SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: April 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) 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 April 18, 2000, Washington Mutual, Inc. issued a press release
reporting its results of operations during the three months ended March 31,
2000.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
99.1 Press release dated April 18, 2000 reporting results of operations
during the three months ended March 31, 2000.
<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: April 20, 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 April 18, 2000
(206) 461-3186 FOR IMMEDIATE RELEASE
WASHINGTON MUTUAL ANNOUNCES RECORD FIRST-QUARTER EARNINGS,
INCREASED CASH DIVIDEND AND NEW SHARE REPURCHASE INITIATIVE
SEATTLE -- Washington Mutual, Inc. (NYSE: WM) today announced record
first-quarter earnings of $458.5 million or 83 cents per diluted share, up
from first-quarter 1999 earnings of $444.1 million or 76 cents per share.
Highlights of the recent quarter included:
a return on average common equity of 20.64 percent;
an efficiency ratio of 47.61 percent;
double-digit, year-over-year increases in depositor and other retail
banking fees and securities fees and commissions;
record net growth of more than 133,000 retail checking accounts; and
continued strength in overall loan originations despite the more
challenging interest rate environment in 2000.
Based on the company's first-quarter performance, the board of
directors declared a cash dividend on the common stock of 28 cents per share,
an increase from the previous quarter's cash dividend of 27 cents per share.
Dividends on the common stock are payable May 15, 2000 to shareholders of
record as of April 28, 2000.
"Washington Mutual's first-quarter results reflect the continued
strength of our underlying operating fundamentals and core business," said
Kerry Killinger, the company's chairman, president and chief executive
officer. "Our employees continue to deliver outstanding results, despite a
challenging interest rate environment, by focusing on the elements of our
business plan that are within our control and finding new and innovative ways
to serve our fast-growing customer base."
-more-
WM - 2
In other news, the board of directors today authorized an expanded
share repurchase program under which Washington Mutual will acquire, from
time to time, up to 55 million additional shares of its common stock. As of
March 31, 2000, the company had repurchased approximately 51.3 million shares
of stock since April 20, 1999, as part of the previously announced purchase
programs totaling 56.3 million shares. Washington Mutual had approximately
553 million shares outstanding at March 31, 2000.
FIRST-QUARTER RESULTS
First-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
Strong growth in noninterest income more than offset the effect of
compression in the net interest margin that occurred over the past year as
short-term interest rates on deposits and borrowings repriced upward faster
than Washington Mutual's assets. In the first quarter of 2000, net interest
income was $1.08 billion versus $1.13 billion a year earlier. The spread
during the quarter was 2.25 percent, compared with 2.60 percent for the same
period last year. The margin was 2.38 percent in the most recent quarter
versus 2.79 percent for first quarter 1999.
Depositor and other retail banking fees were a record $211.0 million,
up 29 percent from $163.4 million a year earlier. Helping drive this
increase in fee income was the addition of 133,292 net new retail checking
accounts during the first quarter of 2000. The company added over 427,000
net new retail checking accounts, year over year.
The strong growth in noninterest income was also fueled by a
significant increase in securities fees and commissions, which were $82.6
million for the first quarter of 2000, up 39 percent from $59.5 million for
the same period one year ago.
As part of its initiative to remix its balance sheet, Washington Mutual
securitized $6.70 billion of seasoned residential mortgage loans and sold
$5.08 billion of the resulting senior and subordinated certificates while
retaining the remainder. During the quarter, the company also sold $1.76
billion of seasoned residential loans, $736.3 million of current production
residential loans and the majority of loans originated by Long Beach
Mortgage. These activities led to gain on sale of loans of $61.2 million for
the most recent quarter, compared with $38.4 million for the first quarter of
1999, when Long Beach Mortgage was not part of the company. The gains that
resulted from these sales were partially offset by losses incurred on the
sale of certain mortgage-backed securities.
-more-
WM - 3
LENDING
Total loan originations increased to $12.16 billion for the quarter, up
from $11.88 billion one year ago.
Single-family residential (SFR) loan originations (excluding
residential construction) were $8.50 billion, as compared with $9.67 billion
one year ago. Of the first-quarter SFR originations, 91 percent were
adjustable-rate mortgages, up from 54 percent for the same period in 1999.
