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 18, 2000
Washington Mutual, Inc.
(Exact Name of Registrant as specified in its charter)
Washington 1-14667 91-1653725
(State or Other Jurisdiction of (Commission File (I.R.S. Employer
Incorporation or Organization) Number) Identification No.)
1201 Third Avenue, Seattle, Washington 98101
(Address of Principal Executive Offices) (Zip Code)
(206) 490-1347
(Registrant's telephone number, including area code)
<PAGE>
ITEM 5. OTHER EVENTS.
On January 18, 2000, Washington Mutual, Inc. issued a press release
reporting its results of operations during the three and twelve months ended
December 31, 1999.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
99.1 Press release dated January 18, 2000 reporting results of operations
during the three and twelve months ended December 31, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WASHINGTON MUTUAL, INC.
Date: January 18, 2000 By: /s/Fay L. Chapman
-----------------------
Fay L. Chapman
Senior Executive Vice President
and General Counsel
<PAGE>
Media Contact: Libby Hutchinson
1-800-228-9268
(206) 461-2484
Investor Contacts: Doug Wisdorf
(206) 461-3805
JoAnn DeGrande January 18, 2000
(206) 461-3186 FOR IMMEDIATE RELEASE
---------------------
WASHINGTON MUTUAL ANNOUNCES RECORD FOURTH-QUARTER AND ANNUAL EARNINGS;
INCREASED CASH DIVIDEND
SEATTLE -- Washington Mutual, Inc. (NYSE: WM) today announced record
fourth-quarter 1999 earnings of $450.3 million, or 80 cents per diluted
share, compared with $157.1 million, or 27 cents per diluted share for the
same period a year ago. Earnings in the fourth quarter of 1998 were reduced
by $472.5 million in pretax charges associated with the completion of the
transaction with H.F. Ahmanson.
Earnings from operations, excluding transaction-related charges for both
periods and writedowns, reserves and other Ahmanson-related charges in the
fourth quarter of 1998, were also a record at $464.8 million in the fourth
quarter of 1999, versus adjusted earnings of $430.0 million in the fourth
quarter of 1998. Earnings per share, excluding the charges noted above, were
82 cents per diluted share in the fourth quarter of 1999, an 11 percent
increase over 74 cents per diluted share as reported in the fourth quarter of
1998. A significant increase in the London Interbank Offered Rate (LIBOR), a
result of the added demand for borrowings near the Y2K roll-over, led to an
estimated after-tax increase of $22.2 million in interest expense - or 4
cents per diluted share -- during the fourth quarter of 1999.
Earnings for 1999 were a record $1.82 billion, or $3.16 per diluted
share, versus $1.49 billion, or $2.56 per diluted share, for the same period
one year ago. Earnings from operations for 1999, excluding transaction-
related charges, were also a record at $1.88 billion or $3.27 per diluted
share, versus 1998 operating earnings of $1.81 billion or $3.12 per diluted
share. However, earnings from operations for 1998 included a $171.1 million
after-tax gain (or 30 cents per share on a diluted basis) on the sale of
Florida branches by the former Home Savings.
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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 27
cents per share, up from 26 cents the previous quarter. Dividends on the
common stock are payable on Feb. 15, 2000 to shareholders of record as of
Jan. 31, 2000.
"Despite a progressively challenging interest rate environment during
1999, Washington Mutual posted significantly improved year-over-year
operating results, successfully completed the largest acquisition integration
in the company's history while expanding our net household base, unveiled
several new and innovative business initiatives and established aggressive
financial targets for the next five years," said Kerry Killinger, the
company's chairman, president and chief executive officer. "Overall, it was
a very successful and productive 12-month period for our company."
Highlights of the fourth quarter of 1999 included a 32 percent increase
in noninterest income, year over year; a return on average common equity of
20.66 percent, on an operating basis; and an efficiency ratio - excluding
transaction-related charges and the amortization of goodwill - of 46.14
percent.
FOURTH-QUARTER RESULTS
Fourth quarter and annual results for 1999 reflect the Oct. 1, 1999,
acquisition of Long Beach Financial, which was accounted for as a purchase
transaction. Financial data for periods prior to Oct. 1, 1999, therefore,
have not been restated.
Net Interest Income and Noninterest Income
Reflecting the effect of rising short-term interest rates and the
previously mentioned Y2K-related increase in the cost of LIBOR-based
borrowings, net interest income in the fourth quarter of 1999 was $1.06
billion versus $1.08 billion in the prior year's fourth quarter. The spread
in the fourth quarter was 2.28 percent compared with 2.66 percent for the
same period a year earlier, while the margin was 2.41 percent in the most
recent quarter versus 2.85 percent in fourth quarter 1998.
Asset growth during the year helped offset the impact of the lower
margin and resulted in net interest income of $4.45 billion in 1999, up 4
percent from $4.29 billion in 1998.
Strong growth in noninterest income continued in the fourth quarter,
fueled by an increase in fee-generating checking accounts, and securities and
insurance commissions. Total noninterest income in the fourth quarter was
$423.2 million, up from $321.3 million in last year's fourth quarter. Total
noninterest income was $1.51 billion in 1999 compared with $1.52 billion for
1998, which included the gain resulting from the sale of Home Savings'
Florida branches, equaling $289.0 million on a pretax basis.
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WM - 3
A net increase of more than 388,000 checking accounts, year over year,
contributed to depositor and other retail banking fees of $219.7 million for
the quarter, up 34 percent over $163.6 million for the same period one year
ago. For the year, depositor and other retail banking fees totaled $763.6
million in 1999, also a 34 percent increase over $568.4 million for 1998
(without Long Beach).
