Media Contact: Libby Hutchinson
1-800-228-9268
(206) 461-2484
Investor Contacts:JoAnn DeGrande
(206) 461-3186
Ruthanne King Oct. 17, 2000
(206) 461-6421 FOR IMMEDIATE RELEASE
---------------------
WASHINGTON MUTUAL ANNOUNCES STRONG THIRD-QUARTER EARNINGS;
BOARD OF DIRECTORS INCREASES CASH DIVIDEND
SEATTLE -- Washington Mutual, Inc. (NYSE: WM) today announced
third-quarter earnings of $452.5 million or 86 cents per diluted share, versus
third-quarter 1999 earnings of $470.0 million or 83 cents per share. Earnings
for the first nine months of 2000 were $1.40 billion or $2.60 per diluted share
versus $1.37 billion or $2.37 per diluted share for the same period in 1999.
Highlights of the recent quarter included:
o a return on average common equity of 20.54 percent;
o exceptional total loan volume of $17.81 billion, which included, on a
year-over-year-basis, a 12 percent increase in single-family
residential (SFR) loan originations and a 59 percent increase in other
originations;
o record depositor and other retail banking fee income of $256.4 million,
up 29 percent, year over year;
o gains of $62.5 million, composed of a $55.5 million gain on the sale
of current loan production and a $7.0 million gain on the sale of
seasoned loans originated by the company and held in the form of
securities;
o an operating efficiency ratio of 49.06 percent; and
o record net growth of more than 141,000 retail checking accounts.
Based on the company's third-quarter performance, the board of directors
declared a cash dividend on the common stock of 30 cents per share, an increase
from the previous quarter's cash dividend of 29 cents per share. Dividends on
the common stock are payable Nov. 15, 2000 to shareholders of record as of Oct.
31, 2000.
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WM - 2
"Our company continues to successfully execute a growth strategy
predicated upon efficient household acquisition and continual cross-sale of
products and services to our customers, significantly increasing the level of
fee-based income and expansion of our loan origination capability," said Kerry
Killinger, Washington Mutual's chairman, president and CEO. "During the third
quarter, we achieved these key objectives while generating a return on common
equity that exceeded our long-term goal of 20 percent. It was a very solid
quarter."
He continued, "Washington Mutual also took steps to strengthen its market
position in several key businesses with the announced acquisition of Bank
United, Texas' largest independent consumer bank. Bank United also has numerous
commercial lending specialties, Killinger said, which will assist Washington
Mutual in its effort to remix the balance sheet by increasing the percentage of
higher-margin loans over time.
Shortly following the end of the quarter, the company also announced the
acquisition of the residential mortgage origination and servicing operations of
PNC Financial Services Group in a move that Killinger said will solidify
Washington Mutual's mortgage origination and loan servicing position nationally.
"PNC is a terrific match for our company in a business that will require
significant scale, breadth and flexibility to deliver shareholder value in the
future."
THIRD-QUARTER RESULTS
Third-quarter 1999 results do not reflect the operations of Long Beach
Mortgage, which was acquired in a purchase transaction on Oct. 1 of last year.
NET INTEREST AND NONINTEREST INCOME
Primarily the result of rising interest rates and controlled growth of the
balance sheet, net interest income was $1.03 billion for the third quarter
versus $1.12 billion a year earlier. The spread during the quarter was 2.19
percent, compared with 2.50 percent for the same period last year. The margin
was 2.31 percent in the most recent quarter versus 2.64 percent for third
quarter 1999.
Depositor and other retail banking fees were a record $256.4 million, up 29
percent from $198.4 million a year earlier. Helping drive this increase in fee
income was the addition of 492,393 net new retail checking accounts over the
twelve-month period ending Sept. 30, 2000. In the third quarter alone, the
company added a record 141,699 net new retail checking accounts.
The strong growth in noninterest income was also fueled by an increase in
securities fees and commissions, which were $78.4 million for the third quarter
of 2000, up nearly 11 percent from $70.8 million for the same period one year
ago.
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WM - 3
Consistent with its ongoing strategy, Washington Mutual continues to sell
the vast majority of its fixed-rate loan production as well as loans originated
by its specialty mortgage unit, Long Beach Mortgage. In addition, the company
has successfully developed a secondary market for some of its adjustable rate
mortgage (ARM) production. Current ARM production that is not retained in the
loan portfolio is sold to investors shortly following origination or securitized
and seasoned for a period of time before being sold at a later date. Washington
Mutual retains the servicing rights on the residential mortgages that are sold.
"Our unique strategy combines the strengths of a traditional mortgage
banker with those of a portfolio lender," Killinger said. "Throughout all points
of the interest rate cycle, this strategy should produce a more consistent
revenue stream than a mono-line mortgage banking or portfolio-lending-only
strategy."
During the third quarter, the sale of current loan production resulted in
gains of $55.5 million. Additionally, the sale of securitized seasoned loans
previously originated by Washington Mutual generated gains of $7.0 million.
Collectively these gains totaled $62.5 million. The company realized additional
net gains of $2.3 million on the sale of investment securities.
