EX-99 3 exh991to8k41602.txt PRESS RELEASE/FINANCIALS EXHIBIT 99.1 Washington Mutual Announces Record Quarterly Earnings; Board of Directors Increases Cash Dividend SEATTLE -- Washington Mutual, Inc. (NYSE: WM) today announced record quarterly earnings of $950 million, or 98 cents per diluted share, for the quarter ended March 31, 2002, up 29 percent on a per share basis from $641 million, or 76 cents per diluted share for the same period a year ago. Earnings for the first quarter of 2002 included results of the former Dime Bancorp, Inc. (Dime), which the company acquired on Jan. 4, and results of the former operations of HomeSide Lending, Inc. (HomeSide), the U.S. mortgage unit of the National Australia Bank Limited, which Washington Mutual acquired in an asset acquisition on March 1. Both acquisitions were accounted for as purchase transactions. In 2002, new accounting rules under generally accepted accounting principles (GAAP) eliminated the amortization of goodwill. The impact of goodwill amortization to net income in the first quarter of 2001 was $29 million, or 3 cents per diluted share. (Year-over-year comparisons reflect the three acquisitions completed in 2001.) In addition to the exceptional earnings growth, highlights of the recently completed quarter include: o A net interest margin of 3.74 percent and a higher average earning asset base combined to produce a 76 percent increase in net interest income over last year; o A return on common equity of 20.68 percent; o Record quarterly checking account growth of 327,598, excluding accounts acquired from Dime; o Record depositor and other retail banking fees of $361 million, up 29 percent from last year; o Record loan volume of $65.27 billion, including a 187 percent increase in total single-family residential (SFR) loan volume and a 39 percent increase in non-SFR loan volume from the first quarter of 2001. "Washington Mutual has entered 2002 on a very solid note," said Kerry Killinger, the company's chairman, president and CEO. "We are extremely proud of our first quarter results and everything that our employees have accomplished. We look forward to continuing to profitably grow our national franchises while creating value for our shareholders over the long term." BOARD OF DIRECTORS INCREASES DIVIDEND Based on the company's continued strong operating fundamentals and financial performance, Washington Mutual's Board of Directors declared a cash dividend of 26 cents per share on the company's common stock, up from 25 cents per share in the previous quarter. Dividends on the common stock are payable May 15, 2002 to shareholders of record as of April 30, 2002. The board also declared a $0.90625 dividend on Washington Mutual's Series H Preferred Stock which, together with a related purchase contract adjustment payment of $0.09375, will result in an aggregate payment of $1.00 on each unit of the company's Premium Income Equity Securities (PIES). These amounts are payable on May 16, 2002, to shareholders of record as of May 15, 2002. FIRST QUARTER RESULTS Net Interest and Noninterest Income A favorable net interest margin and the addition of the previously mentioned acquisitions helped fuel an increase in net interest income of 76 percent to $2.40 billion in the first quarter of 2002 versus $1.36 billion a year earlier. The net interest spread for the quarter was 3.60 percent, compared with 2.29 percent for the same period last year. The margin was 3.74 percent in the most recent quarter versus 2.65 percent in the first quarter of 2001. Depositor and other retail banking fees were a record $361 million, up 29 percent from $279 million a year earlier. Much of this increase in banking fees was the result of a much higher base of retail checking accounts year over year. During the most recent quarter, retail checking accounts grew on a net basis by 686,444, which included 358,846 checking accounts acquired from Dime. Additionally, Washington Mutual's new Platinum Checking accounts added significantly to the net increase in the number of retail checking accounts. Although mortgage rates trended slightly upward as the first quarter progressed, fixed-rate SFR loan volume remained strong. This led to a strong gain from SFR mortgage loans of $231 million, compared with fourth quarter's record gain of $287 million. During the quarter, the company recorded an increase in mortgage servicing rights (MSR) of $1.71 billion, reflecting the acquisition of Dime, strong loan origination volume and slightly lower loan pay-off volume. Lending Washington Mutual's substantial loan origination capacity, enhanced by recent acquisitions produced total loan volume of $65.27 billion for the quarter, up 10 percent from $59.12 billion in the fourth quarter of 2001. Total SFR loan volume was $59.16 billion, up 8 percent from $54.83 billion in the fourth quarter of 2001. The increase was a result of a 29 percent increase in adjustable-rate mortgage volume over the fourth quarter. Non-SFR volume totaled a record $6.11 billion for the most recent quarter, up 42 percent from the fourth quarter volume of $4.29 billion. Efficiency Ratio The efficiency ratio (defined as total noninterest expense, excluding amortization of goodwill in prior periods and other intangible assets, as a percentage of net interest income, noninterest income and the extraordinary item) was 46.96 percent in the most recent quarter compared with 46.33 percent in the first quarter of last year. The efficiency ratio, while up slightly from the previous quarter's 44.99 percent, reflected the additions of the former Dime and HomeSide operations, which are in the early stages of their integrations into Washington Mutual. Noninterest expense totaled $1.53 billion in the first quarter of 2002, which is higher than $1.01 billion in the previous year principally because of the company's acquisitions. Credit Quality Remains Steady Killinger said that credit quality, a key focus for Washington Mutual, remains solid and in line with the company's expectations. Although nonperforming assets (NPAs) increased from the previous quarter, the rate of growth in NPAs appears to be decreasing from its high during the second half of 2001 due to the recovering national economy and continued strong housing demand. During the quarter, NPAs increased by $399 million to $2.78 billion at March 31, 2002, but reflected the addition of $108 million of NPAs from the former Dime. Excluding Dime, the increase in NPAs was $291 million in the first quarter of 2002, down from the increase of $349 million in fourth quarter of 2001. NPAs represented 1.01 percent of total assets at March 31, 2002. Reflecting the company's current view that growth in the NPAs may have peaked in previous quarters, the provision for loan and lease losses was $175 million, versus $200 million in the fourth quarter of 2001. Net loan charge offs for the first quarter were $99 million, holding steady with the fourth quarter level of $97 million. However, net loan charge offs as a percentage of average loans improved from 0.25 percent in the fourth quarter of 2001 to 0.23 percent at March 31, 2002. "Given