8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

Date of Report: April 17, 2007

Washington Mutual, Inc.

(Exact name of registrant as specified in its charter)

Washington	1-14667	91-1653725
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

1301 Second Avenue, Seattle, Washington	98101
(Address of principal executive offices)	(Zip Code)

(206) 461-2000

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On April 17, 2007, Washington Mutual, Inc. issued a press release and held a conference call regarding its results of operations and financial condition for the quarter ended March 31, 2007. The text of the press release is included as Exhibit 99.1 to this report, the financial supplement to the press release is included as Exhibit 99.2 to this report and management’s prepared remarks for the conference call is included as Exhibit 99.3 to this report. The information included in the press release text, financial supplement and management’s prepared remarks for the conference call 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 ended March 31, 2007, as part of its Form 10-Q covering that period.

Item 9.01 Financial Statements and Exhibits

(d) The following exhibits are being furnished herewith:

Exhibit No.	Exhibit Description
99.1	Press release text of Washington Mutual, Inc. dated April 17, 2007
99.2	Financial supplement of Washington Mutual, Inc.
99.3	Management’s prepared remarks for Washington Mutual, Inc. Conference Call held on April 17, 2007.

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.
Date: April 17, 2007	By:	/s/ Fay L. Chapman
		Fay L. Chapman
		Senior Executive Vice President

EX-99.1

Exhibit 99.1

April 17, 2007

For Immediate Release

WaMu Reports First Quarter Earnings Per Share of $0.86 and

Increases Cash Dividend to 55 Cents

SEATTLE - Washington Mutual, Inc. (NYSE: WM) reported first quarter 2007 net income of $784 million, or $0.86 per diluted share, compared with net income of $985 million, or $0.98 per diluted share, in the first quarter of 2006, a period that included an $85 million after tax partial settlement related to Home Savings goodwill litigation.

Based on these earnings and the company’s strong financial position, the Board of Directors increased the cash dividend on the company’s common stock for the 47^th consecutive quarter to 55 cents per share.

“Our Retail Banking, Card Services, and Commercial groups continued to post strong results in the first quarter as we successfully attracted a growing number of new customers to our expanding national banking franchise,” said Kerry Killinger, the company’s chairman and CEO. “Overall, we delivered solid results in the first quarter despite the challenging interest rate environment and slowing housing market.”

“Our Home Loans business was challenged during the first quarter by difficult market conditions,” he added. “Over the past 12 months, we have taken a number of prudent actions to reduce our exposure to the subprime mortgage industry. These actions, along with a diversified business mix, limited our exposure to the mortgage market’s downturn and position us well to expand and grow as market conditions improve.”

FIRST QUARTER FINANCIAL SUMMARY AND HIGHLIGHTS

Financial Summary
	Three Months Ended
(in millions, except per share data)	Mar. 31, 2007			Dec. 31, 2006			Mar. 31, 2006
Income Statement
Net interest income	$	2,081		$	1,998		$	2,117
Provision for loan and lease losses		234			344			82
Noninterest income		1,541			1,592			1,638
Noninterest expense		2,105			2,257			2,138
Income from continuing operations		784			640			976
Income from discontinued operations, net of taxes		-			418			9
Net income		784			1,058			985
Diluted earnings per common share	$	0.86		$	1.10		$	0.98
Balance Sheet
Total assets, end of period	$	319,985		$	346,288		$	348,401
Average total assets		331,905			353,056			343,660
Average interest-earning assets		295,700			314,784			307,777
Average total deposits		210,764			214,801			191,034
Performance Ratios
Return on average common equity		12.99	%		16.03	%		14.69	%
Net interest margin		2.79			2.58			2.75
Efficiency ratio		58.13			62.87			56.95
Nonperforming assets/total assets		1.02			0.80			0.59
Tangible equity/total tangible assets		5.78			6.04			5.75

· Net interest margin expands 21 basis points to 2.79 percent. The net interest margin during the first quarter increased to 2.79 percent from 2.58 percent in the fourth quarter. The increase reflected the balance sheet repositioning initiated during the previous quarter, upward repricing of the company’s loan portfolio, and strong deposit pricing discipline.   The increase in the net interest margin contributed to a 4 percent increase in net interest income in the first quarter from the prior quarter despite a 6 percent decrease in average interest-earning assets. The modest decline in net interest income from a year ago reflected a decline in average interest-earning assets.

· Customer and account growth continues to be robust. During the first quarter, the company continued to be successful in attracting customers, adding 195,000 net new retail households to its customer base and adding 328,000 net new checking accounts. Checking account growth during the first quarter was up 82 percent from the prior quarter and was down only slightly from a year ago, which included the company’s March launch of its WaMu Free Checking^TM product. The company also continued its strong credit card growth, opening 782,000 new accounts.

· Depositor and other retail banking fees up 15 percent. Depositor and other retail banking fees of $665 million during the first quarter were up 15 percent from a year ago, which reflected the company’s continued success in growing checking accounts. They were down from the fourth quarter due to normal seasonality.

· Home Loans loss due to subprime deterioration. Weakening subprime mortgage credit performance and widening market credit spreads drove the first quarter $113 million loss for the company’s Home Loans group. First quarter gain on sale included net losses of $164 million on sales of subprime mortgage loans and adjustments to reflect declines in market values of loans held for sale. Based on actual and estimates of future credit performance, the company decreased the value of its subprime mortgage residual portfolio by $88 million to a balance of $105 million at the end of the first quarter.

· Provision reflects housing downturn. The provision for loan losses of $234 million was down from $344 million on a linked quarter basis but up from $82 million in the first quarter of 2006. The decline from the prior quarter was the result of a lower provision for credit card loans. The card provision declined from $275 million in the fourth quarter to $106 million in the first quarter, primarily reflecting a decline in the balance of credit card receivables in the company’s loan portfolio, as well as an improvement in the credit quality.   Excluding the decline in the provision for Card Services, the provision increased due to the downturn in the housing sector and related increase in the level of net charge-offs. This weakening of credit contributed to an increase in the level of non-card provisioning which significantly exceeded net charge-offs in the quarter. Partially offsetting this increase was a refinement of the company’s provisioning methodology for home equity lending.   The much smaller provision in the first quarter a year ago reflected a stronger housing market and more benign credit environment.