Originations of second mortgage and other consumer, specialty mortgage
finance, commercial business, commercial real estate and residential
construction loans totaled $3.67 billion for the most recent quarter, up 66
percent over $2.21 billion in the first quarter of 1999.
EFFICIENCY RATIO
The strong growth in noninterest income, combined with effective
expense management, led to an efficiency ratio (defined as other expenses,
excluding amortization of intangible assets, as a percentage of net interest
income and other income) of 47.61 percent for the most recent quarter,
comparable with 47.62 percent in last year's first quarter.
Noninterest expense, excluding expenses associated with Long Beach
Mortgage, totaled $720.8 million in the first quarter of 2000, compared with
first-quarter 1999's figure of $706.1 million, after excluding the $23.8
million of transaction-related expenses.
CREDIT QUALITY
Total nonperforming assets were a low $979.3 million at March 31, 2000,
versus $1.03 billion at Dec. 31, 1999 and represented just 0.52 percent of
total assets at the end of the first quarter of 2000.
The company's provision for loan losses was $41.2 million, versus
$41.7 million for the same period in the previous year. Net loan charge-offs
for the first quarter were $41.0 million, compared with $45.0 million a year
earlier. At March 31, 2000, loan loss reserves totaled $1.03 billion, and
represented 130 percent of nonaccrual loans.
-more-
WM - 4
BALANCE SHEET AND CAPITAL MANAGEMENT
Consolidated assets at March 31, 2000, were $188.61 billion, up from
$186.51 billion at Dec. 31, 1999. (Approximately $5.47 billion of the asset
sales previously discussed settled after the quarter end and therefore were
still included in the company's total assets at March 31, 2000.)
Stockholders' equity at March 31, 2000 was $8.71 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 March 31, 2000, transaction account balances, including checking,
savings and money market deposits, represented 55 percent of total deposits,
up from 50 percent at the end of the first quarter of 1999 and 54 percent at
the end of 1999. Total deposits were $82.51 billion at the end of the
current quarter, up from $81.13 billion at the end of 1999.
Killinger noted that the company continued to actively deploy its
capital during the first quarter by purchasing 19.8 million shares of its
common stock at an average price of $23.42.
COMPANY UPDATES
On April 5, the company opened the first five of 21 new retail concept
financial stores in Southern Nevada. The remaining 16 stores will open by
the end of the summer. The company projects that the stores will break even
shortly after one year of operation and will reach a return on common equity
of 20 percent by the end of year two.
On Feb. 9, Washington Mutual announced a collaborative initiative with
iPlanet E-Commerce Solutions, a Sun-Netscape Alliance. The collaboration
will extend Washington Mutual's e-commerce initiatives, including the
development of a platform that will support the company's net-based messaging
applications, gaining additional internal efficiencies and forging stronger
relationships with both its consumer and corporate customers.
On March 30, the company offered and sold $500 million in non-callable
8.25 percent subordinated notes due April 1, 2010. The net proceeds from the
sale will be used for general corporate purposes.
-more-
WM - 5
OUTLOOK
"Although the current interest rate environment provides an immediate
challenge for our company, we are focused on the successful execution of our
business plan," Killinger said. "Key components of that plan are to remix
our balance sheet by increasing the proportion of higher-margin loans,
diversify revenues, launch new and innovative ways of serving our customers,
operate even more efficiently and maintain credit quality. We're in an
excellent position to successfully implement all of financial targets
and continue to be one of the nation's top financial services companies."
With a history dating back to 1889, Washington Mutual is a financial
services company that provides a diversified line of products and services to
consumers and small- to mid-sized businesses. At March 31, 2000, Washington
Mutual and its subsidiaries had consolidated assets of $188.61 billion. The
company operates more than 2,000 offices throughout the nation. Washington
Mutual press releases are available at www.wamu.com.
