-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Flo/E15VuGklt5jDJDZoSdNAt3c+ZOR3wEAcI7kV6SDn3tsgQp3Y/nYRVULl+uTp lvZ79sbYrQSudQmCwpFSsQ== 0000950123-97-002295.txt : 19970320 0000950123-97-002295.hdr.sgml : 19970320 ACCESSION NUMBER: 0000950123-97-002295 CONFORMED SUBMISSION TYPE: DEFA14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19970319 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREAT WESTERN FINANCIAL CORP CENTRAL INDEX KEY: 0000043512 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 951913457 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEFA14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-04075 FILM NUMBER: 97559484 BUSINESS ADDRESS: STREET 1: 9200 OAKDALE AVENUE CITY: CHATSWORTH STATE: CA ZIP: 91311 BUSINESS PHONE: 8187753411 MAIL ADDRESS: STREET 1: 9200 OAKDALE AVENUE CITY: CHATSWORTH STATE: CA ZIP: 91311 DEFA14A 1 ADDITIONAL DEFINITIVE SOLICITING MATERIALS 1 SCHEDULE 14A INFORMATION REVOCATION STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Filed by the Registrant /X/ Filed by a Party other than the Registrant / / Check the appropriate box: / / Preliminary Proxy Statement (Revocation of Consent Statement) / / Confidential, for Use of the Commission Only (as permitted by Rule 14s-6(e)(2)) / / Definitive Proxy Statement (Revocation of Consent Statement) /x/ Definitive Additional Materials /x/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 GREAT WESTERN FINANCIAL CORPORATION - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant) Payment of Filing Fee (Check the appropriate box): /x/ No fee required. / / Fee computed on table below per Exchange Act Rules 14s-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------ (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------ (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------ (4) Proposed maximum aggregate value of transactions: ------------------------------------------------------------------------ (5) Total fee paid: ------------------------------------------------------------------------ / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------------ (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------ (3) Filing Party: ------------------------------------------------------------------------ (4) Date Filed: ------------------------------------------------------------------------ 2 Washington Mutual, Inc. [LOGO] Merger With [LOGO] Great Western Financial Corporation HIGH GROWTH CONSUMER BANKING March 1997 3 FORWARD-LOOKING INFORMATION - -------------------------------------------------------------------------------- This presentation contains estimates of future operating results for 1997, 1998 and 1999 for both Washington Mutual, Inc. and Great Western Financial Corporation on a stand-alone and pro forma combined basis, as well as estimates of financial condition, operating efficiencies and revenue creation on a combined basis. These estimates constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995), which involve significant risks and uncertainties. Actual results may differ materially from the results discussed in these forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in WAMU's Current Report on Form 8-K dated March 6, 1997, and its Registration Statement on Form S-4, Registration No. 333-23221, as filed with the Securities and Exchange Commission, to which reference is hereby made. - -------------------------------------------------------------------------------- [LOGO] WASHINGTON MUTUAL 2 GREAT WESTERN [LOGO] 4 Transaction Summary - -------------------------------------------------------------------------------- Fixed Exchange Ratio: 0.9x Implied Value Per GWF Share: $47.93(a) Caps/Collars: None Consideration: 100% common stock Accounting/Tax Treatment: Pooling of interests/Tax-free exchange Assumed Closing: 3rd Quarter 1997 Board Composition: Four GWF Directors to join WAMU Board Termination Fee: Up to $175 million plus expenses (a) Based on WAMU closing stock price of $53.25 on 3/5/97, the day prior to the announcement. Implied value is $45.34 based on WAMU closing stock price of $50.375 on 3/14/97 - -------------------------------------------------------------------------------- [LOGO] WASHINGTON MUTUAL 3 GREAT WESTERN [LOGO] 5 Combination Creates Strength and Scale - -------------------------------------------------------------------------------- ($ in billions) At 12/31/96 -------------------------------------- WAMU GWF Combined -------- -------- -------- Assets $44.6 $42.9 $87.0 Deposits $24.1 $28.6 $52.7 Market Capitalization at 3/5/97 $ 6.3 $ 6.2 $12.9 Banking and Lending Offices 557 571 1,028 Consumer Finance Offices -- 502 502 Households (mm) 1.4 2.7 4.1 Mutual Funds Under Management $ 1.4 $ 3.4 $ 4.8 1996 Single Family Mortgage Originations $10.0 $ 6.1 $16.1 1996 Total Loan Originations $13.5 $ 8.5 $22.1 - -------------------------------------------------------------------------------- [LOGO] WASHINGTON MUTUAL 4 GREAT WESTERN [LOGO] 6 BENEFITS OF THE TRANSACTION - -------------------------------------------------------------------------------- PREMIER CONSUMER BANKING FRANCHISE - - Geographically diversified West Coast powerhouse - - National mortgage and consumer finance franchises CREATES SHAREHOLDER VALUE - - Accelerates earnings growth prospects - - Strong, low risk balance sheet LOW RISK EXECUTION - - Strong management team with proven track record - - Thorough due diligence and business plan formulation - -------------------------------------------------------------------------------- [LOGO] WASHINGTON MUTUAL 5 GREAT WESTERN [LOGO] 7 - -------------------------------------------------------------------------------- PREMIER CONSUMER BANKING FRANCHISE - -------------------------------------------------------------------------------- [LOGO] WASHINGTON MUTUAL GREAT WESTERN [LOGO] 6 8 STRONG WEST COAST AND FLORIDA FRANCHISES - -------------------------------------------------------------------------------- [MAPS OF THE WESTERN UNITED STATES AND FLORIDA SHOWING BRANCH LOCATIONS]
Deposits Banking Deposit State ($B)(a) Locations Share Rank - ------------ -------- --------- ------- ---- California $34.6 562 9.2% 3 Washington 8.1 189 15.4% 2 Oregon 2.8 135 10.0% 3 Florida 7.1 140 4.0% 5 Other States 0.6 20 NA NA
Source: SNL Securities (a) June 30, 1996 deposit data updated for announced acquisitions through February 26, 1997 - -------------------------------------------------------------------------------- [LOGO] WASHINGTON MUTUAL 7 GREAT WESTERN [LOGO] 9 NATIONAL CONSUMER ORIGINATION FRANCHISE - -------------------------------------------------------------------------------- [MAP OF THE UNITED STATES SHOWING MORTGAGE LOAN OFFICES AND CONSUMER FINANCE LOCATIONS]
Mortgage Consumer Loan Finance State Offices Locations - ------------ -------- --------- California 107 28 Washington 30 0 Oregon 13 0 Florida 20 35 Other States 123 439 --- --- Total 293 502 === ===
Great Western: Black Box - Aristar Black Star - Wholesale Mortgage Outlined Box - Retail Mortgage Washington Mutual: Bullet - Mortgage Loan Offices - -------------------------------------------------------------------------------- [LOGO] WASHINGTON MUTUAL 8 GREAT WESTERN [LOGO] 10 SINGLE FAMILY MORTGAGE LENDING LEADERSHIP - ------------------------------------------------------------------------------- CALIFORNIA(a) [BAR GRAPH] BAC..........................8.8% WAMU/GWF.....................6.7% (WAMU = 4.8%, GWF = 1.9%) GDW..........................3.0% NOB..........................2.8% AHM..........................2.7%
WASHINGTON(b) [BAR GRAPH] WAMU/GWF....................16.5% (WAMU = 14.6%, GWF = 1.9%) NOB......................... 6.5% BAC......................... 4.0% MEL......................... 2.0% CCR......................... 1.9%
