-----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, WwTrvyuS0mhpLV4IfZqJmn8UBCWFxn6RuoSUoJcmurtHP8UiIkFmNhs4qGW0G2d9 SBOnoenMapdN3t+gqmre9A== 0000950133-97-001302.txt : 19970414 0000950133-97-001302.hdr.sgml : 19970414 ACCESSION NUMBER: 0000950133-97-001302 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970410 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970411 SROS: NASD 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-04075 FILM NUMBER: 97578359 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 8-K 1 FORM 8-K 1 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 (Date of earliest event reported): April 10, 1997 GREAT WESTERN FINANCIAL CORPORATION (Exact name of registrant as specified in its character) Delaware (State or other jurisdiction of incorporation or organization) 1-4075 95-1913457 (Commission file number) (I.R.S. Employer Identification No.) 9200 Oakdale Avenue Chatsworth, California 91311 (Address of principal (Zip Code) executive offices) (818) 775-3411 (Registrant's telephone number, including area code) Not applicable (Former name, former address and former fiscal year, if changed since last report) 2 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS 99.1 Materials to be used by Great Western Financial Corporation on an ongoing basis in presentations to the investment community. 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. GREAT WESTERN FINANCIAL CORPORATION Date: April 10, 1997 By: /s/ J. Lance Erikson ---------------------------- J. Lance Erikson Executive Vice President, Secretary and General Counsel 3 Washington Mutual, Inc. [LOGO] Merger With [LOGO] Great Western Financial Corporation HIGH GROWTH CONSUMER BANKING April 10, 1997 4 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] 5 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 $43.31 based on WAMU closing stock price of $48.125 on 4/1/97. - -------------------------------------------------------------------------------- [LOGO] Washington Mutual 3 GREAT WESTERN [LOGO] 6 COMBINATION CREATES STRENGTH AND SCALE - -------------------------------------------------------------------------------- ($ in billions) At 12/31/96 -------------------------------------- WAMU GWF Pro Forma -------- -------- --------- 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 557 571 928 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 $13.6 $ 8.5 $22.1 - -------------------------------------------------------------------------------- [LOGO] Washington Mutual 4 GREAT WESTERN [LOGO] 7 BENEFITS OF THE TRANSACTION - -------------------------------------------------------------------------------- CREATES SHAREHOLDER VALUE - - EPS accretion and accelerated earnings growth - - Strong, low risk balance sheet PREMIER CONSUMER BANKING FRANCHISE - - Geographically diversified West Coast powerhouse - - National mortgage and consumer finance franchises LOW RISK EXECUTION - - Strong management team with proven track record - - Thorough due diligence and business plan formulation - -------------------------------------------------------------------------------- [LOGO] Washington Mutual 5 GREAT WESTERN [LOGO] 8 - -------------------------------------------------------------------------------- CREATES SHAREHOLDER VALUE - -------------------------------------------------------------------------------- [LOGO] Washington Mutual GREAT WESTERN[LOGO] 6 9 TESTED ASSUMPTIONS -- ATTRACTIVE RETURNS - ------------------------------------------------------------------------------- Assumptions Results - ------------------------------ ------------------------------ - - Cost savings of $340 - Double digit accretion million in 1999 in 1999 - - Additional fee income [ARROW] - Strong operating of $88 million in 1999 fundamentals - - Surplus capital - Maintains solid capital supports increased loan levels and flexibility retention - Strong NPA, loss reserve ratios - ------------------------------------------------------------------------------- [LOGO] Washington Mutual 7 GREAT WESTERN [LOGO] 10 EPS ACCRETION BASED ON DUE DILIGENCED ASSUMPTIONS - --------------------------------------------------------------------------------
($ 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 Opportunities 0 36 53 Earnings from Retained Capital and Loans 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 $5.90 % Accretion to First Call 5.0% 15.0% % EPS Growth 25.3% 22.7%
(a) First Call estimates for 1997 and 1998 before preferred dividends. 1999 estimates based on IBES growth rate of 12% and 10.5% for WAMU and GWF. (b) Based on 252.1mm pro forma shares outstanding in 1997, 253.1mm in 1998, and 253.8mm in 1999. EPS figures include 9.1mm GWF option shares. EPS accretion using option shares under the treasury stock method would be 6.3% and 16.6% in 1998 and 1999. - ------------------------------------------------------------------------------- [LOGO] Washington Mutual 8 GREAT WESTERN [LOGO] 11 COST SAVINGS BREAKDOWN - --------------------------------------------------------------------------------
($ 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 $745mm for WAMU based on sampling of analyst reports. - ------------------------------------------------------------------------------- [LOGO] Washington Mutual 9 GREAT WESTERN [LOGO] 12 CONFIDENCE IN EXECUTION - -------------------------------------------------------------------------------- / / Unique experience as an acquiror (22 transactions) / / Integration plan is underway / / Deposit/mortgage servicing systems are the same / / Network infrastructure is the same / / WAMU partnerships with: o IBM o EDS o ALLTEL / / Track record of fully integrating within 6 months of close - ------------------------------------------------------------------------------- [LOGO] Washington Mutual 10 GREAT WESTERN [LOGO] 13 COST SAVINGS BREAKDOWN - -------------------------------------------------------------------------------- ($ 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 consolidations (approximately 100) and alignment of GWF's loan origination cost structure with WAMU's $52 - - Reduced servicing cost per loan 17 --- $69 ===