Washington Mutual's credit risk profile, which is heavily weighted toward single-family residential mortgages, management believes it is adequately reserved," Killinger added. Balance Sheet and Capital Management Consolidated assets at March 31, 2002 were $275.22 billion, compared with $242.51 billion at Dec. 31, 2001. The acquisitions during the first quarter added approximately $32.60 billion of assets to Washington Mutual's balance sheet. At March 31, 2002, balances of transaction deposits, including checking, savings and money market deposits, represented 68 percent of total deposits, compared with 66 percent at Dec. 31, 2001. Total deposits were $129.01 billion at the end of the first quarter, up from $107.18 billion at Dec. 31, 2001. The company's recent acquisitions contributed approximately 70 percent of this growth, while organic growth contributed 30 percent. Stockholders' equity at March 31, 2002 was $18.13 billion, or 6.6 percent of consolidated assets at March 31, 2002. In addition, the capital ratios of the company's banking subsidiaries continued to exceed federal regulatory requirements for classification as "well-capitalized" institutions, the highest regulatory standard. Company Updates o The company announced today that Denver, Colorado has been selected as the newest site for its innovative Occasio financial stores. Washington Mutual will complement its existing mortgage lending presence in the Greater Denver area with up to 30 financial stores. The first 20 stores are scheduled to open this year. o Earlier, Washington Mutual announced plans to open up to 40 Occasio financial stores in the Greater New York area over the next year, extending its existing branch network of more than 120 retail financial centers in the market and complementing its strong mortgage position in New York/New Jersey. o The company recently converted the loan servicing records of the former mortgage operations of Fleet Financial, Inc. While a few post-conversion activities remain to be completed, the company said it anticipates a successful integration. Outlook "We expect to deliver another year of strong profitability in 2002," Killinger said. "While it appears that the net interest margin will likely trend toward a more normalized level as the year progresses, we anticipate that the solid business fundamentals that exist in all of our key businesses will produce another successful year." "Our primary focus in 2002 is on gaining further efficiencies from our recent acquisitions, continuing strong momentum in our internal growth and making further progress toward our long-term goal of building the nation's top financial services company focused on the middle-market consumer." With a history dating back to 1889, Washington Mutual is a national financial services company that provides a diversified line of products and services to consumers and small- to mid-sized businesses. At March 31, 2002, Washington Mutual and its subsidiaries had assets of $275.22 billion. Washington Mutual currently operates more than 2,400 consumer banking, mortgage lending, commercial banking, consumer finance and financial services offices throughout the nation. Washington Mutual's press releases are available at www.wamu.com. A live webcast of the company's quarterly earnings conference call will be held on Wednesday, April 17 at 10:30 a.m. Eastern Time at www.wamu.com or via phone at 1-888-455-9641. A recording of the conference call will be available after 1 p.m. Eastern Time on Wednesday, April 17, 2002 through 2:59 a.m. Eastern Time on Saturday, April 27 at 1-800-666-8092. Callers from outside the United States may dial 1-402-220-0267. Forward-Looking Statements This press release contains forward-looking statements, which are not historical facts and pertain to future operating results. These forward-looking statements are within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to statements about our plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts. When used in this press release, the words "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions are generally intended to identify forward-looking statements. These forward-looking statements are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ materially from the results discussed in these forward-looking statements for the reasons, among others, discussed under the heading, "Business Factors That May Affect Future Results" in Washington Mutual's 2001 Annual Report on Form 10-K which include: (1) changes in general business and economic conditions may significantly affect our earnings; (2) the risk of our inability to effectively manage the volatility of our mortgage banking business could adversely affect our earnings; (3) the risk of our inability to effectively integrate the operations and personnel of companies we have acquired could adversely affect our earnings and financial condition; (4) the concentration of our operations in California could adversely affect our earnings and financial condition if the California economy or real estate market declines; (5) competition from other financial services companies in all our markets could make it a bigger challenge for us to achieve our financial goals; and (5) changes in the regulation of financial services companies could adversely affect our business. # # # Media Contact: Alan Gulick (206) 377-3637 alan.gulick@wamu.net Investor Contacts: JoAnn DeGrande (206) 461-3186 joann.degrande@wamu.net Ruthanne King (206) 461-6421 ruthanne.king@wamu.net
WM-1 Washington Mutual, Inc. Consolidated Statements of Income (dollars in millions, except per share data) (unaudited) Quarter Ended ------------------------------------------------------------------------------------------------------------------------------- Mar. 31, Dec. 31, Mar. 31, 2002 2001 2001 ------------------------------------------------------------------------------------------------------------------------------- Interest Income Loans $ 2,854 $ 2,690 $ 2,811 Available-for-sale ("AFS") securities 947 776 1,032 Other interest and dividend income 82 59 71 ------------------------------------------------------------------------------------------------------------------------------- Total interest income 3,883 3,525 3,914 Interest Expense Deposits 648 649 887 Borrowings 839 849 1,668 ------------------------------------------------------------------------------------------------------------------------------- Total interest expense 1,487 1,498 2,555 ------------------------------------------------------------------------------------------------------------------------------- Net interest income 2,396 2,027 1,359 Provision for loan and lease losses 175 200 82 ------------------------------------------------------------------------------------------------------------------------------- Net interest income after provision for loan and lease losses 2,221 1,827 1,277 Noninterest Income Depositor and other retail banking fees 361 353 279 Securities fees and commissions 82 77 72 Insurance income 47 29 20 Single-family residential ("SFR") mortgage banking income (expense) 393 (690) 