· Lower operating expense reflects successful efficiency efforts. Noninterest expense of $2.11 billion during the first quarter was down 7 percent from the prior quarter or essentially flat after excluding $155 million of costs associated with efficiency initiatives recorded in the fourth quarter. Compared with the same period a year ago, noninterest expense was down 2 percent as efficiency gains helped fund the expansion of the franchise.

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FIRST QUARTER OPERATING SEGMENT RESULTS

Retail Banking Group

Selected Segment Information
	Three Months Ended
(in millions, except accounts and households)	Mar. 31, 2007		Dec. 31, 2006		Mar. 31, 2006
Net interest income	$	1,275	$	1,239	$	1,347
Provision for loan and lease losses		62		47		54
Noninterest income		751		774		670
Noninterest expense		1,075		1,102		1,088
Net income from continuing operations		569		545		548
Average loans	$	155,206	$	172,029	$	173,852
Average retail deposits		144,030		143,513		139,060
Net change in number of retail checking accounts		327,776		179,784		340,157
Net change in retail households		195,000		123,000		210,000

· Retail Bank delivers strong performance. Net income from continuing operations of $569 million was up 4 percent from the prior quarter and up 4 percent from a year ago. Excluding the contribution from portfolio management, which contains the bulk of the company’s loans held in portfolio and is particularly impacted by the interest rate environment, net income from continuing operations for the Retail Bank network was up 5 percent from the prior quarter, and was up 21 percent compared with last year’s first quarter. The substantial year-over-year growth reflected both the strong growth in retail banking fees and efficiency improvements.   The provision was up from prior periods in response to the downturn in the housing market that has resulted in increased delinquencies and higher charge-offs. This increase in the provision was partially offset by a refinement of the company’s provisioning methodology for home equity lending.

· Customer and account growth continues to be strong. During the first quarter, the company added 328,000 net new checking accounts, up 82 percent from the fourth quarter, but down slightly from the first quarter a year ago, which included the March launch of WaMu’s new free checking product. During the first quarter, the company also increased its household base, with net new growth up 59 percent compared with the prior quarter.

· Cross-sell ratio improvement driven by card growth. The Retail Bank’s success in marketing credit cards to its retail banking customers contributed to the increase in the cross-sell ratio to 6.78 products and services at the end of the first quarter from 6.66 at year end and 6.46 at the end of last year’s first quarter.

Card Services Group (managed basis)

Selected Segment Information
	Three Months Ended
(in millions)	Mar. 31, 2007			Dec. 31, 2006			Mar. 31, 2006
Net interest income	$	653		$	664		$	619
Provision for loan and lease losses		388			555			330
Noninterest income		474			451			344
Noninterest expense		325			316			298
Net income		256			149			207
Average managed receivables	$	23,604		$	22,875		$	20,086
Period-end managed receivables		23,597			23,501			20,099
30+ day managed delinquency rate		5.15	%		5.25	%		5.18	%
Managed net credit losses		6.31			5.84			5.79

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· Card Services posts another strong quarter. Card Services reported net income of $256 million, up 72 percent from the prior quarter and up 24 percent from a year ago. The decrease in the provision was the result of the prior quarter’s higher level of provisioning due to that quarter’s substantial growth in period-end receivables.

· Retail channel continues to show strong customer growth. During the quarter, Card Services opened 782,000 new credit card accounts, more than a third of which came through the company’s retail channel. During the first quarter, the company modestly grew its managed card receivables to $23.60 billion at quarter end.

· Card Services’ credit quality continues to be good. At 5.15 percent of period-end managed receivables, the 30+ day managed delinquency rate was down from prior quarters. The first quarter is typically a high payment period which has a beneficial impact on the level of delinquencies. Net credit losses of 6.31 percent during the quarter were up from prior periods, reflecting in part an increase in contractual losses due to the 2006 change in minimum payment policy.

Commercial Group

Selected Segment Information
	Three Months Ended
(in millions)	Mar. 31, 2007			Dec. 31, 2006			Mar. 31, 2006
Net interest income	$	200		$	189		$	163
Reversal of reserve for loan and lease losses		(10	)		(69	)		-
Noninterest income		14			40			12
Noninterest expense		74			72			67
Net income		94			140			67
Loan volume	$	3,671		$	4,019		$	2,769
Average loans		38,641			37,552			31,011

· Commercial Group net income up 40 percent year over year. The Commercial Group’s net income of $94 million for the first quarter was up 40 percent from the same period a year ago. The increase in net interest income was primarily due to an increase in average loans as a result of the fourth quarter acquisition of Commercial Capital Bancorp and continued growth in multi-family and nonresidential loans.   Although net income was down from the fourth quarter, the prior quarter results included a $67 million reduction in the allowance for loan and lease losses associated with the characteristics of the multi-family loan portfolio. The lower amount of noninterest income for the first quarter reflected a decrease of $24 million in the value of derivatives that economically hedge the pipeline and warehouse of loans held for sale.

· Loan volume remains strong. Loan volume of $3.67 billion was up 33 percent from a year ago, benefited by the addition of CCBI. The decline from the fourth quarter was due to normal seasonality in multi-family lending.

Home Loans Group

Selected Segment Information
		Three Months Ended
(in millions)		Mar. 31, 2007			Dec. 31, 2006			Mar. 31, 2006
Net interest income	$	245		$	273		$	338
Provision for loan and lease losses		49			47			21
Noninterest income		162			126			401
Noninterest expense		521			534			621
Net income		(113	)		(122	)		52
Loan volume	$	29,645		$	34,897		$	44,998
Average loans		53,254			51,048			49,913

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· Weakness in the subprime mortgage market overshadows improvement in prime business. During the quarter, production volume for prime loans was solid and gain on sale increased from the prior quarter. However, due to the difficult subprime mortgage market, the Home Loans group recorded a $113 million loss for the quarter. Noninterest income included an $88 million decrease in value of the company’s subprime residuals and net losses of $164 million on sales of subprime loans and adjustments to reflect declines in market values of loans held for sale. Impacting first quarter results when compared with a year ago was a reduction in net interest income as the continuation of a flat yield curve has decreased lending volumes and spread income.

· Decrease in home loan volume reflects strategic actions. The decline in home loan volume from the fourth quarter was the result of the proactive steps the company has taken to reduce its subprime exposure through this point in the cycle. Subprime mortgage production for the first quarter was down 51 percent from the same quarter in 2006. The decline in home loan volume, year over year, also reflected the company’s decision to exit its traditional correspondent business.