- -------------------------------------------------------------------------------- [LOGO]Washington Mutual 11 GREAT WESTERN[LOGO] 14 COST SAVINGS BREAKDOWN - -------------------------------------------------------------------------------- ($ 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 --- $99 ===
- -------------------------------------------------------------------------------- [LOGO]Washington Mutual 12 GREAT WESTERN[LOGO] 15 MERGER-RELATED CHARGES FACILITATE COST SAVINGS - -------------------------------------------------------------------------------
($ 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 $318 ==== - -------------------------------------------------------------------------------
[LOGO] Washinton Mutual 13 GREAT WESTERN [LOGO] 16 CONSUMER BANKING FEE INCOME OPPORTUNITIES - -------------------------------------------------------------------------------- ($ in millions)
1998 1999 ---- ---- 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 securities subsidiaries 13 16 Enhanced fees from expanded loan production 4 7 --- --- Total Pretax $60 $88 Total Aftertax $36 $53
- -------------------------------------------------------------------------------- [LOGO] Washington Mutual GREAT WESTERN [LOGO] 14 17 NET INTEREST INCOME GROWTH - -------------------------------------------------------------------------------- - - Earnings retention results in strong capital growth - - Strong historical and projected loan originations support net loan growth - - Margin assumptions are conservative relative to current lending spreads: - Adjusted for origination, servicing and credit costs - Wholesale match-funding assumed to neutralize interest rate risk - - Result: net interest income grows from retaining loans at reasonable margins - -------------------------------------------------------------------------------- [LOGO]Washington Mutual 15 GREAT WESTERN [LOGO] 18 STRONG CAPITAL GENERATION AND GROWTH POTENTIAL - -------------------------------------------------------------------------------- ($ 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 ====== ====== ====== ====== Excess Common Equity Above 5% Common Equity/Assets Ratio Assuming the Following Asset Growth Rate(a): 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 $87.4 billion - -------------------------------------------------------------------------------- [LOGO] Washington Mutual GREAT WESTERN [LOGO] 16 19 STRONG ORIGINATIONS DRIVE NET LOAN GROWTH - -------------------------------------------------------------------------------- ($ in billions) TOTAL LOAN ORIGINATIONS [BAR GRAPH]
WAMU & GWF WAMU GWF WAMU & 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
NET ORIGINATIONS(a) [BAR GRAPH]
WAMU GWF WAMU & GWF ----- ----- ---------- 1994.......... $5.6 $3.1 $ 8.7 1995.......... 6.5 3.4 9.9 1996.......... 9.2 0.9 10.1
(a) Total originations less REO transfers, prepayments and paydowns. Net originations are not reduced for loans sold. - -------------------------------------------------------------------------------- [LOGO] Washington Mutual 17 GREAT WESTERN [LOGO] 20 1996 WAMU/ASB LOAN SPREADS - ---------------------------------------------------------------------------- % of Net Spread to Resi/Consumer Wholesale Production Matched Funding(a) ------------- ------------------ Residential Mortgage Fixed Rate 28% 1.15% COFI ARM's 36 1.35 Treasury ARM's 12 1.71 Multifamily 4 2.57 Construction - Custom 6 1.91 Construction - Spec. 4 5.54 Consumer Home Equity 5 2.48% Mfd Housing 3 1.61 Other 2 3.24 --- Total 100% 1.69%(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] 18 21 LOAN RETENTION DRIVES GROWTH IN NET INTEREST INCOME - -------------------------------------------------------------------------------- ($ in millions)
1997P 1998P 1999P ------- ------- ------- Combined Net Loan Growth (Street Expectations)(a) $3,500 $ 3,600 $ 3,800 Additional Net Loan Growth 3,100 7,400 7,600 ------ ------- ------- Total Net Loan Growth $6,600 $11,000 $11,400 Cumulative Average Additional Net Loan Growth (Above Street Expectations)(b) $ 6,800 $14,300 Pretax Margin(c) 1.66% 1.72% ------- ------- Incremental Net Interest Income $ 113 $ 246 Aftertax Incremental Net Interest Income $ 68 $ 148
(a) Assumes 4% asset (in loans) growth of combined companies. (b) Equals 100% of prior years and 50% of current year. (c) 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] 19 22 STRONG ASSET QUALITY AND RESERVES - ---------------------------------------------------------------------------- ($ in millions)
At December 31, 1996 --------------------------------------------------------- WAMU GWF Adjustments Pro Forma ---- --- ----------- --------- Non-Performing $226 $352 - $578 Loans(a) Real Estate Owned 103 120 - 223 ---- ---- ---- NPAs $329 $472 - $801 ==== ==== ==== NPAs/Assets 0.74% 1.10% - 0.92% Loan Loss Reserves $363 $314 $100 $777 Reserves/NPLs(a) 161% 89% - 134% (a) Excluding restructured loans - --------------------------------------------------------------------------------- [LOGO] Washington Mutual GREAT WESTERN [LOGO]