273 Portfolio loan related income 65 60 32 (Loss) gain from sale of other AFS securities (298) 392 (49) Other income 83 113 123 ------------------------------------------------------------------------------------------------------------------------------- Total noninterest income 733 334 750 Noninterest Expense Compensation and benefits 690 535 416 Occupancy and equipment 288 228 184 Telecommunications and outsourced information services 139 119 106 Depositor and other retail banking losses 50 45 30 Amortization of goodwill - 34 29 Amortization of other intangible assets 25 11 7 Professional fees 55 63 37 Advertising and promotion 44 50 32 Other expense 238 246 172 ------------------------------------------------------------------------------------------------------------------------------- Total noninterest expense 1,529 1,331 1,013 ------------------------------------------------------------------------------------------------------------------------------- Income before income taxes and extraordinary item 1,425 830 1,014 Income taxes 521 295 373 ------------------------------------------------------------------------------------------------------------------------------- Income before extraordinary item 904 535 641 Extraordinary item - gain on extinguishment of securities sold under agreements to repurchase, net of taxes of $28 million for quarter ended March 31, 2002, and $189 million for quarter ended December 31, 2001 46 307 - ------------------------------------------------------------------------------------------------------------------------------- Net Income $ 950 $ 842 $ 641 =============================================================================================================================== Net Income Attributable to Common Stock $ 948 $ 840 $ 640 =============================================================================================================================== Basic earnings per common share: Income before extraordinary item $ 0.95 $ 0.62 $ 0.77 Extraordinary item 0.05 0.36 - Net income 1.00 0.98 0.77 Diluted earnings per common share: Income before extraordinary item $ 0.93 $ 0.62 $ 0.76 Extraordinary item 0.05 0.35 - Net income 0.98 0.97 0.76 Dividends declared per common share $ 0.25 $ 0.24 $ 0.21 Basic weighted average number of common shares outstanding (in thousands) 947,653 856,014 827,139 Diluted weighted average number of common shares outstanding (in thousands) 963,242 868,951 837,125
WM-2 Washington Mutual, Inc. Consolidated Statements of Financial Condition (dollars in millions, except per share data) (unaudited)
Mar. 31, 2002 Dec. 31, 2001 Mar. 31, 2001 ------------------------------------------------------------------------------------------------------------------------------- Assets Cash and cash equivalents $ 8,052 $ 6,044 $ 2,963 AFS securities: Mortgage-backed securities ("MBS") 24,347 28,568 46,483 Investment securities 42,951 29,781 9,199 Loans held for sale 23,317 23,842 13,850 Loans: Loans held in portfolio 146,364 132,991 132,460 Allowance for loan and lease losses (1,621) (1,404) (1,158) ----------------------------------------------------------------------------------------------------------------------------- Total loans held in portfolio, net of allowance for loan and lease losses 144,743 131,587 131,302 Mortgage servicing rights ("MSR") 7,955 6,241 3,456 Investment in Federal Home Loan Banks ("FHLBs") 4,317 3,873 3,707 Goodwill 5,970 1,981 2,011 Other assets 13,571 10,589 6,954 ----------------------------------------------------------------------------------------------------------------------------- Total assets $ 275,223 $ 242,506 $ 219,925 ============================================================================================================================= Liabilities Deposits: Checking accounts $ 53,376 $ 37,736 $ 19,237 Savings accounts and money market deposit accounts ("MMDAs") 34,378 32,484 38,792 Time deposit accounts 41,256 36,962 35,306 ----------------------------------------------------------------------------------------------------------------------------- Total deposits 129,010 107,182 93,335 Federal funds purchased and commercial paper 4,018 4,690 4,030 Securities sold under agreements to repurchase ("repurchase agreements") 44,789 39,447 29,514 Advances from FHLBs 61,734 61,182 66,780 Other borrowings 14,238 12,576 10,216 Other liabilities 3,204 3,264 3,612 ----------------------------------------------------------------------------------------------------------------------------- Total liabilities 256,993 228,341 207,487 Redeemable preferred stock 102 102 102 Stockholders' equity 18,128 14,063 12,336 ----------------------------------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $ 275,223 $ 242,506 $ 219,925 ============================================================================================================================= Common shares outstanding at end of period (in thousands) (1) 973,590 873,089 877,131 Book value per common share $18.97 $16.45 $14.36 Tangible book value per common share 12.55 14.18 12.14 Full-time equivalent employees at end of period 49,039 39,465 33,525 --------------- (1) Includes 18 million shares held in escrow that were not included in the book value per share calculations.
WM-3 Washington Mutual, Inc. Selected Financial Information (dollars in millions, except for per share data) (unaudited)
Quarter Ended --------------------------------------------------------------------------------------------------------------------- Mar. 31, Dec. 31, Mar. 31, 2002 2001 2001 --------------------------------------------------------------------------------------------------------------------- Basic and Diluted Weighted Average Number of Common Shares Outstanding (in thousands) Basic weighted average number of common shares outstanding 947,653 856,014 827,139 Dilutive effect of potential common shares from: Stock options 8,602 6,726 9,183 Premium Income Equity SecuritiesSM 1,360 1,268 803 Trust Preferred Income Equity Redeemable SecuritiesSM 5,627 4,943 - --------------------------------------------------------------------------------------------------------------------- 15,589 12,937 9,986 --------------------------------------------------------------------------------------------------------------------- Diluted weighted average number of common shares outstanding 963,242 868,951 837,125 =====================================================================================================================
Quarter Ended --------------------------------------------------------------------------------------------------------------------- Mar. 31, 2002 Mar. 31, 2001 --------------------------------------------------------------------------------------------------------------------- Stockholders' Equity Rollforward Balance, beginning of period $ 14,063 $ 10,166 Net income 950 641 Other comprehensive (loss) income, net of tax (412) 225 Cash dividends declared on common stock (243) (168) Cash dividends declared on redeemable preferred stock (2) (1) Common stock repurchased and retired - - Common stock warrants issued, net of costs - - Common stock issued for acquisitions 3,685 1,389 Common stock issued 87 84 --------------------------------------------------------------------------------------------------------------------- Balance, end of period $ 18,128 $ 12,336 =====================================================================================================================