# # #
<PAGE>
WM - 6
WASHINGTON MUTUAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended
- ---------------------------------------------------------------------------------------------------------
Mar. 31, Dec. 31, Mar. 31,
2000 1999 1999
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Loans $2,221,191 $2,179,532 $2,028,502
Available-for-sale ("AFS") securities 692,244 651,868 539,012
Held-to-maturity ("HTM") securities 339,096 305,031 247,377
Other interest and dividend income 51,115 52,511 39,227
- ---------------------------------------------------------------------------------------------------------
Total interest income 3,303,646 3,188,942 2,854,118
INTEREST EXPENSE
Deposits 787,855 788,141 813,627
Borrowings 1,431,081 1,344,580 913,296
- ---------------------------------------------------------------------------------------------------------
Total interest expense 2,218,936 2,132,721 1,726,923
- ---------------------------------------------------------------------------------------------------------
Net interest income 1,084,710 1,056,221 1,127,195
Provision for loan losses 41,162 41,720 41,700
- ---------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 1,043,548 1,014,501 1,085,495
NONINTEREST INCOME
Depositor and other retail banking fees 211,033 219,695 163,417
Securities fees and commissions 82,573 71,662 59,522
Insurance fees and commissions 11,479 11,575 10,670
Loan servicing income 33,269 38,540 26,031
Loan related income 24,021 24,792 26,547
Gain on sale of loans 61,228 28,362 38,362
Gain (loss) from securities (21,566) 299 (2,693)
Other income 21,027 28,291 30,288
- ---------------------------------------------------------------------------------------------------------
Total noninterest income 423,064 423,216 352,144
NONINTEREST EXPENSE
Compensation and benefits 330,406 288,361 301,609
Occupancy and equipment 152,501 153,280 134,904
Telecommunications and outsourced information services 76,927 67,857 70,064
Depositor and other retail banking losses 25,522 30,004 25,247
Transaction-related expense - 22,678 23,802
Amortization of goodwill and other intangible assets 26,746 26,305 25,373
Foreclosed asset (income) expense (1,395) 21 3,794
Other expense 133,871 143,098 145,074
- ---------------------------------------------------------------------------------------------------------
Total noninterest expense 744,578 731,604 729,867
- ---------------------------------------------------------------------------------------------------------
Income before income taxes 722,034 706,113 707,772
Income taxes 263,542 255,821 263,654
- ---------------------------------------------------------------------------------------------------------
NET INCOME $ 458,492 $ 450,292 $ 444,118
=========================================================================================================
NET INCOME ATTRIBUTABLE TO COMMON STOCK $ 458,492 $ 450,292 $ 444,118
=========================================================================================================
Net income per common share:
Basic $0.83 $0.80 $0.76
Diluted 0.83 0.80 0.76
</TABLE>
<PAGE>
WM - 7
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended
- ----------------------------------------------------------------------------------------------------------
Mar. 31, Dec. 31, Mar. 31,
2000 1999 1999
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DATA USED TO COMPUTE PER SHARE AMOUNTS
Net income attributable to basis and diluted common stock $458,492 $450,292 $444,118
Average common shares used to calculate earnings per share:
Basic 551,787,125 563,378,599 581,939,740
Common stock equivalents 871,533 1,449,079 2,640,443
- ----------------------------------------------------------------------------------------------------------
Diluted 552,658,658 564,827,678 584,580,183
FINANCIAL RATIOS
Return on average assets 0.98% 0.98% 1.08%
Return on average common equity 20.64 20.01 18.72
Efficiency ratio:
Including amortization of intangible assets 49.38 49.45 49.34
Excluding amortization of intangible assets 47.61 47.67 47.62
WEIGHTED AVERAGE INTEREST RATES
Yield on loans 7.64% 7.45% 7.43%
Yield on mortgage-backed securities ("MBS") 6.81 6.67 6.78
Yield on investment securities 5.88 5.96 5.56
- ----------------------------------------------------------------------------------------------------------
Yield on interest-earning assets 7.33 7.17 7.20
Cost of deposits 3.91 3.83 3.91
Cost of borrowings 6.08 5.84 5.44
- ----------------------------------------------------------------------------------------------------------
Cost of interest-bearing liabilities 5.08 4.89 4.60
Net interest spread 2.25 2.28 2.60
Net interest margin 2.38 2.41 2.79
AVERAGE BALANCES
Loans $116,289,707 $116,858,676 $109,289,268
MBS 60,046,653 56,801,218 45,765,022
Investment securities 4,120,524 4,136,732 3,606,580
- ----------------------------------------------------------------------------------------------------------
Total interest-earning assets 180,456,884 177,796,626 158,660,870
Deposits 80,967,950 81,694,852 84,289,648
Borrowings 94,727,478 91,354,999 68,015,000
- ----------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 175,695,428 173,049,851 152,304,648
Total assets 186,376,917 183,722,193 164,220,074
Stockholders' equity 8,885,473 8,999,852 9,488,284
</TABLE>
<PAGE>
WM - 8
WASHINGTON MUTUAL, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Mar. 31, 2000 Dec. 31, 1999 Mar. 31, 1999
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 2,818,015 $ 3,040,167 $ 1,907,920
Trading securities 35,320 34,660 29,757
AFS securities:
MBS 40,704,634 40,972,653 41,425,579