20 23 - -------------------------------------------------------------------------------- PREMIER CONSUMER BANKING FRANCHISE - -------------------------------------------------------------------------------- [LOGO] Washington Mutual GREAT WESTERN [LOGO] 21 24 STRONG WEST COAST AND FLORIDA FRANCHISES - -------------------------------------------------------------------------------- [MAPS OF THE WESTERN UNITED STATES AND FLORIDA SHOWING BRANCH LOCATIONS]
Deposits Banking Deposit State ($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 22 GREAT WESTERN [LOGO] 25 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 - Retail Mortgage Black Star - Wholesale Mortgage Shaded Box - Aristar Washington Mutual: Bullet - Mortgage Loan Offices - -------------------------------------------------------------------------------- [LOGO] Washington Mutual 23 GREAT WESTERN [LOGO] 26 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 = 1.8%) 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 24 GREAT WESTERN [LOGO] 27 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 25 GREAT WESTERN [LOGO] 28 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 26 GREAT WESTERN [LOGO] 29 - ------------------------------------------------------------------------------ WASHINGTON MUTUAL'S POSITIONING - ------------------------------------------------------------------------------- [LOGO] Washington Mutual GREAT WESTERN [LOGO] 27 30 EVOLUTION OF A 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 $44.6B Loans 30.3B Deposits 24.1B Equity 2.4B Stock Price 43.31 Market Capitalization 5.1B (a) As of and for the latest twelve months ended 12/31/87 and 12/31/96. - ------------------------------------------------------------------------------- [LOGO] Washington Mutual GREAT WESTERN [LOGO] 28 31 AMERICAN'S INTEGRATION IS WELL UNDERWAY - -------------------------------------------------------------------------------- - - Closed transaction on time - - Integration on schedule - - Effectively capitalizing on product opportunities with ASB customers - - Consumer banking strategy showing clear signs of success - 16,000 net new checking accounts opened in first two months of 1997 (compares to net account loss in first two months of 1996) - Majority of accounts opened represent new households - - Strengthening of senior and middle management - -------------------------------------------------------------------------------- [LOGO] Washington Mutual 29 GREAT WESTERN [LOGO] 32 FRANCHISE POTENTIAL OF AMERICAN - ------------------------------------------------------------------------------ ($ 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 30 GREAT WESTERN [LOGO] 33 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 31 GREAT WESTERN [LOGO] 34 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 32 GREAT WESTERN [LOGO] 35 A COMPELLING VALUATION - --------------------------------------------------------------------------------
1997P 1998P 1999P ----- ----- ----- EPS Estimates Before Great Western(a) $3.84 $4.58 $5.13 P/E Multiple(b) 12.5x 10.5x 9.4x EPS with Great Western $4.81 $5.90 P/E Multiple(b) 10.0x 8.2x
(a) First Call estimates for 1997 and 1998. 1999 based on IBES growth rate of 12%. (b) Based on closing stock price of $48.125 on 4/1/97. - ------------------------------------------------------------------------------- [LOGO] Washington Mutual 33 GREAT WESTERN [LOGO] 36 - ----------------------------------------------------------------------------- A SUPERIOR ALTERNATIVE - ----------------------------------------------------------------------------- [LOGO] Washington Mutual GREAT WESTERN [LOGO] 34 37 ================================================================================ AHMANSON'S PROJECTIONS: CONSTANTLY CHANGING, UNREALISTIC ASSUMPTIONS AND INCONSISTENT ANALYSIS ================================================================================ [LOGO] Washington Mutual 35 GREAT WESTERN [LOGO] 38 AHMANSON'S PROJECTIONS: CONSTANTLY CHANGING, UNREALISTIC ASSUMPTIONS AND INCONSISTENT ANALYSIS ================================================================================ - - Ahmanson made significant changes in operating assumptions to support its higher revised proposal. Absent revised assumptions, the ------------------------------- transaction is dilutive through 1999 ------------------------------------ - - Ahmanson increased its share repurchase assumptions by 40% (from $2.0 billion to $2.8 billion) just one day after filing its revised joint proxy statement/prospectus on March 18, 1997 - - Ahmanson's forecasts are dependent on maintaining one of the lowest ----------------- consolidated tangible common equity ratios in the industry ---------------------------------------------------------- ================================================================================ [LOGO] Washington Mutual 36 GREAT WESTERN [LOGO] 39 AHMANSON'S PROJECTIONS: CONSTANTLY CHANGING, UNREALISTIC ASSUMPTIONS AND INCONSISTENT ANALYSIS ================================================================================ - - To keep its equity ratios from being even lower, Ahmanson's projections assume negative asset growth for the rest of the decade. This assumption ------------------------------------------------- is inconsistent with the baseline EPS assumed by Ahmanson in its pro formas - Wall Street expects annual asset growth of 1% for Ahmanson and 3% for Great Western - Wall Street EPS forecasts are premised on this asset growth - The required offset to negative asset growth is a combined pro forma net interest margin of approximately 20 bps over the level of Wall Street expectations - - Ahmanson's EPS forecasts depend on massive share repurchases that leave ----- little margin for error ----------------------- ================================================================================ [LOGO] Washington Mutual 37 GREAT WESTERN [LOGO] 40 AHMANSON'S MOST RECENT "REVISED" ASSUMPTIONS ARE NOT CREDIBLE ================================================================================