WM-4 Washington Mutual, Inc. Selected Financial Information (dollars in millions, except per share amounts) (unaudited)
Quarter Ended ---------------------------------------------------------------------------------------------------------------------------- Mar. 31, Dec. 31, Mar. 31, 2002 2001 2001 ---------------------------------------------------------------------------------------------------------------------------- Reported Financial Results Net income $ 950 $ 842 $ 641 Net income per common share $ 1.00 $ 0.98 $ 0.77 Net income per diluted common share 0.98 0.97 0.76 Financial ratios on reported financial results: Return on average assets 1.34% 1.43% 1.21% Return on average common equity 20.68 23.36 22.34 Efficiency ratio(1), excluding amortization of other intangible assets 46.96 44.99 (2) 46.33 (2) Efficiency ratio(1), including amortization of other intangible assets 47.75 46.58 (3) 48.04 (3)
Quarter Ended ---------------------------------------------------------------------------------------------------------------------------- Mar. 31, Dec. 31, Mar. 31, 2002 2001 2001 ---------------------------------------------------------------------------------------------------------------------------- Pro Forma (4) Income before income taxes and extraordinary item $ 1,425 $ 830 $ 1,014 Amortization of goodwill - 34 29 ---------------------------------------------------------------------------------------------------------------------------- Income before income taxes and extraordinary item, excluding amortization of goodwill 1,425 864 1,043 Income tax expense (521) (298) (376) ---------------------------------------------------------------------------------------------------------------------------- Net income before extraordinary item, excluding amortization of goodwill 904 566 667 Extraordinary item, net of taxes 46 307 - Redeemable preferred stock dividends (2) (2) (1) ---------------------------------------------------------------------------------------------------------------------------- Net income attributable to common stock, excluding amortization of goodwill $ 948 $ 871 $ 666 ============================================================================================================================ Earnings per diluted common share, excluding amortization of goodwill $ 0.98 $ 1.00 $ 0.79 ------------------------------------ (1) Includes extraordinary item. (2) Excludes amortization of goodwill. (3) Includes amortization of goodwill. (4) Represents pro forma impact to quarter-to-date December 31, 2001 and March 31, 2001 net income assuming that the adoption of Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets, which eliminates the amortization of goodwill from net income, was applied to all periods presented. SFAS No. 142 became effective on January 1, 2002.
WM-5 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Quarter Ended -------------------------------------------------------------------------------------------------------------------------- Mar. 31, 2002 Dec. 31, 2001 Mar. 31, 2001 Balance Rate Balance Rate Balance Rate -------------------------------------------------------------------------------------------------------------------------- Average Balances and Weighted Average Interest Rates Assets Earning assets: Loans(1)(2) SFR $ 114,792 6.07% $103,594 6.39% $ 91,167 7.67% Specialty mortgage finance(3) 10,406 9.59 10,024 9.97 7,471 10.23 ------------------------------------------------------------------- ---------- ----------- Total SFR 125,198 6.36 113,618 6.70 98,638 7.87 SFR construction(4) 2,498 6.62 2,692 7.04 2,445 8.92 Second mortgage and other consumer: Banking subsidiaries 14,478 6.84 10,291 7.71 8,796 9.03 Washington Mutual Finance 2,557 16.66 2,576 15.91 2,510 16.88 Commercial business 5,647 5.52 5,265 5.91 3,776 8.76 Commercial real estate: Multi-family 17,552 6.35 15,929 7.02 16,578 8.30 Other commercial real estate 6,840 6.82 4,553 6.78 4,114 8.59 ------------------------------------------------------------------- ---------- ----------- Total loans 174,770 6.54 154,924 6.94 136,857 8.22 MBS(5) 25,248 5.39 31,188 6.29 53,909 7.10 Investment securities and other(5) 55,157 5.04 27,951 4.92 9,552 6.14 ------------------------------------------------------------------- ---------- ----------- Total earning assets 255,175 6.11 214,063 6.58 200,318 7.82 Noninterest-earning assets: MSR 7,006 6,517 2,834 Goodwill 5,401 2,125 1,351 Other 16,626 13,630 8,261 ------------------------------------------------------------------- ---------- ----------- Total assets $ 284,208 $236,335 $ 212,764 =================================================================== ========== =========== Liabilities Interest-bearing liabilities: Deposits: Interest-bearing checking $ 23,873 2.76 $ 10,897 1.98 $ 6,399 1.83 Savings accounts and MMDAs 36,179 1.57 34,174 2.11 34,899 4.08 Time deposit accounts 42,033 3.33 38,863 4.22 35,609 5.77 ------------------------------------------------------------------- ---------- ----------- Total interest-bearing deposits 102,085 2.57 83,934 3.07 76,907 4.68 Repurchase agreements 53,450 1.62 29,677 2.31 31,043 6.02 Advances from FHLBs 65,302 2.63 64,338 3.17 63,747 6.08 Federal funds purchased and commercial paper 5,565 1.83 5,163 2.39 5,094 5.84 Other 14,156 5.10 14,357 3.61 10,370 6.98 ------------------------------------------------------------------- ---------- ----------- Total interest-bearing liabilities 240,558 2.51 197,469 3.01 187,161 5.53 Noninterest-bearing sources: Noninterest-bearing deposits 21,767 19,699 10,739 Other liabilities 3,536 4,778 3,408 Stockholders' Equity 18,347 14,389 11,456 ------------------------------------------------------------------- ---------- ----------- Total liabilities and stockholders' equity $ 284,208 $236,335 $ 212,764 =================================================================== ========== =========== Net interest spread 3.60 3.57 2.29 Impact of noninterest-bearing sources 0.14 0.23 0.36 Net interest margin 3.74 3.80 2.65 ------------------------------- (1) Nonaccrual loans were included in the average loan amounts outstanding. (2) Interest income for loans includes amortization of net deferred loan origination costs of $55 million, $57 million, and $25 million for the quarters ended March 31, 2002, December 31, 2001, and March 31, 2001. (3) Includes purchased subprime loan portfolios as well as first mortgages originated by Washington Mutual Finance and Long Beach Mortgage. (4) Includes custom construction loans to the intended occupant of a house to finance the house's construction and residential builder construction loans to borrowers who are in the business of acquiring land and building homes for resale. (5) Yield is based on average amortized cost balances.