Investment securities 444,394 411,665 574,118
HTM securities:
MBS 18,596,688 19,263,413 14,663,994
Investment securities 138,014 138,052 137,918
Loans:
Loans held in portfolio 110,859,979 113,745,650 107,942,189
Loans held for sale 362,202 793,504 1,171,720
Reserve for loan losses (1,025,244) (1,041,929) (1,069,719)
- -----------------------------------------------------------------------------------------------------
Total loans 110,196,937 113,497,225 108,044,190
Mortgage servicing rights 767,596 643,185 482,873
Foreclosed assets 190,030 198,961 287,154
Premises and equipment 1,541,906 1,558,649 1,439,547
Investment in Federal Home Loan Banks ("FHLBs") 3,091,918 2,916,749 2,207,034
Goodwill and other intangible assets 1,165,221 1,199,854 980,233
Other assets 8,914,545 2,638,397 $2,114,735
- ----------------------------------------------------------------------------------------------------
Total assets $188,605,218 $186,513,630 $174,295,052
====================================================================================================
LIABILITIES
Deposits:
Checking accounts $ 15,553,923 $ 13,489,471 $ 13,079,328
Savings accounts and money market deposit
accounts ("MMDAs") 29,702,330 30,048,378 29,381,930
Time deposit accounts 37,256,706 37,591,919 41,718,368
- ----------------------------------------------------------------------------------------------------
Total deposits 82,512,959 81,129,768 84,179,626
Federal funds purchased and commercial paper 2,410,693 866,543 2,424,302
Securities sold under agreements to repurchase
("reverse repurchase agreements") 28,467,663 30,162,823 24,483,163
Advances from FHLBs 57,853,022 57,094,053 42,775,203
Other borrowings 6,832,067 6,203,197 4,613,294
Other liabilities 1,823,241 2,004,567 6,209,938
- ----------------------------------------------------------------------------------------------------
Total liabilities 179,899,645 177,460,951 164,685,526
STOCKHOLDERS' EQUITY 8,705,573 9,052,679 9,609,526
- ---------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $188,605,218 $186,513,630 $174,295,052
====================================================================================================
Common shares outstanding at end of period 552,626,483 571,589,272 594,566,383
Book value per common share $16.10 $16.18 $16.50
Tangible book value per common share 14.24 14.32 15.15
Full-time equivalent employees at end of period 28,205 28,509 27,931
</TABLE>
<PAGE>
WM - 9
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in thousands, except per share amounts)
(unaudited)
Note: The following analysis of reported and operating earnings is based upon
the Company's opinion and is intended to provide the user additional
information about the Company's operations. It is not intended to replace
traditional financial statement disclosures in accordance with generally
accepted accounting principles and may not be comparable to similarly titled
measures reported by other companies.
<TABLE>
<CAPTION> Quarter Ended
- ---------------------------------------------------------------------------------------------------------
Mar. 31, Dec. 31, Mar. 31,
2000 1999 1999
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REPORTED FINANCIAL RESULTS
Net income $458,492 $450,292 $444,118
Net income per diluted common share $0.83 $0.80 $0.76
Financial ratios on reported financial results:
Return on average assets 0.98% 0.98% 1.08%
Return on average common equity 20.64 20.01 18.72
Efficiency ratio, excluding amortization of intangible assets 47.61 47.67 47.62
OPERATING FINANCIAL RESULTS, EXCLUDING TRANSACTION-RELATED EXPENSE
Reported pretax income $722,034 $706,113 $707,772
Transaction-related expense - 22,678 23,802
- ---------------------------------------------------------------------------------------------------------
Adjusted pretax income 722,034 728,791 731,574
Provision for income taxes 263,542 264,037 272,521
- ---------------------------------------------------------------------------------------------------------
Earnings from operations, excluding transaction-related expense(a) $458,492 $464,754 $459,053
=========================================================================================================
Earnings per diluted common share $0.83 $0.82 $0.79
Financial ratios on operating financial results:
Return on average assets 0.98% 1.01% 1.12%
Return on average common equity 20.64 20.66 19.35
Efficiency ratio, excluding amortization of intangible assets 47.61 46.14 46.01
EARNINGS FROM OPERATIONS, EXCLUDING TRANSACTION-RELATED EXPENSE AND AMORTIZATION OF INTANGIBLE ASSETS
(a)Earnings from operations, excluding transaction-related expense $458,492 $464,754 $459,053
Total amortization of intangible assets during the period 26,746 26,305 25,373
Tax benefit(1) 6,058 3,438 5,093
- ---------------------------------------------------------------------------------------------------------
Amortization of intangible assets, net of tax 20,688 22,867 20,280
- ---------------------------------------------------------------------------------------------------------
Earnings from operations, excluding transaction-related
expense and amortization of intangible assets $479,180 $487,621 $479,333
========================================================================================================
Earnings per diluted common share $0.87 $0.86 $0.82
Financial ratios on earnings from operations:
Return on average assets 1.03% 1.06% 1.17%
Return on average common equity 21.57 21.67 20.21
(1) Cash basis calculations exclude intangible assets and the related amortization expense.
