8-K

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:  July 21, 2004

Washington Mutual, Inc.
(Exact name of registrant as specified in its charter)
Washington	1-14667	91-1653725
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
1201 Third Avenue, Seattle, Washington		98101
(Address of principal executive offices)		(Zip Code)
(206) 461-2000
(Registrant’s telephone number, including area code)

Item 7.  Exhibits

(c) The following exhibits are being furnished herewith:

Exhibit No.	Exhibit Description
99.1	Press release text of Washington Mutual, Inc. dated July 21, 2004.
99.2	Financial supplement of Washington Mutual, Inc.

Item 12.  Results of Operations and Financial Condition

On July 21, 2004, Washington Mutual, Inc. issued a press release regarding its results of operations and financial condition for the quarter and six months ended June 30, 2004. The text of the press release is included as Exhibit 99.1 to this report and the financial supplement is included as Exhibit 99.2 to this report. The information included in the press release text and the financial supplement is considered to be “furnished” under the Securities Exchange Act of 1934. The Company will include final financial statements and additional analyses for the quarter and six months ended June 30, 2004, as part of its Form 10-Q covering that period.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	WASHINGTON MUTUAL, INC.
Dated: July 21, 2004	By:	/s/ Fay L. Chapman
		Fay L. Chapman
		Senior Executive Vice President

2

EX-99.1

Exhibit 99.1

FINAL

July 21, 2004

For Immediate Release

Washington Mutual Announces Second Quarter 2004 EarningsBoard of Directors Increases Cash Dividend

SEATTLE — Washington Mutual, Inc. (NYSE: WM) today announced second quarter 2004 earnings of $489 million, or $0.55 per diluted share, down 49 percent on a per share basis from $995 million, or $1.07 per diluted share from continuing operations for the same period a year ago.

The reduction in second quarter net income resulted primarily from a reduction in net home loan mortgage banking income, which declined to zero from $611 million in the second quarter of 2003 and $531 million in the first quarter of this year. The second quarter decrease reflected the large change in the hedging performance of the company’s mortgage servicing rights since the end of the first quarter.

Washington Mutual’s Board of Directors declared a cash dividend of 44 cents per share on the company’s common stock, up from 43 cents per share previously. Dividends on the common stock are payable on August 13, 2004 to shareholders of record as of July 30, 2004.

On June 28, the company provided revised guidance that earnings for the full 2004 year are estimated to range from $3.00 to $3.60 per diluted share.  The most important development that led us to change guidance was the company’s view that the increase in long term interest rates would be sustained.  The impact of rising rates on its mortgage banking unit, which is compounded by the unit’s high cost structure, will result in lower than expected gain on sale and increased overall hedging costs, especially in the second half of this year.  Also, net income for the year will be reduced by sales of investment securities in the first quarter.

Key second quarter highlights:

•Net income in the company’s Retail Banking & Financial Services segment increased by 25 percent year over year and 8 percent from last quarter;

•Total loan volume decreased to $79.52 billion compared with $121.63 billion in the second quarter of 2003 but was up from $62.17 billion in the first quarter of 2004.

•Total home equity loan and line of credit volume of $11.57 billion increased 38 percent from last quarter and was up 62 percent, or $4.42 billion, year over year;

•Loans held in portfolio grew from the prior quarter by $8.47 billion primarily due to strong growth in the company’s home equity loans and lines of credit and Option ARM portfolios;

•Depositor and other retail banking fees increased 12 percent to $507 million from the comparable period a year ago, with the addition of nearly 157,000 net new retail checking accounts in the second quarter and 792,000 accounts in the preceding 12 months. In addition nearly 34,000 net new small business checking accounts were added in the quarter;

•66 new retail banking stores were opened during the quarter, including 20 in the company’s newest market, Tampa-St. Petersburg, Florida, and 20 in Chicago;

—more—

•A HarrisInteractive poll recently named Washington Mutual one of the nation’s top 10 financial services brands.

“Most of Washington Mutual is strong and growing profitably, but this was a disappointing quarter,” said Kerry Killinger, chairman, president and chief executive officer.  “While second quarter results were affected by the volatility of our mortgage servicing rights, the root of our problem is the unacceptably high cost structure in our Mortgage Banking business.  We know what we need to do, our efforts are well underway, and we will not be satisfied until we have fixed it.”

Killinger added: “Our middle-market retail strategy is sound and remains unchanged.  We have a great franchise of talented, hard-working employees.  I’m proud of our people, but we have to improve execution in our mortgage business to deliver on the potential of this franchise.  This is my highest priority.”

SECOND QUARTER FINANCIAL SUMMARY

Net Interest Income

Net interest income was $1.79 billion compared with $1.99 billion in the second quarter of 2003 and $1.73 billion in the first quarter of 2004. The net interest margin was 2.86 percent, compared with 3.22 percent in the second quarter of 2003 and 2.89 percent in the first quarter of 2004.   Although the margin continued to be affected by the downward repricing of loans and the sale of debt securities, its performance on a linked quarter basis was enhanced by the company’s early retirement of certain high-cost Federal Home Loan Bank borrowings in the first quarter of 2004 and growth in average noninterest bearing deposits in the second quarter of 2004.

Noninterest Income

Noninterest income was $894 million compared with $1.53 billion a year ago and $1.24 billion in the first quarter of 2004. The principal reason for the change was a reduction in net home loan mortgage banking income, which declined to zero from $611 million in the second quarter of 2003 and $531 million in the first quarter of this year. The second quarter decrease reflected the large quarter to quarter change in the performance of the company’s hedging of its mortgage servicing rights.

As would be expected in a rising interest rate environment, the company’s mortgage servicing rights, excluding additions and amortization, increased in value but were more than offset by losses in corresponding hedges.  This difference in performance of the mortgage servicing rights and the associated hedges reflects both tightening basis spreads (the difference between the mortgage and interest rate swap indicies) during the quarter and higher interest rates, thus reducing Mortgage Banking income.  The company’s loan pipeline and warehouse hedging were not adversely affected by these factors.

Continued strong consumer demand for Washington Mutual’s products and personal service contributed to the 12 percent year to year growth in depositor and other retail banking fees and a 10 percent increase from the previous quarter.

Cost Leadership Initiative – Noninterest Expense Update

The company reduced noninterest expense by $32 million from the first quarter of 2004. The majority of the decrease occurred in compensation and benefits, which resulted primarily from headcount reductions in the mortgage banking business.  When adjusted for technology-related charges and restructuring costs that were incurred primarily from headcount reductions and facilities closures, noninterest expense increased by $10 million from the prior quarter, primarily due to growth in the company’s retail banking business.

The company expects to keep 2004 noninterest expense essentially flat with the 2003 level while executing its targeted growth and expansion plans this year. The company’s efficiency ratio, which was negatively impacted by the performance of the mortgage servicing rights, was 68.77 percent, as compared with 63.34 percent for the first quarter of 2004.

The company recently completed the conversion of all of its home loan servicing records onto a common platform.  This migration enables the company to fully realize its strategy to consolidate its 5 million customer records onto one servicing platform and to announce today the closure of the company’s San Antonio Service Delivery facility.

Lending

Total loan volume was $79.52 billion, compared with $121.63 billion in the second quarter of 2003 and $62.17 billion in the first quarter of 2004. Home loan volume of $63.15 billion was down $46.46 billion from the second quarter of 2003 due to the significant industry-wide reduction in mortgage originations year over year, but up $12.65 billion from the first quarter of 2004, partially due to lower interest rates near the end of the first quarter, which resulted in a strong pipeline of loans that were funded in the second quarter after the dip in interest rates.

During the second quarter of 2004, ARMs represented 55 percent of the company’s home loan origination volume, compared with 53 percent in the first quarter of 2004 and 26 percent in the second quarter of 2003.

The company’s focus on cross-selling its broad range of products and services and expanding customer relationships contributed to record home equity loans and lines of credit volume of $11.57 billion, up 62 percent from the second quarter of 2003 and up 38 percent from the first quarter of 2004.

Credit Quality

The positive credit trends of recent quarters continued in the second quarter. Nonperforming assets as a percentage of total assets were 0.60 percent, an improvement from 0.66 percent as of March 31, 2004 and 0.78 percent as of June 30, 2003. Net charge offs were $24 million versus $46 million in the first quarter of 2004 and $81 million in the second quarter of 2003. The company’s provision for loan and lease losses was $60 million, while the allowance for loan and lease losses was $1.29 billion at June 30, 2004.

Balance Sheet and Capital Management

Total assets declined $2.22 billion from the end of the first quarter to $278.54 billion, reflecting a decrease in loans held for sale and sales of investment securities. Loans held in portfolio grew to $195.93 billion, an increase of $8.47 billion from the first quarter 2004, reflecting the company’s emphasis on Option ARM loans as well as growth in its home equity loans and lines of credit and commercial business lending portfolios. Loans held for sale declined to $26.41 billion, a decrease of $6.72 billion from March 31, 2004 levels.

Total deposits increased $1.49 billion from the prior quarter to $162.47 billion at June 30, 2004.

The company’s ratio of tangible common equity to tangible assets was 5.32 percent. In addition, the capital ratios of the company’s banking subsidiaries continued to exceed the federal regulatory requirements for classification as “well-capitalized” institutions, the highest regulatory standard.