Securities and insurance fees and commissions totaled $83.2 million in
the most recent quarter, up 35 percent from $61.5 million in the fourth
quarter of last year. For the year, these fees and commissions totaled
$314.4 million, up 25 percent from 1998's $251.3 million.
Long Beach Mortgage generated $22.6 million of mortgage banking income
during the fourth quarter of 1999, contributing to the company's total for
the period of $28.4 million. This compares with mortgage banking income of
$31.2 million in the fourth quarter of 1998. The rise in interest rates for
residential mortgages during the year curbed consumer preference for fixed-
rate residential loans, which Washington Mutual generally sells on the
secondary market. As a result, mortgage banking income for 1999 was $109.4
million versus $133.1 million in 1998.
Lending
Washington Mutual posted another strong year of loan originations,
despite a significant slowing in residential mortgage refinancing activity.
During the most recent quarter, total loan originations were $13.29 billion,
versus a record $15.53 billion for the fourth quarter of 1998. For the year,
total loan originations were $51.56 billion, compared with $52.69 billion in
1998.
In the fourth quarter, single-family residential (SFR) loans originated
by Washington Mutual banking affiliates totaled $9.58 billion, versus $12.87
billion a year ago. For the year, those SFR originations totaled $40.25
billion, compared with $41.87 billion in 1998. Meanwhile, the percentage of
loans for home purchases was substantially higher for 1999 at 51 percent, up
from 35 percent for 1998. Of the SFR loans originated by Washington Mutual
banking affiliates, 73 percent were adjustable-rate loans in 1999, versus
just 44 percent the previous year. Washington Mutual is the leading
adjustable-rate mortgage lender in the U.S.
Originations of commercial, consumer and residential construction loans
totaled $2.16 billion for the most recent quarter and represented 16 percent
of the company's total loan originations, as compared with $2.0 billion, or
13 percent, in the fourth quarter of 1998. For the year, these originations
totaled $8.04 billion in 1999, versus $8.34 billion in 1998.
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Loans originated by Washington Mutual Finance and Long Beach Mortgage
totaled $1.54 billion for the fourth quarter of 1999, as compared with $670.4
million for the same period one year ago. For the year, these originations
were $3.26 billion in 1999, as compared with $2.48 billion in 1998.
Efficiency Ratio
The company's efficiency ratio (defined as total noninterest expense,
excluding amortization of intangible assets, as a percentage of net interest
income and noninterest income) was 47.67 percent during the fourth quarter of
1999, compared with 80.53 percent for the fourth quarter of 1998. (The 1998
fourth quarter included the previously mentioned charges related to the
Ahmanson transaction). Excluding the amortization of intangible assets and
transaction-related charges for both periods, and the charges associated with
the Ahmanson transaction in fourth quarter 1998, the company's operating
efficiency ratio was 46.14 percent for the fourth quarter of 1999, versus an
adjusted efficiency ratio of 46.77 percent for the same period one year ago.
Noninterest expense for the fourth quarter of 1999 totaled $731.6
million and included $22.7 million of transaction-related expenses, $23.2
million of Long Beach Financial noninterest expenses and $26.3 million in
amortization of intangible assets. For the fourth quarter of 1998,
noninterest expense was $1.15 billion, but included the $472.5 million in
pretax charges related to the Ahmanson transaction.
Balance Sheet and Capital Management
Washington Mutual's consolidated assets were $186.51 billion at Dec. 31,
1999, up from $165.49 billion at year-end 1998.
Total deposits were $81.13 billion at Dec. 31, 1999, versus $81.62
billion at the end of the third quarter of 1999.
To improve balance sheet liquidity during the quarter, the company
securitized approximately $12 billion of SFR loans originated by the
company. Of these securities, approximately $5 billion are held in
available-for-sale and $7 billion are held-to-maturity securities.
At Dec. 31, 1999, stockholders' equity stood at $9.05 billion, or 4.85
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.
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During the quarter, the company repurchased a total of 10.5 million
shares of its common stock at an average price of $30.99, bringing the total
shares repurchased in 1999 to 31.5 million shares at an average price of
$34.30.
Credit Quality
Nonperforming assets declined by 3 percent to $1.03 billion at Dec. 31,
1999, from $1.06 billion at Sept. 30, 1999, and down from $1.21 billion at
year-end 1998. The ratio of nonperforming assets to total assets was 0.55
percent at Dec. 31, 1999, a decrease from 0.58 percent at the end of the
third quarter, and down from 0.73 percent at year-end 1998. In the fourth
quarter, the company made a $41.7 million provision for loan losses.
Company Updates
At the company's investors' conference on Nov. 8, Washington Mutual
announced its revised five-year financial targets and key future business
initiatives.
The financial targets include achieving a return on common equity
greater than 20 percent; generating earnings per share growth on an operating
basis that exceeds 13 percent; managing operating efficiency to below 45
percent; keeping the ratio of nonperforming assets to total assets less than
1 percent; and a long-term common equity to assets ratio of 5 percent.
The company's key business initiatives for the next five years are to
remix the balance sheet, diversify revenue sources, reduce interest rate
risk, further improve operating efficiency, actively manage credit risk and
employ capital strategies to effectively manage returns and risk.
The company also announced a series of corporate initiatives at the
conference, including its plans to enter Las Vegas by opening 20 financial
stores (branches) this year. The Las Vegas market entry, known as Project
Occasio (Latin for "favorable occasion"), will feature a completely new
retail approach to banking that includes four distinct sales areas focusing
on personal loans, securities and insurance sales, checking and savings
accounts, and home loans. A concierge will greet patrons at the entry and
sales staff will approach customers to offer assistance. Customers may also
use one of several self-service interactive touch screens and direct Internet
access will be available. A play area for children will allow parents to
focus on their banking business.