WM-6 Washington Mutual, Inc. Selected Financial Information (unaudited)
Mar. 31, Dec. 31, Mar. 31, 2002 2001 2001 ------------------------------------------------------------------------------------------------------------------- Capital Adequacy Stockholders' equity/total assets 6.59% 5.80% 5.61% Stockholders' equity (1)/total assets (1) 6.80 5.89 5.54 Tangible common equity (1)(2) 4.69 5.14 4.72 Estimated total risk-based capital (3) 11.88 12.87 10.75 -------------------------- (1) Excludes unrealized net gain/loss on available-for-sale securities and derivatives. (2) Excludes goodwill and other intangible assets. (3) Estimate of what WMI's total risk-based capital ratio would be if it was a bank holding company that complies with Federal Reserve Board capital requirements.
Mar. 31, Dec. 31, Mar. 31, 2002 2001 2001 ------------------------------------------------------------------------------------------------------------------- Retail Checking Accounts (4) WMB and WMBfsb 1,218,440 1,182,385 1,119,736 WMB, FA 5,318,195 (5) 4,667,806 4,159,860 (6) ------------------------------------------------------------------------------------------------------------------- Total retail checking accounts 6,536,635 5,850,191 5,279,596 =================================================================================================================== Retail Checking Account Activity (4) Net accounts opened during the quarter: WMB and WMBfsb 36,055 23,739 14,789 WMB, FA 650,389 (5) 166,577 415,665 (6) ------------------------------------------------------------------------------------------------------------------- Net new retail checking accounts 686,444 190,316 430,454 =================================================================================================================== (4) Retail checking accounts exclude commercial business accounts. The information provided refers to the number of accounts, not dollar volume. (5) Includes 358,846 checking accounts acquired from Dime. (6) Includes 271,183 checking accounts acquired from Bank United Corp.
WM-7 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Quarter Ended --------------------------------------------------------------------------------------------------------------------- Mar. 31 Dec. 31, Mar. 31 2002 2001 2001 --------------------------------------------------------------------------------------------------------------------- Loan Volume SFR: Adjustable rate ("ARMs") $ 16,608 $ 12,891 $ 7,245 Fixed rate 39,231 39,280 11,161 Specialty mortgage finance (1) 3,320 2,654 2,233 --------------------------------------------------------------------------------------------------------------------- Total SFR loan volume 59,159 54,825 20,639 SFR construction: Builder (2) 417 186 1,075 Custom (3) 96 118 122 Second mortgage and other consumer: Banking subsidiaries 3,720 2,318 1,335 Washington Mutual Finance 452 518 449 Commercial business 643 501 756 Commercial real estate: Multi-family 599 561 480 Other commercial real estate 183 89 180 --------------------------------------------------------------------------------------------------------------------- Total loan volume $ 65,269 $ 59,116 $ 25,036 ===================================================================================================================== Loan Volume by Channel Originated $ 43,120 $ 35,138 $ 20,409 Purchased/Correspondent 22,149 23,978 4,627 --------------------------------------------------------------------------------------------------------------------- Total loan volume by channel $ 65,269 $ 59,116 $ 25,036 ===================================================================================================================== Refinancing Activity (4) SFR: ARMs $ 14,157 $ 10,623 $ 4,321 Fixed rate 25,933 27,264 6,291 SFR construction 13 7 6 Second mortgage and other consumer 641 149 58 Commercial real estate 370 315 195 --------------------------------------------------------------------------------------------------------------------- Total refinances $ 41,114 $ 38,358 $ 10,871 ===================================================================================================================== SFR Loan Originations(5) Short-term ARMs: Treasury indices $ 6,284 $ 5,606 $ 5,228 COFI 691 429 514 Other 40 48 2 --------------------------------------------------------------------------------------------------------------------- Total short-term ARMs 7,015 6,083 5,744 Medium-term ARMs 8,393 6,383 1,312 Fixed-rate mortgages 19,796 16,840 7,977 --------------------------------------------------------------------------------------------------------------------- Total SFR loan originations $ 35,204 $ 29,306 $ 15,033 ===================================================================================================================== (1) Includes purchased subprime loan portfolios as well as first mortgages originated by Washington Mutual Finance and Long Beach Mortgage. (2) Represents residential builder construction loans to borrowers who are in the business of acquiring land and building homes for resale. (3) Represents custom construction loans to the intended occupant of a house to finance the house's construction. (4) Includes loan refinancings entered into by both new and pre-existing loan customers. (5) Does not include purchased and correspondent SFR loans and specialty mortgage finance loans.
WM-8 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Change from Dec. 31, 2001 Mar. 31, Dec. 31, Mar. 31, to Mar. 31, 2002 2002 2001 2001 ----------------------------------------------------------------------------------------------------------------------------- Loans by Property Type and MBS Loans held in portfolio: SFR $ 4,471 $ 86,492 $ 82,021 $ 83,534 Specialty mortgage finance(1) 723 10,544 9,821 7,399 ----------------------------------------------------------------------------------------------------------------------------- Total SFR loans 5,194 97,036 91,842 90,933 SFR construction: Builder(2) (139) 1,988 2,127 2,575 Custom(3) (72) 403 475 425 Second mortgage and other consumer: Banking subsidiaries 4,584 15,046 10,462 9,226 Washington Mutual Finance (13) 2,573 2,586 2,568 Commercial business (160) 5,230 5,390 4,863 Commercial real estate: Multi-family 1,620 17,228 15,608 17,090 Other commercial real estate 2,359 6,860 4,501 4,780 ----------------------------------------------------------------------------------------------------------------------------- Total loans held in portfolio 13,373 146,364 132,991 132,460 Less: allowance for loan and lease losses (217) (1,621) (1,404) (1,158) Loans securitized and retained as MBS (1,067) 21,145 22,212 29,116 ----------------------------------------------------------------------------------------------------------------------------- Total net loans held in portfolio and loans securitized and retained as MBS 12,089 165,888 153,799 160,418 Loans held for sale (525) 23,317 23,842 13,850 ----------------------------------------------------------------------------------------------------------------------------- Total net loans and loans securitized and retained as MBS 11,564 189,205 177,641 174,268 Purchased MBS (3,154) 3,202 6,356 17,367 ----------------------------------------------------------------------------------------------------------------------------- Total net loans and MBS $ 8,410 $192,407 $183,997 $ 191,635 ============================================================================================================================= (1) Includes purchased subprime loan portfolios as well as first mortgages originated by Washington Mutual Finance. (2) Represents residential builder construction loans to borrowers who are in the business of acquiring land and building homes for resale. (3) Represents custom construction loans to the intended occupant of a house to finance the house's construction.