· Efficiency gains drive down expenses. The 16 percent drop in noninterest expense from a year ago reflected the company’s success in reducing its cost structure. The 2 percent decline in noninterest expense compared with the fourth quarter was due to the continued success of the company’s efficiency initiatives, that more than offset increased subprime mortgage asset foreclosure and due diligence costs.

COMPANY UPDATES

· On Feb. 7, WaMu announced that the corporation’s bylaws had been amended to include a majority vote standard for the election of directors in uncontested elections.

· On Feb. 12, the company announced that Anthony (Tony) F. Vuoto had been named president of the company’s credit card business succeeding Joseph W. Saunders.

· On Apr. 17, WaMu’s Board of Directors declared a cash dividend of 55 cents per share on the company’s common stock, up from 54 cents per share in the previous quarter. Dividends on the common stock are payable on May 15, 2007 to shareholders of record as of Apr. 30, 2007. In addition to declaring a dividend on the company’s common stock, the company will pay a dividend of $0.3868 per depository share of Series K Preferred Stock to be payable on June 15, 2007 to holders of record on June 1, 2007.

ABOUT WAMU

WaMu, through its subsidiaries, is one of the nation’s leading consumer and small business banks. At Mar. 31, 2007, WaMu and its subsidiaries had assets of $319.99 billion. The company has a history dating back to 1889 and its subsidiary banks currently operate nearly 2,700 consumer and small business banking stores throughout the nation. WaMu’s press releases are available at http://newsroom.wamu.com.

WEBCAST INFORMATION

A conference call to discuss the company’s financial results will be held on Tuesday, Apr. 17, 2007, at 6:30 p.m. ET and will be hosted by Kerry Killinger, chairman 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 210-795-2680. 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 available on the company’s web site prior to the call and archived for 30 days. A recording of the conference call will be available from 9:00 p.m ET on Tuesday, Apr. 17, 2007, through 11:59 p.m. ET on Friday, Apr. 27, 2007. The recorded message will be available at 866-469-5760. Callers from outside the United States may dial 203-369-1459.

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CAUTIONARY STATEMENTS

This document 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 document that are not historical facts. When used in this presentation, the words “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” 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 “Factors That May Affect Future Results” in Washington Mutual’s 2006 Annual Report on Form 10-K which include:

· Volatile interest rates and their impact on the mortgage banking business;

· Credit risk;

· Operational risk;

· Risks related to credit card operations;

· Changes in the regulation of financial services companies, housing government-sponsored enterprises and credit card lenders;

· Competition from banking and nonbanking companies;

· General business, economic and market conditions; and

· Reputational risk.

There are other factors not described in our 2006 Form 10-K which are beyond the company’s ability to anticipate or control that could cause results to differ.

####

Media Contact	Investor Relations Contact
Alan Gulick	Alan Magleby
Washington Mutual	Washington Mutual
206-500-2760	206-500-4148 (Seattle)
alan.gulick@wamu.net	212-702-6955 (New York)
	alan.magleby@wamu.net

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EX-99.2

WM-1

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions, except per share data)

(unaudited)

	Quarter Ended
	Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
	2007			2006			2006			2006			2006
PROFITABILITY
Net income	$	784		$	1,058		$	748		$	767		$	985
Net interest income		2,081			1,998			1,947			2,060			2,117
Noninterest income		1,541			1,592			1,570			1,578			1,638
Noninterest expense		2,105			2,257			2,184			2,229			2,138
Diluted earnings per common share:
Income from continuing operations	$	0.86		$	0.66		$	0.76		$	0.78		$	0.97
Income from discontinued operations		-			0.44			0.01			0.01			0.01
Net income		0.86			1.10			0.77			0.79			0.98
Diluted weighted average number of common shares outstanding
(in thousands)		899,706			955,817			967,376			975,504			1,003,460
Net interest margin		2.79	%		2.58	%		2.53	%		2.65	%		2.75	%
Dividends declared per common share		0.54			0.53			0.52			0.51			0.50
Book value per common share (period end)(1)		27.30			28.21			27.65			27.31			27.10
Return on average assets		0.95	%		1.20	%		0.86	%		0.88	%		1.15	%
Return on average common equity		12.99			16.03			11.47			11.82			14.69
Efficiency ratio(2)(3)		58.13			62.87			62.09			61.27			56.95
ASSET QUALITY
Nonperforming assets(4) to total assets		1.02	%		0.80	%		0.69	%		0.62	%		0.59	%
Allowance as a percentage of total loans held in portfolio		0.71			0.72			0.64			0.68			0.68
CREDIT PERFORMANCE
Provision for loan and lease losses	$	234		$	344		$	166		$	224		$	82
Net charge-offs		183			136			154			116			105
CAPITAL ADEQUACY
Capital Ratios for WMI:
Tangible equity to total tangible assets(5)		5.78	%		6.04	%		5.86	%		5.84	%		5.75	%
Total risk-based capital to total risk-weighted assets(6)		11.14			11.77			11.10			11.26			10.77
Tier 1 capital to average total assets(6)		5.87			6.35			6.28			6.24			6.13
Capital Ratios for WMB (well-capitalized minimum)(7):
Tier 1 capital to adjusted total assets (5.00%)		6.71			6.79			6.47			6.33			6.76
Adjusted tier 1 capital to total risk-weighted assets (6.00%)		7.84			8.28			8.12			8.13			8.92
Total risk-based capital to total risk-weighted assets (10.00%)		11.89			12.16			11.30			11.39			11.82
SUPPLEMENTAL DATA
Average balance sheet:
Total loans held in porfolio	$	222,617		$	239,265		$	242,165		$	242,334		$	232,505
Total interest-earning assets(2)		295,700			314,784			312,827			313,239			307,777
Total assets		331,905			353,056			349,542			348,664			343,660
Total deposits		210,764			214,801			208,912			200,252			191,034
Total stockholders' equity		24,407			26,700			26,147			25,958			26,825
Period-end balance sheet:
Total lons held in portfolio, net of allowance for loan and lease losses		215,481			223,330			240,215			241,840			238,362
Total assets		319,985			346,288			348,877			350,884			348,401
Total deposits		210,209			213,956			210,882			204,558			200,002
Total stockholders' equity		24,578			26,969			26,458			26,131			25,819
Common shares outstanding at the end of period (in thousands)(8)		888,111			944,479			945,098			962,880			958,819
Employees at end of period		49,693			49,824			51,056			56,247			60,381