SECOND QUARTER OPERATING SEGMENT RESULTS

Retail Banking and Financial Services

The award-winning Retail Banking and Financial Services segment offers innovative retail banking and financial products and services to consumers and small businesses, including deposits, loans, securities brokerage, mutual funds and annuities, through its network of more than 1,800 internationally recognized retail banking stores. The company’s home loan and consumer loan portfolios, as well as its mutual fund management business are also part of the Retail Banking and Financial Services segment.

Retail Banking and Financial Services Second Quarter Financial Performance

Net income for the company’s Retail Banking and Financial Services business increased by 25 percent to $508 million, compared with $405 million in the second quarter of 2003. In addition to the strong growth in depositor and other retail banking fees, net interest income of the segment increased 30 percent from the second quarter of 2003, driven by growth in Option ARM loans and home equity loans and lines of credit held in portfolio.

The strong growth in net interest income and noninterest income was partially offset by an increase in noninterest expense, which reflected the continued expansion of the company’s retail banking network.

Highlights of the Retail Banking and Financial Services Business for the second quarter included:

•Total retail deposits increased $5.33 billion year over year. Retail deposits were up $1.16 billion from the prior quarter with the introduction of new deposit account products in the quarter;

•Retail banking stores that have been open since January 1, 2003 produced strong same-store sales from the second quarter of 2003, posting a 57 percent increase in consumer lending, a 10 percent increase in depositor and other banking fees and 8 percent growth in net new checking accounts;

•Average loans grew 39 percent from the second quarter of 2003 to $158.95 billion, reflecting the emphasis on originating ARM loans for the balance sheet as well as growth in its home equity loans and lines of credit, which increased 76 percent to $36.08 billion year over year;

•The company’s retail banking network grew 13 percent year over year as it opened 214 new stores over that period, including 61 new store openings during the second quarter;

•The cross-sell ratio for the average mature retail banking household increased to 5.79 products and services, up from 5.65 at the end of the first quarter of 2004;

•Over the past year, WM Group of Funds grew assets under management by $4.79 billion, or 31 percent, to $20.11 billion at June 30, 2004;

Mortgage Banking

The Mortgage Banking business is a leading national originator and servicer of home loans. Loans originated by Mortgage Banking are either sold to secondary market participants or retained by the company. Mortgage Banking also makes insurance products and services available to its customers and manages the company’s captive reinsurance activities.

Mortgage Banking Second Quarter Financial Performance

The Mortgage Banking segment experienced a net loss of $63 million, compared with net income of $489 million in the second quarter of 2003.  The principal drivers of the year to year difference were the results of the company’s mortgage servicing rights hedging program, a high cost structure in the Mortgage Banking segment and declining loan volumes.

Highlights of the Mortgage Banking Business for the second quarter included:

•Total home loan volume from the Mortgage Banking Business was $59.49 billion, compared to $106.68 billion in the second quarter of 2003 but up $11.59 billion from $47.90 billion in the first quarter of 2004;

•ARM loan volume was 54 percent of total Mortgage Banking home loan volume up from 24 percent in the second quarter of 2003. This trend reflects the company’s ability to quickly adjust the mix of fixed- and adjustable-rate products in response to interest rates, market conditions and customer preference.

•The company recently completed the conversion of the remaining 1 million of 5 million Washington Mutual home loan customer records to a single servicing platform.

•With all loans on one system, the company can now take additional steps to drive efficiency in this area.

Commercial Group

The Commercial Group is the leading national originator of multi-family loans and provides loans to developers of and investors in multi-family and other commercial real estate properties, which it retains in its portfolio or sells in the secondary market. The Commercial Group also provides financing for mortgage bankers, home builders, and mid-sized businesses, and offers deposits and cash management services to its customers. Through Long Beach Mortgage, a wholly owned subsidiary of the company, the Commercial Group originates and services home loans that are made to higher-risk borrowers and sold to secondary market participants. The discontinued operations of Washington Mutual Finance were also previously included in the segment.

Commercial Group Second Quarter Financial Performance

Net income from continuing operations for the Commercial Group increased 11 percent to $187 million, compared with $169 million on a linked quarter basis, and increased 6 percent from $176 million from second quarter of 2003.  The main drivers for the increases from the previous quarter were an 18 percent increase in noninterest income, resulting from gains from the sale of originated mortgage-backed securities and the securitization and sale of multi-family and commercial real estate loans, and a 5 percent decrease in noninterest expense related to lower compensation and benefits expense.

Highlights of the Commercial Group for the second quarter included:

•Multi-family loan volume of $2.35 billion increased 54 percent from the prior quarter’s $1.53 billion and 16 percent from the second quarter of last year’s $2.02 billion;

•The average balance for multi-family loans in the second quarter of 2004 grew 9 percent from second quarter of 2003 and contributed to the 12 percent growth in the total average loans for the Commercial Group overall;

•Average deposits of $6.90 billion increased 42 percent from second quarter of 2003 and 14 percent from the first quarter of 2004.

About Washington Mutual

With a history dating back to 1889, Washington Mutual is a retailer of financial services that provides a diversified line of products and services to consumers and commercial clients. At June 30, 2004, Washington Mutual and its subsidiaries had assets of $278.54 billion. Washington Mutual currently operates more than 2,400 retail banking, mortgage lending, commercial banking and financial services offices throughout the nation. Washington Mutual’s press releases are available at www.wamunewsroom.com.

Webcast information: A conference call to discuss the company’s financial results will be held on Thursday, July 22, 2004, at 10:30 a.m. EDT and will be hosted by Kerry Killinger, chairman, president, and chief executive officer, and Tom Casey, executive vice president and chief financial officer. The conference call is available by telephone or on the Internet. The dial-in number for the live conference call is 888-391-7808. Participants calling from outside the United States may dial 773-756-4602. The passcode “WaMu” is required to access the call. Via the internet, the conference call is available on the Investor Relations portion of the company’s web site at www.wamu.com/ir. A transcript of the prepared remarks will be on the company’s web site following the call. A recording of the conference call will be available after 1 p.m. EDT on Thursday, July 22, 2004, through 11:59 pm EDT on Friday, July 30. The recorded message will be available at 800-937-1821. Callers from outside the United States may dial 402-220-4880.

Forward Looking Statement

Our Form 10-K/A and other documents that we file with the Securities and Exchange Commission have forward-looking statements. In addition, our senior management may make forward-looking statements orally to analysts, investors, the media and others. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.” Forward-looking statements provide our expectations or predictions of future conditions, events or results. They are not guarantees of future performance. By their nature, forward-looking statements are subject to risks and uncertainties. These statements speak only as of the date they are made. We do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward looking statements were made. There are a number of factors, many of which are beyond our control that could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. Some of these factors are:

•General business and economic conditions may significantly affect our earnings;

•If we are unable to effectively manage the volatility of our mortgage banking business, our earnings could be adversely affected;

•If we are unable to fully realize the operational and systems efficiencies sought to be achieved from our business segment realignment, our earnings could be adversely affected;

•We face competition for loans and deposits from banking and nonbanking companies and national mortgage companies; and

•Changes in the regulation of financial services companies and housing government-sponsored enterprises could adversely affect our business.

###

Media Contact
Alan Gulick
Washington Mutual
206-377-3637
alan.gulick@wamu.net

Investor Relations Contact
Doug Wisdorf
Washington Mutual
206-461-3805
doug.wisdorf@wamu.net

Investor Relations Contact
Ruthanne King
Washington Mutual
206-461-6421
ruthanne.king@wamu.net

EX-99.2

Exhibit 99.2

WM - 1

Washington Mutual, Inc.

Consolidated Statements of Income

(dollars in millions, except per share data)

(unaudited)