($ in millions) AHM Original AHM Revised WAMU Proposal Proposal Transaction Discussion - ------------------------------------------------------------------------------------------------------------------------------------ Expense Savings $404 $454 $340 AHM's sole advantage is 100 additional branch closures, an advantage that GWF believes is worth less than $50 million. In all other respects, WAMU has an advantage by virtue of its superior and more compatible technology. Revenue Synergies -- $50 $88(a) AMH (in direct contrast to WAMU) has provided no details on its revenue synergies and has no demonstrated ability to generate incremental revenues through a transaction. Share Repurchase Amount $2.0 bn $2.8 bn -- AHM's original per share repurchase price was unreasonably low. In order to increase the per share repurchase price and still make the numbers work they had to either (i) reduce the aggregate number of shares repurchased, or (ii) increase the aggregate dollar amount of the share repurchase. The former would result in lower pro forma earnings per share, the latter would result in reduced capital levels; AHM elected the latter
- -------------------------------------------------------------------------------- Key Considerations - ------------------ - - Why didn't AHM present its revised assumptions as part of its original proposal? - - The revised proposal would be dilutive to AHM shareholders through 1999 absent the most recent assumptions - -------------------------------------------------------------------------------- (a) Includes fee income opportunities only. ================================================================================ [LOGO] Washington Mutual 38 GREAT WESTERN [LOGO] 41 AHMANSON'S COST SAVINGS ARE OVERLY AGGRESSIVE ================================================================================ ($ 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 ---- ---- ---- Itemized Cost Savings $404 $340 $ 64 Additional Savings(c) 50 -- 50 ---- ---- ---- Total $454 $340 $114 ==== ==== ====
(a) From February 18, 1997 analyst presentation. (b) From Form S-4 filed on March 13, 1997. (c) From March 17, 1997 analyst presentation. ================================================================================ [LOGO] Washington Mutual 39 GREAT WESTERN [LOGO] 42 AHMANSON'S PROPOSAL RELIES ON IMPRUDENT LEVERAGE - ------------------------------------------------------------------------------- ($ in millions)
Pro Forma December 31, ------------------------------------------------ 1997E 1998E 1999E -------------- -------------- ------------- WASHINGTON MUTUAL -- "PRUDENT LEVERAGE"(a) Tangible Assets(b) $95,220 $104,742 $115,216 Tangible Common Equity(c) 4,671 5,636 6,810 Tangible Common/Tangible Assets 4.91% 5.38% 5.91% AHMANSON PROPOSAL -- "A LEVERAGED BUYOUT"(d) Tangible Assets $90,823 $ 90,767 $ 90,017 Tangible Common Equity(c) 3,146 3,128 3,118 Tangible Common/Tangible Assets(e) 3.46% 3.45% 3.46% Ahmanson Tangible Equity Required to Equal Washington Mutual's Ratio $ 4,455 $ 4,884 $ 5,321 Change from Ahmanson Base 1,309 1,756 2,203
(a) Based on data presented in or underlying Washington Mutual's S-4 Registration Statement dated March 13, 1997 and recent transaction-related analyst presentations. See appendix for further details. (b) Assumes 10% annual growth rate, for illustrative purposes. (c) Tangible common equity equals common equity minus intangible assets. (d) Based on data presented in Ahmanson's March 25, 1997 press release. (e) In its March 25, 1997 press release, Ahmanson computes the ratio by deducting intangible assets on a tax-affected basis. The above ratios are shown using a more conventional method of deducting intangible assets prior to any tax effect. - ------------------------------------------------------------------------------- [LOGO] Washington Mutual 40 GREAT WESTERN [LOGO] 43 AHMANSON'S CONSOLIDATED TANGIBLE COMMON EQUITY RATIO IS AMONG THE LOWEST IN THE INDUSTRY(a) =============================================================================== - --------------------------------------------------------------- Rank out of 93 institutions with more than $1 billion in assets - --------------------------------------------------------------- Tangible Common/ Bottom 10 Institutions Tangible Assets - ---------------------------- ------------------------------------- 93. Coastal Bancorp 2.75% - ------------------------------------------------------------------------------- 92. H.F. AHMANSON 3.31/3.46%(b) - ------------------------------------------------------------------------------- 91. Sterling Financial 3.58 90. Bank United Financial 3.65 89. Chevy Chase Bank 3.80 88. Sovereign Bancorp(c) 3.88 87. Webster Financial 3.93 86. FirstFed Financial 4.63 85. Bank United 4.79 84. Coast Savings 4.81 (a) Source: SNL Securities. At December 31, 1996. (b) Pro forma at 12/31/99 for acquisition of Great Western. Based on Ahmanson's March 25, 1997 press release. (c) Pro forma for acquisition of Bankers Corp. ================================================================================ [LOGO] Washington Mutual 41 GREAT WESTERN [LOGO] 44 AHMANSON'S FORECAST DEPENDS ON MASSIVE SHARE REPURCHASES (a)