</TABLE>
<PAGE>
WM - 10
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(unaudited)
<TABLE>
<CAPTION>
Mar. 31, Dec. 31,
2000 1999
- ---------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL ADEQUACY
Stockholders' equity/total assets(1) 4.62% 4.85%
Stockholder's equity(2)/total assets(2) 5.04 5.18
(1) During the first quarter of 2000, $8.75 billion of loans were securitized into MBS.
Of that amount, $5.08 billion was sold on March 31, 2000 with a settlement date of
April 12, 2000 and is a component of "Other assets."
(2) Excludes unrealized net gain (loss) on available-for-sale securities.
Mar. 31, Dec. 31, Mar. 31,
2000 1999 1999
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
RETAIL CHECKING ACCOUNTS(3)
WMB and WMBfsb 1,026,450 1,006,749 940,842
WMB, FA 3,401,775 3,288,184 3,059,707
- ---------------------------------------------------------------------------------------
Total retail checking accounts 4,428,225 4,294,933 4,000,549
=======================================================================================
RETAIL CHECKING ACCOUNT ACTIVITY(3)
Net accounts opened during the quarter:
WMB and WMBfsb 19,701 11,024 32,765
WMB,FA 113,591 73,367 60,897
- ---------------------------------------------------------------------------------------
Net new retail checking accounts 133,292 84,391 93,662
=======================================================================================
(3) Retail checking accounts exclude commercial business accounts. The information
provided refers to the number of accounts, not dollar volume.
</TABLE>
<PAGE>
WM - 11
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended
- ---------------------------------------------------------------------------------------
Mar. 31, Dec. 31, Mar. 31,
2000 1999 1999
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
LOAN ORIGINATIONS
Single-family residential ("SFR"):
Adjustable rate ("ARMs") $ 7,767.2 $ 8,588.8 $ 5,174.5
Fixed rate 732.4 994.4 4,495.5
SFR - construction 427.9 470.2 380.6
Second mortgage and other consumer 1,348.2 1,393.8 1,025.8
Specialty mortgage finance 925.2 990.0 121.5
Commercial business 408.6 364.9 298.4
Commercial real estate 555.3 483.2 383.6
- ---------------------------------------------------------------------------------------
Total loan originations $12,164.8 $13,285.3 $11,879.9
=======================================================================================
As a percentage of total loan originations:
SFR, excluding SFR construction 70% 72% 81%
All other 30 28 19
SFR LOAN ORIGINATIONS
Short-term ARMs:
Treasury index $5,326.4 $5,598.7 $1,946.4
COFI 378.6 257.0 125.7
Other 2.3 1.1 5.5
- ---------------------------------------------------------------------------------------
Total short-term ARMs 5,707.3 5,856.8 2,077.6
Medium-term ARMs:
Treasury index 2,059.9 2,732.0 3,096.9
- ---------------------------------------------------------------------------------------
Total medium-term ARMs 2,059.9 2,732.0 3,096.9
Fixed-rate mortgages 732.4 994.4 4,495.5
- ---------------------------------------------------------------------------------------
Total SFR loan originations $8,499.6 $9,583.2 $9,670.0
=======================================================================================
</TABLE>
<PAGE>
WM - 12
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Change from
Dec. 31, 1999 Mar. 31, Dec. 31, Mar. 31,
to Mar. 31, 2000 2000 1999 1999
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LOANS AND MBS BY PROPERTY TYPE
Loans held in portfolio:
SFR(1)(2) $(2,988.5) $77,245.9 $80,234.4 $79,313.9
SFR - construction 34.3 1,277.1 1,242.8 1,002.7
Second mortgage and other consumer 191.6 8,665.9 8,474.3 7,231.0
Specialty mortgage finance (excludes Long Beach Mortgage) (332.2) 3,772.9 4,105.1 1,194.8
Commercial business 71.1 1,522.6 1,451.5 1,149.2
Commercial real estate 138.1 18,375.6 18,237.5 18,050.6
-----------------------------------------------------------------------------------------------------------
Total loans held in portfolio (2,885.6) 110,860.0 113,745.6 107,942.2
Loans securitized and retained as MBS(1)(2) 577.4 34,082.8 33,505.4 25,541.0