_______________________

(1)	Excludes six million shares held in escrow.
(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)	Excludes unrealized net gain/loss on available-for-sale securities and derivatives, goodwill and intangible assets (except MSR) and the impact from the adoption and application of FASB Statement No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, as of December 31, 2006. Minority interests of $2.45 billion for March 31, 2007 and December 31, 2006, $1.96 billion for September 30, 2006 and June 30, 2006 and $1.97 billion for March 31, 2006 are included in the numerator.
(6)	The capital ratios are estimated as if Washington Mutual, Inc. were a bank holding company subject to Federal Reserve Board capital requirements.
(7)	Capital ratios for Washington Mutual Bank ("WMB") at March 31, 2007 are preliminary.
(8)	Includes six million shares held in escrow.

WM-2

Washington Mutual, Inc.

Consolidated Statements of Income

(dollars in millions, except per share data)

(unaudited)

	Quarter Ended
	Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
	2007			2006			2006			2006			2006
Interest Income
Loans held for sale	$	562		$	515		$	435		$	395		$	462
Loans held in portfolio		3,900			4,053			4,012			3,887			3,580
Available-for-sale securities		332			392			379			368			322
Trading assets		113			102			140			165			198
Other interest and dividend income		101			148			139			120			95
Total interest income		5,008			5,210			5,105			4,935			4,657
Interest Expense
Deposits		1,772			1,843			1,739			1,461			1,221
Borrowings		1,155			1,369			1,419			1,414			1,319
Total interest expense		2,927			3,212			3,158			2,875			2,540
Net interest income		2,081			1,998			1,947			2,060			2,117
Provision for loan and lease losses		234			344			166			224			82
Net interest income after provision for loan and lease losses		1,847			1,654			1,781			1,836			2,035
Noninterest Income
Revenue from sales and servicing of home mortgage loans		125			164			118			222			263
Revenue from sales and servicing of consumer loans		443			372			355			424			376
Depositor and other retail banking fees		665			692			655			641			578
Credit card fees		172			182			165			152			138
Securities fees and commissions		60			54			52			56			52
Insurance income		29			30			31			33			33
Trading assets income (loss)		(108	)		(81	)		68			(129	)		(13	)
Gain (loss) from sales of other available-for-sale securities		35			(1	)		(1	)		-			(7	)
Other income		120			180			127			179			218
Total noninterest income		1,541			1,592			1,570			1,578			1,638
Noninterest Expense
Compensation and benefits		1,002			945			939			1,021			1,032
Occupancy and equipment		376			476			408			435			391
Telecommunications and outsourced information services		129			133			142			145			134
Depositor and other retail banking losses		61			64			57			51			56
Advertising and promotion		98			107			124			117			95
Professional fees		38			89			57			45			36
Other expense		401			443			457			415			394
Total noninterest expense		2,105			2,257			2,184			2,229			2,138
Minority interest expense		43			34			34			37			-
Income from continuing operations before income taxes		1,240			955			1,133			1,148			1,535
Income taxes		456			315			394			389			559
Income from continuing operations		784			640			739			759			976
Discontinued Operations(1)
Income from discontinued operations before income taxes		-			2			14			12			15
Gain on disposition of discontinued operations		-			667			-			-			-
Income taxes		-			251			5			4			6
Income from discontinued operations		-			418			9			8			9
Net Income	$	784		$	1,058		$	748		$	767		$	985
Net Income Available to Common Stockholders	$	777		$	1,050		$	748		$	767		$	985
Basic Earnings Per Common Share:
Income from continuing operations	$	0.89		$	0.68		$	0.78		$	0.80		$	1.00
Income from discontinued operations		-			0.45			0.01			0.01			0.01
Net Income		0.89			1.13			0.79			0.81			1.01
Diluted Earnings Per Common Share:
Income from continuing operations	$	0.86		$	0.66		$	0.76		$	0.78		$	0.97
Income from discontinued operations		-			0.44			0.01			0.01			0.01
Net Income		0.86			1.10			0.77			0.79			0.98
Dividends declared per common share		0.54			0.53			0.52			0.51			0.50
Basic weighted average number of common shares outstanding (in thousands)		874,816			931,484			941,898			947,023			973,614
Diluted weighted average number of common shares outstanding (in thousands)		899,706			955,817			967,376			975,504			1,003,460

_______________________

⁽¹⁾ Represents WM Advisors, Inc., the Company's retail mutual fund management business, which was sold in the fourth quarter of 2006.

WM-3

Washington Mutual, Inc.

Consolidated Statements of Financial Condition

(dollars in millions)

(unaudited)

	Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
	2007			2006			2006			2006			2006
Assets
Cash and cash equivalents	$	4,047		$	6,948		$	6,649		$	6,675		$	5,868
Federal funds sold and securities purchased under agreements to resell		8,279			3,743			5,102			4,112			3,995
Trading assets		5,290			4,434			5,391			7,445			9,958
Available-for-sale securities, total amortized cost of $22,921, $25,073, $29,136, $28,504, and $27,424:
Mortgage-backed securities		15,939			18,063			22,353			21,438			21,388
Investment securities		6,900			6,915			6,664			6,358			5,586
Total available-for-sale securities		22,839			24,978			29,017			27,796			26,974
Loans held for sale		26,874			44,970			23,720			23,342			25,020
Loans held in portfolio		217,021			224,960			241,765			243,503			240,004
Allowance for loan and lease losses		(1,540	)		(1,630	)		(1,550	)		(1,663	)		(1,642	)
Total loans held in portfolio, net of allowance for loan and lease losses		215,481			223,330			240,215			241,840			238,362
Investment in Federal Home Loan Banks		2,230			2,705			3,013			3,500			4,200
Mortgage servicing rights		6,507			6,193			6,288			9,162			8,736
Goodwill		9,052			9,050			8,368			8,339			8,298
Other assets		19,386			19,937			21,114			18,673			16,990
Total assets	$	319,985		$	346,288		$	348,877		$	350,884		$	348,401
Liabilities
Deposits:
Noninterest-bearing deposits	$	34,367		$	33,386		$	34,667		$	35,457		$	36,531
Interest-bearing deposits		175,842			180,570			176,215			169,101			163,471
Total deposits		210,209			213,956			210,882			204,558			200,002
Federal funds purchased and commercial paper		563			4,778			5,282			6,138			6,841
Securities sold under agreements to repurchase		8,323			11,953			13,665			19,866			15,471
Advances from Federal Home Loan Banks		24,735			44,297			47,247			55,311			65,283
Other borrowings		39,430			32,852			33,883			27,995			24,872
Other liabilities		9,694			9,035			9,501			8,926			8,140
Minority interests		2,453			2,448			1,959			1,959			1,973
Total liabilities		295,407			319,319			322,419			324,753			322,582
Stockholders' equity
Preferred stock		492			492			492			-			-
Capital surplus - common stock		3,121			5,825			5,761			6,596			6,414
Accumulated other comprehensive loss		(268	)		(287	)		(180	)		(599	)		(448	)
Retained earnings		21,233			20,939			20,385			20,134			19,853
Total stockholders' equity		24,578			26,969			26,458			26,131			25,819
Total liabilities and stockholders' equity	$	319,985		$	346,288		$	348,877		$	350,884		$	348,401