	Quarter Ended
	June 30, 2004			Mar. 31, 2004			Dec. 31, 2003			Sept. 30, 2003		June 30, 2003
Interest Income
Loans held for sale	$	396		$	328		$	439		$	684	$	693
Loans held in portfolio	2,121			2,071			1,969			1,848		1,905
Available-for-sale securities	180			265			353			401		468
Other interest and dividend income	55			57			38			65		72
Total interest income	2,752			2,721			2,799			2,998		3,138
Interest Expense
Deposits	458			443			491			538		548
Borrowings	500			546			565			551		604
Total interest expense	958			989			1,056			1,089		1,152
Net interest income	1,794			1,732			1,743			1,909		1,986
Provision (reversal of reserve) for loan and lease losses	60			56			(202		)	76		81
Net interest income after provision (reversal of reserve) for loan and lease losses	1,734			1,676			1,945			1,833		1,905
Noninterest Income
Home loan mortgage banking income, net	–			531			592			145		611
Depositor and other retail banking fees	507			463			472			471		454
Securities fees and commissions	105			107			103			103		100
Insurance income	57			61			49			45		48
Portfolio loan related income	103			87			96			116		111
Gain (loss) from other available-for-sale securities	41			21			(13		)	557		137
Gain (loss) on extinguishment of borrowings	(1		)	(89		)	–			7		(49		)
Other income	82			56			166			120		114
Total noninterest income	894			1,237			1,465			1,564		1,526
Noninterest Expense
Compensation and benefits	849			899			877			837		843
Occupancy and equipment	393			400			569			352		371
Telecommunications and outsourced information services	123			123			125			150		140
Depositor and other retail banking losses	40			40			40			35		37
Amortization of other intangible assets	14			15			15			15		15
Advertising and promotion	84			58			88			51		80
Professional fees	32			39			78			69		66
Other expense	313			306			309			301		298
Total noninterest expense	1,848			1,880			2,101			1,810		1,850
Income from continuing operations before income taxes	780			1,033			1,309			1,587		1,581
Income taxes	291			385			488			588		586
Income from continuing operations, net of taxes	489			648			821			999		995
Discontinued Operations
Income (loss) from discontinued operations before income taxes	–			(32		)	34			38		34
Gain on disposition of discontinued operations	–			676			–			–		–
Income taxes	–			245			13			14		12
Income from discontinued operations, net of taxes	–			399			21			24		22
Net Income	$	489		$	1,047		$	842		$	1,023	$	1,017
Basic Earnings Per Common Share:
Income from continuing operations	$	0.57		$	0.75		$	0.93		$	1.11	$	1.09
Income from discontinued operations, net	–			0.46			0.02			0.03		0.03
Net income	0.57			1.21			0.95			1.14		1.12
Diluted Earnings Per Common Share:
Income from continuing operations	$	0.55		$	0.73		$	0.91		$	1.09	$	1.07
Income from discontinued operations, net	–			0.45			0.02			0.02		0.02
Net income	0.55			1.18			0.93			1.11		1.09
Dividends declared per common share	0.43			0.42			0.41			0.40		0.30
Basic weighted average number of common shares outstanding (in thousands)	860,496			863,299			883,539			899,579		910,921
Diluted weighted average number of common shares outstanding (in thousands)	883,414			886,467			904,840			918,372		929,386

WM - 2

Washington Mutual, Inc.

Consolidated Statements of Income

(dollars in millions, except per share data)

(unaudited)

	Six Months Ended
	June 30, 2004			June 30, 2003
Interest Income
Loans held for sale	$	724		$	1,361
Loans held in portfolio	4,193			3,869
Available-for-sale securities	444			984
Other interest and dividend income	112			152
Total interest income	5,473			6,366
Interest Expense
Deposits	901			1,135
Borrowings	1,046			1,253
Total interest expense	1,947			2,388
Net interest income	3,526			3,978
Provision for loan and lease losses	116			169
Net interest income after provision for loan and lease losses	3,410			3,809
Noninterest Income
Home loan mortgage banking income, net	531			1,237
Depositor and other retail banking fees	969			875
Securities fees and commissions	212			189
Insurance income	118			94
Portfolio loan related income	190			227
Gain from other available-for-sale securities	62			131
Loss on extinguishment of borrowings	(90		)	(136		)
Other income	139			204
Total noninterest income	2,131			2,821
Noninterest Expense
Compensation and benefits	1,748			1,590
Occupancy and equipment	794			672
Telecommunications and outsourced information services	246			280
Depositor and other retail banking losses	80			78
Amortization of other intangible assets	29			31
Advertising and promotion	143			139
Professional fees	71			120
Other expense	617			586
Total noninterest expense	3,728			3,496
Income from continuing operations before income taxes	1,813			3,134
Income taxes	676			1,161
Income from continuing operations, net of taxes	1,137			1,973
Discontinued Operations
Income (loss) from discontinued operations before income taxes	(32		)	65
Gain on disposition of discontinued operations	676			–
Income taxes	245			24
Income from discontinued operations, net of taxes	399			41
Net Income	$	1,536		$	2,014
Basic Earnings Per Common Share:
Income from continuing operations	$	1.32		$	2.15
Income from discontinued operations, net	0.46			0.05
Net income	1.78			2.20
Diluted Earnings Per Common Share:
Income from continuing operations	$	1.29		$	2.12
Income from discontinued operations, net	0.45			0.04
Net income	1.74			2.16
Dividends declared per common share	0.85			0.59
Basic weighted average number of common shares outstanding (in thousands)	861,898			915,974
Diluted weighted average number of common shares outstanding (in thousands)	884,940			932,109

WM - 3

Washington Mutual, Inc.

Consolidated Statements of Financial Condition

(dollars in millions, except per share data)

(unaudited)

	June 30, 2004			Mar. 31, 2004			Dec. 31, 2003			Sept. 30, 2003			June 30, 2003
Assets
Cash and cash equivalents	$	5,133		$	6,045		$	7,018		$	5,744		$	7,333
Federal funds sold and securities purchased under agreements to resell	70			1,783			19			12			2,085
Available-for-sale securities, total amortized cost of $19,392, $22,843, $36,858, $36,792 and $43,170:
Mortgage-backed securities	10,042			10,766			10,695			14,352			24,875
Investment securities	9,337			12,565			26,012			22,705			20,152
Loans held for sale	26,409			33,125			20,343			35,493			44,870
Loans held in portfolio	195,929			187,462			175,644			160,556			150,050
Allowance for loan and lease losses	(1,293		)	(1,260		)	(1,250		)	(1,549		)	(1,530		)
Total loans held in portfolio, net of allowance for loan and lease losses	194,636			186,202			174,394			159,007			148,520
Investment in Federal Home Loan Banks	3,965			3,916			3,462			3,429			3,596
Mortgage servicing rights	7,501			5,239			6,354			5,870			4,598
Goodwill	6,196			6,196			6,196			6,196			6,196
Assets of discontinued operations	–			–			4,184			4,138			4,020
Other assets	15,255			14,931			16,501			29,685			16,875
Total assets	$	278,544		$	280,768		$	275,178		$	286,631		$	283,120
Liabilities
Deposits:
Noninterest-bearing deposits	$	33,343		$	35,714		$	29,968		$	39,197		$	46,505
Interest-bearing deposits	129,123			125,267			123,213			124,944			119,952
Total deposits	162,466			160,981			153,181			164,141			166,457
Federal funds purchased and commercial paper	2,293			4,501			2,011			3,113			2,632
Securities sold under agreements to repurchase	15,764			18,306			28,333			20,468			22,964
Advances from Federal Home Loan Banks	61,379			58,494			48,330			43,743			46,127
Other borrowings	12,113			13,692			15,483			12,584			12,986
Liabilities of discontinued operations	–			–			3,578			3,554			3,448
Other liabilities	4,160			4,411			4,520			18,587			7,528
Total liabilities	258,175			260,385			255,436			266,190			262,142
Stockholders’ equity	20,369			20,383			19,742			20,441			20,978
Total liabilities and stockholders’ equity	$	278,544		$	280,768		$	275,178		$	286,631		$	283,120
Common shares outstanding at end of period (in thousands)(1)	872,246			868,953			880,986			913,854			924,238
Book value per common share(2)	$	23.51		$	23.62		$	22.56		$	22.77		$	23.13
Tangible book value per common share(2)	16.47			16.53			15.58			15.94			16.35
Employees at end of period(3)	57,274			59,173			63,720			62,901			60,166

⁽¹⁾Includes 6,000,000 shares at June 30, 2004, March 31, 2004 and December 31, 2003, 16,200,000 shares at September 30, 2003, and 17,100,000 shares at June 30, 2003, held in escrow.

⁽²⁾Excludes 6,000,000 shares at June 30, 2004, March 31, 2004 and December 31, 2003, 16,200,000 shares at September 30, 2003, and 17,100,000 shares at June 30, 2003, held in escrow.

⁽³⁾Includes 2,346, 2,352, and 2,397 employees reported as part of discontinued operations at December 31, 2003, September 30, 2003, and June 30, 2003.

WM - 4

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Quarter Ended
	June 30, 2004			Mar. 31, 2004			Dec. 31, 2003			Sept. 30, 2003			June 30, 2003
Stockholders’ Equity Rollforward
Balance, beginning of period	$	20,383		$	19,742		$	20,441		$	20,978		$	20,608
Net income	489			1,047			842			1,023			1,017
Other comprehensive income (loss), net of tax	(210		)	512			(105		)	(805		)	91
Cash dividends declared on common stock	(372		)	(367		)	(368		)	(362		)	(275		)
Cash dividends returned(1)	–			–			45			4			2
Common stock repurchased and retired	–			(712		)	(1,269		)	(457		)	(621		)
Common stock issued	79			161			156			60			156
Balance, end of period	$	20,369		$	20,383		$	19,742		$	20,441		$	20,978

⁽¹⁾Represents accumulated dividends on shares returned from escrow.