- ------------------------------------------------------------------------------------------------------------
Total loans held in portfolio and loans
securitized and retained as MBS (2,308.2) 144,942.8 147,251.0 133,483.2
Loans held for sale (includes Long Beach Mortgage) (431.3) 362.2 793.5 1,171.7
Less: reserve for loan losses 16.7 (1,025.2) (1,041.9) (1,069.7)
- ------------------------------------------------------------------------------------------------------------
Total loans and loans securitized and retained as MBS (2,722.8) 144,279.8 147,002.6 133,585.2
Purchased MBS (1,512.2) 25,218.5 26,730.7 30,548.6
- ------------------------------------------------------------------------------------------------------------
Total loans and MBS $(4,235.0) $169,498.3 $173,733.3 $164,133.8
============================================================================================================
Dec. 31, 1999 Mar. 31, 1999
to Mar. 31, 2000 to Mar. 31, 2000
- ------------------------------------------------------------------------------------------------------------
RECONCILIATION OF LOANS HELD IN PORTFOLIO
Balance, beginning of period: $113,745.6 $107,942.2
Loans originated and purchased 9,789.6 50,332.9
Loans securitized(1)(2) (8,754.1) (19,950.6)
Loans sold (123.6) (168.3)
Loan payments and other (3,797.5) (27,296.2)
- ------------------------------------------------------------------------------------------------------------
Change in loans held in portfolio (2,885.6) (2,917.8)
Balance, end of period $110,860.0 $110,860.0
============================================================================================================
(1) During the first quarter of 2000, $8.75 billion of loans were securitized into MBS. Of that amount,
$5.08 billion was sold on March 31, 2000 with a settlement date of April 12, 2000. The receivable of
$5.08 billion is a component of "Other assets." The remaining $1.62 billion was retained and held in
the AFS MBS portfolio. This increase in the MBS portfolio was partially offset by paydowns and
additional unrealized net losses on available-for-sale securities.
(2) $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>
WM - 13
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(unaudited)
<TABLE>
<CAPTION>
Change from
Dec. 31, 1999 Mar. 31, % of Dec. 31, % of Mar. 31, % of
to Mar. 31, 2000 2000 total 1999 total 1999 total
- ------------------------------------------------------------------------------------------------------------
(dollars in millions)
<S> <C> <C> <C> <C> <C> <C> <C>
REAL ESTATE LOANS AND MBS
Short-term ARMs:
COFI $(6,306.7) $ 49,532.0 32% $ 55,838.7 35% $ 73,673.9 48%
Treasury index 3,503.2 33,351.6 21 29,848.4 18 14,533.1 9
Other 1,529.2 7,742.6 5 6,213.4 4 6,518.3 4
- ------------------------------------------------------------------------------------------------------------
Total short-term ARMs (1,274.3) 90,626.2 58 91,900.5 57 94,725.3 61
Medium-term ARMs:
Treasury index 1,171.6 26,980.4 17 25,808.8 16 19,455.7 12
COFI 43.2 604.7 1 561.5 - 736.4 1
Other (108.1) 1,935.7 1 2,043.8 2 1,577.4 1
- ------------------------------------------------------------------------------------------------------------
Total medium-term ARMs 1,106.7 29,520.8 19 28,414.1 18 21,769.5 14
Fixed-rate loans held in portfolio (2,189.6) 11,560.2 7 13,749.8 8 15,615.8 10
Fixed-rate loans held for sale (431.3) 362.2 - 793.5 1 1,171.7 1
Fixed-rate MBS (1,393.7) 24,492.7 16 25,886.4 16 22,346.2 14
- ------------------------------------------------------------------------------------------------------------
Total real estate loans and MBS $(4,182.2) $156,562.1 100% $160,744.3 100% $155,628.5 100%
============================================================================================================
LOANS SERVICED FOR OTHERS $ 73,444.7(1) $ 65,159.4(2) $ 52,424.2
(1) During the first quarter of 2000, $8.75 billion of loans were securitized into MBS. Of that amount,
$5.08 billion was sold on March 31, 2000 with a settlement date of April 12, 2000. The receivable
of $5.08 billion is a component of "Other assets." The remaining $1.62 billion was retained and
held in the AFS MBS portfolio.