WM-4

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Quarter Ended
	Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
	2007			2006			2006			2006			2006
Stockholders' Equity Rollforward
Balance, beginning of period	$	26,969		$	26,458		$	26,131		$	25,819		$	27,279
Net income		784			1,058			748			767			985
Cumulative effect from the adoption of new accounting pronouncements		(6)	(1)		(157)	(2)		-			-			35	(3)
Other comprehensive income (loss), net of income taxes		19			50			419			(151	)		(219	)
Cash dividends declared on common stock		(476	)		(496	)		(497	)		(486	)		(499	)
Cash dividends declared on preferred stock		(7	)		(8	)		-			-			-
Common stock repurchased and retired(4)		(2,797	)		-			(930	)		-			(2,108	)
Common stock issued		92			64			95			182			346
Preferred stock issued		-			-			492			-			-
Balance, end of period	$	24,578		$	26,969		$	26,458		$	26,131		$	25,819

⁽¹⁾ As of January 1, 2007, the Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes.

⁽²⁾ On December 31, 2006, the Company adopted Statement of Financial Accounting Standards ("Statement") No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans. Statement No. 158 requires an entity to recognize the overfunded or underfunded status of its defined benefit postretirement plans as an asset or liability in its statement of financial condition and to recognize changes, through comprehensive income, in that funded status in the year in which the changes occur. The cumulative effects, net of income taxes, resulted in a $274 million decrease to December 31, 2006 other assets and a $117 million decrease to December 31, 2006 other liabilities.

⁽³⁾ As of January 1, 2006, the Company adopted Statement No. 156, Accounting for Servicing of Financial Assets. Statement No. 156 permits an entity to choose either to continue the practice of amortizing servicing assets and assess such assets for impairment, or to report servicing assets at fair value. The Company has elected to report its mortgage servicing assets at fair value. Statement No. 156 also permits the one-time transfer of available-for-sale securities being utilized as MSR risk management instruments to trading securities. The cumulative effects, net of income taxes, resulted in a $29 million increase to January 1, 2006 retained earnings from the MSR fair value election and a $6 million increase to January 1, 2006 accumulated other comprehensive income from the transfer of AFS securities, designated as MSR risk management instruments, to the trading portfolio.

⁽⁴⁾ The Company repurchased 61.4 million, 1.7 million, 18.8 million, zero and 47.0 million shares of its common stock in the three months ended March 31, 2007, December 31, 2006, September 30, 2006, June 30, 2006 and March 31, 2006. At March 31, 2007, the total remaining common stock repurchase authority was 68.2 million shares.

WM-5

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Quarter Ended
	Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
	2007			2006			2006			2006			2006
RETAIL BANKING GROUP
Condensed income statement:
Net interest income	$	1,275		$	1,239		$	1,260		$	1,323		$	1,347
Provision for loan and lease losses		62			47			53			13			54
Noninterest income		751			774			738			732			670
Inter-segment revenue		22			17			17			16			13
Noninterest expense		1,075			1,102			1,079			1,109			1,088
Income from continuing operations before income taxes		911			881			883			949			888
Income taxes		342			336			337			363			340
Income from continuing operations		569			545			546			586			548
Income from discontinued operations		-			12			9			8			9
Net income	$	569		$	557		$	555		$	594		$	557
Performance and other data:
Efficiency ratio		52.50	%		54.29	%		53.55	%		53.53	%		53.61	%
Average loans	$	155,206		$	172,029		$	180,829		$	182,891		$	173,852
Average assets		165,047			182,256			191,288			193,246			184,147
Average deposits:
Checking deposits:
Noninterest bearing		22,331			21,873			21,440			21,418			20,344
Interest bearing		31,739			33,010			34,792			37,518			40,343
Total checking deposits		54,070			54,883			56,232			58,936			60,687
Savings and money market deposits		43,103			41,442			38,317			38,143			37,433
Time deposits		46,857			47,188			45,405			41,724			40,940
Average deposits		144,030			143,513			139,954			138,803			139,060
Loan volume		8,492			7,966			9,006			10,488			7,255
Employees at end of period		27,873			27,664			28,034			31,426			32,863
CARD SERVICES GROUP
Managed basis(1)
Condensed income statement:
Net interest income	$	653		$	664		$	633		$	615		$	619
Provision for loan and lease losses		388			555			345			417			330
Noninterest income		474			451			343			389			344
Inter-segment expense		4			2			2			1			-
Noninterest expense		325			316			294			293			298
Income before income taxes		410			242			335			293			335
Income taxes		154			93			128			112			128
Net income	$	256		$	149		$	207		$	181		$	207
Performance and other data:
Efficiency ratio		28.96	%		28.41	%		30.16	%		29.19	%		30.95	%
Average loans	$	23,604		$	22,875		$	21,706		$	20,474		$	20,086
Average assets		26,039			25,472			24,236			23,044			22,764
Employees at end of period		2,646			2,676			2,731			2,597			2,871
Securitization adjustments
Condensed income statement:
Net interest income	$	(414	)	$	(437	)	$	(411	)	$	(405	)	$	(432	)
Provision for loan and lease losses		(282	)		(280	)		(220	)		(217	)		(225	)
Noninterest income		132			157			191			188			207
Performance and other data:
Average loans		(12,507	)		(12,811	)		(12,169	)		(11,565	)		(12,107	)
Average assets		(10,961	)		(11,035	)		(10,330	)		(9,753	)		(10,219	)
Adjusted basis
Condensed income statement:
Net interest income	$	239		$	227		$	222		$	210		$	187
Provision for loan and lease losses		106			275			125			200			105
Noninterest income		606			608			534			577			551
Inter-segment expenses		4			2			2			1			-
Noninterest expense		325			316			294			293			298
Income before income taxes		410			242			335			293			335
Income taxes		154			93			128			112			128
Net income	$	256		$	149		$	207		$	181		$	207
Performance and other data:
Average loans	$	11,097		$	10,064		$	9,537		$	8,909		$	7,979
Average assets		15,078			14,437			13,906			13,291			12,545
(This table is continued on "WM-6.")