LENDING
Defying the industry-wide decline in lending, total loan volume (including
loans originated by the company, purchased loans and loans originated by
correspondents) increased to $17.81 billion for the quarter, up 10 percent from
$16.19 billion one year ago.
Single-family residential (SFR) loan originations (excluding residential
construction) were $11.18 billion, up 12 percent from $9.99 billion one year
ago. Of the third-quarter SFR originations, 85 percent were adjustable-rate
mortgages, consistent with last year's 86 percent.
Originations of loans other than SFR totaled $4.39 billion for the most
recent quarter, up 59 percent over $2.76 billion in the third quarter of 1999.
EFFICIENCY RATIO
The efficiency ratio (defined as noninterest expense, excluding
amortization of intangible assets, as a percentage of net interest income and
noninterest income) was 49.06 percent for the most recent quarter compared with
45.39 percent in last year's third quarter, which did not include Long Beach
Mortgage.
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WM - 4
Noninterest expense, including $26.2 million in expenses associated with
Long Beach Mortgage, totaled $784.8 million in the third quarter of 2000,
compared with third-quarter 1999's figure of $699.5 million. Last year's
noninterest expense figure included $12.7 million of transaction-related expense
but did not include Long Beach expenses.
CREDIT QUALITY
Killinger said that credit quality, a key focus for the company, continues
to be closely monitored. Total nonperforming assets were $993.3 million at Sept.
30, 2000 versus $973.6 million at June 30, 2000 and represented just 0.52
percent of total assets at the end of the third quarter of 2000, unchanged from
June 30, 2000.
Reflecting the company's progress in diversifying its balance
sheet, the provision for loan losses was $47.6 million, versus $40.8 million for
the same period in the previous year. Net loan charge-offs for the third quarter
were $42.9 million, comparable with $43.0 million a year earlier. At Sept. 30,
2000, loan loss reserves totaled $1.01 billion, and represented 121 percent of
nonaccrual loans.
BALANCE SHEET AND CAPITAL MANAGEMENT
Reflecting the recent appreciation of its common stock, the company did not
repurchase any of its outstanding shares during the third quarter. Instead,
Washington Mutual deployed capital to facilitate balance sheet growth and
retained additional capital in anticipation of completing the announced
acquisitions of Bank United and PNC's mortgage business.
Consolidated assets at Sept. 30, 2000, were $190.78 billion, compared with
$185.69 billion at June 30, 2000 and $186.51 billion at Dec. 31, 1999.
Stockholders' equity at Sept. 30, 2000 was $9.33 billion and the capital
ratios of Washington Mutual's banking subsidiaries continued to exceed
regulatory requirements for classification as "well-capitalized," the highest
regulatory standard.
At Sept. 30, 2000, transaction account balances, including checking,
savings and money market deposits, represented 55 percent of total deposits,
unchanged from the end of the third quarter of 1999. The average deposit balance
during the third quarter was $79.95 billion, versus $82.51 billion during the
third quarter of 1999.
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WM - 5
COMPANY UPDATES
o As previously mentioned, on August 21 the company announced the signing
of a definitive agreement to acquire Bank United Corp. (Nasdaq: BNKU) for
approximately $1.5 billion. The transaction will create a $10.7 billion deposit
banking operation in Texas and gives Washington Mutual top-tier market share in
three of the four largest metropolitan markets in the state. The transaction is
expected to be completed in the first quarter of 2001, pending approval by Bank
United shareholders and regulatory authorities.
With nearly 20 million consumers, the Texas economy is the third largest in
the U.S. and its deposit market is the country's fourth largest. The Texas
economy is growing at a rate of 4.6 percent, outpacing the economic growth of
the U.S. as a whole.
At the time of the announcement, Killinger noted that Bank United has
demonstrated that it can generate strong loan growth, as well as significantly
increase fee income and checking accounts. Bank United's success in diversifying
its business over the past few years is highly complementary to Washington
Mutual's own strategy to remix the balance sheet with higher-yielding consumer,
commercial and mortgage banking assets.
o The acquisition of PNC's mortgage operations, announced on Oct. 2, will
further diversify Washington Mutual's mortgage operation geographically and
enhances the company's already strong position in the home loan business, making
it the country's third-largest mortgage originator and fourth-largest servicer
of residential mortgages, on a pro forma basis.
At the time of the announcement the transaction was valued at approximately
$605 million in cash, subject to closing adjustments. It is expected to close in
the first quarter of 2001.
o The company re-launched its enhanced mortgage lending site,
wamumortgage.com, further expanding its presence on the Internet. The new site
possesses a more robust recommendation engine, numerous calculators, interactive
customer service and a feature known as "My Notebook & Loan Status" which
provides customers with 24-hour access to the status of their loan application.
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WM - 6
OUTLOOK
"By any measure, Washington Mutual's operating fundamentals are strong,
credit quality remains good and our employees continue to produce excellent
results," Killinger said. "We continue to invest in new and innovative ways of
serving an ever-growing customer base; and our ability to generate significant
capital through ongoing operations places Washington Mutual in an excellent
position to continue to create shareholder value."