============================================================================================================== ($ and shares in millions) 197EQ4 1998E 1999E CUMULATIVE ------ ----- ----- ---------- Net Income to Common $ 64 $ 807 $ 938 $1,809 Cash Net Income to Common 121 1,033 1,164 2,318 -------- Repurchases + Common Dividends $621 $1,381 $1,218 $3,220 -------- Repurchases + Common Dividends Net of Reissuances 613 1,077 1,203 2,893 Repurchases + Common Dividends -------- % of net income to common 970% 171% 130% 178% -------- Repurchases + Common Dividends Net of Reissuances -------- % of cash net income to common 507% 104% 103% 125% -------- # Shares Repurchased 13.8 23.8 17.0 54.6 -------- % of initials shares 5% 9% 6% 20% -------- (a) All data based on Ahmanson's March 25, 1997 press release. ==============================================================================================================
[LOGO] WASHINGTON MUTUAL 42 GREAT WESTERN [LOGO] 45 AHMANSON'S OFFER IS DILUTIVE TO REPORTED EPS THROUGH 1999 ===============================================================================
REPORTED EPS CASH EPS ACCRETION/(DILUTION) ACCRETION/(DILUTION) ------------------- -------------------- 1998E 1999E 1998E 1999E -------- -------- ------- -------- Ahmanson's Assumptions: 3/25/97 Press Release (11.0)% 2.0 % 9.0 % 21.0% Adjusted for WAMU Capital Level(a) (15.0)% (5.0)% 3.0 % 11.0% Adjusted for Original Synergies(b) (16.0)% (5.0)% 4.0 % 14.0% Adjusted for WAMU Capital/ Original Synergies(c) (19.0)% (11.0)% (2.0)% 5.0%
(a) Tangible common equity ratio assumed to be equal to Washington Mutual's pro forma ratio. Share repurchases made at prices consistent with Ahmanson's March 25, 1997 press release (approximately 12.25x cash EPS). Assumes, for illustrative purposes only, that Ahmanson fully realizes its revised synergies. See appendix for further details. (b) Assumes cost savings as presented on February 18, 1997 and no revenue enhancements. We believe this to be a more realistic synergy level. Share repurchases made at prices consistent with Ahmanson's March 25, 1997 press release (approximately 12.25x cash EPS). See appendix for further details. (c) Assumes cost savings as presented on February 18, 1997 and no revenue enhancements and WAMU tangible common equity ratio. Share repurchase made at prices consistent with Ahmanson's March 25, 1997 press release (approximately 12.25x cash EPS). See appendix for further details. =============================================================================== [LOGO] WASHINGTON MUTUAL 43 GREAT WESTERN [LOGO] 46 - -------------------------------------------------------------------------------- THE WAMU/GWF COMBINATION IS SIGNIFICANTLY STRONGER - -------------------------------------------------------------------------------- [LOGO] Washington Mutual GREAT WESTERN [LOGO] 44 47 STRONGER WAMU CAPITAL/ASSET QUALITY - LONG TERM DRAG ON AHM EARNINGS - --------------------------------------------------------------------------------
WAMU/GWF AHM/GWF Merger Proposal - -------------------------------------------------------------------------------- Tangible Common Equity to Assets 4.59%(a) 3.46%(b) Intangibles to Total Equity 9%(a) 58%(b) NPAs to Assets(c) 0.92% 1.37% Reserves to NPLs(c)(d) 134% 84% High Risk Real Estate Loans to Loans(e) 11% 22% Tangible Common Equity to Assets With Equal Reserve to NPL Coverage 4.59%(a) 3.16%(b)
- ------------ (a) Pro forma at December 31, 1996. Reflects $318 million in after-tax restructuring charges. (b) Projected at December 31, 1997 based on data presented in Ahmanson's March 25, 1997 press release. (c) Pro forma at December 31, 1996. NPL and NPA ratios exclude restructured loans. (d) Reflects $100 million increase in loan loss reserves. (e) At September 30, 1996 for Ahmanson; at December 31, 1996 for Washington Mutual and Great Western. Includes construction, multi-family, commercial real estate and land loans and REO/REI. Loans include REO/REI. - -------------------------------------------------------------------------------- [LOGO] Washington Mutual 45 GREAT WESTERN [LOGO] 48 BETTER OPERATING PERFORMANCE(a) - -------------------------------------------------------------------------------- ($ in millions)
WAMU/GWF AHM/GWF Merger Proposal - -------------------------------------------------------------------------------- Net Income $1,497 $ 938 Cash Flow 1,556 1,164 Return on Assets 1.35%(b) 0.98% Return on Common Equity 23.1% 11.7% Cash Return on Tangible Common 25.1% 37.3% Cash Return on Tangible Common - Equal Leverage(c) 25.1% 24.7%
(a) Projected results are for 1999 and are presented in Washington Mutual's S-4 registration statement dated March 13, 1997 and Ahmanson's press release dated March 25, 1997. (b) Assumes 10% asset growth rate, for illustrative purposes. (c) Assumes Ahmanson's tangible common equity to tangible assets ratio increases to 5.91% (equal to Washington Mutual's) in 1999. - -------------------------------------------------------------------------------- [LOGO] Washington Mutual 46 GREAT WESTERN [LOGO] 49 FASTER PROJECTED PRO FORMA EPS GROWTH - ------------------------------------------------------------------------------- [Bar Graph] WAMU/GWF EPS Accretion/ CAGR = 32% EPS (Dilution) ----- ----- 1997E..........................$3.40 1998E..........................$4.81 5% 1999E..........................$5.90 15% [Bar Graph] AHM/GWF -- 3/25/97 PRESS RELEASE CAGR = 20% EPS Accretion/ EPS (Dilution) ----- ----- 1997E..........................$2.68 1998E..........................$3.13 (11)% 1999E..........................$3.97 2 % - ------------------------------------------------------------------------------- [LOGO] Washington Mutual GREAT WESTERN [LOGO] 47 50 FASTER PROJECTED GROWTH IN TANGIBLE BOOK VALUE PER SHARE - ------------------------------------------------------------------------------- [Bar Graph] WAMU/GWF CAGR = 15% 1996...........................$18.17 1997E..........................$19.28 1998E..........................$23.27 1999E..........................$28.11 [Bar Graph] AHM/GWF -- 3/25/97 PRESS RELEASE CAGR = (5)% 1996...........................$16.07 1997E..........................$12.73 1998E..........................$12.04 1999E..........................$12.85 - ------------------------------------------------------------------------------- [LOGO] Washington Mutual GREAT WESTERN [LOGO] 48 51 - -------------------------------------------------------------------------------- THE WAMU TRANSACTION IS THE BEST FOR GWF SHAREHOLDERS - -------------------------------------------------------------------------------- [LOGO] Washington Mutual GREAT WESTERN [LOGO] 49 52 EPS PER GWF SHARE - --------------------------------------------------------------------------------