WM-9 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Dec. 31, 2001 to Mar. 31, 2002 ----------------------------------------------------------------------------------------------------------------- Rollforward of Loans Held for Sale Balance, beginning of period $ 23,842 Loans added through acquisitions 6,717 Loans originated and purchased 44,693 Loans transferred from MBS - Loans transferred from loans held in portfolio 383 Loans sold or securitized (51,193) Loan payments and other (1,125) ----------------------------------------------------------------------------------------------------------------- Change in loans (525) ----------------------------------------------------------------------------------------------------------------- Balance, end of period $ 23,317 ================================================================================================================= Rollforward of Loans Held in Portfolio Balance, beginning of period $ 132,991 Loans added through acquisitions 16,225 Loans originated and purchased 20,576 Loans transferred to loans held for sale (383) Loans securitized (3,938) Loan payments and other (19,107) ----------------------------------------------------------------------------------------------------------------- Change in loans 13,373 ----------------------------------------------------------------------------------------------------------------- Balance, end of period $ 146,364 =================================================================================================================
WM-10 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Dec. 31, 2001 to Mar. 31, 2002 --------------------------------------------------------------------------------------------------------------------------------- Rollforward of Mortgage Servicing Rights ("MSR") Balance, beginning of period $ 6,241 SFR: Additions through acquisitions 926 Additions 1,222 Amortization (479) Impairment recovery 45 Sales - Net change in commercial real estate MSR - --------------------------------------------------------------------------------------------------------------------------------- Balance, end of period(1) $ 7,955 ================================================================================================================================= Rollforward of Valuation Allowance for MSR Impairment Balance, beginning of period $ 1,714 Impairment recovery (45) --------------------------------------------------------------------------------------------------------------------------------- Balance, end of period $ 1,669 ================================================================================================================================= Rollforward of Loan Servicing Portfolio with MSR Balance, beginning of period $ 378,383 SFR: Additions through acquisitions 57,495 Additions 57,178 Sales - Loan payments and other (33,699) Net change in commercial real estate loan servicing portfolio 18 --------------------------------------------------------------------------------------------------------------------------------- Balance, end of period $ 459,375 =================================================================================================================================
Mar. 31, 2002 Balance --------------------------------------------------------------------------------------------------------------------------------- Total Servicing Portfolio Loan servicing portfolio with MSR $ 459,375 Loan servicing portfolio without MSR 7,666 Servicing on retained MBS without MSR 7,678 Servicing on owned loans 157,109 Subservicing portfolio 170,760 --------------------------------------------------------------------------------------------------------------------------------- Total servicing portfolio $ 802,588 =================================================================================================================================
Mar. 31, 2002 -------------------------------------------- Unpaid Principal Weighted Average Balance Servicing Fee --------------------------------------------------------------------------------------------------------------------------------- (in basis points, annualized) Total Servicing Portfolio, Excluding Retained MBS without MSR and Owned Loans Government $ 71,409 52 Agency 304,603 43 Private 82,846 52 Specialty home loans 8,183 50 --------------------------------------------------------------------------------------------------------------------------------- Total servicing portfolio, excluding retained MBS without MSR and owned loans(2) $ 467,041 47 ================================================================================================================================= (1) At March 31, 2002, aggregate MSR fair value was $7.98 billion. (2) Weighted average coupon (in basis points, annualized) was 7.11% at March 31, 2002.
WM-11 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Change from Dec. 31, 2001 Mar. 31, % of Dec. 31, % of Mar. 31, % of to Mar. 31, 2002 2002 total 2001 total 2001 total --------------------------------------------------------------------------------------------------------------------------------- Real Estate Loans and MBS (1) Short-term ARMs: COFI $ (1,058) $ 31,936 20% $ 32,994 21% $ 40,913 25% Treasury indices 1,299 35,462 22 34,163 22 42,590 25 Other (1,467) 12,024 (2) 8 13,491 (2) 9 11,819 (2) 7 ---------------------------------------------------------------------------------------------------------------------------------- Total short-term ARMs (1,226) 79,422 50 80,648 52 95,322 57 Medium-term ARMs 3,603 45,188 29 41,585 26 31,825 19 Fixed-rate loans 2,411 30,096 19 27,685 18 23,508 14 Other MBS (3,020) 3,559 2 6,579 4 17,106 10 ---------------------------------------------------------------------------------------------------------------------------------- Total real estate loans and MBS $ 1,768 $158,265 100% $156,497 100% $167,761 100% ================================================================================================================================== (1) Does not include specialty mortgage finance loans. (2) The balance included the following amount of securities retained which bear COFI to LIBOR basis risk (dollars in billions): Mar. 31, 2002: $2.8 Dec. 31, 2001: 2.9 Mar. 31, 2001: 2.7
Quarter Ended ------------------------------------------------------------------------------------------------- Mar. 31, Dec. 31, Mar. 31, 2002 2001 2001 ------------------------------------------------------------------------------------------------- SFR Mortgage Banking Income (Expense) Loan servicing fees $ 475 $ 448 $ 196 Amortization of MSR (479) (381) (123) MSR recovery (impairment) 45 (1,057) (64) Other, net 21 (52) (20) ------------------------------------------------------------------------------------------------- Net SFR loan servicing income (expense) 62 (1,042) (11) Loan related income 98 49 24 Gain from mortgage loans 231 287 187 Gain from sale of originated MBS 2 16 73 ------------------------------------------------------------------------------------------------- Total SFR mortgage banking income (expense) $ 393 $ (690) $ 273 =================================================================================================
WM-12 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Mar. 31, 2002 Dec. 31, 2001 ----------------------------------------------------------------------------------------------------------------------------------- Balance Term (1) Balance Term (1) ----------------------------------------------------------------------------------------------------------------------------------- (in months) (in months) Deposits and Borrowings Deposits: Noninterest-bearing deposits $ 21,836 N/A $ 22,441 N/A Interest-bearing checking accounts, savings accounts and MMDAs 65,918 N/A 47,779 N/A Interest-bearing time deposit accounts 41,256 11 36,962 10 ----------------------------------------------------------------------------------------------------------------------------------- Total deposits(2) 129,010 107,182 Borrowings: Adjustable 55,781 2 48,014 2 Short-term fixed 47,355 2 49,569 1 Long-term fixed 21,643 63 20,312 72 ----------------------------------------------------------------------------------------------------------------------------------- Total borrowings 124,779 117,895 ----------------------------------------------------------------------------------------------------------------------------------- Total deposits and borrowings $ 253,789 $ 225,077 =================================================================================================================================== (1) Terms used are remaining term for deposits and term to reprice for borrowings. (2) Includes custodial and escrow deposits of $10.02 billion at March 31, 2002 and $10.11 billion at December 31, 2001.