With a history dating back to 1889, Washington Mutual is a national
financial services company that provides a diversified line of products and
services to consumers and small- to mid-sized businesses. At Sept. 30, 2000,
Washington Mutual and its subsidiaries had consolidated assets of $190.78
billion. Washington Mutual currently operates more than 2,000 consumer banking,
mortgage lending, commercial banking, consumer finance and financial services
offices throughout the nation. Washington Mutual's press releases are available
at www.wamu.com.
To view a downloadable version of the third quarter earnings financial
supplement, click here.
A live webcast of the company's quarterly earnings conference call will be
held on Wednesday, October 18 at 10:30 a.m. Eastern Time at www.wamu.com.
# # #
<PAGE>
WM - 7
<TABLE>
<CAPTION>
WASHINGTON MUTUAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share amounts)
(unaudited)
Quarter Ended Nine Months Ended
----------------------------------------------------------------------------------------------------------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2000 2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INTEREST INCOME
Loans $2,396,449 $2,237,514 $2,126,725 $6,855,154 $6,168,599
Available-for-sale ("AFS") securities 703,405 702,647 644,262 2,098,296 1,829,596
Held-to-maturity ("HTM") securities 325,782 333,187 239,199 998,065 744,992
Other interest and dividend income 59,305 88,655 49,330 199,075 130,069
----------------------------------------------------------------------------------------------------------------------
Total interest income 3,484,941 3,362,003 3,059,516 10,150,590 8,873,256
INTEREST EXPENSE
Deposits 844,318 803,068 775,800 2,435,241 2,382,121
Borrowings 1,606,640 1,467,044 1,164,050 4,504,765 3,095,566
----------------------------------------------------------------------------------------------------------------------
Total interest expense 2,450,958 2,270,112 1,939,850 6,940,006 5,477,687
----------------------------------------------------------------------------------------------------------------------
Net interest income 1,033,983 1,091,891 1,119,666 3,210,584 3,395,569
Provision for loan losses 47,565 44,076 40,799 132,803 125,356
----------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 986,418 1,047,815 1,078,867 3,077,781 3,270,213
NONINTEREST INCOME
Depositor and other retail banking fees 256,435 239,773 198,360 707,241 543,891
Securities fees and commissions 78,369 83,516 70,781 244,458 199,667
Insurance fees and commissions 10,671 10,836 10,571 32,986 31,510
Loan servicing income 37,709 39,134 23,871 110,112 73,783
Loan related income 30,086 29,044 24,586 83,151 77,992
Gain on sale of loans 55,523 80,671 14,642 197,422 81,025
Gain (loss) from securities 9,318 (1,758) (9,549) (14,006) (11,900)
Other income 32,813 19,027 36,257 72,867 89,813
----------------------------------------------------------------------------------------------------------------------
Total noninterest income 510,924 500,243 369,519 1,434,231 1,085,781
NONINTEREST EXPENSE
Compensation and benefits 339,061 335,480 294,323 1,004,947 898,052
Occupancy and equipment 145,518 148,080 139,237 446,099 411,301
Telecommunications and outsourced information services 81,982 77,359 70,862 236,268 208,106
Depositor and other retail banking losses 27,638 23,169 29,594 76,329 77,483
Transaction-related expense - - 12,673 - 73,044
Amortization of goodwill and other intangible assets 26,866 27,137 23,447 80,749 72,082
Foreclosed asset income (635) (3,777) (7,043) (5,807) (6,314)
Other expense 164,325 167,755 136,363 465,951 444,193
----------------------------------------------------------------------------------------------------------------------
Total noninterest expense 784,755 775,203 699,456 2,304,536 2,177,947
----------------------------------------------------------------------------------------------------------------------
Income before income taxes 712,587 772,855 748,930 2,207,476 2,178,047
Income taxes 260,094 282,093 278,950 805,729 811,275
----------------------------------------------------------------------------------------------------------------------
NET INCOME $452,493 $490,762 $469,980 $1,401,747 $1,366,772
======================================================================================================================
NET INCOME ATTRIBUTABLE TO COMMON STOCK $452,493 $490,762 $469,980 $1,401,747 $1,366,772
======================================================================================================================
Net income per common share:
Basic $0.86 $0.92 $0.83 $2.61 $2.37
Diluted 0.86 0.92 0.83 2.60 2.37
</TABLE>
<PAGE>
WM - 8
<TABLE>
<CAPTION>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
Quarter Ended Nine Months Ended
-----------------------------------------------------------------------------------------------------------------------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2000 2000 1999 2000 1999
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DATA USED TO COMPUTE PER SHARE AMOUNTS
Net income attributable to basic and diluted common stock $452,493 $490,762 $469,980 $1,401,747 $1,366,772
Average common shares used to calculate earnings per share:
Basic 526,896,474 532,327,052 565,360,141 536,966,663 575,777,473
Common stock equivalents 1,991,650 1,172,475 1,333,556 1,345,219 1,997,716