(a) Source: TRW Redi for year ended 12/31/96 (b) Source: RMS Information Services for year ended 12/31/96 - ------------------------------------------------------------------------------- [LOGO] WASHINGTON MUTUAL 9 GREAT WESTERN [LOGO] 11 SINGLE FAMILY MORTGAGE LENDING LEADERSHIP - ------------------------------------------------------------------------------- OREGON(a) [BAR GRAPH] WAMU/GWF.....................11.4% (WAMU=10.1%, GWF=1.3%) NOB.......................... 5.9% BAC.......................... 4.7% MEL.......................... 3.2% Premier Mortgage............. 2.5%
WEST COAST ORIGINATIONS ($ B)(b) [BAR GRAPH] WAMU/GWF.....................$11.8 (WAMU=$9.1, GWF=$2.7) BAC..........................$11.4 NOB..........................$ 4.9 GDW..........................$ 3.6 AHM..........................$ 3.2
(a) Source: RMS Information Services for year ended 12/31/96 (b) Source: RMS Information Services and TRW Redi for year ended 12/31/96 - ------------------------------------------------------------------------------- [LOGO] WASHINGTON MUTUAL 10 GREAT WESTERN [LOGO] 12 STRONG BUSINESS LINE FIT - ------------------------------------------------------------------------------- - -- CONSUMER LOAN PRODUCTS - Home Equity [WASHINGTON MUTUAL LOGO] - Consumer Finance [GREAT WESTERN LOGO] - Manufactured Housing [WASHINGTON MUTUAL LOGO] - Auto/Other [WASHINGTON MUTUAL LOGO] - -- NON-BANKING SERVICES - Mutual Funds [WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO] - Annuities [WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO] - Securities Brokerage [WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO] - Credit Insurance [WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO] - -- BUSINESS BANKING PRODUCTS - Small Business Lending [GREAT WESTERN LOGO] - Business Checking [GREAT WESTERN LOGO] - Community Banking [WASHINGTON MUTUAL LOGO] - -- RETAIL BANKING PRODUCTS - Transaction Accounts [WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO] - Certificates/Savings [WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO] - -- MORTGAGE LENDING - Single Family [WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO] - Residential Construction [WASHINGTON MUTUAL LOGO] - Multi-Family [WASHINGTON MUTUAL LOGO] - ------------------------------------------------------------------------------- [LOGO] WASHINGTON MUTUAL 11 GREAT WESTERN [LOGO] 13 - ------------------------------------------------------------------------------ Washington Mutual's Positioning - ------------------------------------------------------------------------------- [LOGO] Washington Mutual GREAT WESTERN [LOGO] 12 14 Acquisitions Have Created a Strong, Super-Regional Franchise - ------------------------------------------------------------------------------- [MAP OF THE WESTERN UNITED STATES] 1987(a) Assets $5.7B Loans 3.0B Deposits 3.5B Equity 316.9mm Stock Price 6.28 Market Capitalization 390.0mm [MAP OF THE WESTERN UNITED STATES] 1996(a) Assets $44.6B Loans 30.3B Deposits 24.1B Equity 2.4B Stock Price 43.31 Market Capitalization 5.1B (a) As of and for the latest twelve months ended 12/31/87 and 12/31/96 - ------------------------------------------------------------------------------- [LOGO] Washington Mutual GREAT WESTERN [LOGO] 13 15 AMERICAN INTEGRATION IS WELL UNDERWAY - -------------------------------------------------------------------------------- - - Closed transaction on time - - Integration on schedule - - Effectively capitalizing on product opportunities with ASB customers - - Consumer banking strategy showing clear signs of success - 15,000 net new checking accounts opened in first two months of 1997, compared to a net loss of accounts in the first two months of 1996 - Majority of checking accounts opened represented new households - - Strengthening of senior and middle management - -------------------------------------------------------------------------------- [LOGO] WASHINGTON MUTUAL 14 GREAT WESTERN [LOGO] 16 FRANCHISE POTENTIAL OF AMERICAN - ------------------------------------------------------------------------------ ($ in millions) [BAR GRAPH]
Consumer Lending (CAGRS: 7.3% - 2.4%) WAMU WAMU & American ---- --------------- 1993 $ 957 $ 980 1994 $ 998 $1,054 1995 $ 968 $ 997 1996 $1,268 $1,289 Depositor Fee Income (CAGRs: 52.4%, 10.4%) WAMU WAMU & American ---- --------------- 1993 $22 $ 40 1994 $29 $ 45 1995 $58 $ 79 1996 $79 $103
- ------------------------------------------------------------------------------- [LOGO WASHINGTON MUTUAL] 15 [LOGO GREAT WESTERN] 17 FRANCHISE POTENTIAL OF AMERICAN - ------------------------------------------------------------------------------ (in thousands) [BAR GRAPH]
Retail Checking Accounts (CAGRS: 22.6%, 2.3%) WAMU WAMU & American ---- --------------- 1993 330 569 1994 394 611 1995 489 744 1996 608 864 Households Served (CAGRs: 10.0%, 2.7%) WAMU WAMU & American ---- --------------- 1993 623 1,170 1994 653 1,197 1995 737 1,323 1996 830 1,423
- ------------------------------------------------------------------------------- [LOGO WASHINGTON MUTUAL] 16 [LOGO GREAT WESTERN] 18 STOCK MARKET OUTPERFORMANCE - ------------------------------------------------------------------------------- 4/1/90 - 12/31/96 COMPARATIVE RETURN(a) [BAR GRAPH] WAMU ......... 34.0% NOB .......... 28.5% CCI .......... 28.4% WFC .......... 26.2% BAC .......... 24.5% KEY .......... 23.8% USBC ......... 21.5% NB ........... 18.8% ONE .......... 18.6% S&P .......... 15.5% AHM .......... 14.7% GWF .......... 14.2% GDW .......... 14.0% WFSL ......... 13.9%
Source: Bloomberg (a) Total return assumes reinvestment of dividends - ------------------------------------------------------------------------------- [LOGO WASHINGTON MUTUAL] 17 [LOGO GREAT WESTERN] 19 - -------------------------------------------------------------------------------- CREATES SHAREHOLDER VALUE - -------------------------------------------------------------------------------- [WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO] 18 20 TESTED ASSUMPTIONS -- ATTRACTIVE RETURNS - ------------------------------------------------------------------------------- Assumptions Results - ------------------------------ ------------------------------ - - Cost savings of $340 - Double digit accretion million in 1999 in 1999 - - Fee income synergies - Maintains solid capital levels and flexibility - - Substantial capital buildup [ARROW] - Strong NPA, loss reserve supports increased loan ratios retention - - $343 million pre-tax - Strong operating restructuring charge fundamentals - - $100 million addition to - Accelerates achievement loan loss reserves of WAMU's 5-year plan - ------------------------------------------------------------------------------- [WASHINGTON MUTUAL LOGO] 19 [GREAT WESTERN LOGO] 21 EPS ACCRETION BASED ON DUE DILIGENCED ASSUMPTIONS - --------------------------------------------------------------------------------
($ in millions, except per share data) 1997P 1998P 1999P ----- ----- ----- WAMU Estimated Net Income(a) $471 $556 $623 GWF Estimated Net Income(a) 397 434 470 ----- ------ ------ Total Estimated Net Income 868 990 1,093 Net Income Available to Common 847 987 1,093 Cost Savings 9 125 204 Fee Income Increases 0 36 53 Incremental Net Interest Income 0 68 148 ----- ------ ------ Estimated Combined Net Income $856 $1,216 $1,497 ===== ====== ====== Stand Alone EPS $3.84 $4.58 $5.13 Estimated Combined EPS(b) $4.81 $5.90 % Accretion to First Call 5.0% 15.0% % EPS Growth 25.3% 22.7%
(a) First Call estimates for 1997 and 1998 before preferred dividends. 1999 estimates based on IBES growth rate of 12% and 10.5% for WAMU and GWF. (b) Based on 252.1mm pro forma shares outstanding in 1997, 253.1mm in 1998, and 253.8mm in 1999. EPS figures include 9.1mm GWF option shares. EPS accretion using option shares under the treasury stock method would be 6.3% and 16.6% in 1998 and 1999. - ------------------------------------------------------------------------------- [LOGO WASHINGTON MUTUAL] 20 [LOGO GREAT WESTERN] 22 COST SAVINGS BREAKDOWN - --------------------------------------------------------------------------------