WM-13 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Quarter Ended --------------------------------------------------------------------------------------------------------------------------- Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2002 2001 2001 2001 2001 --------------------------------------------------------------------------------------------------------------------------- Allowance for Loan and Lease Losses Balance, beginning of quarter $ 1,404 $ 1,295 $ 1,170 $1,158 $1,014 Allowance acquired through business combinations/other 141 6 - (5) 120 Provision for loan and lease losses 175 200 200 92 82 --------------------------------------------------------------------------------------------------------------------------- 1,720 1,501 1,370 1,245 1,216 Loans charged off: SFR (11) (3) (6) (14) (6) Specialty mortgage finance (9) (10) (4) (5) (7) --------------------------------------------------------------------------------------------------------------------------- Total SFR charge offs (20) (13) (10) (19) (13) Second mortgage and other consumer: Banking subsidiaries (21) (16) (12) (16) (12) Washington Mutual Finance (43) (41) (36) (34) (33) Commercial business (26) (38) (19) (12) (4) Commercial real estate: Other commercial real estate (2) - (5) (3) (3) --------------------------------------------------------------------------------------------------------------------------- Total loans charged off (112) (108) (82) (84) (65) Recoveries of loans previously charged off: SFR - - - 1 1 --------------------------------------------------------------------------------------------------------------------------- Total SFR recoveries of loans previously charged off - - - 1 1 Second mortgage and other consumer: Banking subsidiaries 3 1 1 1 1 Washington Mutual Finance 5 4 5 5 5 Commercial business 5 5 1 1 - Commercial real estate: Other commercial real estate - 1 - 1 - --------------------------------------------------------------------------------------------------------------------------- Total recoveries of loans previously charged off 13 11 7 9 7 --------------------------------------------------------------------------------------------------------------------------- Net charge offs (99) (97) (75) (75) (58) --------------------------------------------------------------------------------------------------------------------------- Balance, end of quarter $ 1,621 $ 1,404 $ 1,295 $1,170 $1,158 =========================================================================================================================== Net charge offs (annualized) as a percentage of average loans 0.23% 0.25% 0.20% 0.20% 0.17% Allowance as a percentage of total loans held in portfolio 1.11% 1.06% 0.97% 0.89% 0.87%
WM-14 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Mar. 31, 2002 Dec. 31, 2001 Mar. 31, 2001 ------------------------------------------------------------------------------------------------------------------------ Nonperforming Assets ("NPAs") and Restructured Loans Nonaccrual loans: SFR $ 1,240 $ 1,041 $ 646 Specialty mortgage finance 477 415 262 ------------------------------------------------------------------------------------------------------------------------ Total SFR nonaccrual loans 1,717 1,456 908 SFR construction: Builder 57 26 26 Custom 15 10 5 Second mortgage and other consumer: Banking subsidiaries 72 64 46 Washington Mutual Finance 91 84 66 Commercial business 186 159 58 Commercial real estate: Multi-family 51 56 19 Other commercial real estate 324 298 110 ------------------------------------------------------------------------------------------------------------------------ Total nonaccrual loans 2,513 2,153 1,238 Foreclosed assets: SFR 126 107 108 Specialty mortgage finance 70 69 31 ------------------------------------------------------------------------------------------------------------------------ Total SFR foreclosed assets 196 176 139 SFR construction: Builder 8 4 3 Custom - 1 - Second mortgage and other consumer: Banking subsidiaries 12 11 20 Washington Mutual Finance 9 9 7 Commercial business 13 10 - Commercial real estate: Multi-family - - 1 Other commercial real estate 29 17 13 ------------------------------------------------------------------------------------------------------------------------ Foreclosed assets 267 228 183 ------------------------------------------------------------------------------------------------------------------------ Total NPAs $ 2,780 $ 2,381 $ 1,421 As a percentage of total assets 1.01% 0.98% 0.65% Restructured loans $ 101 $ 118 $ 245 ------------------------------------------------------------------------------------------------------------------------ Total NPAs and restructured loans $ 2,881 $ 2,499 $ 1,666 ========================================================================================================================
WM-15 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited) We use interest rate contracts as tools to manage interest rate risk. The following tables summarize the notional amounts, maturities and weighted average interest rates and strike rates associated with these contracts. Interest rate contracts that are embedded with certain adjustable-rate borrowings, while not accounted for as derivatives under SFAS No. 133, have been included in the tables since they also function as interest rate risk management tools.