⁽¹⁾ The managed basis presentation treats securitized and sold credit card receivables as if they were still on the balance sheet. The Company uses this basis in assessing the overall performance of this operating segment. The managed basis presentation of the Card Services Group is derived by adjusting the GAAP financial information to add back securitized loan balances and the related interest, fee income and provision for credit losses. Such adjustments are eliminated as securitization adjustments when reporting GAAP results.

WM-6

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Quarter Ended
(This table is continued from "WM-5.")	Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
	2007			2006			2006			2006			2006
COMMERCIAL GROUP
Condensed income statement:
Net interest income	$	200		$	189		$	159		$	166		$	163
Provision (reversal of reserve) for loan and lease losses		(10	)		(69	)		(2	)		(10	)		-
Noninterest income		14			40			25			17			12
Noninterest expense		74			72			60			57			67
Income before income taxes		150			226			126			136			108
Income taxes		56			86			48			52			41
Net income	$	94		$	140		$	78		$	84		$	67
Performance and other data:
Efficiency ratio		34.52	%		31.49	%		32.21	%		31.28	%		38.47	%
Average loans	$	38,641		$	37,552		$	32,414		$	31,505		$	31,011
Average assets		41,001			40,216			34,560			33,709			33,334
Average deposits		3,762			3,609			2,323			2,242			2,259
Loan volume		3,671			4,019			3,104			2,961			2,769
Employees at end of period		1,351			1,409			1,242			1,252			1,326
HOME LOANS GROUP
Condensed income statement:
Net interest income	$	245		$	273		$	276		$	290		$	338
Provision for loan and lease losses		49			47			84			38			21
Noninterest income		162			126			314			461			401
Inter-segment expense		18			15			15			15			13
Noninterest expense		521			534			528			617			621
Income (loss) before income taxes		(181	)		(197	)		(37	)		81			84
Income taxes (benefit)		(68	)		(75	)		(14	)		31			32
Net income (loss)	$	(113	)	$	(122	)	$	(23	)	$	50		$	52
Performance and other data:
Efficiency ratio		133.90	%		138.93	%		92.00	%		83.80	%		85.62	%
Average loans	$	53,254		$	51,048		$	45,407		$	43,988		$	49,913
Average assets		71,381			71,512			70,565			70,958			78,163
Average deposits		16,767			19,788			20,659			20,124			16,532
Loan volume		29,645			34,897			37,200			41,364			44,998
Employees at end of period		13,025			13,025			13,936			15,560			17,653
CORPORATE SUPPORT/TREASURY AND OTHER
Condensed income statement:
Net interest expense	$	(15	)	$	(64	)	$	(107	)	$	(60	)	$	(44	)
Provision (reversal of reserve) for loan and lease losses		27			44			(94	)		(17	)		(98	)
Noninterest income (expense)		81			142			75			(88	)		150
Noninterest expense		110			233			223			153			64
Minority interest expense		43			34			34			37			-
Income (loss) from continuing operations before income taxes		(114	)		(233	)		(195	)		(321	)		140
Income taxes (benefit)		(71	)		(103	)		(90	)		(129	)		33
Income (loss) from continuing operations		(43	)		(130	)		(105	)		(192	)		107
Income from discontinued operations		-			406			-			-			-
Net income (loss)	$	(43	)	$	276		$	(105	)	$	(192	)	$	107
Performance and other data:
Average loans	$	1,345		$	1,294		$	1,245		$	1,178		$	1,142
Average assets		40,877			46,208			40,823			39,061			37,042
Average deposits		46,205			47,891			45,976			39,083			33,183
Loan volume		107			144			58			82			24
Employees at end of period		4,798			5,050			5,113			5,412			5,668

(This table is continued on "WM-7.")

WM-7

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Quarter Ended
(This table is continued from "WM-6.")	Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
	2007			2006			2006			2006			2006
RECONCILING ADJUSTMENTS
Condensed income statement:
Net interest income(1)	$	137		$	134		$	137		$	131		$	126
Noninterest income (expense)(2)		(73	)		(98	)		(116	)		(121	)		(146	)
Income (loss) before income taxes		64			36			21			10			(20	)
Income taxes (benefit)(3)		43			(22	)		(15	)		(40	)		(15	)
Net income (loss)	$	21		$	58		$	36		$	50		$	(5	)
Performance and other data:
Average loans(4)	$	(1,479	)	$	(1,573	)	$	(1,600	)	$	(1,601	)	$	(1,571	)
Average assets(4)		(1,479	)		(1,573	)		(1,600	)		(1,601	)		(1,571	)
TOTAL CONSOLIDATED
Condensed income statement:
Net interest income	$	2,081		$	1,998		$	1,947		$	2,060		$	2,117
Provision for loan and lease losses		234			344			166			224			82
Noninterest income		1,541			1,592			1,570			1,578			1,638
Noninterest expense		2,105			2,257			2,184			2,229			2,138
Minority interest expense		43			34			34			37			-
Income from continuing operations before income taxes		1,240			955			1,133			1,148			1,535
Income taxes		456			315			394			389			559
Income from continuing operations		784			640			739			759			976
Income from discontinued operations		-			418			9			8			9
Net income	$	784		$	1,058		$	748		$	767		$	985
Performance and other data:
Efficiency ratio		58.13	%		62.87	%		62.09	%		61.27	%		56.95	%
Average loans		258,064			270,414			267,832			266,870			262,326
Average assets		331,905			353,056			349,542			348,664			343,660
Average deposits		210,764			214,801			208,912			200,252			191,034
Loan volume		41,915			47,026			49,368			54,895			55,046
Employees at end of period		49,693			49,824			51,056			56,247			60,381

__________________________

 

⁽¹⁾ Represents the difference between mortgage loan premium amortization recorded by the Retail Banking Group and the amount recognized in the Company's Consolidated Statements of Income. For management reporting purposes, certain mortgage loans that are held in portfolio by the Retail Banking Group are treated as if they are purchased from the Home Loans Group. Since the cost basis of these loans includes an assumed profit factor paid to the Home Loans Group, the amortization of loan premiums recorded by the Retail Banking Group reflects this assumed profit factor and must therefore be eliminated as a reconciling adjustment.