($ in millions) 1998 1999 ------------------ ------------------ % of GWF % of GWF Amount Op. Exp(a) Amount Op. Exp(a) ------ ---------- ------ ---------- Administration/Finance $52 41% $65 51% Lending 15 11 69 49 Corporate Operations 56 25 96 43 Retail Banking 77 21 99 27 Subsidiaries 8 5 11 7 ---- ---- Total Pretax Cost Savings $208 $340 Aftertax Cost Savings $125 $204 Pretax Cost Savings as a % of: GWF Net Operating Expenses(b) 23% 38% Combined 1997 G&A(c) 13% 21%
(a) Based on GWF budgeted 1997 gross operating expenses (b) Net operating expenses are net of loan origination costs which are deferred and amortized over the life of the loans and various reimbursable costs (c) 1997 G&A net expense base of $900mm for GWF and $745mm for WAMU based on sampling of analyst reports - ------------------------------------------------------------------------------- [LOGO WASHINGTON MUTUAL] 21 [LOGO GREAT WESTERN] 23 COST SAVINGS DETAIL - -------------------------------------------------------------------------------- ($ in millions)
1999 Savings ------- CORPORATE ADMINISTRATION/FINANCE - - Consolidation of duplicate functions/premises - Corporate properties $16 - Executive management 7 - Corporate administrative staff 42 --- $65 === LENDING - - Loan office closures (approximately 100) and alignment of GWF's loan origination cost structure with WAMU's $52 - - Reduced servicing cost per loan 17 --- $69 ===
- -------------------------------------------------------------------------------- [LOGO]WASHINGTON MUTUAL 22 [LOGO]GREAT WESTERN 24 COST SAVINGS DETAIL (CONT'D) - -------------------------------------------------------------------------------- ($ in millions)
1999 Savings ------- CORPORATE OPERATIONS - - Consolidation and implementation of WAMU technology platform $50 - - Align GWF's cost of branch operations/economies of scale 26 - - Lower loan origination support and credit administration costs 20 --- $96 === CORPORATE MARKETING/RETAIL BANK - - Retail branch consolidation (approximately 100) $50 - - Advertising synergies 25 - - Duplicate staff functions 24 --- $99 ===
- -------------------------------------------------------------------------------- [LOGO]WASHINGTON MUTUAL 23 [LOGO]GREAT WESTERN 25 TRANSACTION-RELATED CHARGES FACILITATE COST SAVINGS - -------------------------------------------------------------------------------
($ in millions) Additional Loan Loss Reserves $100 Severance and Management Payments 145 Facilities and Equipment 106 Other Expenses 92 ---- Total Expenses $443 Tax Effect (125) ---- Aftertax Expenses $318 ==== - -------------------------------------------------------------------------------
[LOGO WASHINGTON MUTUAL] 24 [LOGO GREAT WESTERN] 26 CONFIDENCE IN EXECUTION - -------------------------------------------------------------------------------- / / Unique experience as an acquiror / / Integration plan is underway / / Deposit/mortgage lending systems are the same / / Network infrastructure is the same / / WAMU partnerships with: o IBM o EDS o ALLTEL / / Track record of integrating within 6 months of close - ------------------------------------------------------------------------------- [LOGO WASHINGTON MUTUAL] 25 [LOGO GREAT WESTERN] 27 WAMU'S COST SAVINGS ARE DUE DILIGENCED -- AHMANSON'S ARE AGGRESSIVE - -------------------------------------------------------------------------------- ($ in millions)
AHM WAMU AHM PROJECTED PROJECTED EXCESS OVER SAVINGS(a) SAVINGS(b) WAMU ---------- ---------- ----------- Administration/Operations $167 $161 $ 6 Lending/Servicing 81 69 12 Retail Banking 144 99 45 Subsidiaries 12 11 1 ---- ---- --- Total $404 $340 $64
(a) From February 18, 1997 analyst presentation (b) From Form S-4 filed on March 13, 1997 - -------------------------------------------------------------------------------- 26 [LOGO] WASHINGTON MUTUAL GREAT WESTERN [LOGO] 28 FEE INCOME OPPORTUNITIES -- "LOW HANGING FRUIT" - -------------------------------------------------------------------------------- ($ in millions)
1998 1999 ---- ---- Retail Banking Fees: Checking fee parity with WAMU fees (existing accounts) $13 $13 Implementation of WAMU free checking (new accounts) and cross-selling of related products 30 52 Improved sales/fees in financial services subsidiaries 13 16 Enhanced fees from expanded loan production 4 7 --- --- Total Pretax $60 $88 Total Aftertax $36 $53
- -------------------------------------------------------------------------------- [LOGO] WASHINGTON MUTUAL GREAT WESTERN [LOGO] 27 29 INCREMENTAL NET INTEREST INCOME BASED ON STRONG LOAN VOLUME AND HISTORICAL SPREADS - -------------------------------------------------------------------------------- ($ in millions)
1997P 1998P 1999P ----- ----- ----- Combined Incremental Assets Above Street Expectations $3,100 $7,400 $ 7,600 Cumulative Average Assets $6,800 $14,300 Pretax Margin(a) 1.66% 1.72% ------ ------- Incremental Net Interest Income $ 113 $ 246 Aftertax Incremental Net Interest Income $ 68 $ 148
(a) Net of estimated provision for loan losses and associated operating expenses. Equivalent pretax interest spread estimated to be approximately 150bps - -------------------------------------------------------------------------------- [LOGO] WASHINGTON MUTUAL GREAT WESTERN [LOGO] 28 30 STRONG CAPITAL GENERATION AND GROWTH POTENTIAL - -------------------------------------------------------------------------------- ($ in millions)
12/31/96 1997P 1998P 1999P -------- ----- ----- ----- Beginning Combined Common Equity $4,710 $5,026 $5,926 Pro Forma Net Income 856 1,216 1,497 Aftertax Restructuring Charge (318) -- -- Common Dividends @ 26% Payout (223) (316) (389) ------ ------ ------ ------ Ending Combined Common Equity $4,710 $5,026 $5,926 $7,034 ====== ====== ====== ====== Common Equity/Total Assets Assuming the Following Asset Growth Rates(a): 8% 5.32% 5.81% 6.39% 10% 5.23 5.60 6.04 12% 5.13 5.40 5.73 14% 5.04 5.22 5.43
(a) Annual growth from 12/31/96 pro forma total assets of $87.4 billion. - -------------------------------------------------------------------------------- [LOGO] WASHINGTON MUTUAL GREAT WESTERN [LOGO] 29 31 Projected Excess Capital Analysis - -------------------------------------------------------------------------------- ($ in millions)
1997P 1998P 1999P ----- ----- ----- Excess Common Equity Above 5% Common Equity/Assets Ratio Assuming the Following Asset Growth Rates: 8% $305 $827 $1,527 10% 217 636 1,215 12% 130 442 892 14% 42 245 557
(a) Annual growth from 12/31/96 pro forma total assets of $87.4 billion - -------------------------------------------------------------------------------- [LOGO] Washington Mutual 30 GREAT WESTERN [LOGO] 32 Strong Historical Total Loan Originations - -------------------------------------------------------------------------------- ($ in billions) WAMU & GWF [BAR GRAPH]
WAMU & WAMU & GWF WAMU GWF GWF Paydowns/Prepayments ---- ----- ------ -------------------- 1994.......... 9.3 $10.3 $19.6 $10.0 1995.......... 9.4 9.7 19.1 8.6 1996.......... 13.6 8.5 22.1 11.4
AHM [BAR GRAPH]
AHM ----- 1994.......... $10.3 1995.......... 6.4 1996.......... 5.5
- -------------------------------------------------------------------------------- [LOGO] Washington Mutual 31 GREAT WESTERN [LOGO] 33 Historical Net Loan Originations vs. Projected GWF Asset Growth - -------------------------------------------------------------------------------- ($ in billions) Net Originations(a) [BAR GRAPH]
WAMU & WAMU GWF GWF ---- ---- ------ 1994.......... $5.6 $3.1 $8.7 1995.......... 6.5 3.4 9.9 1996.......... 9.2 0.9 10.1
Incremental GWF Asset Growth(b) [BAR GRAPH]
GWF ---- 1997P......... $3.1 1998P......... 7.4 1999P......... 7.6