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The company also outlined a number of eBusiness strategies that will
position Washington Mutual to have a significant presence on the Internet.
As part of the strategy, the company is working on its next generation
Internet banking and mortgage origination sites, and plans to launch its
online securities trading site soon. In addition, work has begun on a new
digital infrastructure for the company that will allow for a new corporate
intranet with links to the Internet and extranets to outside vendors. The
company also announced the formation of the Washington Mutual Strategic
Partners Capital Fund to serve as a "search engine" for additional eBusiness
opportunities.
Finally, the company said that its Aristar consumer finance unit will
change its name to Washington Mutual Finance in the first half of 2000.
Other News
On Dec. 15, 1999, Washington Mutual and Franchise Finance Corporation of
America ("FFCA") (NYSE: FFA) announced that the companies entered into a
strategic alliance for the sale and purchase of commercial loans.
As a result of the agreement, Washington Mutual will purchase loans
originated by FFCA, one of the premier single-tenant commercial business
lenders in the U.S., and will retain the loans in its portfolio. It is
expected that Washington Mutual will purchase approximately $4 - $5 billion
in loans over the next three years.
Washington Mutual entered into the Year 2000 with no impact to customer
accounts or disruption of business operations. The Team 2000 group will
continue monitoring the company's transition through the end of the first
quarter of 2000.
In addition, the company added the following individuals to its senior
management team: James Vanasek, executive vice president, chief credit risk
officer, most recently with Wells Fargo; Richard Lodge, senior vice president
and treasurer, formerly with Bank One; Ellie Cornfeld, senior vice president
and residential chief credit officer, from Fannie Mae; and Joel Calvo,
executive vice president, financial services, formerly with PNC Bank.
- more -
WM - 7
Outlook
"Washington Mutual has completed an era highlighted by rapid growth as
we built one of the nation's premier banking franchises," said Killinger.
"Our focus for the future will be on diversifying our balance sheet and
revenue sources, developing new and innovative ways to reach new markets and
profitably expand all of our business lines, and maximizing the power of our
franchise to create additional shareholder value. Although interest rates
pose a short-term challenge for us, the overall prospects for Washington
Mutual are excellent."
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, 1999, Washington
Mutual and its subsidiaries had assets of $186.51 billion. The company
operates more than 2,000 offices throughout the nation.
# # #
Webcast information: Investors may listen to Washington Mutual's investor
conference call on January 19, 2000, at 7:30 a.m. PST over the Internet via
Investor Broadcast Network's Vcall website, located at http://www.vcall.com.
To listen to the live call, please go to the web site at least fifteen
minutes early to register, download and install any necessary audio software.
A replay will be available shortly after the completion of the call.
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.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended Year Ended
- ---------------------------------------------------------------------------------------------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
1999 1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INTEREST INCOME
Loans $2,179,532 $2,126,725 $2,064,500 $8,348,131 $8,166,769
Available-for-sale securities 651,868 644,262 466,815 2,481,464 1,707,874
Held-to-maturity securities 305,031 239,199 265,172 1,050,023 1,175,334
Other interest income 52,511 49,330 40,884 182,580 171,491
- ---------------------------------------------------------------------------------------------------------
Total interest income 3,188,942 3,059,516 2,837,371 12,062,198 11,221,468
INTEREST EXPENSE
Deposits 788,141 775,800 866,479 3,170,262 3,588,015
Borrowings 1,344,580 1,164,050 892,535 4,440,146 3,341,728
- ---------------------------------------------------------------------------------------------------------
Total interest expense 2,132,721 1,939,850 1,759,014 7,610,408 6,929,743
- ---------------------------------------------------------------------------------------------------------
Net interest income 1,056,221 1,119,666 1,078,357 4,451,790 4,291,725
Provision for loan losses 41,720 40,799 33,223 167,076 161,968
- ---------------------------------------------------------------------------------------------------------
Net interest income after
provision for loan losses 1,014,501 1,078,867 1,045,134 4,284,714 4,129,757
NONINTEREST INCOME
Depositor and other retail banking fees 219,695 198,360 163,631 763,586 568,376
Securities fees and commissions 71,662 70,781 42,784 271,329 192,126
Insurance fees and commissions 11,575 10,571 18,750 43,085 59,202
Loan servicing income 38,540 23,871 26,215 112,323 117,356
Loan related income 24,792 24,586 27,768 102,784 111,155
Mortgage banking income 28,362 14,642 31,212 109,387 133,084
Gain on sale of retail deposit branch systems -- -- -- -- 289,040
Gain on sale of other assets 10,875 16,132 1,561 40,948 6,278
Gain (loss) from mortgage securities 299 (9,585) (9,494) (12,044) (32,183)
Other income 17,416 20,161 18,890 77,599 79,714
- ---------------------------------------------------------------------------------------------------------
Total noninterest income 423,216 369,519 321,317 1,508,997 1,524,148
NONINTEREST EXPENSE
Compensation and benefits 288,361 294,323 294,256 1,186,413 1,190,679
Occupancy and equipment 153,280 139,237 130,723 564,581 498,126
Telecommunications and outsourced
information services 67,857 70,862 65,143 275,963 255,644
Depositor and other retail banking losses 30,004 29,594 38,012 107,487 87,998
Transaction-related expense 22,678 12,673 431,539 95,722 508,286