AHM/GWF Merger ------------------------------------------------ Ahmanson Assumptions: ------------------------------------------------ Adjusted for GWF WAMU/ Adjusted for WAMU Capital/ Stand- GWF 3/25/97 WAMU Capital Original Alone Merger Press Release Level(a) Synergies(b) ------ ------ ------------- ----------- -------------- Exchange Ratio -- 0.90x 1.20x 1.20x 1.20x 1998E GAAP EPS per GWF Share $3.09 $4.33 $3.76 $3.59 $3.41 Percent Change(c) 40% 22% 16% 10% 1999E GAAP EPS per GWF Share $3.40 $5.31 $4.72 $4.40 $4.12 Percent Change(c) 56% 39% 30% 21% 1998E Cash EPS per GWF Share $3.35 $4.56 $4.80 $4.50 $4.31 Percent Change(c) 36% 43% 34% 29% 1999E Cash EPS per GWF Share $3.66 $5.55 $5.86 $5.36 $5.08 Percent Change(c) 51% 60% 47% 39%
Source: Prospective buyers' respective presentations to analysts. (a) Tangible common equity ratio equal to Washington Mutual's pro forma ratio. Share repurchases made at prices consistent with Ahmanson's March 25, 1997 press release (approximately 12.25x cash EPS). Assumes, for illustrative purposes, that Ahmanson fully realizes its revised synergies. See appendix for further details. (b) Assumes cost savings as presented on February 18, 1997 and no revenue enhancements and WAMU tangible common equity ratio. Share repurchases made at prices consistent with Ahmanson's March 25, 1997 press release (approximately 12.25x cash EPS). See appendix for further details. (c) 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 50 GREAT WESTERN [LOGO] 53 - -------------------------------------------------------------------------------- WAMU'S TRACK RECORD IS SUPERIOR IN EVERY WAY - -------------------------------------------------------------------------------- [LOGO] Washington Mutual GREAT WESTERN [LOGO] 51 54 SENIOR MANAGEMENT WITH MORE EXPERIENCE - --------------------------------------------------------------------------------
Name Position Tenure - ---- -------- ------ Washington Mutual Kerry K. Killinger Chairman, President & CEO 14 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] 55 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. - -------------------------------------------------------------------------------- [LOGO]Washington Mutual GREAT WESTERN [LOGO] 53 56 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 periods ending December 31, 1996. - ------------------------------------------------------------------------------ [LOGO] Washington Mutual 54 GREAT WESTERN [LOGO] 57 LOWER LEVEL OF NPAs/ BETTER RESERVE COVERAGE(a) - ------------------------------------------------------------------------------ [BAR GRAPH]
Reserves/NPLs(b) WAMU(c) AHM ------ -------- 1992 .... 96% 24% 1993 .... 135% 50% 1994 .... 180% 50% 1995 .... 161% 43% 1996 .... 107% 50% NPAs + Restructured Loans/Assets WAMU(c) 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) NPLs including nonaccrual loans and restructured loans. (c) Impacted in 1996 by American Savings Bank. - ------------------------------------------------------------------------------- [LOGO] Washington Mutual 55 GREAT WESTERN [LOGO] 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 $0.88
(a) Reflects numbers as originally reported (prior to restatement for pooling transactions). (b) Adjusted to exclude non-recurring items including gains on sales, restructuring charges, the SAIF recapitalization charge and one-time asset write-offs. 1993 and 1996 Ahmanson figures adjusted to reflect tax rate of 40.0% - ------------------------------------------------------------------------------- [LOGO] Washington Mutual 56 GREAT WESTERN [LOGO] 59 FAST GROWING VS. DECLINING TOTAL LOAN ORIGINATIONS - ------------------------------------------------------------------------------ ($ in billions) [Bar Graph]
WAMU Ahmanson ---- -------- 1994 $ 9.3 1994 $10.3 1995 $ 9.4 1995 $ 6.4 1996 $13.6 1996 $ 5.5
- ------------------------------------------------------------------------------ [LOGO] Washington Mutual GREAT WESTERN [LOGO] 57 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. - -------------------------------------------------------------------------------- [LOGO] Washington Mutual GREAT WESTERN [LOGO] 58 61 MORE "BANK-LIKE" DEPOSIT COMPOSITION - --------------------------------------------------------------------------------
[PIE CHART] [PIE CHART] WASHINGTON MUTUAL(a) AHMANSON(b) ASB WAMU Total FIB AHM 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%)