(a) Total originations net of prepayments and paydowns excluding loan sales (b) From Form S-4 filed on March 13, 1997 - -------------------------------------------------------------------------------- [LOGO] Washington Mutual 32 GREAT WESTERN [LOGO] 34 1996 WAMU/ASB Loan Spreads - ---------------------------------------------------------------------------- % of Net Spread to Resi/Consumer Wholesale Production Matched Funding(a) ------------- ------------------ Residential Mortgage Fixed Rate 26% 1.15% COFI ARM's 32 1.35 Treasury ARM's 21 1.71 Multifamily 4 2.57 Construction - Custom 6 1.91 Construction - Spec. 3 2.90 Consumer Home Equity 4 2.48% Mfd Housing 3 1.61 Other 2 3.24 --- Total 100% 1.59%(b) (a) Net spread after deducting origination, servicing and credit costs (b) Equivalent margin estimated to be 15-30 bps higher depending on capital allocation - ---------------------------------------------------------------------------- [LOGO] Washington Mutual GREAT WESTERN [LOGO] 33 35 Strong Asset Quality and Reserves - ---------------------------------------------------------------------------- ($ in millions)
At December 31, 1996 --------------------------------------------------------- WAMU GWF Adjustments Pro Forma 5-Year Goal ---- --- ----------- --------- ----------- Non-Performing $226 $352 - $578 Loans Real Estate Owned 103 120 - 223 ---- ---- ---- NPAs $329 $472 - $801 ==== ==== ==== NPAs/Assets 0.74% 1.10% - 0.92% <1.00% Loan Loss Reserves $363 $314 $100 $777 Reserves/NPLs 161% 89% - 134% >100% - ------------------------------------------------------------------------------------------------------- [LOGO] Washington Mutual GREAT WESTERN [LOGO]
34 36 - ----------------------------------------------------------------------------- A Superior Alternative - ----------------------------------------------------------------------------- [LOGO] Washington Mutual GREAT WESTERN [LOGO] 35 37 - ----------------------------------------------------------------------------- Ahmanson's Projections Are Overly-Aggressive - ------------------------------------------------------------------------------ [LOGO] Washington Mutual GREAT WESTERN [LOGO] 36 38 AHMANSON'S PROJECTIONS ARE OVERLY-AGGRESSIVE - -------------------------------------------------------------------------------- - - Aggressive leverage driven by $2+ billion in share repurchases through 1999 - Ahmanson proposal is really an LBO of Great Western - GWF's and WAMU's pro forma projections are based on capital ratios nearly 50% higher than Ahmanson's - Ahmanson is presently, and under its pro forma projections would be, among the worst-capitalized thrifts in the nation - - Ahmanson assumes an unreasonably low repurchase price for the $2 billion in projected share repurchases - Ahmanson's numbers require an average share repurchase price of about $37 per share through 1998 and imply a 10 percent stock price increase through 1999 - -------------------------------------------------------------------------------- [LOGO]WASHINGTON MUTUAL 37 GREAT WESTERN[LOGO] 39 SIGNIFICANTLY MORE LEVERAGE THAN WAMU - ------------------------------------------------------------------------------- ($ in millions)
At December 31, ------------------------------------------------ Initial Balance Sheet(a) 1997E 1998E 1999E ----------------- -------------- -------------- ------------- [WASHINGTON MUTUAL CAPITAL -- "PRUDENT LEVERAGE"(b)] Tangible Assets(c) $87,007(d) $95,220 $104,742 $115,216 Tangible Common Equity 4,291 4,671 5,636 6,810 Tangible Common /Tangible Assets 4.93% 4.91% 5.38% 5.91% AHMANSON CAPITAL -- "A LEVERAGED BUYOUT"(e) Tangible Assets(f) $92,783 $93,711 $ 97,459 $101,358 Tangible Common Equity 3,570 3,570 3,570 3,570 Tangible Common/Tangible Assets 3.85% 3.81% 3.66% 3.52% Ahmanson Tangible Equity Required to Equal Washington Mutual's Ratio $ 4,575 $ 4,597 $ 5,244 $ 5,991 Change from Ahmanson's Base 1,005 1,027 1,674 2,421
(a) Data for Washington Mutual is pro forma at December 31, 1996. Data for Ahmanson is projected pro forma at September 30, 1997 (assumed closing date). (b) Based on data presented in or underlying Washington Mutual's S-4 Registration Statement dated March 13, 1997 and March 6, 1997 analyst presentation. (c) Assumes 10% annual growth rate, for illustrative purposes. (d) As shown in Washington Mutual's S-4 registration statement dated March 13, 1997, grossed up for $443 million pre-tax restructuring reserve. (e) Based on data presented at Ahmanson's February 18, 1997 analyst presentation. (f) Assumes 4% annual growth rate for illustrative purposes. - ------------------------------------------------------------------------------- [WASHINGTON MUTUAL LOGO] 38 [GREAT WESTERN LOGO] 40 UNREALISTICALLY LOW SHARE REPURCHASE PRICE - ------------------------------------------------------------------------------- ($ in millions, except per share amounts)
1997E 1998E 1999E ---------- ---------- ---------- Cash Generated to Buy Back Common(a) $ 258 $ 866 $ 916 Average Shares Outstanding (millions)(a) 147.8 241.2 219.6 Implied # Shares Repurchased (millions)(b) 7.5 22.9 20.3 Implied Repurchase Price(c) $34.47 $37.79 $45.16 Current Year P/E Multiple (d) 12.2x 11.4x 11.0x
(a) From Ahmanson's analyst presentation dated February 18, 1997. (b) Number of shares that must be repurchased in order to match Ahmanson's projected average share amount. See Appendix for further details. (c) "Cash Generated to Buy Back Common" divided by "Implied # Shares Repurchased". (d) Based on market data as of February 14, 1997, Ahmanson's 1996 P/E ratio is 17.5 x (based on recurring EPS of $2.31) and its 1997E P/E ratio is 13.7x (based on First Call EPS of $2.96). - ------------------------------------------------------------------------------- [WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO] 39 41 THE AHMANSON OFFER IS DILUTIVE THROUGH 1999 - ------------------------------------------------------------------------------- ($ in millions, except per share amounts)
Ahmanson's Assumptions(a) Reasonable Assumptions(b) ------------------------- ------------------------- 1998E 1999E 1998E 1999E ---------- ---------- ---------- ---------- Pro Forma Net Income $ 800 $ 899 $ 849 $ 973 Average Shares (millions) 241.2 219.6 276.1 270.8 Tangible Common Equity/Tangible Assets 3.66% 3.52% 5.38% 5.91% Ahmanson Stand-Alone EPS $3.42 $3.76 $3.42 $3.76 Pro Forma EPS 3.32 4.10 3.07 3.59 Accretion/(Dilution) (3)% 9% (10)% (4)% Ahmanson Stand-Alone Cash EPS $3.58 $3.94 $3.58 $3.94 Pro Forma Cash EPS 4.10 4.95 3.75 4.29 Accretion/(Dilution) 15% 26% 5% 9%
(a) Based on data from Ahmanson's February 18, 1997 analyst presentation. (b) Share repurchases made at a reasonable price (14.5 x current year EPS). Tangible common equity ratio equal to Washington Mutual's pro forma ratio. See appendix for further details. - ------------------------------------------------------------------------------- [WASHINGTON MUTUAL LOGO] 40 [GREAT WESTERN LOGO] 42 - -------------------------------------------------------------------------------- The WAMU/GWF Combination Is Significantly Stronger - -------------------------------------------------------------------------------- [WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO] 41 43 Stronger Capital/Asset Quality - Long Term Drag on AHM Earnings - --------------------------------------------------------------------------------
WAMU/GWF AHM/GWF Merger Proposal - -------------------------------------------------------------------------------- Tangible Common Equity to Assets 4.59%(a) 3.85%(b) Intangibles to Total Equity 9 (a) 51 (b) NPA's to Assets(c) 0.92% 1.55% Reserves to NPL's(c) 134 (d) 62 High Risk Real Estate Loans to Loans(e) 11 22 Tangible Common Equity to Assets With Equal Reserve to NPL Coverage 4.59%(a) 3.33%(b)
- ------------ (a) At December 31, 1996. Reflects $318 million in after-tax restructuring charges. (b) Projected at September 30, 1997E based on Ahmanson's February 18, 1997 analyst presentation. Reflects $325 million in pre-tax restructuring charges. (c) At December 31, 1996. (d) Reflects $100 million increase in loan loss reserves. (e) At September 30, 1996 for Ahmanson and Great Western; at December 31, 1996 for Washington Mutual. Includes construction, multi-family, commercial real estate and land loans. - -------------------------------------------------------------------------------- [WASHINGTON MUTUAL LOGO] 42 [GREAT WESTERN LOGO] 44 Better Operating Performance(a) - -------------------------------------------------------------------------------- ($ in millions)