WM - 5

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Quarter Ended
	June 30, 2004			Mar. 31, 2004		Dec. 31, 2003		Sept. 30, 2003		June 30, 2003
CONSUMER GROUP
RETAIL BANKING AND FINANCIAL SERVICES
Condensed income statement:
Net interest income	$	1,271		$	1,236	$	1,116	$	994	$	975
Provision for loan and lease losses	42			38		35		40		37
Noninterest income	702			622		646		653		625
Inter-segment revenue	7			6		20		63		45
Noninterest expense	1,120			1,071		1,075		982		958
Income before income taxes	818			755		672		688		650
Income taxes	310			286		257		273		245
Net income	$	508		$	469	$	415	$	415	$	405
Performance and other data:
Efficiency ratio(1)	50.07%			50.58%		53.01%		49.80%		50.40%
Average loans	$	158,945		$	149,356	$	135,323	$	118,295	$	114,390
Average assets	171,306			161,298		147,203		130,048		125,666
Average deposits	128,680			128,000		128,651		126,040		123,767
MORTGAGE BANKING
Condensed income statement:
Net interest income	$	358		$	277	$	401	$	683	$	668
Provision for loan and lease losses	3			2		–		1		1
Noninterest income	199			760		870		288		953
Inter-segment expense	7			6		20		63		45
Noninterest expense	649			671		867		729		786
Income (expense) before income taxes	(102		)	358		384		178		789
Income taxes (benefit)	(39		)	135		163		61		300
Net income (loss)	$	(63	)	$	223	$	221	$	117	$	489
Performance and other data:
Efficiency ratio(1)	108.71%			59.97%		65.16%		74.58%		46.58%
Average loans	$	26,999		$	19,871	$	24,677	$	51,648	$	51,558
Average assets	39,936			35,478		44,279		78,809		73,411
Average deposits	19,837			14,877		18,347		35,120		30,039
COMMERCIAL GROUP
Condensed income statement:
Net interest income	$	340		$	340	$	364	$	324	$	316
Provision for loan and lease losses	10			15		22		24		26
Noninterest income	103			87		54		204		122
Noninterest expense	145			152		154		142		139
Income from continuing operations before income taxes	288			260		242		362		273
Income taxes	101			91		90		130		97
Income from continuing operations	187			169		152		232		176
Income from discontinued operations, net of taxes	–			–		21		24		22
Net income	$	187		$	169	$	173	$	256	$	198
Performance and other data:
Efficiency ratio(1)	26.10%			28.73%		29.77%		21.42%		24.95%
Average loans	$	38,517		$	37,005	$	37,816	$	35,318	$	34,480
Average assets	43,761			42,871		46,368		44,017		43,133
Average deposits	6,898			6,049		6,130		6,131		4,868

__________________________

⁽¹⁾The efficiency ratio is defined as noninterest expense, excluding a cost of capital charge on goodwill, divided by total revenue (net interest income and noninterest income).

WM - 6

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Quarter Ended
	June 30, 2004			Mar. 31, 2004			Dec. 31, 2003			Sept. 30, 2003			June 30, 2003
CORPORATE SUPPORT/TREASURY AND OTHER
Condensed income statement:
Net interest expense	$	(281	)	$	(224	)	$	(235	)	$	(183	)	$	(59	)
Noninterest income (expense)	33			(68		)	135			611			–
Noninterest expense	144			196			217			169			177
Income (expense) from continuing operations	(392		)	(488		)	(317		)	259			(236		)
Income taxes (benefit)	(146		)	(182		)	(118		)	96			(87		)
Income (expense) from continuing operations	(246		)	(306		)	(199		)	163			(149		)
Income from discontinued operations, net of taxes	–			399			–			–			–
Net income (loss)	$	(246	)	$	93		$	(199	)	$	163		$	(149	)
Performance and other data:
Average assets	$	30,687		$	33,416		$	41,472		$	39,103		$	43,492
Average deposits	9,391			5,028			5,558			6,654			5,006
RECONCILING ADJUSTMENTS
Condensed income statement:
Net interest income(2)	$	106		$	103		$	97		$	91		$	86
Provision (reversal of reserve) for loan and lease losses(3)	5			1			(259		)	11			17
Noninterest income (expense)(4)	(143		)	(164		)	(240		)	(192		)	(174		)
Noninterest (income) expense(5)	(210		)	(210		)	(212		)	(212		)	(210		)
Income before income taxes	168			148			328			100			105
Income taxes(6)	65			55			96			28			31
Net income	$	103		$	93		$	232		$	72		$	74
Performance and other data:
Average loans(7)	$	(1,553	)	$	(1,505	)	$	(1,421	)	$	(1,293	)	$	(1,201	)
Average assets(7)(8)	(1,750		)	(1,657		)	(1,882		)	(1,762		)	(1,665		)
TOTAL CONSOLIDATED
Condensed income statement:
Net interest income	$	1,794		$	1,732		$	1,743		$	1,909		$	1,986
Provision (reversal of reserve) for loan and lease losses	60			56			(202		)	76			81
Noninterest income	894			1,237			1,465			1,564			1,526
Noninterest expense	1,848			1,880			2,101			1,810			1,850
Income from continuing operations before income taxes	780			1,033			1,309			1,587			1,581
Income taxes	291			385			488			588			586
Income from continuing operations	489			648			821			999			995
Income from discontinued operations, net of taxes	–			399			21			24			22
Net income	$	489		$	1,047		$	842		$	1,023		$	1,017
Performance and other data:
Efficiency ratio(9)	68.77%			63.34%			65.51%			52.13%			52.66%
Average loans	$	222,908		$	204,727		$	196,395		$	203,968		$	199,227
Average assets	283,940			271,406			277,440			290,215			284,037
Average deposits	164,806			153,954			158,686			173,945			163,680

⁽²⁾Represents the difference between home loan premium amortization recorded by the Retail Banking and Financial Services segment and the amount recognized in the Company’s Consolidated Statements of Income.  For management reporting purposes, loans that are held in portfolio by the Retail Banking and Financial Services segment are treated as if they are purchased from the Mortgage Banking segment.  Since the cost basis of these loans includes an assumed profit factor paid to the Mortgage Banking segment, the amortization of loan premiums recorded by the Retail Banking and Financial Services segment includes this assumed profit factor and must therefore be eliminated as a reconciling adjustment.

⁽³⁾Represents the difference between the long-term, normalized net charge-off ratio used to assess expected loan and lease losses for the operating segments and the “losses inherent in the loan portfolio” methodology used by the Company.

⁽⁴⁾Represents the difference between gain from mortgage loans recorded by the Mortgage Banking segment and the gain from mortgage loans recognized in the Company’s Consolidated Statements of Income.  As the Mortgage Banking segment holds no loans in portfolio, all loans originated or purchased by this segment are considered to be salable for management reporting purposes.

⁽⁵⁾Represents the corporate offset for the cost of capital related to goodwill that has been allocated to the segments.

⁽⁶⁾Represents the tax effect of reconciling adjustments.

⁽⁷⁾Includes the inter-segment offset for inter-segment loan premiums that the Retail Banking and Financial Services segment recognized from the transfer of portfolio loans from the Mortgage Banking segment.

⁽⁸⁾Includes the impact to the allowance for loan and lease losses per the following table that results from the difference between the long-term, normalized net charge-off ratio used to assess expected loan and lease losses for the operating segments and the “losses inherent in the loan portfolio” methodology used by the Company.

Quarter Ended
June 30, 2004	Mar. 31, 2004	Dec. 31, 2003	Sept. 30, 2003	June 30, 2003
$(197)	$(152)	$(461)	$(469)	$(464)

⁽⁹⁾The efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income).

WM - 7

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions, except per share data)

(unaudited)

	Quarter Ended
	June 30, 2004					Mar. 31, 2004				Dec. 31, 2003				Sept. 30, 2003				June 30, 2003
PROFITABILITY
Net interest income	$		1,794			$		1,732		$		1,743		$		1,909		$		1,986
Net interest margin	2.86				%	2.89			%	2.90			%	3.07			%	3.22			%
Noninterest income	$		894			$		1,237		$		1,465		$		1,564		$		1,526
Noninterest expense	1,848					1,880				2,101				1,810				1,850
Basic earnings per common share:
Income from continuing operations	$			0.57		$		0.75		$		0.93		$		1.11		$		1.09
Income from discontinued operations, net	–					0.46				0.02				0.03				0.03
Net income	0.57					1.21				0.95				1.14				1.12
Diluted earnings per common share:
Income from continuing operations	$			0.55		$		0.73		$		0.91		$		1.09		$		1.07
Income from discontinued operations, net	–					0.45				0.02				0.02				0.02
Net income	0.55					1.18				0.93				1.11				1.09
Dividends declared per common share	$			0.43		$		0.42		$		0.41		$		0.40		$		0.30
Return on average assets(1)	0.69				%	1.54			%	1.21			%	1.41			%	1.43			%
Return on average common equity(1)	9.63					20.85				16.83				19.82				19.26
Efficiency ratio(2)(3)	68.77					63.34				65.51				52.13				52.66
ASSET QUALITY
Nonaccrual loans(4)(5)	$			1,396		$		1,542		$		1,626		$		1,813		$		1,893
Foreclosed assets(5)	286					307				311				293				307
Total nonperforming assets(5)	1,682					1,849				1,937				2,106				2,200
Nonperforming assets/total assets(5)	0.60				%	0.66			%	0.70			%	0.73			%	0.78			%
Restructured loans(5)	$			79		$		107		$		111		$		118		$		89
Total nonperforming assets and restructured loans(5)	1,761					1,956				2,048				2,224				2,289
Allowance for loan and lease losses(5)	1,293					1,260				1,250				1,549				1,530
Allowance as a percentage of total loans held in portfolio(5)	0.66				%	0.67			%	0.71			%	0.96			%	1.02			%
Provision (reversal of reserve) for loan and lease losses	$			60		$		56		$		(202	)	$		76		$		81
Net charge-offs(5)	24					46				97				74				81
CAPITAL ADEQUACY(5)
Stockholders’ equity/total assets	7.31				%	7.26			%	7.17			%	7.13			%	7.41			%
Tangible common equity(6)/total tangible assets(6)	5.32					5.21				5.26				5.26				5.26
Estimated total risk-based capital/risk-weighted assets(7)	10.34					10.53				10.94				11.54				11.68
SUPPLEMENTAL DATA
Average balance sheet:
Total loans held for sale	$	31,694				$	23,859			$	29,362			$	51,272			$	51,519
Total loans held in portfolio	191,214					180,868				167,033				152,696				147,708
Total interest-earning assets	251,264					239,979				241,718				249,892				246,851
Total assets	283,940					271,406				277,440				290,215				284,037
Total interest-bearing deposits	127,670					123,336				125,318				124,488				120,144
Total noninterest-bearing deposits	37,136					30,618				33,368				49,457				43,536
Total stockholders’ equity	20,288					20,088				20,027				20,657				21,112
Period-end balance sheet:
Loans held for sale	26,409					33,125				20,343				35,493				44,870
Loans held in portfolio, net of allowance for loan and lease losses	194,636					186,202				174,394				159,007				148,520
Interest-earning assets(2)	245,752					249,617				236,175				236,547				245,628
Total assets	278,544					280,768				275,178				286,631				283,120
Interest-bearing deposits	129,123					125,267				123,213				124,944				119,952
Noninterest-bearing deposits	33,343					35,714				29,968				39,197				46,505
Total stockholders’ equity	20,369					20,383				19,742				20,441				20,978