-----------------------------------------------------------------------------------------------------------------------------------
Diluted 528,888,124 533,499,527 566,693,697 538,311,882 577,775,189
FINANCIAL RATIOS
Return on average assets 0.96% 1.07% 1.06% 1.00% 1.06%
Return on average common equity 20.54 22.97 21.03 21.37 19.58
Efficiency ratio:
Including amortization of intangible assets 50.80 48.69 46.97 49.62 48.60
Excluding amortization of intangible assets 49.06 46.99 45.39 47.88 46.99
WEIGHTED AVERAGE INTEREST RATES
Yield on loans 8.09% 7.88% 7.35% 7.87% 7.38%
Yield on mortgage-backed securities ("MBS") 7.00 6.90 6.70 6.90 6.69
Yield on investment securities 6.46 8.43 5.62 6.98 5.58
-----------------------------------------------------------------------------------------------------------------------------------
Yield on interest-earning assets 7.70 7.57 7.11 7.53 7.13
Cost of deposits 4.20 4.02 3.73 4.05 3.81
Cost of borrowings 6.60 6.35 5.47 6.34 5.39
-----------------------------------------------------------------------------------------------------------------------------------
Cost of interest-bearing liabilities 5.51 5.27 4.61 5.29 4.57
Net interest spread 2.19 2.30 2.50 2.24 2.56
Net interest margin 2.31 2.43 2.64 2.37 2.72
AVERAGE BALANCES
Loans $118,399,234 $113,597,564 $115,584,502 $116,103,819 $111,504,519
MBS 58,102,264 59,525,121 52,239,151 59,220,582 50,767,461
Investment securities 4,398,396 4,674,386 4,101,172 4,397,772 3,799,978
-----------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 180,899,894 177,797,071 171,924,825 179,722,173 166,071,958
Deposits:
Checking accounts 14,285,677 14,375,905 13,638,697 14,059,743 13,690,500
Savings accounts and money market deposit accounts("MMDAs") 29,698,608 29,264,717 31,539,951 29,672,428 30,155,393
Time deposit accounts 35,965,225 36,697,784 37,332,695 36,684,629 39,720,784
-----------------------------------------------------------------------------------------------------------------------------------
Total deposits 79,949,510 80,338,406 82,511,343 80,416,800 83,566,677
Borrowings 96,904,261 92,903,373 84,500,292 94,852,461 76,795,776
-----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 176,853,771 173,241,779 167,011,635 175,269,261 160,362,453
Total assets 188,014,534 183,712,586 177,663,218 186,041,782 171,129,534
Stockholders' equity 8,811,941 8,544,297 8,938,658 8,747,473 9,307,584
</TABLE>
<PAGE>
WM - 9
<TABLE>
<CAPTION>
WASHINGTON MUTUAL, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands, except per share amounts)
(unaudited)
Sept. 30, 2000 Dec. 31, 1999 Sept. 30, 1999
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $2,218,333 $3,040,167 $2,467,109
Trading securities 46,609 34,660 30,740
AFS securities:
MBS 39,754,149 40,972,653 37,483,437
Investment securities 468,939 411,665 455,474
HTM securities:
MBS 17,138,429 19,263,413 12,967,231
Investment securities 136,727 138,052 138,043
Loans:
Loans held in portfolio 115,054,356 113,745,650 119,541,616
Loans held for sale 6,185,789 793,504 304,418
Reserve for loan losses (1,011,817) (1,041,929) (1,051,369)
-----------------------------------------------------------------------------------------------------------------------
Total loans, net of reserve for loan losses 120,228,328 113,497,225 118,794,665
Mortgage servicing rights 899,240 643,185 489,037
Foreclosed assets 156,628 198,961 222,689
Premises and equipment 1,544,250 1,558,649 1,544,342
Investment in Federal Home Loan Banks ("FHLBs") 3,195,901 2,916,749 2,669,898
Goodwill and other intangible assets 1,108,616 1,199,854 936,433
Other assets 3,884,001 2,638,397 2,600,806
-----------------------------------------------------------------------------------------------------------------------
Total assets $190,780,150 $186,513,630 $180,799,904
=======================================================================================================================
LIABILITIES
Deposits:
Checking accounts $ 14,656,567 $ 13,489,471 $ 13,542,197
Savings accounts and MMDAs 29,843,865 30,048,378 31,127,144
Time deposit accounts 35,952,913 37,591,919 36,955,147
-----------------------------------------------------------------------------------------------------------------------
Total deposits 80,453,345 81,129,768 81,624,488
Federal funds purchased and commercial paper 3,913,673 866,543 1,574,706
Securities sold under agreements to repurchase
("reverse repurchase agreements") 30,588,865 30,162,823 28,649,976
Advances from FHLBs 56,938,413 57,094,053 52,531,731
Other borrowings 6,907,166 6,203,197 5,850,417
Other liabilities 2,649,450 2,004,567 1,662,606
-----------------------------------------------------------------------------------------------------------------------
Total liabilities 181,450,912 177,460,951 171,893,924
STOCKHOLDERS' EQUITY 9,329,238 9,052,679 8,905,980
-----------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $190,780,150 $186,513,630 $180,799,904
=======================================================================================================================
Common shares outstanding at end of period (1) 539,082,138 571,589,272 574,428,172
Book value per common share $17.70 $16.18 $15.83
Tangible book value per common share 15.89 14.32 14.50
Full-time equivalent employees at end of period 28,428 28,509 26,967
(1) Includes 12 million shares held in escrow that were not included in the book
value per share calculations.