WAMU/GWF AHM/GWF Merger Proposal - -------------------------------------------------------------------------------- Net Income $1,497 $ 899 Cash Flow 1,556 1,087 Return on Assets 1.35%(b) 0.90%(c) Return on Common Equity 23.1 11.8 Cash Return on Tangible Common 25.1% 28.0% Cash Return on Tangible Common - Equal Leverage(d) 25.1% 20.7%
(a) Results are for 1999 as presented in Washington Mutual's S-4 registration statement dated March 13, 1997 and Ahmanson's February 18, 1997 analyst presentation. (b) Assumes 10% asset growth rate, for illustrative purposes. (c) Assumes 4% asset growth rate, for illustrative purposes. (d) Assumes Ahmanson's tangible common equity to tangible assets ratio increases to 5.91% (equal to Washington Mutual's) in 1999. - -------------------------------------------------------------------------------- [WASHINGTON MUTUAL LOGO] 43 [GREAT WESTERN LOGO] 45 FASTER PROJECTED PRO FORMA EPS GROWTH - ------------------------------------------------------------------------------- [Bar Graph] WAMU/GWF Accretion/ CAGR = 32% EPS (Dilution) ----- ----- 1997E..........................$3.40 1998E..........................$4.81 5% 1999E..........................$5.90 15% [Bar Graph] AHM/GWF -- Ahmanson Assumptions CAGR = 20% Accretion/ EPS (Dilution) ----- ----- 1997E..........................$2.84 1998E..........................$3.32 (3)% 1999E..........................$4.10 9 % [Bar Graph] AHM/GWF -- Reasonable Assumptions (a) CAGR = 17% Accretion/ EPS (Dilution) ----- ----- 1997E..........................$2.63 1998E..........................$3.07 (10)% 1999E..........................$3.59 (4)% (a) Adjusted to reflect realistic share repurchase prices and leverage consistent with Washington Mutual. See appendix for further details. - ------------------------------------------------------------------------------- [WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO] 44 46 FASTER PROJECTED GROWTH IN TANGIBLE BOOK VALUE PER SHARE - ------------------------------------------------------------------------------- [Bar Graph] WAMU/GWF CAGR = 16% 1996...........................$18.17 1997E..........................$19.28 1998E..........................$23.27 1999E..........................$28.11 [Bar Graph] AHM/GWF -- Ahmanson Assumptions CAGR = 4% 1996...........................$16.07 1997E..........................$14.88 1998E..........................$16.45 1999E..........................$18.21 [Bar Graph] AHM/GWF -- Reasonable Assumptions (a) CAGR = 13% 1996...........................$16.07 1997E..........................$17.28 1998E..........................$20.17 1999E..........................$23.49 (a) Adjusted to reflect realistic share repurchase prices and leverage consistent with Washington Mutual. See appendix for further details. - ------------------------------------------------------------------------------- [WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO] 45 47 AHMANSON TRANSACTION IS DILUTIVE AT HIGHER PRICES - ------------------------------------------------------------------------------- AHMANSON ASSUMPTIONS
Exchange Ratio --------------------------------------------- 1.05x 1.15x 1.20x 1.25x ------ ------ ------ ------ 1999E PRO FORMA: (a) Income to Common Before Intang. Amortization $1,087 $1,087 $1,087 $1,087 Amortization of Intangibles (b) (188) (210) (221) (233) ------ ------ ------ ------ Adjusted Net Income to Common 899 877 866 854 Average Shares 219.6 233.4 240.3 247.2 Reported Earnings Per Share $4.10 $3.76 $3.60 $3.46 Cash Earnings Per Share $4.95 $4.66 $4.52 $4.40 Accretion/(Dilution) Reported EPS 9% 0% -4% -8% Accretion/(Dilution) Cash EPS 26% 19% 15% 12%
- ------------ (a) Based on data presented in Ahmanson's February 18, 1997, analyst presentation. (b) Based on Ahmanson's price on February 14, 1997 of $40.50. - ------------------------------------------------------------------------------- [WASHINGTON MUTUAL LOGO] 46 [GREAT WESTERN LOGO] 48 AHMANSON TRANSACTION IS DILUTIVE AT HIGHER EXCHANGE RATIOS - -------------------------------------------------------------------------------- REASONABLE ASSUMPTIONS
Exchange Ratio --------------------------------- 1.05x 1.15x 1.20x 1.25x ------ ------ ------ ------ 1999E PRO FORMA:(a) Income to Common Before Intang. Amortization $1,087 $1,087 $1,087 $1,087 Earnings on Incremental Capital(a) 74 74 74 74 Amortization of Intangibles(b) (188) (210) (221) (233) ------ ------ ------ ------ Adjusted Net Income to Common 973 950 939 928 Average Shares 271.0 284.8 291.7 298.6 Reported Earnings Per Share $3.59 $3.34 $3.22 $3.11 Cash Earnings Per Share $4.28 $4.07 $3.98 $3.89 Accretion/(Dilution) Reported EPS -4% -11% -14% -17% Accretion/(Dilution) Cash EPS 9% 4% 1% -1%
(a) Assumes a 6% earnings rate on incremental capital and a tax rate of 40%. (b) Based on Ahmanson's price on February 14, 1997, of $40.50. - -------------------------------------------------------------------------------- [LOGO] Washington Mutual 47 GREAT WESTERN [LOGO] 49 - -------------------------------------------------------------------------------- THE WAMU TRANSACTION IS THE BEST FOR GWF SHAREHOLDERS - -------------------------------------------------------------------------------- [LOGO] Washington Mutual GREAT WESTERN [LOGO] 48 50 EPS PER GWF SHARE - --------------------------------------------------------------------------------
AHM/GWF Proposal -- GWF WAMU/ -------------------------- Stand- GWF Ahmanson Reasonable Alone Merger Assumptions Assumptions ------ ------ ----------- ----------- Exchange Ratio -- 0.90x 1.05x 1.05x 1998E GAAP EPS per GWF Share $3.09 $4.33 $3.49 $3.22 Percent Change(a) 40% 13% 4% 1999E GAAP EPS per GWF Share $3.40 $5.31 $4.31 $3.77 Percent Change(a) 56% 27% 11% 1998E Cash EPS per GWF Share $3.35 $4.56 $4.31 $3.94 Percent Change(a) 36% 29% 18% 1999E Cash EPS per GWF Share $3.66 $5.55 $5.21 $4.50 Percent Change(a) 51% 42% 23%
Source: Prospective buyers' respective presentations to analysts. (a) Relative to First Call mean estimates for 1998. 1999 assumes 10% EPS growth over 1998 First Call mean estimate. Cash EPS figures add back intangible amortization. - -------------------------------------------------------------------------------- [LOGO] Washington Mutual 49 GREAT WESTERN [LOGO] 51 EPS PER GWF SHARE - --------------------------------------------------------------------------------
GWF WAMU/ Stand- GWF AHM/GWF Proposal -- Alone Merger Reasonable Assumptions ----- ------ ------------------------------- Exchange Ratio 0.90x 1.05x 1.15x 1.20x 1.25x 1998E GAAP EPS per GWF Share $3.09 $4.33 $3.22 $3.28 $3.30 $3.31 Percent Change(a) 40% 4% 6% 7% 7% 1999E GAAP EPS per GWF Share $3.40 $5.31 $3.77 $3.84 $3.86 $3.88 Percent Change(a) 56% 11% 13% 14% 14% 1998E Cash EPS per GWF Share $3.35 $4.56 $3.94 $4.12 $4.19 $4.27 Percent Change(a) 36% 18% 23% 25% 27% 1999E Cash EPS per GWF Share $3.66 $5.55 $4.50 $4.69 $4.77 $4.86 Percent Change(a) 51% 23% 28% 30% 33%
Source: Prospective buyers' respective presentations to analysts. (a) Relative to First Call mean estimates for 1998. 1999 assumes 10% EPS growth over 1998 First Call mean estimate. Cash EPS figures add back intangible amortization. - -------------------------------------------------------------------------------- [WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO] 50 52 - -------------------------------------------------------------------------------- WAMU'S TRACK RECORD IS SUPERIOR IN EVERY WAY - -------------------------------------------------------------------------------- [WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO] 51 53 SENIOR MANAGEMENT WITH MORE EXPERIENCE - --------------------------------------------------------------------------------