⁽¹⁾Includes income from continuing and discontinued operations through the period ending March 31, 2004.

⁽²⁾Based on continuing operations.

⁽³⁾The efficiency ratio is defined as noninterest expense, divided by total revenue (net interest income and noninterest income).

⁽⁴⁾Excludes nonaccrual loans held for sale.

⁽⁵⁾As of quarter end.

⁽⁶⁾Excludes unrealized net gain/loss on available-for-sale securities and derivatives, goodwill and intangible assets, but includes MSR.

⁽⁷⁾Estimate of what the total risk-based capital ratio would be if Washington Mutual, Inc. were a bank holding company that is subject to Federal Reserve Board capital requirements.

WM - 8

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Quarter Ended
	June 30, 2004						Mar. 31, 2004						June 30, 2003
	Balance		Rate		Interest Income/ Expense		Balance		Rate		Interest Income/ Expense		Balance		Rate		Interest Income/ Expense
Average Balances and Weighted Average Interest Rates
Assets
Interest-earning assets:
Federal funds sold and securities purchased under agreements to resell	$	1,030	1.14	%	$	3	$	1,026	1.34	%	$	3	$	3,448	1.29	%	$	11
Available-for-sale securities(1):
Mortgage-backed securities	9,887		3.92		97		9,999		4.35		109		24,087		5.22		314
Investment securities	11,975		2.76		83		19,073		3.29		156		14,880		4.14		154
Loans held for sale(2)	31,694		5.00		396		23,859		5.50		328		51,519		5.38		693
Loans held in portfolio(2):
Loans secured by real estate:
Home	105,360		4.12		1,086		102,691		4.24		1,089		83,426		4.95		1,033
Purchased specialty mortgage finance	15,361		4.77		183		14,016		5.21		182		10,475		5.50		144
Total home loans	120,721		4.20		1,269		116,707		4.36		1,271		93,901		5.01		1,177
Home equity loans and lines of credit	33,716		4.53		381		29,262		4.72		344		19,238		5.13		246
Home construction:
Builder(3)	1,211		4.35		13		1,117		4.42		12		1,103		4.77		13
Custom(4)	1,299		6.16		20		1,200		6.17		19		927		7.48		17
Multi-family	20,809		4.97		259		20,376		5.06		258		19,036		5.34		255
Other real estate	6,502		6.05		98		6,589		5.77		95		7,306		6.25		114
Total loans secured by real estate	184,258		4.43		2,040		175,251		4.57		1,999		141,511		5.15		1,822
Consumer	927		9.92		23		997		10.15		25		1,253		8.93		28
Commercial business	6,029		3.83		58		4,620		4.01		47		4,944		4.38		55
Total loans held in portfolio	191,214		4.44		2,121		180,868		4.58		2,071		147,708		5.16		1,905
Other	5,464		3.84		52		5,154		4.17		54		5,209		4.69		61
Total interest-earning assets	251,264		4.38		2,752		239,979		4.54		2,721		246,851		5.08		3,138
Noninterest-earning assets:
Mortgage servicing rights	7,128						5,872						4,754
Goodwill	6,196						6,196						6,196
Other(5)	19,352						19,359						26,236
Total assets	$	283,940					$	271,406					$	284,037
Liabilities
Interest-bearing liabilities:
Deposits:
Interest-bearing checking deposits	$	65,468	1.28		208		$	67,431	1.28		214		$	60,597	1.74		262
Savings and money market deposits	29,328		0.82		60		26,915		0.75		50		28,229		0.98		69
Time deposits	32,874		2.31		190		28,990		2.48		179		31,318		2.77		217
Total interest-bearing deposits	127,670		1.44		458		123,336		1.45		443		120,144		1.83		548
Federal funds purchased and commercial paper	3,029		1.07		8		3,493		1.08		10		2,972		1.27		10
Securities sold under agreements to repurchase	17,004		2.28		98		21,954		1.93		107		20,040		2.66		134
Advances from Federal Home Loan Banks	59,233		1.88		281		52,921		2.28		305		51,916		2.56		334
Other	12,774		3.56		113		14,032		3.56		124		13,297		3.80		126
Total interest-bearing liabilities	219,710		1.74		958		215,736		1.83		989		208,369		2.21		1,152
Noninterest-bearing sources:
Noninterest-bearing deposits	37,136						30,618						43,536
Other liabilities(6)	6,806						4,964						11,020
Stockholders’ equity	20,288						20,088						21,112
Total liabilities and stockholders’ equity	$	283,940					$	271,406					$	284,037
Net interest spread and net interest income			2.64		$	1,794			2.71		$	1,732			2.87		$	1,986
Impact of noninterest-bearing sources			0.22						0.18						0.35
Net interest margin			2.86						2.89						3.22

⁽¹⁾The average balance and yield are based on average amortized cost balances.

⁽²⁾Nonaccrual loans were included in the average loan amounts outstanding.

⁽³⁾Represents loans to builders for the purpose of financing the acquisition, development and construction of single-family residences for sale.

⁽⁴⁾Represents construction loans made directly to the intended occupant of a single-family residence.

⁽⁵⁾Includes assets of continuing and discontinued operations for the quarter ended June 30, 2003.

⁽⁶⁾Includes liabilities of continuing and discontinued operations for the quarter ended June 30, 2003.

WM - 9

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Six Months Ended
	June 30, 2004						June 30, 2003
	Balance		Rate		Interest Income/ Expense		Balance		Rate		Interest Income/ Expense
Average Balances and Weighted Average Interest Rates
Assets
Interest-earning assets:
Federal funds sold and securities purchased under agreements to resell	$	1,028	1.24	%	$	6	$	4,286	1.27	%	$	27
Available-for-sale securities(1):
Mortgage-backed securities	9,943		4.14		205		25,142		5.26		661
Investment securities	15,524		3.08		239		14,903		4.34		323
Loans held for sale(2)	27,776		5.21		724		49,422		5.51		1,361
Loans held in portfolio(2):
Loans secured by real estate:
Home	104,025		4.18		2,174		83,255		5.08		2,116
Purchased specialty mortgage finance	14,689		4.98		366		10,286		5.72		294
Total home loans	118,714		4.28		2,540		93,541		5.15		2,410
Home equity loans and lines of credit	31,489		4.62		725		18,248		5.28		480
Home construction:
Builder(3)	1,164		4.38		26		1,080		4.90		27
Custom(4)	1,249		6.16		38		923		7.61		35
Multi-family	20,592		5.02		517		18,758		5.50		516
Other real estate	6,546		5.91		194		7,525		6.30		237
Total loans secured by real estate	179,754		4.50		4,040		140,075		5.29		3,705
Consumer	962		10.04		48		1,293		8.94		57
Commercial business	5,325		3.91		105		4,837		4.42		107
Total loans held in portfolio	186,041		4.51		4,193		146,205		5.30		3,869
Other	5,309		4.00		106		4,873		5.16		125
Total interest-earning assets	245,621		4.46		5,473		244,831		5.20		6,366
Noninterest-earning assets:
Mortgage servicing rights	6,500						5,103
Goodwill	6,196						6,202
Other(5)	19,356						26,262
Total assets	$	277,673					$	282,398
Liabilities
Interest-bearing liabilities:
Deposits:
Interest-bearing checking deposits	$	66,449	1.28		422		$	59,416	1.83		538
Savings and money market deposits	28,122		0.79		110		28,056		1.03		143
Time deposits	30,932		2.39		369		32,088		2.85		454
Total interest-bearing deposits	125,503		1.44		901		119,560		1.91		1,135
Federal funds purchased and commercial paper	3,261		1.07		18		2,339		1.29		15
Securities sold under agreements to repurchase	19,479		2.08		205		20,205		2.71		274
Advances from Federal Home Loan Banks	56,077		2.07		586		53,869		2.64		712
Other	13,403		3.56		237		13,694		3.66		252
Total interest-bearing liabilities	217,723		1.79		1,947		209,667		2.29		2,388
Noninterest-bearing sources:
Noninterest-bearing deposits	33,877						41,249
Other liabilities(6)	5,885						10,663
Stockholders’ equity	20,188						20,819
Total liabilities and stockholders’ equity	$	277,673					$	282,398
Net interest spread and net interest income			2.67		$	3,526			2.91		$	3,978
Impact of noninterest-bearing sources			0.21						0.34
Net interest margin			2.88						3.25

⁽¹⁾The average balance and yield are based on average amortized cost balances.