(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. ---------------------------------------------------------------------------- [LOGO]Washington Mutual 59 GREAT WESTERN [LOGO] 62 AHMANSON WILL HAVE DIFFICULTY EXECUTING [LOGO] Washington Mutual GREAT WESTERN [LOGO] 60 63 INTEGRATION RISKS ARE VERY SUBSTANTIAL WITH AN AHM/GWF COMBINATION - ------------------------------------------------------------------------------- - - Elimination of Great Western name - - Hostile offer/antagonized employees - - Disruptive branch closures - Substantial deposit runoff - Customer losses - - Questionable systems capabilities - - Management's lack of integration experience - ------------------------------------------------------------------------------- [LOGO] Washington Mutual 61 GREAT WESTERN [LOGO] 64 CONCLUSIONS [LOGO] Washington Mutual GREAT WESTERN [LOGO] 62 65 GREAT WESTERN'S STRATEGIC ALTERNATIVES - ------------------------------------------------------------------------------ WAMU Merger AHM Proposal - --------------------------------- ---------------------------------- - - Strong growth and profitability - Mediocre operating performance - - Attractive earnings and EPS - Cash EPS growth, reported EPS growth dilution - - Transaction economics: - Transaction economics: - Realistic cost cuts - Cost cutting - Fee income opportunities - Aggressive stock buyback - Loan retention - - Strong, low risk balance sheet - Weak, high risk balance sheet - - Low risk integration - High risk integration - - Flexible strategic alternatives - Unclear exit strategies - - Strong insider ownership - Low insider ownership (discipline) - - Strong diversified currency - Increased CA thrift exposure - ------------------------------------------------------------------------------ [LOGO] Washington Mutual GREAT WESTERN [LOGO] 63 66 Washington Mutual, Inc. [LOGO] Merger With [LOGO] Great Western Financial Corporation HIGH GROWTH CONSUMER BANKING April 10, 1997 64 67 - -------------------------------------------------------------------------------- APPENDIX - -------------------------------------------------------------------------------- [LOGO] Washington Mutual GREAT WESTERN [LOGO] 65 68 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. - -------------------------------------------------------------------------------- [LOGO] Washington Mutual 66 GREAT WESTERN [LOGO] 69 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. - -------------------------------------------------------------------------------- [LOGO] Washington Mutual 67 [GREAT WESTERN LOGO] 70 AHMANSON'S PROJECTED COMBINED FINANCIAL DATA(a) - --------------------------------------------------------------------------------
($ in millions, except per share amounts; shares in millions) 1997E 1998E 1999E - -------------------------------------------------------------------------------------------------------- Net Income Available to Common(b) $ 423 $ 819 $ 938 Intangible Amortization 68 226 226 ------ ------ ------ Projected Cash Earnings Available to Common $ 491 $ 1,045 $1,164 Projected GAAP EPS $ 2.75 $ 3.13 $ 3.93 % Pick-Up / (Dilution) (10)% (11)% 2% Projected Cash EPS $ 3.19 $ 3.99 $ 4.88 % Pick-Up / (Dilution) 1% 9% 21% Cash Generated to Buy Back Common $ 386 $ 845 $ 978 Additional Borrowings to Fund Buyback 359 320 38 ------ ------ ------ Total Buyback $ 745 $1,165 $1,016 Average Shares 154 262 239 Beginning Shares 115 270 246 Shares Issued 174 12 1 Shares Repurchased 19 24 17 Change in Common Stock Equivalents 0 (12) 0 ------ ------ ------ Ending Shares 270 246 230 Average Shares 154 262 239
(a) All data based on Ahmanson's March 25, 1997 press release. (b) 1997 and 1998 are adjusted to exclude non-recurring items. - -------------------------------------------------------------------------------- [LOGO] Washington Mutual 68 GREAT WESTERN [LOGO] 71 AHMANSON'S OFFER -- ORIGINAL SYNERGIES - --------------------------------------------------------------------------------
($ in millions, except per share amounts; shares in millions) 1997E 1998E 1999E - --------------------------------------------------------------------------------------------------------- Base Net Income Available to Common (a) $ 417 $ 773 $ 874 Intangible Amortization (a) 68 226 226 ------- ------- ------- Cash Earnings Available to Common $ 485 $ 999 $ 1,100 Projected GAAP EPS $ 2.71 $ 2.96 $ 3.66 % Pick-Up / (Dilution) (11)% (16)% (5)% Projected Cash EPS $ 3.15 $ 3.82 $ 4.61 % Pick-Up / (Dilution) 0% 4% 14% Base Cash Generated to Buy Back Common (a) $ 386 $ 845 $ 978 Change in Cash(b) (6) (56) (65) Additional Borrowings to Fund Planned Buyback 359 320 38 ------- ------- ------- Revised Buy Back / (Issuance) $ 739 $1,119 $ 951 Beginning Shares 115 270 246 Shares Issued 174 12 1 Shares Repurchased / (Issued) 19 24 17 Change in Common Stock Equivalents 0 (12) 0 ------- ------- ------- Ending Shares 270 246 229 Average Shares 154 261 239 Calculated Share Repurchase Price $ 39.57 $ 46.82 $ 56.45 Multiple of Cash EPS 12.6x 12.3x 12.2x
Note: Assumes cost savings as presented on February 18, 1997 and no revenue enhancements. We believe this to be a more realistic synergy level. Share repurchases made at prices consistent with March 25, 1997 Ahmanson press release (approximately 12.25x cash EPS). (a) Based on Ahmanson's March 25, 1997 press release. 1997 and 1998 are adjusted to exclude non-recurring items. (b) Net effect of dividends on additional shares issued and reduced synergies - -------------------------------------------------------------------------------- [LOGO] Washington Mutual 69 GREAT WESTERN[LOGO] 72 AHMANSON'S OFFER -- WAMU CAPITAL/ORIGINAL SYNERGIES - --------------------------------------------------------------------------------