</TABLE>
<PAGE>
WM - 10
<TABLE>
<CAPTION>
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.
Quarter Ended Nine Months Ended
---------------------------------------------------------------------------------------------------------------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2000 2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REPORTED FINANCIAL RESULTS
Net income $452,493 $490,762 $469,980 $1,401,747 $1,366,772
Net income per diluted common share $0.86 $0.92 $0.83 $2.60 $2.37
Financial ratios on reported financial results:
Return on average assets 0.96% 1.07% 1.06% 1.00% 1.06%
Return on average common equity 20.54 22.97 21.03 21.37 19.58
Efficiency ratio, excluding amortization of intangible assets 49.06 46.99 45.39 47.88 46.99
OPERATING FINANCIAL RESULTS, EXCLUDING TRANSACTION-RELATED EXPENSE
Reported pretax income $712,587 $772,855 $748,930 $2,207,476 $2,178,047
Transaction-related expense - - 12,673 - 73,044
---------------------------------------------------------------------------------------------------------------------------
Adjusted pretax income 712,587 772,855 761,603 2,207,476 2,251,091
Provision for income taxes 260,094 282,093 283,671 805,729 838,483
---------------------------------------------------------------------------------------------------------------------------
Earnings from operations, excluding transaction-related expense $452,493 $490,762 $477,932 $1,401,747 $1,412,608
===========================================================================================================================
Earnings per diluted common share $0.86 $0.92 $0.84 $2.60 $2.44
Financial ratios on operating financial results:
Return on average assets 0.96% 1.07% 1.08% 1.00% 1.10%
Return on average common equity 20.54 22.97 21.39 21.37 20.24
Efficiency ratio, excluding amortization of intangible assets 49.06 46.99 44.54 47.88 45.36
EARNINGS FROM OPERATIONS, EXCLUDING TRANSACTION-RELATED EXPENSE AND AMORTIZATION OF INTANGIBLE ASSETS
Earnings from operations, excluding transaction-related expense $452,493 $490,762 $477,932 $1,401,747 $1,412,608
Total amortization of intangible assets during the period 26,866 27,137 23,447 80,749 72,082
Tax benefit 6,213 6,275 4,655 18,546 14,367
---------------------------------------------------------------------------------------------------------------------------
Amortization of intangible assets, net of tax 20,653 20,862 18,792 62,203 57,715
---------------------------------------------------------------------------------------------------------------------------
Earnings from operations, excluding transaction-related
expense and amortization of intangibl assets $473,146 $511,624 $496,724 $1,463,950 $1,470,323
===========================================================================================================================
Earnings per diluted common share $0.89 $0.96 $0.88 $2.72 $2.54
Financial ratios on earnings from operations:
Return on average assets 1.01% 1.11% 1.12% 1.05% 1.15%
Return on average common equity 21.48 23.95 22.23 22.31 21.06
</TABLE>
<PAGE>
WM - 11
<TABLE>
<CAPTION>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(unaudited)
Sept. 30, June 30,
2000 2000
------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL ADEQUACY
Stockholders' equity/total assets 4.89% 4.61%
Stockholders' equity (1)/total assets (1) 5.14 5.09
Estimated total risk-based capital (2) 11.15 11.29
(1) Excludes unrealized net loss on available-for-sale securities.
(2) Estimate of what WMI's total risk-based capital ratio would be if it were a
bank holding company that complies with Federal Reserve Board capital
requirements.
Sept. 30, June 30, Sept. 30,
2000 2000 1999
------------------------------------------------------------------------------------
<S> <C> <C> <C>
RETAIL CHECKING ACCOUNTS (3)
WMB and WMBfsb 1,057,124 1,040,850 995,725
WMB, FA 3,645,811 3,520,385 3,214,817
------------------------------------------------------------------------------------
Total retail checking accounts 4,702,935 4,561,235 4,210,542
====================================================================================
RETAIL CHECKING ACCOUNT ACTIVITY (3)
Net accounts opened during the quarter:
WMB and WMBfsb 16,274 14,400 29,590
WMB, FA 125,426 118,610 101,781
------------------------------------------------------------------------------------
Net new retail checking accounts 141,700 133,010 131,371
====================================================================================
(3) Retail checking accounts exclude commercial business accounts. The
information provided refers to the number of accounts, not dollar volume.