Amortization of intangible assets 26,305 23,447 26,693 98,387 104,252
Foreclosed asset (income) expense (2,914) (7,043) 6,003 (9,228) 23,445
Other expense 146,033 136,363 161,495 590,226 616,018
- ---------------------------------------------------------------------------------------------------------
Total noninterest expense 731,604 699,456 1,153,864 2,909,551 3,284,448
- ---------------------------------------------------------------------------------------------------------
Income before income taxes 706,113 748,930 212,587 2,884,160 2,369,457
Income taxes 255,821 278,950 55,500 1,067,096 882,525
- ---------------------------------------------------------------------------------------------------------
NET INCOME $ 450,292 $ 469,980 $ 157,087 1,817,064 1,486,932
=========================================================================================================
NET INCOME ATTRIBUTABLE TO COMMON STOCK $ 450,292 $ 469,980 $ 157,087 1,817,064 $1,470,990
=========================================================================================================
Net income per common share:
Basic $0.80 $0.83 $0.27 $3.17 $2.61
Diluted 0.80 0.83 0.27 3.16 2.56
</TABLE>
<PAGE>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended Year Ended
- ---------------------------------------------------------------------------------------------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
1999 1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DATA USED TO COMPUTE PER SHARE AMOUNTS
Net income $450,292 $469,980 $157,087 $1,817,064 $1,486,932
Preferred stock dividends:
Nonconvertible -- -- -- -- (6,673)
Convertible -- -- -- -- (9,269)
- ---------------------------------------------------------------------------------------------------------
Net income attributable
to basic common stock $450,292 $469,980 $157,087 $1,817,064 $1,470,990
=========================================================================================================
Net income $450,292 $469,980 $157,087 $1,817,064 $1,486,932
Preferred stock dividends,
nonconvertible -- -- -- -- (6,673)
- ---------------------------------------------------------------------------------------------------------
Net income attributable
to diluted common stock $450,292 $469,980 $157,087 $1,817,064 $1,480,259
=========================================================================================================
Average common shares used
to calculate earnings per share:
Basic 563,378,599 565,360,141 581,286,242 572,652,277 564,420,541
Common stock equivalents 1,449,079 1,333,556 1,896,694 1,900,754 14,141,764
- ---------------------------------------------------------------------------------------------------------
Diluted 564,827,678 566,693,697 583,182,936 574,553,031 578,562,305
FINANCIAL RATIOS
Return on average assets 0.98% 1.06% 0.39% 1.04% 0.96%
Return on average equity 20.01 21.03 6.61 19.66 16.62
Return on average common equity 20.01 21.03 6.61 19.66 16.67
Efficiency ratio:
Including amortization of
intangible assets 49.45 46.97 82.44 48.81 56.47
Excluding amortization of
intangible assets 47.67 45.39 80.53 47.16 54.68
</TABLE>
<PAGE>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended Year Ended
- ---------------------------------------------------------------------------------------------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
1999 1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
WEIGHTED AVERAGE INTEREST RATES
Yield on loans 7.45% 7.35% 7.62% 7.40% 7.73%
Yield on mortgage-backed
securities ("MBS") 6.67 6.70 6.93 6.68 7.11
Yield on investment securities 5.96 5.62 6.22 5.68 6.15
- ---------------------------------------------------------------------------------------------------------
Yield on interest-earning assets 7.17 7.11 7.40 7.14 7.53
Cost of deposits 3.83 3.73 4.04 3.82 4.15
Cost of borrowings 5.84 5.47 5.70 5.52 5.85
- ---------------------------------------------------------------------------------------------------------
Cost of interest-bearing liabilities 4.89 4.61 4.74 4.66 4.83
Net interest spread 2.28 2.50 2.66 2.48 2.70
Net interest margin 2.41 2.64 2.85 2.63 2.88
AVERAGE BALANCES
Loans $116,858,676 $115,584,502 $108,308,802 $112,859,456 $105,595,302
MBS 56,801,218 52,239,151 41,646,991 52,293,134 39,686,277
Investment securities 4,136,732 4,101,172 3,289,540 3,883,747 3,797,983
- ---------------------------------------------------------------------------------------------------------
Total interest-earning assets 177,796,626 171,924,825 153,245,333 169,036,337 149,079,562
Deposits 81,694,852 82,511,343 85,047,378 83,094,696 86,430,382
Borrowings 91,354,999 84,500,292 62,180,217 80,469,153 57,152,872
- ---------------------------------------------------------------------------------------------------------
Total interest-bearing
liabilities 173,049,851 167,011,635 147,227,595 163,563,849 143,583,254
Total assets 183,722,193 177,663,218 159,340,139 174,786,286 155,121,396
Stockholders' equity 8,999,852 8,938,658 9,505,740 9,243,790 8,947,229
</TABLE>
<PAGE>
WASHINGTON MUTUAL, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Dec. 31, 1999 Sept. 30, 1999 Dec. 31, 1998
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash $ 2,806,681 $ 2,406,198 $ 2,695,454
Cash equivalents 233,486 60,911 61,520
Trading securities 34,660 30,740 39,068
Available-for-sale ("AFS") securities:
MBS 40,972,653 37,483,437 32,399,591
Investment securities 411,665 455,474 517,462
Held-to-maturity ("HTM") securities:
MBS 19,263,413 12,967,231 13,992,235
Investment securities 138,052 138,043 137,247
Loans:
Loans held in portfolio 113,745,650 119,541,616 107,612,197
Loans held for sale 793,504 304,418 1,826,549
Reserve for loan losses (1,041,929) (1,051,369) (1,067,840)
- --------------------------------------------------------------------------------------------------
Total loans 113,497,225 118,794,665 108,370,906
Investment in Federal Home Loan Banks ("FHLBs") 2,916,749 2,669,898 2,030,027
Foreclosed assets 198,961 222,689 274,767
Premises and equipment 1,558,649 1,544,342 1,421,162
