------------------
Total loans and loans securitized
and retained as MBS (240.9) 133,895.5 134,136.4 134,911.8 135,901.7 127,395.5
MBS purchased and retained 6,472.4 20,867.2 14,394.8 10,830.5 10,849.1 5,938.1
- ------------------------------------------------------------------------------------------------------------------------------------
Total loans and MBS $6,231.5 $154,762.7 $148,531.2 $145,742.3 $146,750.8 $133,333.6
====================================================================================================================================
Change in Loans and Securitized MBS
Loans held in portfolio:
Loans originated $ 10,938.9 $ 9,096.0 $ 9,587.2 $ 6,812.7 $ 8,137.5
Loans purchased or acquired (1) 1,329.2 1,043.4 617.1 6,064.6 0.1
Loans securitized (828.5) (629.1) (1,098.1) (734.4) (3,731.3)
Loans sold (23.6) (6.1) (10.0) (8.5) (15.0)
Loan payments and other (9,634.0) (8,469.7) (8,082.0) (5,883.7) (4,628.7)
- ------------------------------------------------------------------------------------------------------------------------------------
Change in loans held in portfolio 1,782.0 1,034.5 1,014.2 6,250.7 (237.4)
Change in loans securitized
and retained as MBS (2,264.5) (1,913.3) (1,409.3) 1,340.6 2,859.0
- ------------------------------------------------------------------------------------------------------------------------------------
Change in loans held in portfolio
and loans securitized and
retained as MBS (482.5) (878.8) (395.1) 7,591.3 2,621.6
Loans held for sale:
Loans originated 4,591.5 3,553.5 4,080.8 4,028.9 1,650.3
Loans sold (4,433.6) (3,454.9) (4,673.2) (3,007.9) (2,587.3)
- ------------------------------------------------------------------------------------------------------------------------------------
Change in loans held for sale 157.9 98.6 (592.4) 1,021.0 (937.0)
Change in reserve for loan losses 83.7 4.8 (2.4) (106.1) 4.4
- ------------------------------------------------------------------------------------------------------------------------------------
Total change in loans
and securitized MBS $ (240.9) $ (775.4) $ (989.9) $ 8,506.2 $ 1,689.0
====================================================================================================================================
As a percentage of total loans
and securitized MBS at
beginning of quarter (0.2)% (0.6)% (0.7)% 6.7% 1.3%
As a percentage of total
assets at beginning of quarter (0.2) (0.5) (0.6) 5.9 1.2
(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
Sept. 30, 1998
to Dec. 31,
1998 Dec. 31, 1998 Sept. 30, 1998
- ----------------------------------------------------------------------------------------------------------------------------
Amount % of total Amount % of total
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Real Estate Loans and MBS
Short-term ARMs:
COFI $ (860.5) $ 74,901.8 51% $ 75,762.3 54%
CMT (787.2) 6,275.9 4 7,063.1 5
MTA 1,208.0 11,747.4 8 10,539.4 8
Other 4,569.8 16,153.4 11 11,583.6 8
- ----------------------------------------------------------------------------------------------------------------------------
Total short-term ARMs 4,130.1 109,078.5 74 104,948.4 75
Medium-term ARMs:
MTA 2,181.8 7,529.6 5 5,347.8 4
CMT (1,718.0) 2,033.7 1 3,751.7 2
COFI (163.9) 739.3 1 903.2 1
Other (355.5) 2,303.0 2 2,658.5 2
- ----------------------------------------------------------------------------------------------------------------------------
Total medium-term ARMs (55.6) 12,605.6 9 12,661.2 9
- ----------------------------------------------------------------------------------------------------------------------------
Fixed-rate loans held in portfolio (3,180.7) 9,529.6 7 12,710.3 9
Fixed-rate loans held for sale 157.9 1,826.5 1 1,668.6 1
Fixed-rate MBS 4,998.9 13,608.2 9 8,609.3 6
- ----------------------------------------------------------------------------------------------------------------------------
Total real estate loans and MBS $ 6,050.6 $146,648.4 100% $140,597.8 100%
============================================================================================================================
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31,
1998 1998 1998 1998 1997
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonperforming Assets ("NPAs")
Nonaccrual loans:
SFR and SFR construction $ 761.7 $ 849.0 $ 909.5 $ 940.0 $ 856.0
Apartment buildings and other
commercial real estate 76.5 68.4 86.8 105.6 95.9
Manufactured housing, second mortgage
and other consumer 38.6 36.2 28.7 27.1 28.6
Consumer finance 53.7 55.3 51.3 48.8 51.2
Commercial business 7.4 3.0 2.1 2.5 2.6
- --------------------------------------------------------------------------------------------------------------------------------
Total nonaccrual loans 937.9 1,011.9 1,078.4 1,124.0 1,034.3
Foreclosed assets:
SFR and SFR construction 215.2 215.7 233.7 279.0 269.9
Apartment buildings and other