</TABLE>
<PAGE>
WM - 12
<TABLE>
<CAPTION>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
Quarter Ended Nine Months Ended
--------------------------------------------------------------------------------------------------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2000 2000 1999 2000 1999
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LOAN VOLUME
Single-family residential ("SFR"):
Adjustable rate ("ARMs") $10,329.8 $10,220.1 $ 9,866.0 $28,519.4 $23,950.6
Fixed rate 1,638.9 1,392.6 1,413.5 3,770.4 9,904.4
SFR - construction 466.8 540.6 581.9 1,435.3 1,533.2
Second mortgage and other consumer:
Banking subsidiaries 1,381.5 1,299.9 770.8 3,577.6 2,106.9
Washington Mutual Finance 499.6 527.1 488.4 1,478.7 1,351.2
Specialty mortgage finance 2,351.3 2,800.5 2,302.8 6,462.2 3,550.9
Commercial business 738.7 704.5 219.0 1,888.9 821.1
Commercial real estate:
Apartment buildings 305.7 412.1 473.5 1,189.7 1,225.1
Other commercial real estate 99.9 50.5 78.2 233.8 200.2
--------------------------------------------------------------------------------------------------------------
Total loan volume $17,812.2 $17,947.9 $16,194.1 $48,556.0 $44,643.6
==============================================================================================================
As a percentage of total loan volume:
SFR, excluding SFR construction 67% 65% 70% 67% 76%
All other 33 35 30 33 24
LOAN VOLUME BY CHANNEL
Originated $15,576.1 $15,855.9 $12,760.3 $43,596.8 $38,303.9
Purchased 2,236.1 2,092.0 3,433.8 4,959.2 6,339.7
--------------------------------------------------------------------------------------------------------------
Total loan volume by channel $17,812.2 $17,947.9 $16,194.1 $48,556.0 $44,643.6
==============================================================================================================
SFR LOAN ORIGINATIONS (1)
Short-term ARMs:
Treasury indices $ 6,604.0 $ 7,214.6 $4,149.0 $19,145.0 $ 8,886.5
COFI 2,624.2 1,598.6 212.7 4,601.4 488.9
Other 12.3 1.3 1.6 16.0 8.5
--------------------------------------------------------------------------------------------------------------
Total short-term ARMs 9,240.5 8,814.5 4,363.3 23,762.4 9,383.9
Medium-term ARMs 310.9 1,126.8 4,222.3 3,497.6 11,601.0
Fixed-rate mortgages 1,631.6 1,386.5 1,413.5 3,750.4 9,683.5
--------------------------------------------------------------------------------------------------------------
Total SFR loan originations $11,183.0 $11,327.8 $9,999.1 $31,010.4 $30,668.4
==============================================================================================================
(1) Does not include purchased SFR loans.
</TABLE>
<PAGE>
WM - 13
<TABLE>
<CAPTION>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
Change from
June 30, 2000 Sept. 30, June 30, Sept. 30,
to Sept. 30, 2000 2000 2000 1999
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LOANS AND MBS BY PROPERTY TYPE
Loans held in portfolio:
SFR $297.5 $77,006.6 $76,709.1 $87,489.1
SFR - construction 53.7 1,413.8 1,360.1 1,172.5
Second mortgage and other consumer:
Banking subsidiaries 494.9 7,496.5 7,001.6 6,146.7
Washington Mutual Finance 98.7 2,413.9 2,315.2 1,953.3
Specialty mortgage finance 954.3 6,187.0 5,232.7 3,734.4
Commercial business 238.9 2,075.9 1,837.0 1,312.9
Commercial real estate:
Apartment buildings 18.5 15,588.4 15,569.9 14,623.3
Other commercial real estate (20.6) 2,872.2 2,892.8 3,109.4
---------------------------------------------------------------------------------------------------------
Total loans held in portfolio 2,135.9 115,054.3 112,918.4 119,541.6
Loans securitized and retained as MBS (481.4) 33,416.1 33,897.5 22,652.0
---------------------------------------------------------------------------------------------------------
Total loans held in portfolio and loans
securitized and retained as MBS 1,654.5 148,470.4 146,815.9 142,193.6
Loans held for sale 4,439.3 6,185.8 1,746.5 304.4
Less: reserve for loan losses (2.1) (1,011.8) (1,009.7) (1,051.4)
---------------------------------------------------------------------------------------------------------
Total loans and loans securitized and retained as MBS 6,091.7 153,644.4 147,552.7 141,446.6
Purchased MBS (708.5) 23,476.5 24,185.0 27,798.7
---------------------------------------------------------------------------------------------------------
Total loans and MBS $5,383.2 $177,120.9 $171,737.7 $169,245.3
=========================================================================================================
Sept. 30, 2000 Dec. 31, 1999 Sept. 30, 1999
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MBS BALANCES BY ORIGINATED AND PURCHASED:
AFS MBS:
Originated $16,391.0 $14,381.5 $ 9,838.7
Purchased 23,363.2 26,591.2 27,644.8
------------------------------------------------------------------------------------------------------
$39,754.2 $40,972.7 $37,483.5
======================================================================================================
HTM MBS:
Originated $17,025.1 $19,123.9 $12,813.3
Purchased 113.3 139.5 153.9
------------------------------------------------------------------------------------------------------
$17,138.4 $19,263.4 $12,967.2
======================================================================================================
</TABLE>
<PAGE>
WM - 14
<TABLE>
<CAPTION>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
June 30, 2000 Dec. 31, 1999
to Sept. 30, 2000 to Sept. 30, 2000
----------------------------------------------------------------------------------------------------
<S> <C> <C>
ROLLFORWARD OF LOANS (HELD FOR SALE AND HELD IN PORTFOLIO)
Balance, beginning of period $114,664.9 $114,539.2
Loans originated and purchased 17,812.2 48,556.0
Loans sold or securitized (4,674.2) (23,665.4)
Loan payments and other (6,562.8) (18,189.7)
----------------------------------------------------------------------------------------------------
Change in loans 6,575.2 6,700.9
----------------------------------------------------------------------------------------------------
Balance, end of period $121,240.1 $121,240.1
====================================================================================================
ROLLFORWARD OF MORTGAGE SERVICING RIGHTS ("MSR")
Balance, beginning of period $841.0 $643.2
Additions 94.2 347.0
Amortization (36.0) (91.0)
Impairment adjustment - -
----------------------------------------------------------------------------------------------------
Balance, end of period $899.2 $899.2
====================================================================================================
ROLLFORWARD OF LOAN SERVICING PORTFOLIO WITH MSR (1)
Balance, beginning of period $70,500.2 $55,268.2
Additions 4,721.5 23,790.3
Loan payments and other (2,433.6) (6,270.4)
----------------------------------------------------------------------------------------------------
Balance, end of period $72,788.1 $72,788.1
====================================================================================================
(1) Rollforward does not include approximately $7.95 billion of loans sold or
securitized without capitalized MSR.