Intangible assets 1,199,854 936,433 1,009,666
Mortgage servicing rights 643,185 489,037 461,295
Other assets 2,638,397 2,600,806 2,082,881
- --------------------------------------------------------------------------------------------------
Total assets $186,513,630 $180,799,904 $165,493,281
==================================================================================================
LIABILITIES
Deposits:
Checking accounts $ 13,489,471 $ 13,542,197 $ 13,460,731
Savings accounts and money market deposit
accounts ("MMDAs") 30,048,378 31,127,144 28,285,868
Time deposit accounts 37,591,919 36,955,147 43,745,542
- --------------------------------------------------------------------------------------------------
Total deposits 81,129,768 81,624,488 85,492,141
Federal funds purchased and commercial paper 866,543 1,574,706 2,482,830
Securities sold under agreements to repurchase 30,162,823 28,649,976 17,519,538
Advances from FHLBs 57,094,053 52,531,731 39,748,613
Other borrowings 6,203,197 5,850,417 5,449,508
Other liabilities 2,004,567 1,662,606 5,456,251
- --------------------------------------------------------------------------------------------------
Total liabilities 177,460,951 171,893,924 156,148,881
STOCKHOLDERS' EQUITY 9,052,679 8,905,980 9,344,400
- --------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $186,513,630 $180,799,904 $165,493,281
==================================================================================================
Common shares outstanding at end of period 571,589,272 574,428,172 593,408,525
Book value per common share $16.18 $15.83 $16.07
Tangible book value per common share 14.32 14.50 14.66
Full-time equivalent employees at end of period 28,144 26,967 27,957
</TABLE>
<PAGE>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in thousands, except per share amounts)
(unaudited)
Note: The following analysis of reported and operating earnings is based upon
the Company's opinion and is intended to provide the user additional
information about the Company's operations. It is not intended to replace
traditional financial statement disclosures in accordance with generally
accepted accounting principles and may not be comparable to similarly titled
measures reported by other companies.
<TABLE>
Quarter Ended Year Ended
- ------------------------------------------------------------------------------------------------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
1999 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REPORTED FINANCIAL RESULTS
Net income $450,292 $469,980 $157,087 $1,817,064 $1,486,932
Net income per diluted common share $0.80 $0.83 $0.27 $3.16 $2.56
Financial ratios on reported financial results:
Return on average assets 0.98% 1.06% 0.39% 1.04% 0.96%
Return on average equity 20.01 21.03 6.61 19.66 16.62
Return on average common equity 20.01 21.03 6.61 19.66 16.67
Efficiency ratio (excluding amortization of
intangible assets) 47.67 45.39 80.53 47.16 54.68
OPERATING FINANCIAL RESULTS, EXCLUDING TRANSACTION-RELATED EXPENSE (a) (1)
Earning from operations $464,754 $477,932 $429,951 $1,877,362 $1,805,902
Earnings per diluted common share $0.82 $0.84 $0.74 $3.27 $3.12
Financial ratios:
Return on average assets 1.01% 1.08% 1.08% 1.07% 1.16%
Return on average equity 20.66 21.39 18.09 20.31 20.18
Return on average common equity 20.66 21.39 18.09 20.31 20.26
Efficiency ratio (excluding amortization of
intangible assets) 46.14 44.54 46.77 45.56 45.94
EARNINGS FROM OPERATIONS, EXCLUDING TRANSACTION-RELATED EXPENSE AND AMORTIZATION OF INTANGIBLE ASSETS (b)
(1)
Earnings from operations $487,621 $496,724 $451,711 $1,957,944 $1,890,702
Earnings per diluted common share $0.86 $0.88 $0.77 $3.41 $3.27
Financial ratios:
Return on average assets 1.06% 1.12% 1.13% 1.12% 1.22%
Return on average equity 21.67 22.23 19.01 21.18 21.13
Return on average common equity 21.67 22.23 19.01 21.18 21.22
(a) EARNINGS FROM OPERATIONS, EXCLUDING TRANSACTION-RELATED EXPENSE
Reported pretax income $706,113 $748,930 $212,587 $2,884,160 $2,369,457
Transaction-related expense 22,678 12,673 472,549 95,722 508,286
- ------------------------------------------------------------------------------------------------------------
Adjusted pretax income 728,791 761,603 685,136 2,979,882 2,877,743
Provision for income taxes 264,037 283,671 255,185 1,102,520 1,071,841
- ------------------------------------------------------------------------------------------------------------
Earnings from operations, (1)
excluding transaction-related expense $464,754 $477,932 $429,951 $1,877,362 $1,805,902
============================================================================================================
(b) EARNINGS FROM OPERATIONS, EXCLUDING TRANSACTION-RELATED EXPENSE AND AMORTIZATION OF INTANGIBLE ASSETS
Earnings from operations $464,754 $477,932 $429,951 $1,877,362 $1,805,902
Amortization of intangible assets, net of tax (c) 22,867 18,792 21,760 80,582 84,800
- ------------------------------------------------------------------------------------------------------------
Earnings from operations, excluding transaction-related
expense and amortization of intangible assets $487,621 $496,724 $451,711 $1,957,944 $1,890,702
============================================================================================================
(c) AMORTIZATION OF INTANGIBLE ASSETS
Total amortization of intangible assets
during the period $26,305 $23,447 $26,693 $98,387 $104,252
Tax benefit (2) 3,438 4,655 4,933 17,805 19,452
- ------------------------------------------------------------------------------------------------------------
Amortization of intangible assets, net of tax benefit $22,867 $18,792 $21,760 $80,582 $84,800
============================================================================================================
(1) Fourth quarter 1998 also excluded other charges associated with the completion of the Ahmanson merger and was
calculated using a tax rate on these items consistent with the company's tax rate of 37.25% for the full
year.