Name Position Tenure - ---- -------- ------ Washington Mutual Kerry K. Killinger Chairman, President & CEO 21 years S. Liane Wilson EVP, Corporate Operations 12 years Lee D. Lannoye EVP, Corporate Administration & Credit 9 years Deanna Oppenheimer EVP, Corporate Marketing & Consumer Bank Distribution 12 years William A. Longbrake(a) EVP & CFO 15 years Craig E. Tall EVP, Corporate Development & Commercial Banking 12 years H.F. Ahmanson Charles R. Rinehart Chairman & CEO 8 years Bruce G. Willison President & COO 1 year Kevin M. Twomey Senior EVP and CFO 4 years Anne-Drue M. Anderson EVP, Treasurer 4 years Carl Forsythe EVP, Director of Personal Financial Services 1 year Madeleine A. Kleiner EVP, General Counsel & Secretary 2 years E. Nancy Markle EVP 3 years
(a) Includes time served as CFO of the FDIC from March, 1995 to September, 1996. - -------------------------------------------------------------------------------- [LOGO]WASHINGTON MUTUAL 52 GREAT WESTERN[LOGO] 54 GREATER ACQUISITION EXPERIENCE - --------------------------------------------------------------------------------
AGGREGATE ANNOUNCEMENT TYPE OF CONSIDERATION CONSIDERATION/ TYPE OF IN MARKET/ DATE TARGET ACQUISITION ($MM) MARKET CAP CONSIDERATION MARKET EXTENSION - ------------ ------ ----------- ------------- -------------- ------------- ---------------- WASHINGTON MUTUAL(a) 09/96 United Western Whole $ 80 3% Cash In Market 06/96 Keystone Holdings Whole 1,647 77 Stock Extension 03/96 Utah Federal Whole 15 1 Stock In Market 10/95 Western Bank Whole 177 10 Stock Extension 06/95 Enterprise Bank(b) Whole 24 2 Stock Extension 07/94 Olympus Capital Whole 48 4 Stock Extension 06/94 Summit Bancorp Whole 26 2 Stock In Market 10/92 Pacific First Bank Whole 663 81 Cash In Market/ Extension 08/92 Pioneer Savings Whole 170 24 Stock In Market 09/91 GNW Financial Whole 68 13 49% Cash/ In Market 51% Stock 11/90 VanFed Whole 23 13 Cash In Market AHMANSON(a) 03/96 First Interstate Branch $ 206 7% Cash In Market 02/95 Household Bank Branch 53 3 Cash In Market 09/94 Western Federal Bank RTC 87 4 Cash In Market 01/93 HomeFed RTC N.A. N.A. Cash In Market 03/92 County Bank of Santa Barbara RTC 4 0 Cash In Market 01/91 Coast Federal Bank Branch 20 1 Cash In Market 04/90 Home Savings Bank Whole 292 17 Stock In Market
(a) Includes only branch acquisitions with more than $200 million of deposits or 10 branches. (b) Acquired remaining 90.1% interest that it did not already own. - -------------------------------------------------------------------------------- [WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO] 53 55 SUPERIOR TOTAL RETURNS - ------------------------------------------------------------------------------- COMPOUNDED ANNUAL TOTAL RETURN(a) [BAR GRAPH]
WAMU AHM ---- --- 1 Year 54% 27% 3 Years 26% 23% 5 Years 27% 18% 10 Years ...... 24% 9%
(a) Stock price appreciation plus reinvestment of dividends. As of the respective period ending December 31, 1996. - ------------------------------------------------------------------------------ [LOGO WASHINGTON MUTUAL] 54 [LOGO GREAT WESTERN] 56 HIGHER CAPITAL RATIOS/ FASTER TANGIBLE BOOK GROWTH(a) - ------------------------------------------------------------------------------ [BAR GRAPH]
Tangible Common Equity/ Tangible Assets(b) (in percentages) WAMU AHM ---- -------- 1992 .... 6.1% 4.4% 1993 .... 4.6% 3.7% 1994 .... 4.7% 3.5% 1995 .... 5.5% 4.5% 1996 .... 4.8% 3.3% Tangible Book Value/ Share (in dollars) WAMU AHM ---- ---- 1992 .... $13.91 $17.94 1993 .... $13.54 $15.94 1994 .... $14.74 $15.70 1995 .... $18.39 $19.47 1996 .... $18.17 $16.07
(a) Reflects numbers as originally reported (prior to restatement for pooling transactions). (b) Excludes goodwill and other intangibles. - ------------------------------------------------------------------------------- [LOGO WASHINGTON MUTUAL] 55 [LOGO GREAT WESTERN] 57 LOWER LEVEL OF NPAs/ BETTER RESERVE COVERAGE(a) - ------------------------------------------------------------------------------ [BAR GRAPH]
Reserves/NPLs WAMU(b) AHM ------ -------- 1992 .... 96% 24% 1993 .... 135% 50% 1994 .... 180% 50% 1995 .... 161% 43% 1996 .... 107% 50% NPAs + Restructured Loans/Assets WAMU(b) AHM ------ ---- 1992 .... 1.52% 4.74% 1993 .... 0.75% 2.09% 1994 .... 0.49% 1.79% 1995 .... 0.51% 2.20% 1996 .... 0.99% 2.07%
(a) Reflects numbers as originally reported (prior to restatement for pooling transactions). (b) Impacted in 1996 by American Savings Bank - ------------------------------------------------------------------------------- [LOGO WASHINGTON MUTUAL] 56 [LOGO GREAT WESTERN] 58 MORE CONSISTENT/FASTER GROWING EPS AND DIVIDENDS(a) - --------------------------------------------------------------------------------
[BAR GRAPH] RECURRING EPS(b) DIVIDENDS PER SHARE WAMU AHM WAMU AHM 1992 $1.84 $1.00 $0.33 $0.88 1993 $2.30 -$1.73 $0.50 $0.88 1994 $2.62 $1.38 $0.70 $0.88 1995 $2.76 $1.47 $0.77 $0.88 1996 $3.39 $1.90 $0.90 $0.88
(a) Reflects numbers as originally reported (prior to restatement for pooling transactions). (b) Adjusted to exclude non-recurring items including gains on sales, restructuring charges, the SAIF recapitalization charge and one-time asset write-offs. 1993 and 1996 Ahmanson figures adjusted to reflect tax rate of 40.0% - -------------------------------------------------------------------------------- [WASHINGTON MUTUAL LOGO] 57 [GREAT WESTERN LOGO] 59 MORE CONSISTENT/FASTER GROWING NET INCOME(a) - -------------------------------------------------------------------------------- ($ in millions) [BAR GRAPH]
RECURRING NET INCOME RECURRING NET INCOME ADJUSTED FOR CREDIT LOSSES(b) WAMU AHM WAMU AHM 1992 90.1 117.2 100.1 416.8 1993 149.7 -203.2 176.6 406.6 1994 172.8 189.2 185.3 380.1 1995 192.0 180.1 193.8 319.8 1996 401.2 231.5 459.7 403.0
(a) Reflects numbers as originally reported (prior to restatement for pooling transactions). Adjusted to exclude non-recurring items including gains on sales, restructuring charges, the SAIF capitalization charge and one-time asset write-offs, 1993 and 1996 Ahmanson figures adjusted to reflect tax rate of 40.0%. (b) Further adjusted to exclude provision for loan losses and real estate held for investment (REI) and sale (REO). - -------------------------------------------------------------------------------- [WASHINGTON MUTUAL LOGO] 58 [GREAT WESTERN LOGO] 60 MORE "BANK-LIKE"/LOWER RISK LOAN COMPOSITION - --------------------------------------------------------------------------------
[PIE CHART] [PIE CHART] WASHINGTON MUTUAL(a) AHMANSON(b) Commercial 1% > 1% Commercial Real Estate 12% 34% Consumer 11% 2% 1-4 Family Residential(c) 76% 64%
(a) At December 31, 1996. (b) At September 30, 1996. (c) Includes residential and other construction. - -------------------------------------------------------------------------------- [WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO] 59 61 MORE "BANK-LIKE" DEPOSIT COMPOSITION - --------------------------------------------------------------------------------
[PIE CHART] [PIE CHART] WASHINGTON MUTUAL(a) AHMANSON(b) ASB WAMU Total (Total) FIB AHM Total (Total) Total Term 37% 22% 59% (47%) 2% 66% 68% (71%) Total Savings + MMDA 11% 17% 28% (38%) 2% 21% 23% (23%) Total Checking 6% 7% 13% (15%) 3% 6% 9% (6%)
Note: Percentages in parenthesis indicate WAMU's and Ahmanson's deposit breakdown not including deposits from the American Savings Bank or First Interstate branch acquisitions, respectively. (a) At December 31, 1996. Shaded areas represent deposits from the acquisition of American Savings Bank. Acquired deposits totaled $12.9 billion, or approximately 54% of current deposits. (b) At September 30, 1996. Shaded areas represent deposits from the acquisition of 61 First Interstate branches. Data from analyst presentation on March 28, 1996. Acquired deposits totaled $2.5 billion, or approximately 7% of current deposits. ---------------------------------------------------------------------------- [WASHINGTON MUTUAL LOGO] 60 [GREAT WESTERN LOGO] 62 Ahmanson's Stock Has Downside Potential Based on Higher Leverage - --------------------------------------------------------------------------------
Washington Mutual Ahmanson ---------- ---------- Closing Price -- 2/14/97 $55.19 $40.50 1997 Projected EPS(a) $3.84 $2.96 Price/1997 Projected EPS 14.37x 13.68x EPS with Normalized Capital $3.84 $2.73(b)