</TABLE>
<PAGE>
WM - 15
<TABLE>
<CAPTION>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(unaudited)
Change from
June 30, 2000 Sept. 30, June 30, Sept. 30,
to Sept. 30, 2000 2000 % of total 2000 % of total 1999 % of total
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
REAL ESTATE LOANS AND MBS (dollars in millions)
Short-term ARMs:
COFI $1,038.1 $43,085.9 27% $42,047.8 27% $61,934.2 39%
Treasury indices 4,092.6 43,025.9 27 38,933.3 25 18,297.5 12
Other (37.6) 8,733.8 (1) 5 8,771.4 (1) 5 5,929.6 4
---------------------------------------------------------------------------------------------------------------------
Total short-term ARMs 5,093.1 94,845.6 59 89,752.5 57 86,161.3 55
Medium-term ARMs (799.0) 29,753.5 19 30,552.5 20 30,929.2 20
Fixed-rate loans (84.8) 12,308.7 8 12,393.5 8 17,477.8 11
Fixed-rate MBS (610.8) 23,051.6 14 23,662.4 15 22,581.1 14
---------------------------------------------------------------------------------------------------------------------
Total real estate loans and MBS $3,598.5 $159,959.4 100% $156,360.9 100% $157,149.4 100%
=====================================================================================================================
(1) At June 30, 2000 the balance includes $2.67 billion of securities
retained which bear COFI to LIBOR basis risk.
At September 30, 2000 the balance includes $2.68 billion of securities
retained which bear COFI to LIBOR basis risk.
Quarter Ended Nine Months Ended
-----------------------------------------------------------------------------------------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2000 2000 1999 2000 1999
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCOME RELATED TO MORTGAGE LOANS (dollars in thousands)
Loan related income $ 30,086 $ 29,044 $24,586 $ 83,151 $ 77,992
Loan servicing income 37,709 39,134 23,871 110,112 73,783
Gain on sale of loans 55,523 80,671 14,642 197,422 81,025
-----------------------------------------------------------------------------------------------------
Total income related to mortgage loans $123,318 $148,849 $63,099 $390,685 $232,800
=====================================================================================================
</TABLE>
<PAGE>
WM - 16
<TABLE>
<CAPTION>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
Sept. 30, 2000 June 30, 2000
---------------------------------------------------------------------------------------------------------------
Balance Term (1) Balance Term (1)
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DEPOSITS, BORROWINGS AND DERIVATIVES OUTSTANDING (in months) (in months)
Deposits:
Noninterest-bearing checking accounts $ 8,844.2 NA $ 8,952.7 NA
Interest-bearing checking accounts, savings accounts and MMDAs 35,656.2 NA 35,427.0 NA
Time deposit accounts 35,952.9 7 36,216.6 8
---------------------------------------------------------------------------------------------------------------
Total deposits 80,453.3 80,596.3
Borrowings:
Adjustable 57,284.4 1 53,247.5 1
Short-term fixed 28,930.0 2 26,221.7 2
Long-term fixed 12,133.7 52 14,873.5 47
---------------------------------------------------------------------------------------------------------------
Total borrowings 98,348.1 94,342.7
---------------------------------------------------------------------------------------------------------------
Total deposits and borrowings $178,801.4 $174,939.0
===============================================================================================================
Notional amount of derivatives:
WM pay rate swaps:
Fixed rate $12,658.0 11 $12,967.0 14
Variable rate 2,090.0 1 2,140.0 2
---------------------------------------------------------------------------------------------------------------
Total swaps 14,748.0 15,107.0
Caps\Collars\Corridors 8,984.3 1 9,333.8 1
---------------------------------------------------------------------------------------------------------------
Total derivatives $23,732.3 $24,440.8
===============================================================================================================
(1) Terms used are remaining term for deposits and term to reprice for
borrowings and notional amount of derivatives.