March 31, 2002 ------------------------------------------------------------------------------------------------------------------------------------ Maturity Range ------------------------------------------------------------------------------------------------------------------------------------ Total Notional After Amount 2002 2003 2004 2005 2006 2006 ------------------------------------------------------------------------------------------------------------------------------------ Interest Rate Contracts: Asset/Liability Management Pay-fixed swaps Contractual maturity $ 15,608 $ 813 $ 5,586 $ 3,534 $ 280 $ 4,448 $ 947 Weighted average pay rate 4.00% 4.65% 3.03% 4.46% 4.42% 4.39% 5.58% Weighted average receive rate 1.90% 1.89% 1.91% 1.89% 1.89% 1.89% 1.95% Receive-fixed swaps Contractual maturity $ 4,628 $ 36 $ 620 $ 100 $ 560 $ 1,004 $ 2,308 Weighted average pay rate 1.93% 4.11% 1.59% 2.02% 1.83% 1.91% 2.02% Weighted average receive rate 6.29% 4.19% 5.17% 1.99% 5.48% 6.80% 6.78% Interest rate caps/collars/corridors Contractual maturity $ 935 $ 359 $ 271 $ 191 $ 64 $ 50 - Weighted average strike rate 7.38% 7.34% 7.62% 8.14% 5.94% 5.25% - Payor swaptions Contractual maturity (option) $ 5,000 - $ 5,000 - - - - Weighted average strike rate 6.12% - 6.12% - - - - Contractual maturity (swap) - - - - - $ 1,000 $ 4,000 Weighted average strike rate - - - - - 6.05% 6.14% Embedded caps Contractual maturity $ 683 - $ 183 $ 500 - - - Weighted average strike rate 7.62% - 7.25% 7.75% - - - Embedded payor swaptions(1) Contractual maturity (option) $ 6,400 - $ 5,900 $ 500 - - - Weighted average strike rate 6.14% - 6.13% 6.21% - - - Contractual maturity (swap) - - - - - $ 3,750 $ 2,650 Weighted average strike rate - - - - - 5.99% 6.34% ------------------------------------------------------------------------------------------------------------------------------------ Total asset/liability management $ 33,254 ==================================================================================================================================== MSR Risk Management Receive-fixed swaps Contractual maturity $ 6,300 - - - - - $ 6,300 Weighted average pay rate 2.01% - - - - - 2.01% Weighted average receive rate 6.02% - - - - - 6.02% Receiver swaptions Contractual maturity (option) $ 1,500 $1,500 - - - - - Weighted average strike rate 5.88% 5.88% - - - - - Contractual maturity (swap) - - - - - - $ 1,500 Weighted average strike rate - - - - - - 5.88% Embedded floors (2) Contractual maturity $ 5,150 - - - $ 650 - $ 4,500 Weighted average strike rate 6.33% - - - 5.13% - 6.50% ------------------------------------------------------------------------------------------------------------------------------------ Total MSR risk management $ 12,950 ==================================================================================================================================== Total interest rate contracts $ 46,204 (3) ==================================================================================================================================== (1) Embedded interest rate swaptions are exercisable upon maturity. (2) At March 31, 2002, $650 million of these contracts were effective. Contractual start dates for the remaining floors begin on March 18, 2003. Once effective, the floors reprice every three months. (3) Interest rate contracts decreased net interest income by $37 million for the quarter ended March 31, 2002.
WM-16 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Dec. 31, 2001 ------------------------------------------------------------------------------------------------------------------------------------ Maturity Range ------------------------------------------------------------------------------------------------------------------------------------ Total Notional After Amount 2002 2003 2004 2005 2006 2006 ------------------------------------------------------------------------------------------------------------------------------------ Interest Rate Contracts: Asset/Liability Management Pay-fixed swaps Contractual maturity $ 12,905 $ 2,914 $ 2,036 $ 2,534 $ 30 $ 4,448 $ 943 Weighted average pay rate 4.82% 6.09% 3.78% 4.63% 7.15% 4.39% 5.58% Weighted average receive rate 2.18% 2.21% 2.23% 2.21% 2.11% 2.20% 1.75% Receive-fixed swaps Contractual maturity $ 3,627 $ 40 $ 120 - $ 560 $ 1,005 $ 1,902 Weighted average pay rate 2.05% 2.11% 1.95% - 1.89% 2.01% 2.13% Weighted average receive rate 6.63% 7.17% 5.55% - 5.48% 6.81% 6.94% Interest rate caps/collars/corridors Contractual maturity $ 835 $ 380 $ 214 $ 191 - $ 50 - Weighted average strike rate 7.59% 7.47% 7.86% 8.14% - 5.25% - Payor swaptions Contractual maturity (option) $ 5,500 $ 500 $ 5,000 - - - - Weighted average strike rate 6.11% 6.04% 6.12% - - - - Contractual maturity (swap) - - - - - $ 1,000 $ 4,500 Weighted average strike rate - - - - - 6.05% 6.12% Embedded caps Contractual maturity $ 696 - $ 196 $ 500 - - - Weighted average strike rate 7.60% - 7.25% 7.75% - - - Embedded payor swaptions (1) Contractual maturity (option) $ 5,900 - $ 5,900 - - - - Weighted average strike rate 6.13% - 6.13% - - - - Contractual maturity (swap) - - - - - $ 3,750 $ 2,150 Weighted average strike rate - - - - - 5.99% 6.37% ------------------------------------------------------------------------------------------------------------------------------------ Total asset/liability management $ 29,463 ==================================================================================================================================== MSR Risk Management Embedded floors (2) Contractual maturity $ 2,300 - - - $2,300 - - Weighted average strike rate 5.12% - - - 5.12% - - ------------------------------------------------------------------------------------------------------------------------------------ Total MSR risk management $ 2,300 ==================================================================================================================================== Total interest rate contracts $ 31,763 (3) ==================================================================================================================================== (1) Embedded interest rate swaptions are exercisable upon maturity. (2) At December 31, 2001, $1.8 billion of these contracts were effective. Contractual start dates for the remaining floors begin on September 15, 2002. Once effective, the floors reprice every three months. (3) Interest rate contracts decreased net interest income by $34 million for the quarter ended December 31, 2001.