(2) A tax benefit was included on approximately 36% for the fourth quarter of 1999 and approximately 53% for the
first three quarters of 1999, and 48% for 1998 of the amortization of intangible assets.
</TABLE>
<PAGE>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(unaudited)
<TABLE>
<CAPTION>
Dec. 31, Sept. 30,
1999 1999
- ---------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL ADEQUACY
Stockholders' equity/total assets 4.85% 4.93%
Stockholder's equity(excluding unrealized loss on
available-for-sale securities)/total assets 5.21 5.25
Dec. 31, Sept. 30, Dec. 31,
1999 1999 1998
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
RETAIL CHECKING ACCOUNTS (1)
WMB and WMBfsb 1,006,749 995,725 908,077
WMB, FA 3,288,184 3,214,817 2,998,810
- ---------------------------------------------------------------------------------------
Total retail checking accounts 4,294,933 4,210,542 3,906,887
=======================================================================================
RETAIL CHECKING ACCOUNT ACTIVITY (1)
Net accounts opened during the quarter:
WMB and WMBfsb 11,024 29,590 33,560
WMB, FA 73,367 101,781 40,678
- ---------------------------------------------------------------------------------------
Net new retail checking accounts 84,391 131,371 74,238
=======================================================================================
(1) Retail checking accounts exclude commercial business accounts. The information
provided refers to the number of accounts, not dollar volume.
</TABLE>
<PAGE>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended Year Ended
- ----------------------------------------------------------------------------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
1999 1999 1998 1999 1998
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LOAN ORIGINATIONS
Single-family residential ("SFR"):
Adjustable rate ("ARMs") $ 8,588.8 $ 8,585.6 $ 5,282.7 $29,573.7 $18,342.9
Fixed rate 994.4 1,413.5 7,586.0 10,677.9 23,526.8
SFR - construction 470.2 581.9 446.0 2,003.4 1,748.3
Manufactured housing 75.6 76.1 59.7 263.5 281.0
Second mortgage and other consumer 763.8 694.7 569.1 2,682.9 2,815.3
Commercial business 364.9 219.0 262.6 1,186.0 1,011.5
Apartment buildings 447.4 473.5 488.8 1,672.5 2,014.8
Other commercial real estate 35.8 78.2 165.1 236.0 471.7
Washington Mutual Finance and
Long Beach Mortgage 1,544.4 637.9 670.4 3,261.1 2,477.3
- ----------------------------------------------------------------------------------------
Total loan originations $13,285.3 $12,760.4 $15,530.4 $51,557.0 $52,689.6
========================================================================================
As a percentage of total loan originations:
SFR, excluding SFR construction 72% 78% 83% 78% 79%
All other 28 22 17 22 21
SFR LOAN ORIGINATIONS
Short-term ARMs:
Treasury index $5,598.7 $4,149.0 $ 1,641.8 $14,485.2 $ 7,984.0
COFI 257.0 212.7 175.9 745.9 852.2
Other 1.1 1.6 2.8 9.6 143.0
- ----------------------------------------------------------------------------------------
Total short-term ARMs 5,856.8 4,363.3 1,820.5 15,240.7 8,979.2
Medium-term ARMs:
Treasury index 2,732.0 4,222.3 3,462.2 14,333.0 9,363.7
- ----------------------------------------------------------------------------------------
Total medium-term ARMs 2,732.0 4,222.3 3,462.2 14,333.0 9,363.7
Fixed-rate mortgages 994.4 1,413.5 7,586.0 10,677.9 23,526.8
- ----------------------------------------------------------------------------------------
Total SFR loan originations $9,583.2 $9,999.1 $12,868.7 $40,251.6 $41,869.7
========================================================================================
</TABLE>
<PAGE>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Change from
Sept. 30, 1999 Dec. 31, Sept. 30, Dec. 31,
to Dec. 31, 1999 1999 1999 1998
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LOANS AND MBS BY PROPERTY TYPE
Loans held in portfolio:
SFR (1) $(6,926.0) $ 83,358.8 $ 90,284.8 $ 79,275.2
SFR - construction 70.3 1,242.8 1,172.5 1,020.1
Manufactured housing, second mortgage and other consumer 246.6 6,393.3 6,146.7 5,478.3
Commercial business 138.6 1,451.5 1,312.9 1,129.3
Apartment buildings 637.7 15,261.0 14,623.3 14,558.7
Other commercial real estate (132.9) 2,976.5 3,109.4 3,576.2
Washington Mutual Finance 169.7 3,061.7 2,892.0 2,574.4
- ------------------------------------------------------------------------------------------------------------
Total loans held in portfolio (5,796.0) 113,745.6 119,541.6 107,612.2
Loans securitized and retained as MBS (1) 10,853.4 33,505.4 22,652.0 25,524.6
- ------------------------------------------------------------------------------------------------------------
Total loans held in portfolio and loans
securitized and retained as MBS 5,057.4 147,251.0 142,193.6 133,136.8
Loans held for sale (includes Long Beach Mortgage) 489.1 793.5 304.4 1,826.5
Less: reserve for loan losses 9.5 (1,041.9) (1,051.4) (1,067.8)
- ------------------------------------------------------------------------------------------------------------
Total loans and loans securitized and retained as MBS 5,556.0 147,002.6 141,446.6 133,895.5
Purchased MBS (1,068.0) 26,730.7 27,798.7 20,867.2
- ------------------------------------------------------------------------------------------------------------
Total loans and MBS $ 4,488.0 $173,733.3 $169,245.3 $154,762.7
============================================================================================================
Change from Change from
Sept. 30, 1999 Dec. 31, 1998
to Dec. 31, 1999 to Dec. 31, 1999
- ------------------------------------------------------------------------------------------------------------
CHANGE IN LOANS AND LOANS SECURITIZED AND RETAINED AS MBS
Loans held in portfolio:
Loans originated and purchased $ 12,092.9 $ 50,806.7
Loans securitized (1) (12,429.7) (14,769.9)
Loans sold (23.7) (54.2)
Loan payments and other (5,435.5) (29,849.2)
- ------------------------------------------------------------------------------------------------------------
Change in loans held in portfolio (5,796.0) 6,133.4
Change in loans securitized and retained as MBS (1) 10,853.4 7,980.8
- ------------------------------------------------------------------------------------------------------------
Change in loans held in portfolio and
loans securitized and retained as MBS 5,057.4 14,114.2
Loans held for sale:
Loans originated and purchased 2,469.3 8,377.0
Loans sold (1,980.2) (9,410.0)
- ------------------------------------------------------------------------------------------------------------
Change in loans held for sale (includes Long Beach Mortgage) 489.1 (1,033.0)
Change in reserve for loan losses 9.5 25.9
- ------------------------------------------------------------------------------------------------------------
Total change in loans and loans securitized and retained as MBS $ 5,556.0 $ 13,107.1
============================================================================================================
As a percentage of total loans and loans securitized
and retained as MBS at beginning of period 3.9% 9.8%
As a percentage of total assets at beginning of period 3.1 7.9
(1) $12.43 billion of loans were securitized during the fourth quarter of 1999. Approximately $10 billion
were attributed to REMICs, which are classified as AFS and HTM securities in the MBS portfolio.