</TABLE>
<PAGE>
WM - 17
<TABLE>
<CAPTION>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
Quarter Ended
---------------------------------------------------------------------------------------------------------------------
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2000 2000 2000 1999 1999
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVE FOR LOAN LOSSES
Balance, beginning of quarter $1,009.7 $1,025.2 $1,041.9 $1,051.4 $1,053.6
Provision for loan losses 47.6 44.1 41.2 41.7 40.8
Identified allowance for loans sold or securitized(1) (2.6) (17.1) (16.9) (6.4) -
Loans charged off:
SFR and SFR construction (3.1) (5.6) (6.8) (8.3) (9.9)
Second mortgage and other consumer:
Banking subsidiaries (11.6) (9.9) (10.6) (9.9) (12.2)
Washington Mutual Finance (30.2) (28.2) (27.1) (26.5) (23.5)
Specialty mortgage finance (0.8) (0.8) (0.6) (0.3) (0.1)
Commercial business (3.4) (3.7) (0.8) (1.1) (0.7)
Commercial real estate:
Apartment buildings (0.3) (0.5) (1.2) (2.2) (1.2)
Other commercial real estate (0.4) (0.6) (0.4) (4.7) (2.2)
---------------------------------------------------------------------------------------------------------------------
Total loans charged off (49.8) (49.3) (47.5) (53.0) (49.8)
Recoveries of loans previously charged off:
SFR and SFR construction 0.3 0.8 0.1 1.4 0.5
Second mortgage and other consumer:
Banking subsidiaries 0.7 1.0 0.8 0.8 1.0
Washington Mutual Finance 4.4 4.3 4.4 4.0 3.8
Specialty mortgage finance - - 0.5 0.3 -
Commercial business 0.3 0.4 0.2 0.2 0.1
Commercial real estate:
Apartment buildings 0.8 - 0.5 1.4 0.7
Other commercial real estate 0.4 0.3 - 0.1 0.7
--------------------------------------------------------------------------------------------------------------------
Total recoveries of loans previously charged off 6.9 6.8 6.5 8.2 6.8
--------------------------------------------------------------------------------------------------------------------
Net charge offs (42.9) (42.5) (41.0) (44.8) (43.0)
--------------------------------------------------------------------------------------------------------------------
Balance, end of quarter $1,011.8 $1,009.7 $1,025.2 $1,041.9 $1,051.4
====================================================================================================================
Net charge offs (annualized) as a percentage of average loans 0.14% 0.15% 0.14% 0.15% 0.15%
(1) Allowance is due to loan sales and securitizations during the applicable quarters.
</TABLE>
<PAGE>
WM - 18
<TABLE>
<CAPTION>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
Sept. 30, June 30, Sept. 30,
2000 2000 1999
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
RESERVE FOR LOAN LOSSES AS A PERCENTAGE OF:
Nonaccrual loans 121% 126% 126%
Nonperforming assets 102 104 99
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 $106.3 $109.5 $122.0
Charge offs, net of provision for recourse losses (0.2) (3.2) (5.0)
---------------------------------------------------------------------------------------
Balance, end of quarter $106.1 $106.3 $117.0
=======================================================================================
The total loss coverage represents the reserve for loan losses and recourse
liability as a percentage of nonaccrual loans:
Total loss coverage percentage 134% 139% 140%
</TABLE>
<PAGE>
WM - 19
<TABLE>
<CAPTION>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
Sept. 30, 2000 June 30, 2000 Sept. 30, 1999
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NONPERFORMING ASSETS ("NPAS")
Nonaccrual loans:
SFR and SFR construction $551.7 $545.6 $ 659.7
Second mortgage and other consumer:
Banking subsidiaries 41.6 38.1 45.6
Washington Mutual Finance 62.1 61.2 52.3
Specialty mortgage finance 131.3 104.2 6.9
Commercial business 14.1 15.7 12.5
Commercial real estate:
Apartment buildings 8.6 14.5 34.1
Other commercial real estate 27.3 22.2 23.7
----------------------------------------------------------------------------------------------------
Total nonaccrual loans 836.7 801.5 834.8
Foreclosed assets:
SFR and SFR construction 104.6 119.5 172.7
Second mortgage and other consumer:
Banking subsidiaries 17.4 16.4 9.5
Washington Mutual Finance 6.1 6.3 2.8
Specialty mortgage finance 16.1 8.5 -
Commercial real estate:
Apartment buildings 1.3 2.4 12.9
Other commercial real estate 11.1 19.0 24.8
----------------------------------------------------------------------------------------------------
Net foreclosed assets 156.6 172.1 222.7
----------------------------------------------------------------------------------------------------
Total NPAs $993.3 $973.6 $1,057.5
====================================================================================================
NPAs by property type:
SFR and SFR construction $656.3 $665.1 $ 832.4
Second mortgage and other consumer:
Banking subsidiaries 59.0 54.5 55.1
Washington Mutual Finance 68.2 67.5 55.1
Specialty mortgage finance 147.4 112.7 6.9
Commercial business 14.1 15.7 12.5
Commercial real estate:
Apartment buildings 9.9 16.9 47.0
Other commercial real estate 38.4 41.2 48.5
----------------------------------------------------------------------------------------------------
Total NPAs $993.3 $973.6 $1,057.5
====================================================================================================
NPAs as a percentage of :
Total loans 0.82% 0.85% 0.88%
Total loans and recourse loans and recourse MBS 0.70 0.72 0.73
Total assets 0.52 0.52 0.58
</TABLE>