⁽²⁾Nonaccrual loans were included in the average loan amounts outstanding.

⁽³⁾Represents loans to builders for the purpose of financing the acquisition, development and construction of single-family residences for sale.

⁽⁴⁾Represents construction loans made directly to the intended occupant of a single-family residence.

⁽⁵⁾Includes assets of continuing and discontinued operations for the six months ended June 30, 2003.

⁽⁶⁾Includes liabilities of continuing and discontinued operations for the six months ended June 30, 2003.

WM - 10

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	June 30, 2004		Mar. 31, 2004		Dec. 31, 2003		Sept. 30, 2003		June 30, 2003
Deposits
Retail Deposits:
Checking:
Noninterest bearing	$	15,666	$	15,107	$	13,724	$	14,033	$	13,244
Interest bearing	59,395		66,618		67,990		66,009		61,131
Total checking	75,061		81,725		81,714		80,042		74,375
Savings and money market deposits	30,413		22,452		22,131		22,657		23,171
Time deposits(1)	23,990		24,128		24,605		25,356		26,591
Total retail deposits	129,464		128,305		128,450		128,055		124,137
Commercial business	7,925		7,038		7,159		6,451		6,083
Wholesale	8,874		6,219		2,579		4,711		3,287
Custodial and escrow(2)	16,203		19,419		14,993		24,924		32,950
Total deposits	$	162,466	$	160,981	$	153,181	$	164,141	$	166,457

⁽¹⁾Weighted average remaining maturity of time deposits was 16 months at June 30, 2004, 16 months at March 31, 2004, 14 months at December 31, 2003, 15 months at September 30, 2003 and 16 months at June 30, 2003.

⁽²⁾Substantially all custodial and escrow deposits reside in noninterest-bearing checking accounts.

	June 30, 2004	Mar. 31, 2004	Dec. 31, 2003	Sept. 30, 2003	June 30, 2003
Retail Checking Accounts(1)
Accounts, beginning of period	8,273,235	8,066,332	7,882,946	7,637,914	7,461,320
Net accounts opened during the quarter	156,687	206,903	183,386	245,032	176,594
Accounts, end of period	8,429,922	8,273,235	8,066,332	7,882,946	7,637,914

⁽¹⁾Retail checking accounts exclude commercial business accounts.  The information provided refers to the number of accounts, not dollar amounts.

	June 30, 2004	Mar. 31, 2004		Dec. 31, 2003	Sept. 30, 2003	June 30, 2003
Retail Banking Stores
Stores, beginning of period	1,755	1,776		1,677	1,602	1,556
Net stores opened during the quarter	61	(21	)(1)	99	75	46
Stores, end of period	1,816	1,755		1,776	1,677	1,602

⁽¹⁾The Company consolidated 79 grocery store locations into larger, existing, retail banking stores.

	June 30, 2004		Mar. 31, 2004		Dec. 31, 2003		Sept. 30, 2003		June 30, 2003
Assets Under Management	$	20,106	$	19,438	$	17,868	$	16,017	$	15,315

WM - 11

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Quarter Ended
	June 30, 2004		Mar. 31, 2004		Dec. 31, 2003		Sept. 30, 2003		June 30, 2003
Loan Volume
Home loans:
Adjustable rate	$	29,753	$	21,822	$	23,397	$	28,225	$	24,847
Fixed rate	26,076		21,564		28,105		83,360		80,107
Specialty mortgage finance(1)	7,323		7,113		6,031		5,460		4,658
Total home loan volume	63,152		50,499		57,533		117,045		109,612
Home equity loans and lines of credit	11,572		8,416		7,922		9,369		7,152
Home construction loans:
Builder(2)	447		273		636		787		606
Custom(3)	392		336		377		363		273
Multi-family	2,346		1,525		1,647		2,598		2,022
Other real estate	760		370		655		439		595
Total loans secured by real estate	78,669		61,419		68,770		130,601		120,260
Consumer	63		58		72		146		61
Commercial business	789		688		1,061		1,191		1,304
Total loan volume	$	79,521	$	62,165	$	69,903	$	131,938	$	121,625
Loan Volume by Channel
Retail	$	37,720	$	28,126	$	31,630	$	55,104	$	46,620
Wholesale	19,534		15,419		16,334		27,410		27,067
Purchased/correspondent	22,267		18,620		21,939		49,424		47,938
Total loan volume by channel	$	79,521	$	62,165	$	69,903	$	131,938	$	121,625
Refinancing Activity(4)
Home loan refinancing	$	40,201	$	33,233	$	36,817	$	90,762	$	87,772
Home equity loans and lines of credit and consumer	1,147		1,107		848		2,030		1,203
Home construction loans	13		12		6		16		13
Multi-family and other real estate	883		575		690		1,164		893
Total refinancing	$	42,244	$	34,927	$	38,361	$	93,972	$	89,881
Home Loan Volume by Index
Short-term adjustable-rate loans(5):
Treasury indices	$	16,467	$	13,440	$	13,021	$	7,076	$	5,510
COFI	167		110		151		124		198
Other	812		218		628		336		223
Total short-term adjustable-rate loans	17,446		13,768		13,800		7,536		5,931
Medium-term adjustable-rate loans(6)	17,536		12,814		13,667		24,138		22,070
Fixed-rate loans	28,170		23,917		30,066		85,371		81,611
Total home loan volume	$	63,152	$	50,499	$	57,533	$	117,045	$	109,612

Note:  Pursuant to regulatory guidance issued in December 2003,  buyouts of delinquent mortgages contained within Government National Mortgage Association  (GNMA)  loan servicing pools must be classified as loans on the balance sheet.  Accordingly, total home loan volume includes GNMA pool buy-out volume of $689 million, $1.05 billion, $1.30 billion, $1.67 billion and $1.46 billion for the quarters ended June 30, 2004, March 31, 2004, December 31, 2003, September 30, 2003 and June 30, 2003.

⁽¹⁾Represents purchased Specialty Mortgage Finance loan portfolios and mortgages originated by Long Beach Mortgage.

⁽²⁾Represents loans to builders for the purpose of financing the acquisition, development and construction of single-family residences for sale.

⁽³⁾Represents construction loans made directly to the intended occupant of a single-family residence.

⁽⁴⁾Includes loan refinancing entered into by both new and pre-existing loan customers.

⁽⁵⁾Short term is defined as adjustable-rate loans that reprice within one year or less.

⁽⁶⁾Medium term is defined as adjustable-rate loans that reprice after one year.

WM - 12

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Six Months Ended
	June 30, 2004		June 30, 2003
Loan Volume
Home loans:
Adjustable rate	$	51,575	$	48,278
Fixed rate	47,640		152,139
Specialty mortgage finance(1)	14,436		9,187
Total home loan volume	113,651		209,604
Home equity loans and lines of credit	19,988		12,348
Home construction loans:
Builder(2)	720		1,083
Custom(3)	728		436
Multi-family	3,871		3,819
Other real estate	1,130		876
Total loans secured by real estate	140,088		228,166
Consumer	121		120
Commercial business	1,477		2,118
Total loan volume	$	141,686	$	230,404
Loan Volume by Channel
Retail	$	65,846	$	82,813
Wholesale	34,953		51,927
Purchased/correspondent	40,887		95,664
Total loan volume by channel	$	141,686	$	230,404
Refinancing Activity(4)
Home loan refinancing	$	73,434	$	170,404
Home equity loans and lines of credit and consumer	2,254		1,896
Home construction loans	25		25
Multi-family and other real estate	1,458		1,600
Total refinancing	$	77,171	$	173,925
Home Loan Volume by Index
Short-term adjustable-rate loans(5):
Treasury indices	$	29,907	$	10,049
COFI	277		447
Other	1,030		441
Total short-term adjustable-rate loans	31,214		10,937
Medium-term adjustable-rate loans(6)	30,350		43,600
Fixed-rate loans	52,087		155,067
Total home loan volume	$	113,651	$	209,604

Note:  Pursuant to regulatory guidance issued in December 2003,  buyouts of delinquent mortgages contained within Government National Mortgage Association (GNMA) loan servicing pools must be classified as loans on the balance sheet.  Accordingly, total home loan volume includes GNMA pool buy-out volume of $1.74 billion and $3.98 billion for the six months ended June 30, 2004 and June 30, 2003.

⁽¹⁾Represents purchased Specialty Mortgage Finance loan portfolios and mortgages originated by Long Beach Mortgage.

⁽²⁾Represents loans to builders for the purpose of financing the acquisition, development and construction of single-family residences for sale.

⁽³⁾Represents construction loans made directly to the intended occupant of a single-family residence.