- -------------------------------------------------------------------------------- Adjusted Share Price with Normalized Capital $37.35 Potential Downside (8)% - -------------------------------------------------------------------------------- (a) Based on First Call estimates as of February 14, 1997. (b) Ahmanson's capital ratio normalized to Washington Mutual's tangible common equity to tangible assets ratio of 4.83% at December 31, 1996. Assumes that additional capital is invested to earn 6% pre-tax. - -------------------------------------------------------------------------------- [WASHINGTON MUTUAL LOGO] 61 [GREAT WESTERN LOGO] 63 - -------------------------------------------------------------------------------- APPENDIX - -------------------------------------------------------------------------------- [WASHINGTON MUTUAL LOGO] [GREAT WESTERN LOGO] 62 64 Strong Deposit Share in Attractive Markets(a) - --------------------------------------------------------------------------------
[BAR GRAPH] California - ------------------------------------------------------------- BAC .................................................. 20.9% WFC .................................................. 14.9% WAMU/GWF ............................................. 9.2% AHM .................................................. 7.6% UNBC ................................................. 4.8%
[BAR GRAPH] Washington - ------------------------------------------------------------- BAC .................................................. 22.8% WAMU/GWF ............................................. 15.4% USBC ................................................. 13.8% KEY .................................................. 11.4% WFC .................................................. 5.7%
Source: SNL Securities (a) June 30, 1996 deposit data updated for announced acquisitions through February 26, 1997 - -------------------------------------------------------------------------------- [WASHINGTON MUTUAL LOGO] 63 [GREAT WESTERN LOGO] 65 Strong Deposit Share in Attractive Markets(a) - --------------------------------------------------------------------------------
[BAR GRAPH] Oregon - ------------------------------------------------------------- USBC ................................................. 32.6% WFC .................................................. 18.4% WAMU/GWF ............................................. 10.0% BAC .................................................. 9.3% KEY .................................................. 8.6%
[BAR GRAPH] Florida - ------------------------------------------------------------- BBI .................................................. 19.2% FTU .................................................. 17.1% NB ................................................... 12.1% STI .................................................. 10.4% WAMU/GWF ............................................. 4.0%
Source: SNL Securities (a) June 30, 1996 deposit data updated for announced acquisitions through February 26, 1997 - -------------------------------------------------------------------------------- [WASHINGTON MUTUAL LOGO] 64 [GREAT WESTERN LOGO] 66 AHMANSON'S PROJECTED PRO FORMA FINANCIAL DATA - --------------------------------------------------------------------------------
($ in millions, except per share amounts; shares in millions 1997E 1998E 1999E - -------------------------------------------------------------------------------------------------------- FROM AHMANSON'S ANALYST PRESENTATION(a) Net Income Available to Common $ 419 $ 800 $ 899 Intangible Amortization 59 188 188 ------ ------ ------ Projected Cash Earnings Available to Common $ 478 $ 988 $1,087 Projected GAAP EPS $ 2.84 $ 3.32 $ 4.10 % Pick-Up / (Dilution) (3)% (3)% 9% Projected Cash EPS $ 3.24 $ 4.10 $ 4.95 % Pick-Up / (Dilution) 5% 15% 26% Cash Generated to Buy Back Common $ 258 $ 866 $ 916 Average Shares 147.8 241.2 219.6 DERIVED(b) Beginning Shares 115 253 230 Shares Issued in Merger(c) 145 0 0 Shares Repurchased 7 23 20 ------ ------ ------ Ending Shares 253 230 209 Derived Share Repurchase Price(d) $34.47 $37.79 $ 45.16 Multiple of GAAP EPS(e) 12.2x 11.4x 11.0x
(a) All data taken from Ahmanson's February 18, 1997 analyst presentation. (b) Derived based on number of Great Western shares at closing assumed by Ahmanson and average shares presented by Ahmanson in its February 18, 1997 analyst presentation. (c) Assumes September 30, 1997 close. (d) Calculated as "Cash Generated to Buy Back Common" divided by "Shares Repurchased". (e) Ahmanson's 1997E P/E ratio is 14.5 x. - -------------------------------------------------------------------------------- [LOGO]WASHINGTON MUTUAL 65 [LOGO]GREAT WESTERN 67 AHMANSON'S OFFER UNDER REASONABLE ASSUMPTIONS - --------------------------------------------------------------------------------
($ in millions, except per share amounts; shares in millions 1997E 1998E 1999E - --------------------------------------------------------------------------------------------------------- Base Net Income Available to Common (a) $ 419 $ 800 $ 899 Earnings on Additional Capital (b) 5 49 74 ------- ------- ------- Revised Net Income to Common $ 424 $ 849 $ 973 Intangible Amortization (a) 59 188 188 ------- ------- ------- Revised Cash Earnings Available to Common $ 483 $ 1,037 $ 1,161 Projected GAAP EPS $ 2.63 $ 3.07 $ 3.59 % Pick-Up / (Dilution) (10)% (10)% (4)% Projected Cash EPS $ 3.00 $ 3.75 $ 4.29 % Pick-Up / (Dilution) (3)% 5 % 9 % Base Cash Generated to Buy Back Common (a) $ 258 $ 866 $ 916 Change in Cash 5 49 74 Additional Capital Required (c) (1,027) (648) (746) ------- ------- ------- Revised Buy Back / (Issuance) $ (764) $ 267 $ 244 Beginning Shares 115 279 273 Shares Issued in Merger @ October 1, 1997 145 0 0 Shares Repurchased / (Issued) (19) 6 5 ------- ------- ------- Ending Shares 279 273 268 Average Shares 161 276 271 Calculated Share Repurchase Price (d) $ 40.25 $ 44.56 $ 52.08 Multiple of GAAP EPS 15.3x 14.5x 14.5x
(a) From Ahmanson's February 18, 1997 analyst presentation. (b) Assumes 6% earnings rate and 40% tax rate. (c) Additional capital required to equal Washington Mutual's projected capital ratios. (d) Assumes shares repurchased at a price equal to 14.5 x current year EPS (but in no event less than the current stock price). - -------------------------------------------------------------------------------- [LOGO]WASHINGTON MUTUAL 66 [LOGO]GREAT WESTERN 68 Comparison of Capital Structures - -------------------------------------------------------------------------------
($ in millions, except per share amounts; shares in millions) 1997E 1998E 1999E -------------------------------------------- WAMU/GWF Tangible Assets(a) $95,220 $104,742 $115,216 Tangible Common Equity 4,671 5,636 6,810 Ending Primary Shares 242 242 242 Tangible Book Value per Share $ 19.28 $ 23.27 $ 28.11 AHM/GWF -- AHMANSON ASSUMPTIONS Tangible Assets(b) $93,711 $ 97,459 $101,358 Tangible Common Equity 3,570 3,570 3,570 Ending Primary Shares(c) 240 217 196 Tangible Book Value per Share $ 14.88 $ 16.45 $ 18.21 AHM/GWF -- REASONABLE ASSUMPTIONS Tangible Assets(b) $93,711 $ 97,459 $101,358 Tangible Common Equity(d) 4,597 5,244 5,911 Ending Primary Shares(e) 266 260 255 Tangible Book Value per Share $ 17.28 $ 20.17 $ 23.49