(2) $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.
Quarter Ended
-------------------------------------------------------------------------
Mar. 31, Dec. 31, Mar. 31,
2000 1999 1999
-------------------------------------------------------------------------
INCOME RELATED TO MORTGAGE LOANS (dollars in thousands)
<S> <C> <C> <C>
Loan related income $ 24,021 $24,792 $26,547
Loan servicing income 33,269 38,540 26,031
Gain on sale of loans 61,228 28,362 38,362
-------------------------------------------------------------------------
Total $118,518 $91,694 $90,940
=========================================================================
</TABLE>
<PAGE>
WM - 14
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Mar. 31, 2000 Dec. 31, 1999
- -----------------------------------------------------------------------------------------------
Balance Term(1) Balance Term(1)
- -----------------------------------------------------------------------------------------------
DEPOSITS, BORROWINGS AND DERIVATIVES OUTSTANDING (in months) (in months)
<S> <C> <C> <C> <C>
Deposits:
Noninterest bearing checking accounts $ 9,136.5 NA $ 7,274.6 NA
Interest bearing checking accounts,
savings accounts and MMDAs 36,119.8 NA 36,263.3 NA
Time deposit accounts 37,256.7 8 37,591.9 8
- ----------------------------------------------------------------------------------------------
Total deposits 82,513.0 81,129.8
Borrowings:
Adjustable 57,401.1 1 55,481.7 1
Short-term fixed 22,531.7 2 26,925.0 2
Long-term fixed 15,630.6 45 11,919.9 51
- ----------------------------------------------------------------------------------------------
Total borrowings 95,563.4 94,326.6
- ----------------------------------------------------------------------------------------------
Total deposits and borrowings $178,076.4 $175,456.4
==============================================================================================
Notional amount of derivatives:
WM pay rate swaps:
Fixed rate $13,707.0 14 $ 9,292.8 13
Variable rate 1,060.0 1 1,110.0 1
- ----------------------------------------------------------------------------------------------
Total swaps 14,767.0 10,402.8
Caps\Collars\Corridors 10,138.8 1 11,128.8 1
- ----------------------------------------------------------------------------------------------
Total derivatives $24,905.8 $21,531.6
==============================================================================================
(1) Terms used are remaining term for deposits and term to reprice for borrowings and notional
amount of derivatives.
</TABLE>
<PAGE>
WM - 15
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended
- ----------------------------------------------------------------------------------------------------------
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
2000 1999 1999 1999 1999
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVE FOR LOAN LOSSES
Balance, beginning of quarter $1,041.9 $1,051.4 $1,053.6 $1,069.7 $1,067.8
Provision for loan losses 41.2 41.7 40.8 42.9 41.7
Transfers of reserves(1)(2) (16.9) (6.4) - - 5.2
Loans charged off:
SFR and SFR construction (6.8) (8.3) (9.9) (8.5) (11.1)
Second mortgage and other consumer (37.7) (36.4) (35.7) (33.1) (37.2)
Specialty mortgage finance (0.6) (0.3) (0.1) (0.1) -
Commercial business (0.8) (1.1) (0.7) (1.3) (2.5)
Commercial real estate (1.6) (6.9) (3.4) (22.9) (3.9)
- ----------------------------------------------------------------------------------------------------------
Total loans charged off (47.5) (53.0) (49.8) (65.9) (54.7)
Recoveries of loans previously charged off:
SFR and SFR construction 0.1 1.4 0.5 0.2 2.1
Second mortgage and other consumer 5.2 4.8 4.8 4.8 4.7
Specialty mortgage finance 0.5 0.3 - - -
Commercial business 0.2 0.2 0.1 0.2 0.2
Commercial real estate 0.5 1.5 1.4 1.7 2.7
- ----------------------------------------------------------------------------------------------------------
Total recoveries of loans previously charged off 6.5 8.2 6.8 6.9 9.7
- ----------------------------------------------------------------------------------------------------------
Net charge offs (41.0) (44.8) (43.0) (59.0) (45.0)
- ----------------------------------------------------------------------------------------------------------
Balance, end of quarter $1,025.2 $1,041.9 $1,051.4 $1,053.6 $1,069.7
==========================================================================================================
Net charge offs (annualized) as a percentage
of average loans 0.14% 0.15% 0.15% 0.22% 0.16%
(1) During the first quarter of 2000, approximately $16.9 million was transferred out of the reserve for
loan losses due to the securitization of $8.75 billion of loans.