($ in millions, except per share amounts; shares in millions) 1997E 1998E 1999E - --------------------------------------------------------------------------------------------------------- Base Net Income Available to Common (a) $ 417 $ 773 $ 874 Earnings on Additional Capital (b) 13 74 95 ------- ------- ------- Revised Net Income to Common $ 430 $ 847 $ 969 Intangible Amortization (a) 68 226 226 ------- ------- ------- Revised Cash Earnings Available to Common $ 498 $ 1,073 $ 1,195 Projected GAAP EPS $ 2.65 $ 2.84 $ 3.43 % Pick-Up / (Dilution) (13)% (19)% (11)% Projected Cash EPS $ 3.07 $ 3.59 $ 4.23 % Pick-Up / (Dilution) (2)% (2)% 5 % Base Cash Generated to Buy Back Common (a) $ 386 $ 845 $ 978 Change in Cash (c) 0 (5) (9) Additional Borrowings to Fund Planned Buyback 359 320 38 Additional Capital Required (d) (1,309) (447) (447) ------- ------- ------- Revised Buy Back / (Issuance) $ (564) $ 713 $ 561 Beginning Shares 115 304 287 Shares Issued 174 12 1 Shares Repurchased / (Issued) (15) 16 11 Change in Common Stock Equivalents 0 (12) 0 ------- ------- ------- Ending Shares 304 287 276 Average Shares 162 299 283 Calculated Share Repurchase Price $ 38.57 $ 44.01 $ 51.78 Multiple of Cash EPS 12.6x 12.3x 12.2x
Note: Assumes cost savings as presented on February 18, 1997 and no revenue enhancements and WAMU tangible common equity ratio. Share repurchases made at prices consistent with Ahmanson's March 25, 1997 press release (approximately 12.25x cash EPS). (a) Based on Ahmanson's March 25, 1997 press release. 1997 and 1998 are adjusted to exclude non-recurring items. (b) Assumes 8% earnings rate and 40% tax rate. (c) Net effect of earnings on additional capital, dividends on additional shares issued and reduced synergies. (d) Additional capital required to equal Washington Mutual's projected capital ratios. - -------------------------------------------------------------------------------- [LOGO] Washington Mutual 70 GREAT WESTERN [LOGO] 73 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 242 243 244 Tangible Book Value per Share $ 19.28 $ 23.17 $ 27.91 AHM/GWF -- 3/25/97 Press Release Tangible Assets $90,823 $ 90,767 $ 90,017 Tangible Common Equity 3,146 3,128 3,118 Ending Primary Shares 257 246 230 Tangible Book Value per Share $ 12.22 $ 12.72 $ 13.59 AHM/GWF -- Adjusted for WAMU Capital/Original Synergies(b) Tangible Assets $90,823 $ 90,767 $ 90,017 Tangible Common Equity(c) 4,455 4,884 5,321 Ending Primary Shares 291 287 276 Tangible Book Value per Share $ 15.33 $ 17.03 $ 19.25
(a) Assumes 10% annual growth rate for illustrative purposes. (b) Assumes cost savings as presented on February 18, 1997 and no revenue enhancements and WAMU tangible common equity ratio. Share repurchase made at prices consistent with Ahmanson's March 25, 1997 press release (approximately 12.25x cash EPS). (c) Tangible common equity required to equal Washington Mutual tangible common equity ratio. - ------------------------------------------------------------------------------- [LOGO] Washington Mutual GREAT WESTERN [LOGO] 71 74 Washington Mutual, Inc. ("Washington Mutual") 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 Financial Corporation ("Great Western") and a wholly-owned subsidiary of 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 Washington Mutual (Douglas P. Beighle, David Bonderman, Herbert M. Bridge, J. Taylor Crandall, Roger 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 H. Stever); the following executive officers of Washington Mutual: Craig S. Davis, Steven P. Freimuth, Lee D. Lannoye, 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. R. Kittner and Douglas G. Wisdorf (collectively, the "Washington Mutual Participants"). As of the date of this communication, David Bonderman, 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. Great Western and certain other persons named below may be deemed to be participants in the solicitation of proxies in connection with 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 E. 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 680,488 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. 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 securities issued by Washington Mutual and its affiliates ("Washington Mutual Securities") and Great Western and its affiliates ("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 April 7, 1997, Lehman Brothers had positions in Washington Mutual Securities and Great Western Securities as principal as follows: (i) net "short" 224 of Washington Mutual's common shares; (ii) net "long" 27,434 shares of Washington Mutual's 9.12% preferred stock; (iii) net "long" 124,964 shares of Washington Mutual's 7.60% preferred stock; (iv) net "short" 3,509 of Great Western's common shares; and (v) net "long" 160,000 shares of Great Western's 8.30% preferred stock. 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, as well as reimbursement of reasonable out-of-pocket expenses. In addition, Great Western has agreed to indemnify Goldman Sachs and Merrill Lynch and certain persons related to them against certain liabilities, including certain liabilities under the federal securities laws, arising out of their engagement. 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's 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 Grupta. In the normal course of their respective businesses Goldman Sachs and Merrill Lynch regularly buy and sell Great Western Securities and 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. As of April 7, 1997, Goldman Sachs had positions in Great Western Securities and Washington Mutual Securities as principal as follows: (i) net "long" 8,973 of Great Western's common shares; (ii) net "long" $1 million of Great Western's deposit notes; and (iii) net "long" 1,098 shares of Washington Mutual's common shares. As of April 7, 1997, Merrill Lynch had positions in Great Western Securities and Washington Mutual Securities as principal as follows: (i) net "long" 7,125 of Great Western's common shares and (ii) net "long" 1,526 of Washington Mutual's common shares. -----END PRIVACY-ENHANCED MESSAGE-----