⁽²⁾ Represents the difference between gain from mortgage loans recorded by the Home Loans Group and gain from mortgage loans recognized in the Company's Consolidated Statements of Income. A substantial amount of loans originated or purchased by this segment are considered to be salable for management reporting purposes.

⁽³⁾ Represents the tax effect of reconciling adjustments.

⁽⁴⁾ Represents the inter-segment offset for inter-segment loan premiums that the Retail Banking Group recognized upon transfer of portfolio loans from the Home Loans Group.

WM-8

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Quarter Ended
	Mar. 31, 2007							Dec. 31, 2006							Mar. 31, 2006
						Interest							Interest							Interest
						Income/							Income/							Income/
	Balance		Rate			Expense		Balance		Rate			Expense		Balance		Rate			Expense
Average Balances and Weighted Average Interest Rates
Assets
Interest-earning assets(1):
Federal funds sold and securities purchased under
agreements to resell	$	3,930		5.39	%	$	52	$	5,597		5.33	%	$	76	$	3,754		4.62	%	$	43
Trading assets		5,594		8.10			113		4,855		8.39			102		11,692		6.80			198
Available-for-sale securities(2):
Mortgage-backed securities		17,887		5.47			245		21,661		5.58			302		20,144		5.29			266
Investment securities		6,753		5.17			87		6,952		5.15			90		4,845		4.62			56
Loans held for sale		35,447		6.37			562		31,149		6.59			515		29,821		6.20			462
Loans held in portfolio:
Loans secured by real estate:
Home loans(3)(4)		97,365		6.45			1,570		114,645		6.04			1,729		117,720		5.58			1,643
Home equity loans and lines of credit(4)		53,014		7.56			989		52,850		7.54			1,004		51,320		6.96			883
Subprime mortgage channel(5)		20,612		6.67			344		20,982		6.81			357		19,967		5.95			296
Home construction(6)		2,061		6.55			34		2,060		6.62			34		2,059		6.34			33
Multi-family		29,826		6.57			490		30,348		6.52			494		25,758		5.92			382
Other real estate		6,763		7.03			117		6,732		6.88			118		5,157		6.84			88
Total loans secured by real estate		209,641		6.79			3,544		227,617		6.55			3,736		221,981		6.01			3,325
Consumer:
Credit card		10,904		11.57			311		9,597		11.28			273		7,808		10.74			206
Other		267		12.96			9		280		12.54			9		622		11.03			17
Commercial		1,805		7.95			36		1,771		7.72			35		2,094		6.19			32
Total loans held in portfolio		222,617		7.04			3,900		239,265		6.76			4,053		232,505		6.18			3,580
Other		3,472		5.77			49		5,305		5.35			72		5,016		4.17			52
Total interest-earning assets		295,700		6.81			5,008		314,784		6.60			5,210		307,777		6.07			4,657
Noninterest-earning assets:
Mortgage servicing rights		6,304							6,230							8,260
Goodwill		9,054							9,011							8,298
Other assets(7)		20,847							23,031							19,325
Total assets	$	331,905						$	353,056						$	343,660
Liabilities
Interest-bearing liabilities:
Deposits:
Interest-bearing checking deposits	$	31,821		2.63			206	$	33,098		2.78			232	$	40,436		2.29			228
Savings and money market deposits		54,862		3.27			443		53,314		3.34			449		44,816		2.38			263
Time deposits		91,631		4.97			1,123		93,415		4.90			1,162		73,182		4.02			730
Total interest-bearing deposits		178,314		4.03			1,772		179,827		4.05			1,843		158,434		3.11			1,221
Federal funds purchased and commercial paper		3,846		5.48			52		6,781		5.40			93		7,463		4.46			83
Securities sold under agreements to repurchase		12,098		5.48			164		12,177		5.43			169		15,280		4.46			170
Advances from Federal Home Loan Banks		36,051		5.38			478		46,005		5.31			625		66,995		4.46			746
Other		32,808		5.67			461		34,420		5.54			482		26,636		4.81			320
Total interest-bearing liabilities		263,117		4.51			2,927		279,210		4.53			3,212		274,808		3.72			2,540
Noninterest-bearing sources:
Noninterest-bearing deposits		32,450							34,974							32,600
Other liabilities(8)		9,482							10,111							8,875
Minority interests		2,449							2,061							552
Stockholders' equity		24,407							26,700							26,825
Total liabilities and stockholders' equity	$	331,905						$	353,056						$	343,660
Net interest spread and net interest income				2.30		$	2,081				2.07		$	1,998				2.35		$	2,117
Impact of noninterest-bearing sources				0.49							0.51							0.40
Net interest margin				2.79							2.58							2.75

^{_______________________________}

⁽¹⁾ Nonaccrual assets and related income, if any, are included in their respective categories.

⁽²⁾ The average balance and yield are based on average amortized cost balances.

⁽³⁾ Capitalized interest recognized in earnings that resulted from negative amortization within the Option ARM portfolio totaled $361 million, $333 million and $194 million for the three months ended March 31, 2007, December 31, 2006 and March 31, 2006.

⁽⁴⁾ Excludes home loans and home equity loans and lines of credit in the subprime mortgage channel.

⁽⁵⁾ Represents mortgage loans purchased from recognized subprime lenders and mortgage loans originated under the Long Beach Mortgage name and held in its investment portfolio.

⁽⁶⁾ Represents loans to builders for the purpose of financing the acquisition, development and construction of single-family residences for sale and construction loans made directly to the intended occupant of a single-family residence.