(2) During the fourth quarter of 1999, approximately $6.4 million was transferred out of the reserve 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>
WM - 16
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Mar. 31, Dec. 31, Mar. 31,
2000 1999 1999
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RESERVE FOR LOAN LOSSES
Specific and allocated reserves:
Commercial real estate $ 33.3 $ 59.0 $ 112.1
Commercial business 8.4 17.6 16.1
Builder construction 0.8 5.0 0.8
- ------------------------------------------------------------------------------------------------
Total specific and allocated reserves 42.5 81.6 129.0
Unallocated reserves 982.7 960.3 940.7
- ------------------------------------------------------------------------------------------------
Total reserve for loan losses $1,025.2 $1,041.9 $1,069.7
================================================================================================
Reserve for loan losses as a percentage of:
Nonaccrual loans(1)(2) 130% 126% 119%
Nonperforming assets(1)(2) 105 102 90
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 $113.1 $117.0 $144.3
Transfer to reserve for loan losses - - (15.0)
Charge offs, net of provision for recourse losses (3.6) (3.9) (1.3)
- ------------------------------------------------------------------------------------------------
Balance, end of quarter $109.5 $113.1 $128.0
================================================================================================
The total loss coverage represents the reserve for loan losses and recourse liability
as a percentage of nonaccrual loans:
Total loss coverage percentage(1)(2) 144% 140% 134%
(1) During the first quarter of 2000, approximately $16.9 million was transferred out of the reserve for
loan losses due to the securitization of $8.75 billion of loans.
(2) 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>
WM - 17
WASHINGTON MUTUAL, INC.
SELECTED FINANCIAL INFORMATION
(dollars in millions)
(unaudited)
<TABLE>
<CAPTION>
Mar. 31, Dec. 31, Mar. 31,
2000 1999 1999
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
NONPERFORMING ASSETS ("NPAs")
Nonaccrual loans:
SFR and SFR construction $ 584.7 $ 619.9 $ 733.3
Second mortgage and other consumer 91.5 98.1 94.5
Specialty mortgage finance 65.9 57.2 4.0
Commercial business 15.6 9.8 7.0
Commercial real estate 31.6 42.0 57.1
- -----------------------------------------------------------------------------------
Total nonaccrual loans 789.3 827.0 895.9
Foreclosed assets:
SFR and SFR construction 137.2 143.3 220.5
Second mortgage and other consumer 20.7 19.0 14.8
Specialty mortgage finance 3.1 6.6 -
Commercial real estate 29.0 30.1 51.9
- -----------------------------------------------------------------------------------
Net foreclosed assets 190.0 199.0 287.2
- -----------------------------------------------------------------------------------
Total NPAs $979.3 $1,026.0 $1,183.1
===================================================================================
NPAs by property type:
SFR and SFR construction $721.9 $ 763.2 $ 953.8
Second mortgage and other consumer 112.2 117.1 109.3
Specialty mortgage finance 69.0 63.8 4.0
Commercial business 15.6 9.8 7.0
Commercial real estate 60.6 72.1 109.0
----------------------------------------------------------------------------------
Total NPAs $979.3 $1,026.0 $1,183.1
===================================================================================
NPAs as a percentage of:
Total loans 0.88% 0.90% 1.08%
Total loans and recourse loans and recourse MBS 0.74 0.75 0.86
Total assets 0.52 0.55 0.68
</TABLE>
<PAGE>