(a) Assumed 10% annual growth rate for illustrative purposes. (b) Assumes 4% annual growth for illustrative purposes. (c) Based on February 18 analyst presentation. (d) Tangible common equity required to equal Washington Mutual tangible common equity ratio. (e) Based on February 18 analyst presentation. Adjusted to achieve WAMU's tangible common ratio. - ------------------------------------------------------------------------------- [WASHINGTON MUTUAL LOGO] WASHINGTON MUTUAL GREAT WESTERN [GREAT WESTERN LOGO] 67 69 Great Western Financial Corporation ("Great Western") and certain other persons named below may be deemed to be participants in the solicitation of proxies in connection with the merger of Great Western and a wholly-owned subsidiary of Washington Mutual, Inc. ("Washington Mutual") pursuant to which each outstanding share of Great Western common stock would be converted into 0.9 shares of Washington Mutual common stock (the "Merger"). The participants in this solicitation may include the directors of Great Western (James F. Montgomery, John F. Maher, Dr. David Alexander, H. Frederick Christie, Stephen E. Frank, John V. Giovenco, Firmin A. Gryp, Enrique Hernandez, Jr., Charles D. Miller, Dr. Alberta E. Siegel and Willis B. Wood, Jr.); the following executive officers of Great Western: J. Lance Erikson, Carl F. Geuther, Michael M. Pappas, A. William Schenck III, Ray W. Sims and Jaynie M. Studenmund; and the following other members of management of Great Western: Stephen F. Adams, Bruce F. Antenberg, Barry R. Barkley, Ian D. Campbell, Charles Coleman, Allen D. Meadows and John A. Trotter (collectively, the "Great Western Participants"). As of the date of this communication, James F. Montgomery and John F. Maher beneficially owned 605,488 shares and 611,762 shares of Great Western common stock, respectively (including shares subject to stock options exercisable within 60 days). The remaining Great Western Participants do not beneficially own, individually or in the aggregate, in excess of 1% of Great Western's equity securities. The Great Western Participants do not beneficially own, individually or in the aggregate, in excess of 1% of Washington Mutual's equity securities. Great Western has retained Goldman, Sachs & Co. ("Goldman Sachs") and Merrill Lynch & Co. ("Merrill Lynch") to act as its financial advisors in connection with the Merger, as well as the merger proposal by H.F. Ahmanson & Company, for which they received and may receive substantial fees. Each of Goldman Sachs and Merrill Lynch is an investment banking firm that provides a full range of financial services for institutional and individual clients. Neither Goldman Sachs nor Merrill Lynch admits that it or any of its directors, officers or employees is a "participant" as defined in Schedule 14A promulgated under the Securities Exchange Act of 1934, as amended, in the proxy solicitation, or that Schedule 14A requires the disclosure of certain information concerning Goldman Sachs and Merrill Lynch. In connection with Goldman Sachs' role as financial advisor to Great Western, Goldman Sachs and the following investment banking employees of Goldman Sachs may communicate in person, by telephone or otherwise with a limited number of institutions, brokers or other persons who are stockholders of Great Western: Joe Wender, John Mahoney, Andy Gordon, Todd Owens and Andrea Vittorelli. In connection with Merrill Lynch's role as financial advisor to Great Western, Merrill Lynch and the following investment banking employees of Merrill Lynch may communicate in person, by telephone or otherwise with a limited number of institutions, brokers or other persons who are stockholders of Great Western: Herb Lurie, Louis S. Wolfe, Paul Wetzel, Frank V. McMahon, John Esposito, Alex Sun, Christopher Del-Moral Niles and Kavita Gupta. In the normal course of their respective businesses Goldman Sachs and Merrill Lynch regularly buy and sell securities issued by Great Western and its affiliates ("Great Western Securities") and Washington Mutual and its affiliates ("Washington Mutual Securities") for its own account and for the accounts of its customers, which transactions may result from time to time in Goldman Sachs and its associates and Merrill Lynch and its associates having a net "long" or net "short" position in Great Western Securities, Washington Mutual Securities, or option contracts or other derivatives in or relating to Great Western Securities or Washington Mutual Securities. 70 As of March 14, 1997, Goldman Sachs held positions in Great Western Securities and Washington Mutual Securities as principal as follows: (i) net "long" 9,669 of Great Western's common shares; (ii) net "long" $1 million of Great Western's deposit notes; and (iii) net "long" 1,980 of Washington Mutual's convertible preferred stock. As of March 14, 1997, Merrill Lynch had positions in Great Western Securities and Washington Mutual Securities as principal as follows: (i) net "long" 8,800 of Great Western's common shares; (ii) net "long" 1,775 shares of Great Western's 8.30% cumulative perpetual preferred stock; and (iii) net "long" 1,527 of Washington Mutual's common shares. Other participants in the solicitation include Washington Mutual and may include the directors of Washington Mutual (Douglas P. Beighle, David Bounderman, Herbert M. Bridge, J. Taylor Crandall, Robert H. Eigsti, John W. Ellis, Daniel J. Evans, Anne V. Farrell, William P. Gerberding, Kerry K. Killinger, Samuel B. McKinney, Michael K. Murphy, Louis H. Pepper, William G. Reed, Jr. and James E. Stever); the following executive officers of Washington Mutual: William A. Longbrake, Deanna W. Oppenheimer, Craig E. Tall and S. Liane Wilson; and the following other members of management of Washington Mutual: Karen Christensen, JoAnn DeGrande, William Ehrlich, James B. Fitzgerald, Marc Kittner and Douglas G. Wisdorf (collectively, the "Washington Mutual Participants"). As of the date of this communication, David Bounderman, J. Taylor Crandall and Kerry K. Killinger beneficially owned 1,894,141 shares, 6,549,755 shares and 1,044,224 shares of Washington Mutual common stock, respectively. The remaining Washington Mutual Participants do not beneficially own, individually or in the aggregate, in excess of 1% of Washington Mutual's equity securities. The Washington Mutual Participants do not beneficially own, individually or in the aggregate, in excess of 1% of Great Western's equity securities. Washington Mutual has retained Lehman Brothers Inc. ("Lehman Brothers") to act as its financial advisor in connection with the Merger for which it received and may receive substantial fees as well as reimbursement of reasonable out-of-pocket expenses. In addition, Washington Mutual has agreed to indemnify Lehman Brothers and certain persons related to it against certain liabilities, including certain liabilities under the federal securities laws, arising out of its engagement. Lehman Brothers is an investment banking firm that provides a full range of financial services for institutional and individual clients. Lehman Brothers does not admit that it or any of its directors, officers or employees is a "participant" as defined in Schedule 14A promulgated under the Securities Exchange Act of 1934, as amended, in the proxy solicitation, or that Schedule 14A requires the disclosure of certain information concerning Lehman Brothers. In connection with Lehman Brothers' role as financial advisor to Washington Mutual, Lehman Brothers and the following investment banking employees of Lehman Brothers may communicate in person, by telephone or otherwise with a limited number of institutions, brokers or other persons who are stockholders of Washington Mutual and Great Western: Steven B. Wolitzer, Philip R. Erlanger, Sanjiv Sobti, David J. Kim, Craig P. Sweeney and Daniel A. Trznadel. In the normal course of its business Lehman Brothers regularly buys and sells Washington Mutual Securities and Great Western Securities for its own account and for the account of its customers, which transactions may result from time to time in Lehman Brothers and its associates having a net "long" or net "short" position in Washington Mutual Securities, Great Western Securities, or option contracts or other derivatives in or relating to Washington Mutual Securities or Great Western Securities. As of March 14, 1997, Lehman Brothers had positions in Washington Mutual Securities and Great Western Securities as follows: (i) net "short" 124 of Washington Mutual's common shares; and (ii) net "short" 3,327 of Great Western's common shares. -----END PRIVACY-ENHANCED MESSAGE-----