commercial real estate 46.4 53.0 73.3 69.8 66.1
Manufactured housing, second mortgage
and other consumer 10.6 10.4 8.7 6.8 6.0
Consumer finance 2.6 2.0 2.0 2.0 1.6
Reserve for losses on foreclosed assets - - (3.1) (3.1) (3.0)
- --------------------------------------------------------------------------------------------------------------------------------
Net foreclosed assets 274.8 281.1 314.6 354.5 340.6
- --------------------------------------------------------------------------------------------------------------------------------
Total NPAs $1,212.7 $1,293.0 $1,393.0 $1,478.5 $1,374.9
================================================================================================================================
NPAs by property type:
SFR and SFR construction $ 976.9 $1,064.7 $1,143.2 $1,219.0 $1,125.9
Apartment buildings 70.0 80.9 101.7 98.2 72.1
Other commercial real estate 52.8 40.5 58.4 77.2 89.9
Manufactured housing, second mortgage
and other consumer 49.2 46.6 37.4 33.9 34.6
Consumer finance 56.4 57.3 53.3 50.8 52.8
Commercial business 7.4 3.0 2.1 2.5 2.6
Reserve for losses on foreclosed assets - - (3.1) (3.1) (3.0)
================================================================================================================================
Total NPAs $1,212.7 $1,293.0 $1,393.0 $1,478.5 $1,374.9
================================================================================================================================
NPAs as a percentage of :
Total loans 1.12% 1.22% 1.32% 1.41% 1.41%
Total assets 0.73 0.81 0.89 0.94 0.96
</TABLE>
<PAGE>
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31,
1998 1998 1998 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Reserve for Loan Losses
Balance, beginning of quarter $1,151.5 $1,156.3 $1,153.9 $1,047.8 $1,052.2
Provision for loan losses 33.2 34.4 44.4 50.0 55.4
Reserves added through business
combinations - - - 107.8 -
Reserves transferred to other liabilities (73.6) (0.8) - - (5.2)
Loans charged off:
SFR and SFR construction (13.6) (13.3) (16.0) (20.8) (28.4)
Commercial real estate (6.7) (5.8) (9.3) (9.5) (10.2)
Manufactured housing, second mortgage
and other consumer (8.1) (5.4) (6.1) (7.5) (4.8)
Consumer finance (24.5) (23.9) (24.6) (24.0) (23.2)
Commercial business (1.0) (1.4) (1.4) (1.4) (1.8)
- -------------------------------------------------------------------------------------------------------------------------------
Total loans charged off (53.9) (49.8) (57.4) (63.2) (68.4)
Recoveries of loans previously charged off:
SFR and SFR construction 3.9 5.7 4.6 1.9 5.7
Commercial real estate 2.2 1.2 5.5 4.7 2.5
Manufactured housing, second mortgage
and other consumer 0.4 0.5 0.5 0.4 0.4
Consumer finance 3.6 3.8 4.7 4.3 5.2
Commercial business 0.5 0.2 0.1 0.2 -
- -------------------------------------------------------------------------------------------------------------------------------
Total recoveries of loans previously
charged off 10.6 11.4 15.4 11.5 13.8
- -------------------------------------------------------------------------------------------------------------------------------
Net charge offs (43.3) (38.4) (42.0) (51.7) (54.6)
- -------------------------------------------------------------------------------------------------------------------------------
Balance, end of quarter $1,067.8 $1,151.5 $1,156.3 $1,153.9 $1,047.8
===============================================================================================================================
Specific and allocated reserves:
SFR $ 16.3 $ 16.3 $ 16.3 $ 19.3 $ 18.0
Commercial real estate 133.1 133.5 136.8 145.5 129.3
Builder construction 0.9 0.9 1.9 2.0 2.2
Commercial business 9.7 9.0 9.3 5.2 3.3
- -------------------------------------------------------------------------------------------------------------------------------
Total specific and allocated reserves 160.0 159.7 164.3 172.0 152.8
Unallocated reserves 907.8 991.8 992.0 981.9 895.0
- -------------------------------------------------------------------------------------------------------------------------------
Total reserve for loan losses $1,067.8 $1,151.5 $1,156.3 $1,153.9 $1,047.8
===============================================================================================================================
Reserve for loan losses as a percentage of:
Nonaccrual loans 114% 114% 107% 103% 101%
Nonperforming assets 88 89 83 78 76
Reserve for losses on loans securitized and
retained or sold $ 144.3 $ 72.6 $ 74.0 $ 77.7 $ 80.2
Loss coverage as a percentage of
nonaccrual loans (1) 129% 121% 114% 110% 109%
(1) Nonaccrual loans include loans sold for which the company retains a
credit risk. The reserve for losses on loans securitized and retained or sold is
included as a component of "other liabilities." The loss coverage calculation
includes this reserve in addition to the reserve for loan losses.
</TABLE>