</TABLE>
<PAGE>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Change from (2)
Sept. 30, 1999 Dec. 31, % of Sept. 30, % of Dec. 31, % of
to Dec. 31, 1999 1999 total 1999 total 1998 total
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
REAL ESTATE LOANS AND MBS
Short-term ARMs:
COFI $(3,138.1) $ 56,838.7 35% $ 59,976.8 38% $ 76,373.4 52%
Treasury index 6,739.3 32,090.5 19 25,351.2 16 13,944.2 10
Other 1,204.1 6,550.2 4 5,346.1 3 7,151.8 5
- -------------------------------------------------------------------------------------------------------------
Total short-term ARMs 4,805.3 95,479.4 58 90,674.1 57 97,469.4 67
Medium-term ARMs:
Treasury index 620.7 24,865.5 15 24,244.8 15 16,394.9 11
COFI (118.6) 502.1 - 620.7 1 889.2 1
Other (217.3) 1,337.4 1 1,554.7 1 2,233.6 1
- -------------------------------------------------------------------------------------------------------------
Total medium-term ARMs 284.8 26,705.0 16 26,420.2 17 19,517.7 13
Fixed-rate loans held in portfolio (5,360.4) 14,604.9 9 19,965.3 12 14,226.7 10
Fixed-rate loans held for sale 489.1 793.5 1 304.4 - 1,826.5 1
Fixed-rate MBS 3,305.3 25,886.4 16 22,581.1 14 13,608.2 9
- -------------------------------------------------------------------------------------------------------------
Total real estate loans and MBS $ 3,524.1 $163,469.2 100% $159,945.1 100% $146,648.5 100%
=============================================================================================================
LOANS SERVICED FOR OTHERS $13,253.1 $ 65,159.4 (1) $ 51,906.3 $ 51,849.0
=============================================================================================================
(1) $12.43 billion of loans were securitized during the fourth quarter of 1999. Approximately $4 billion of
loans were from Long Beach Mortgage and approximately $10 billion were attributed to REMICs, which are
classified as AFS and HTM securities in the MBS portfolio.
(2) Certain reclassifications have been made to the September 30,1999 information to conform to the
December 31, 1999 presentation.
(3) Terms used are remaining term for deposits and term to reprice for borrowings and notional amount of
derivatives.
</TABLE>
<PAGE>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Dec. 31, 1999 Sept. 30, 1999(2)
- -----------------------------------------------------------------------------------------------
Balance Term(3) Balance Term(3)
- -----------------------------------------------------------------------------------------------
(in months) (in months)
<S> <C> <C> <C> <C>
DEPOSITS, BORROWINGS AND DERIVATIVES OUTSTANDING
Deposits:
Noninterest bearing checking accounts $ 7,274.6 NA $ 7,391.5 NA
Interest bearing checking accounts,
savings accounts and MMDAs 36,263.3 NA 37,277.8 NA
Time deposit accounts 37,591.9 8 36,955.2 8
- ----------------------------------------------------------------------------------------------
Total deposits 81,129.8 81,624.5
Borrowings:
Adjustable 55,481.7 1 52,837.9 1
Short-term fixed 26,925.0 2 23,643.3 3
Long-term fixed 11,919.9 51 12,125.6 51
- ----------------------------------------------------------------------------------------------
Total borrowings 94,326.6 88,606.8
- ----------------------------------------------------------------------------------------------
Total deposits and borrowings $175,456.4 $170,231.3
==============================================================================================
Notional amount of derivatives:
WM pay rate swaps:
Fixed rate $ 9,292.8 13 $ 8,990.8 14
Variable rate 1,110.0 1 850.0 1
- ----------------------------------------------------------------------------------------------
Total swaps 10,402.8 9,840.8
Caps\Collars\Corridors 11,128.8 1 11,091.3 1
- ----------------------------------------------------------------------------------------------
Total derivatives $21,531.6 $20,932.1
==============================================================================================
(1) $12.43 billion of loans were securitized during the fourth quarter of 1999. Approximately
$4 billion of loans were from Long Beach Mortgage and approximately $10 billion were
attributed to REMICs, which are classified as AFS and HTM securities in the MBS portfolio.
(2) Certain reclassifications have been made to the September 30, 1999 information to conform
to the December 31, 1999 presentation.