⁽⁴⁾Includes loan refinancing entered into by both new and pre-existing loan customers.

⁽⁵⁾Short term is defined as adjustable-rate loans that reprice within one year or less.

⁽⁶⁾Medium term is defined as adjustable-rate loans that reprice after one year.

WM - 13

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Change from Mar. 31, 2004 to June 30, 2004			June 30, 2004			Mar. 31, 2004			Dec. 31, 2003			Sept. 30, 2003			June 30, 2003
Loans by Property Type
Loans held in portfolio:
Loans secured by real estate:
Home	$	1,366		$	106,312		$	104,946		$	100,043		$	90,243		$	83,839
Purchased specialty mortgage finance	780			16,217			15,437			12,973			11,366			10,836
Total home loans	2,146			122,529			120,383			113,016			101,609			94,675
Home equity loans and lines of credit	4,813			36,077			31,264			27,647			24,060			20,505
Home construction:
Builder(1)	136			1,241			1,105			1,052			1,061			1,121
Custom(2)	99			1,364			1,265			1,168			1,032			963
Multi-family	577			21,156			20,579			20,324			20,191			19,482
Other real estate	5			6,513			6,508			6,649			6,932			7,122
Total loans secured by real estate	7,776			188,880			181,104			169,856			154,885			143,868
Consumer	(62		)	892			954			1,028			1,121			1,207
Commercial business	753			6,157			5,404			4,760			4,550			4,975
Total loans held in portfolio	8,467			195,929			187,462			175,644			160,556			150,050
Less: allowance for loan and lease losses	(33		)	(1,293		)	(1,260		)	(1,250		)	(1,549		)	(1,530		)
Total net loans held in portfolio	8,434			194,636			186,202			174,394			159,007			148,520
Loans held for sale(3)	(6,716		)	26,409			33,125			20,343			35,493			44,870
Total net loans	$	1,718		$	221,045		$	219,327		$	194,737		$	194,500		$	193,390

⁽¹⁾Represents loans to builders for the purpose of financing the acquisition, development and construction of single-family residences for sale.

⁽²⁾Represents construction loans made directly to the intended occupant of a single-family residence.

⁽³⁾Fair value of loans held for sale was $26.53 billion, $33.28 billion, $20.34 billion, $35.53 billion and $44.87 billion as of June 30, 2004, March 31, 2004, December 31, 2003, September 30, 2003 and June 30, 2003.

WM - 14

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Change from Mar. 31, 2004 to June 30, 2004			June 30, 2004		Weighted Average Coupon Rate		Mar. 31, 2004		Weighted Average Coupon Rate		June 30, 2003		Weighted Average Coupon Rate
Loans Secured by Real Estate and MBS
Selected loans held in portfolio secured by real estate(1):
Short-term adjustable-rate loans(2):
COFI	$	(840	)	$	9,038	4.83	%	$	9,878	4.86	%	$	13,210	5.20	%
Treasury indices	5,711			64,692		3.77		58,981		3.76		36,410		4.26
Other	3,831			34,590		4.70		30,759		4.78		22,244		5.31
Total short-term adjustable-rate loans	8,702			108,320		4.15		99,618		4.19		71,864		4.76
Medium-term adjustable-rate loans(3)	(1,518		)	51,691		5.41		53,209		5.51		44,427		6.01
Fixed-rate loans	352			19,751		6.65		19,399		6.80		18,371		7.55
Total loans held in portfolio secured by real estate(4)	7,536			179,762		4.79		172,226		4.89		134,662		5.55
Loans held for sale(5)	(6,667		)	26,274		5.26		32,941		5.51		44,765		5.74
Total loans secured by real estate	869			206,036		4.85		205,167		4.99		179,427		5.60
MBS(6):
Short-term adjustable-rate MBS(2):
COFI	(431		)	4,533		3.78		4,964		3.82		9,555		4.09
Treasury indices	356			4,581		2.68		4,225		2.50		7,790		3.34
Other	–			9		3.09		9		3.08		3,300		5.31
Total short-term adjustable-rate MBS	(75		)	9,123		3.23		9,198		3.21		20,645		4.00
Fixed-rate MBS	(604		)	668		6.99		1,272		6.38		3,938		6.04
Total MBS(7)	(679		)	9,791		3.49		10,470		3.60		24,583		4.33
Total loans secured by real estate and MBS	$	190		$	215,827	4.79		$	215,637	4.92		$	204,010	5.45

⁽¹⁾Includes total home loans, home equity loans and lines of credit and multi-family loans.

⁽²⁾Short term is defined as adjustable-rate loans and MBS that reprice within one year or less.

⁽³⁾Medium term is defined as adjustable-rate loans that reprice after one year.

⁽⁴⁾At June 30, 2004, March 31, 2004 and June 30, 2003, the adjustable-rate loans with lifetime caps were $156.12 billion, $149.33 billion and $113.01 billion with a lifetime weighted average cap rate of 12.24%, 12.20% and 12.54%.

⁽⁵⁾Excludes student loans.

⁽⁶⁾Excludes principal-only strips and interest-only strips.

⁽⁷⁾At June 30, 2004, March 31, 2004 and June 30, 2003, the adjustable-rate MBS with lifetime caps were $6.60 billion, $7.48 billion and $20.57 billion with a lifetime weighted average cap rate of 11.33%, 11.33% and 11.35%.

	Mar. 31, 2004 to June 30, 2004			Dec. 31, 2003 to June 30, 2004
Rollforward of Loans Held for Sale
Balance, beginning of period	$	33,125		$	20,343
Loans originated and purchased	47,285			80,603
Loans sold and other	(54,001		)	(74,537		)
Balance, end of period	$	26,409		$	26,409
Rollforward of Loans Held in Portfolio
Balance, beginning of period	$	187,462		$	175,644
Loans originated and purchased	32,236			61,083
Loan payments and other	(23,769		)	(40,798		)
Balance, end of period	$	195,929		$	195,929

WM - 15

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Quarter Ended
	June 30, 2004			Mar. 31, 2004			Dec. 31, 2003			Sept. 30, 2003			June 30, 2003
Home Loan Mortgage Banking Income (Expense)
Loan servicing fees	$	485		$	502		$	524		$	542		$	593
Amortization of mortgage servicing rights	(546		)	(750		)	(604		)	(665		)	(1,032		)
Mortgage servicing rights valuation adjustments(1)	(51		)	(606		)	615			368			(309		)
Other, net	(89		)	(66		)	(75		)	(220		)	(161		)
Net home loan servicing income (expense)	(201		)	(920		)	460			25			(909		)
Revaluation gain (loss) from derivatives:
Mortgage servicing rights risk management(2)	(322		)	1,108			(314		)	(317		)	745
Loans held for sale risk management(3)	142			(66		)	8			145			(147		)
Total revaluation gain (loss) from derivatives	(180		)	1,042			(306		)	(172		)	598
Net settlement income from certain interest-rate swaps	192			167			190			130			84
Gain (loss) from mortgage loans(3)	113			171			63			(204		)	747
Loan related income	76			71			124			108			91
Gain from sale of originated mortgage-backed securities	–			–			61			258			–
Total home loan mortgage banking income	–			531			592			145			611
Impact of other mortgage servicing rights risk management instruments(4):
Gain (loss) from certain available-for-sale securities	–			5			(11		)	176			140
Total home loan mortgage banking income, net of other mortgage servicing rights risk management instruments	$	–		$	536		$	581		$	321		$	751

	Six Months Ended
	June 30, 2004			June 30, 2003
Home Loan Mortgage Banking Income (Expense)
Loan servicing fees	$	987		$	1,206
Amortization of mortgage servicing rights	(1,296		)	(2,000		)
Mortgage servicing rights valuation adjustments(1)	(657		)	(272		)
Other, net	(155		)	(294		)
Net home loan servicing expense	(1,121		)	(1,360		)
Revaluation gain (loss) from derivatives:
Mortgage servicing rights risk management(2)	786			1,157
Loans held for sale risk management(3)	76			(342		)
Total revaluation gain from derivatives	862			815
Net settlement income from certain interest-rate swaps	359			224
Gain from mortgage loans(3)	284			1,391
Loan related income	147			166
Gain from sale of originated mortgage-backed securities	–			1
Total home loan mortgage banking income	531			1,237
Impact of other mortgage servicing rights risk management instruments(4):
Gain from certain available-for-sale securities	5			140
Total home loan mortgage banking income, net of other mortgage servicing rights risk management instruments	$	536		$	1,377

⁽¹⁾Represents fair value hedge ineffectiveness as well as any impairment/reversal recognized on MSR accounted for under the lower of cost or market value methodology.  The Company prospectively applied fair value hedge accounting treatment, as prescribed by Statement of Financial Accounting Standards (Statement) No. 133, to most of its MSR on April 1, 2004.

⁽²⁾Represents the change in fair value from certain derivatives that economically hedge the MSR.

⁽³⁾Gain (loss) from mortgage loans net of revaluation gain (loss) from derivatives used for loans held for sale risk management was a net gain of $255 million for the quarter ended June 30, 2004, compared with a net gain of $105 million for the quarter ended March 31, 2004, a net gain of $71 million for the quarter ended December 31, 2003, a net loss of $59 million for the quarter ended September 30, 2003, and a net gain of $600 million for the quarter ended June 30, 2003.  Gain from mortgage loans net of revaluation gain (loss) from derivatives used for loans held for sale risk management was a net gain of $360 million for the six months ended June 30, 2004, compared with a net gain of $1.05 billion for the six months ended June 30, 2003.