(3) Terms used are remaining term for deposits and term to reprice for borrowings and notional
amount of derivatives.
</TABLE>
<PAGE>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended
- ----------------------------------------------------------------------------------------------------------
Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31,
1999 1999 1999 1999 1998
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVE FOR LOAN LOSSES
Balance, beginning of quarter $1,051.4 $1,053.6 $1,069.7 $1,067.8 $1,151.5
Provision for loan losses 41.7 40.8 42.9 41.7 33.2
Transfers of reserves (6.4) -- -- 5.2 (73.5)
Loans charged off:
SFR and SFR construction (8.3) (9.9) (8.5) (11.1) (13.6)
Manufactured housing, second mortgage and
other consumer (9.9) (12.2) (10.4) (13.4) (8.1)
Commercial business (1.1) (0.7) (1.3) (2.5) (1.2)
Commercial real estate (6.9) (3.4) (22.9) (3.9) (6.6)
Washington Mutual Finance and Long Beach Mortgage (26.8) (23.6) (22.8) (23.8) (24.5)
- ----------------------------------------------------------------------------------------------------------
Total loans charged off (53.0) (49.8) (65.9) (54.7) (54.0)
Recoveries of loans previously charged off:
SFR and SFR construction 1.4 0.5 0.2 2.1 3.9
Manufactured housing, second mortgage and
other consumer 0.9 1.0 0.7 0.6 0.4
Commercial business 0.2 0.1 0.2 0.2 0.5
Commercial real estate 1.5 1.4 1.7 2.7 2.2
Washington Mutual Finance and Long Beach Mortgage 4.2 3.8 4.1 4.1 3.6
- ----------------------------------------------------------------------------------------------------------
Total recoveries of loans previously charged off 8.2 6.8 6.9 9.7 10.6
- ----------------------------------------------------------------------------------------------------------
Net charge offs (44.8) (43.0) (59.0) (45.0) (43.4)
- ----------------------------------------------------------------------------------------------------------
Balance, end of quarter $1,041.9 $1,051.4 $1,053.6 $1,069.7 $1,067.8
==========================================================================================================
Net charge offs (annualized) as a percentage
of average loans 0.15% 0.15% 0.22% 0.16% 0.16%
</TABLE>
<PAGE>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Dec. 31, Sept. 30, Dec. 31,
1999 1999 1998
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
RESERVE FOR LOAN LOSSES
Specific and allocated reserves:
Commercial real estate $ 59.0 $ 74.6 $ 125.7
Commercial business 17.6 18.4 17.2
Builder construction 5.0 4.7 0.8
- ---------------------------------------------------------------------------------------
Total specific and allocated reserves 81.6 97.7 143.7
Unallocated reserves 960.3 953.7 924.1
- ---------------------------------------------------------------------------------------
Total reserve for loan losses $1,041.9 $1,051.4 $1,067.8
=======================================================================================
Reserve for loan losses as a percentage of:
Nonaccrual loans (1) 126% 126% 114%
Nonperforming assets (1) 102 99 88
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 $117.0 $122.0 $72.6
Transfer from reserve for loan losses -- -- 73.6
Charge offs, net of provision for losses (3.9) (5.0) (1.9)
- ---------------------------------------------------------------------------------------
Balance, end of quarter $113.1 $117.0 $144.3
=======================================================================================
The total loss coverage represents the reserve for loan losses and recourse liability
as a percentage of nonaccrual loans:
Total loss coverage percentage (1) 140% 140% 129%
(1) During the fourth quarter of 1999, approximately $6.4 million was transferred out of the
reserve for loan losses due to approximately $10 billion of loans securitized into REMICs and
classified as AFS and HTM securities in the MBS portfolio.
</TABLE>
<PAGE>
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Dec. 31, Sept. 30, Dec. 31,
1999 1999 1998
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
NONPERFORMING ASSETS ("NPAs")
Nonaccrual loans:
SFR and SFR construction $ 642.5 $ 661.8 $ 761.4
Manufactured housing, second mortgage and
other consumer 43.3 45.6 39.0
Commercial business 9.8 12.5 7.4
Apartment buildings and other commercial real estate 42.0 57.8 76.7
Washington Mutual Finance and Long Beach Mortgage 89.4 57.1 53.4
- ---------------------------------------------------------------------------------------
Total nonaccrual loans 827.0 834.8 937.9
Foreclosed assets:
SFR and SFR construction 143.3 172.7 215.2
Manufactured housing, second mortgage and
other consumer 15.4 9.5 10.5
Apartment buildings and other commercial real estate 30.1 37.7 46.4
Washington Mutual Finance and Long Beach Mortgage 10.2 2.8 2.7
- ---------------------------------------------------------------------------------------
Net foreclosed assets 199.0 222.7 274.8
- ---------------------------------------------------------------------------------------
Total NPAs $1,026.0 $1,057.5 $1,212.7
=======================================================================================
NPAs by property type:
SFR and SFR construction $ 785.8 $ 834.5 $ 976.6
Manufactured housing, second mortgage and
other consumer 58.7 55.1 49.5
Commercial business 9.8 12.5 7.4
Apartment buildings 30.1 47.0 70.3
Other commercial real estate 42.0 48.5 52.8
Washington Mutual Finance and Long Beach Mortgage 99.6 59.9 56.1
- ----------------------------------------------------------------------------------------
Total NPAs $1,026.0 $1,057.5 $1,212.7
========================================================================================
NPAs as a percentage of:
Total loans 0.90% 0.88% 1.11%
Total loans and recourse loans and recourse MBS 0.76 0.73 0.91
Total assets 0.55 0.58 0.73
</TABLE>
<PAGE>