⁽⁴⁾Includes only instruments designated for mortgage servicing rights risk management and does not include the effects of instruments held for asset/liability risk management.

WM - 16

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Quarter Ended						Six Months Ended
	June 30, 2004			Mar. 31, 2004			June 30, 2004
Mortgage Servicing Rights (“MSR”) Performance
Statement No. 133 MSR accounting valuation adjustments	$	1,707		$	–		$	1,707
Statement No. 133 fair value hedge valuation adjustment	(1,985		)	–			(1,985		)
Statement No. 133 ineffectiveness	(278		)	–			(278		)
Change in value of MSR accounted for under lower of cost or market value methodology (reversal of impairment reserve)	227			(606		)	(379		)
Mortgage servicing rights valuation adjustments(1)	(51		)	(606		)	(657		)
Revaluation gain (loss) from derivatives: MSR risk management	(322		)	1,108			786
Amortization of mortgage servicing rights	(546		)	(750		)	(1,296		)
Net settlement income from certain interest-rate swaps	195			160			355
Gain from certain available-for-sale securities	–			5			5
Net MSR valuation less hedging expense	$	(724	)	$	(83	)	$	(807	)

⁽¹⁾Represents fair value hedge ineffectiveness as well as any impairment/reversal recognized on MSR accounted for under the lower of cost or market value methodology. The Company began applying fair value hedge accounting treatment, as prescribed by Statement No. 133, to most of its MSR on a prospective basis as of April 1, 2004.

WM - 17

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Quarter Ended
	June 30, 2004			Mar. 31, 2004			Dec. 31, 2003			Sept. 30, 2003			June 30, 2003
Rollforward of Mortgage Servicing Rights (“MSR”)(1)
Balance, beginning of period	$	5,239		$	6,354		$	5,870		$	4,598		$	5,210
Home loans:
Additions	874			241			701			1,587			976
Amortization	(546		)	(750		)	(604		)	(665		)	(1,032		)
(Impairment) reversal	227			(606		)	615			368			(309		)
Statement No. 133 MSR accounting valuation adjustments	1,707			–			–			–			–
Sales	–			–			(231		)	(18		)	(247		)
Net change in commercial real estate MSR	–			–			3			–			–
Balance, end of period(2)	$	7,501		$	5,239		$	6,354		$	5,870		$	4,598
Rollforward of Valuation Allowance for MSR Impairment
Balance, beginning of period	$	3,035		$	2,435		$	3,075		$	3,444		$	3,864
Impairment (reversal)	(227		)	606			(615		)	(368		)	309
Other than temporary impairment	(388		)	–			–			–			(579		)
Sales	–			–			(25		)	(1		)	(150		)
Other	(3		)	(6		)	–			–			–
Balance, end of period	$	2,417		$	3,035		$	2,435		$	3,075		$	3,444
Rollforward of Loans Serviced for Others
Balance, beginning of period	$	559,807		$	582,669		$	577,822		$	583,823		$	591,917
Home loans:
Additions	54,201			22,009			51,480			105,883			105,992
Sales	–			–			(195		)	–			(2,960		)
Loan payments and other	(56,388		)	(46,058		)	(47,062		)	(111,834		)	(110,867		)
Net change in commercial real estate loans serviced for others	768			1,187			624			(50		)	(259		)
Balance, end of period	$	558,388		$	559,807		$	582,669		$	577,822		$	583,823

	June 30, 2004		Mar. 31, 2004		Dec. 31, 2003		Sept. 30, 2003		June 30, 2003
Total Servicing Portfolio
Loans serviced for others	$	558,388	$	559,807	$	582,669	$	577,822	$	583,823
Servicing on retained MBS without MSR	2,938		3,208		3,455		3,810		4,293
Servicing on owned loans	205,714		204,449		182,604		182,570		180,377
Subservicing portfolio	563		1,528		1,852		249		2,453
Total servicing portfolio	$	767,603	$	768,992	$	770,580	$	764,451	$	770,946

	June 30, 2004
	Unpaid Principal Balance		Weighted Average Servicing Fee
			(in basis points, annualized)
Loans Serviced for Others by Loan Type
Government	$	59,662	49
Agency	367,178		30
Private	113,720		36
Specialty home loans	17,828		50
Total loans serviced for others(3)	$	558,388	34

⁽¹⁾Net of valuation allowance.

⁽²⁾At June 30, 2004, aggregate mortgage servicing rights fair value was $7.52 billion.

⁽³⁾Weighted average coupon rate (annualized) was 5.93% at June 30, 2004.

WM - 18

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Quarter Ended
	June 30, 2004			Mar. 31, 2004			Dec. 31, 2003			Sept. 30, 2003			June 30, 2003
Allowance for Loan and Lease Losses
Balance, beginning of quarter	$	1,260		$	1,250		$	1,549		$	1,530		$	1,530
Allowance for certain loan commitments/other	(3		)	–			–			17			–
Provision (reversal of reserve) for loan and lease losses	60			56			(202		)	76			81
	1,317			1,306			1,347			1,623			1,611
Loans charged off:
Loans secured by real estate:
Home	(8		)	(16		)	(18		)	(22		)	(9		)
Purchased specialty mortgage finance	(9		)	(9		)	(11		)	(9		)	(9		)
Total home loan charge-offs	(17		)	(25		)	(29		)	(31		)	(18		)
Home equity loans and lines of credit	(5		)	(7		)	(2		)	(4		)	(4		)
Home construction - builder (1)	–			(1		)	(1		)	(1		)	–
Multi-family	–			–			(1		)	(4		)	–
Other real estate	(1		)	(8		)	(52		)	(16		)	(21		)
Total loans secured by real estate	(23		)	(41		)	(85		)	(56		)	(43		)
Consumer	(11		)	(14		)	(14		)	(20		)	(18		)
Commercial business	(4		)	(6		)	(15		)	(19		)	(31		)
Total loans charged off	(38		)	(61		)	(114		)	(95		)	(92		)
Recoveries of loans previously charged off:
Loans secured by real estate:
Home	–			–			1			7			2
Purchased specialty mortgage finance	1			1			1			1			1
Total home loan recoveries	1			1			2			8			3
Home equity loans and lines of credit	1			1			–			–			–
Multi-family	–			2			–			–			–
Other real estate	4			2			5			6			2
Total loans secured by real estate	6			6			7			14			5
Consumer	5			5			5			5			3
Commercial business	3			4			5			2			3
Total recoveries of loans previously charged off	14			15			17			21			11
Net charge-offs	(24		)	(46		)	(97		)	(74		)	(81		)
Balance, end of quarter	$	1,293		$	1,260		$	1,250		$	1,549		$	1,530
Net charge-offs (annualized) as a percentage of average loans held in portfolio	0.05		%	0.10		%	0.23		%	0.19		%	0.22		%
Allowance as a percentage of total loans held in portfolio	0.66			0.67			0.71			0.96			1.02

⁽¹⁾Represents loans to builders for the purpose of financing the acquisition, development and construction of single-family residences for sale.

WM - 19

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	June 30, 2004		Mar. 31, 2004		Dec. 31, 2003		Sept. 30, 2003		June 30, 2003
Nonperforming Assets and Restructured Loans
Nonaccrual loans(1):
Loans secured by real estate:
Home	$	535	$	622	$	736	$	760	$	804
Purchased specialty mortgage finance	585		615		597		553		483
Total home nonaccrual loans	1,120		1,237		1,333		1,313		1,287
Home equity loans and lines of credit	48		45		47		46		49
Home construction:
Builder(2)	18		23		25		31		31
Custom(3)	6		8		10		9		9
Multi-family	20		23		19		39		54
Other real estate	133		153		153		309		369
Total nonaccrual loans secured by real estate	1,345		1,489		1,587		1,747		1,799
Consumer	9		7		8		10		15
Commercial business	42		46		31		56		79
Total nonaccrual loans held in portfolio	1,396		1,542		1,626		1,813		1,893
Foreclosed assets	286		307		311		293		307
Total nonperforming assets	$	1,682	$	1,849	$	1,937	$	2,106	$	2,200
As a percentage of total assets	0.60%		0.66%		0.70%		0.73%		0.78%
Restructured loans	$	79	$	107	$	111	$	118	$	89
Total nonperforming assets and restructured loans	$	1,761	$	1,956	$	2,048	$	2,224	$	2,289

⁽¹⁾Excludes nonaccrual loans held for sale of $99 million at June 30, 2004.  Prior periods also reflect the exclusion of nonaccrual loans held for sale of $135 million, $66 million, $67 million and $73 million at March 31, 2004, December 31, 2003, September 30, 2003 and June 30, 2003.  Loans held for sale are accounted for at lower of aggregate cost or market value, with valuation changes included as adjustments to gain from mortgage loans.

⁽²⁾Represents loans to builders for the purpose of financing the acquisition, development and construction of  single-family residences for sale.

⁽³⁾Represents construction loans made directly to the intended occupant of a single-family residence.