⁽⁷⁾ Includes assets of discontinued operations for the three months ended December 31, 2006 and March 31, 2006.

⁽⁸⁾ Includes liabilities of discontinued operations for the three months ended December 31, 2006 and March 31, 2006.

WM-9

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Change from
	Dec. 31, 2006			Mar. 31,		Dec. 31,		Sept. 30,		June 30,		Mar. 31,
	to Mar. 31, 2007			2007		2006		2006		2006		2006
Deposits
Retail deposits:
Checking deposits:
Noninterest bearing	$	1,562		$	24,400	$	22,838	$	22,466	$	22,450	$	22,378
Interest bearing		(1,200	)		31,523		32,723		33,761		35,958		39,289
Total checking deposits		362			55,923		55,561		56,227		58,408		61,667
Savings and money market deposits		2,115			44,058		41,943		39,481		37,664		38,197
Time deposits(1)		441			47,262		46,821		47,361		43,685		41,534
Total retail deposits		2,918			147,243		144,325		143,069		139,757		141,398
Commercial business and other deposits		2,566			17,741		15,175		15,831		15,625		14,559
Brokered deposits:
Consumer		(3,304	)		18,995		22,299		22,430		14,316		8,111
Institutional		(5,083	)		17,256		22,339		18,236		22,708		23,166
Custodial and escrow deposits(2)		(844	)		8,974		9,818		11,316		12,152		12,768
Total deposits	$	(3,747	)	$	210,209	$	213,956	$	210,882	$	204,558	$	200,002

(1)	Weighted average remaining maturity of time deposits was 9 months at March 31, 2007 and December 31, 2006 and 10 months at September 30, 2006, June 30, 2006 and March 31, 2006.
(2)	Substantially all custodial and escrow deposits are reported as noninterest-bearing checking deposits.

	Mar. 31,		Dec. 31,		Sept. 30,		June 30,		Mar. 31,
	2007		2006		2006		2006		2006
Retail Deposit Accounts (number of accounts)
Noninterest bearing checking		9,983,313		9,611,706		9,403,072		9,063,458		8,630,646
Interest bearing checking		1,459,534		1,503,365		1,532,215		1,564,396		1,593,018
Savings and money market		6,708,784		6,525,772		6,379,068		6,161,187		5,929,653
Total transaction accounts, end of period(1)		18,151,631		17,640,843		17,314,355		16,789,041		16,153,317
Net change in noninterest bearing checking accounts		371,607		208,634		339,614		432,812		331,615
Net change in checking accounts		327,776		179,784		307,433		404,190		340,157

⁽¹⁾ Transaction accounts include retail checking, small business checking, retail savings and small business savings.

	Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
	2007			2006			2006			2006			2006
Retail Banking Stores
Stores, beginning of period		2,225			2,225			2,201			2,168			2,140
Stores opened during the quarter		6			81	(1)		25			35			29
Stores closed during the quarter		(3	)		(81	)		(1	)		(2	)		(1	)
Stores, end of period		2,228			2,225			2,225			2,201			2,168

⁽¹⁾ Includes 26 retail banking stores acquired through the merger with Commercial Capital Bancorp.

WM-10

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Quarter Ended
	Mar. 31,		Dec. 31,		Sept. 30,		June 30,		Mar. 31,
	2007		2006		2006		2006		2006
Loan Volume
Home loans:
Short-term adjustable-rate loans(1):
Option ARMs	$	7,552	$	9,487	$	11,601	$	12,728	$	8,777
Other ARMs		36		13		42		387		2,943
Total short-term adjustable-rate loans		7,588		9,500		11,643		13,115		11,720
Medium-term adjustable-rate loans(2)		13,131		17,323		16,707		16,041		14,865
Fixed-rate loans		8,521		7,351		8,818		13,695		17,605
Total home loan volume		29,240		34,174		37,168		42,851		44,190
Home equity loans and lines of credit		8,319		8,098		8,498		8,251		7,306
Home construction(3)		298		298		269		421		493
Multi-family		2,663		2,977		2,186		2,230		2,034
Other real estate		1,080		1,182		983		787		716
Total loans secured by real estate(4)		41,600		46,729		49,104		54,540		54,739
Consumer(5)		26		23		26		36		49
Commercial		289		274		238		319		258
Total loan volume	$	41,915	$	47,026	$	49,368	$	54,895	$	55,046
Loan Volume by Channel
Retail	$	22,670	$	24,426	$	22,239	$	23,709	$	22,580
Wholesale		13,028		16,002		14,964		14,798		16,722
Purchased		6,217		6,398		11,560		12,033		7,318
Correspondent		-		200		605		4,355		8,426
Total loan volume by channel	$	41,915	$	47,026	$	49,368	$	54,895	$	55,046
Refinancing Activity(6)
Home loan refinancing	$	21,874	$	25,060	$	23,993	$	26,667	$	26,871
Home equity loans and lines of credit and consumer		537		599		689		161		215
Home construction loans		276		283		254		379		393
Multi-family and other real estate		257		1,254		763		799		774
Total refinancing	$	22,944	$	27,196	$	25,699	$	28,006	$	28,253

(1)	Short-term is defined as adjustable-rate loans that reprice within one year.
(2)	Medium-term is defined as adjustable-rate loans that reprice after one year.
(3)	Represents loans to builders for the purpose of financing the acquisition, development and construction of single-family residences for sale and construction loans made directly to the intended occupant of a single-family residence.
(4)	Includes mortgage loans purchased from recognized subprime lenders and mortgage loans originated under the Long Beach Mortgage name of $3.48 billion, $6.07 billion, $9.40 billion, $8.20 billion and $7.09 billion for the three months ended March 31, 2007, December 31, 2006, September 30, 2006, June 30, 2006 and March 31, 2006.
(5)	Excludes credit card loan volume.
(6)	Includes loan refinancing entered into by both new and pre-existing loan customers.

WM-11

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Change from
	Dec. 31, 2006			Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
	to Mar. 31, 2007			2007			2006			2006			2006			2006
Loans Held in Portfolio
Loans secured by real estate:
Home:
Short-term adjustable-rate loans(1):
Option ARMs(2)	$	(5,427	)	$	58,130		$	63,557		$	67,142		$	69,224		$	71,153
Other ARMs		(1,590	)		13,501			15,091			16,375			15,021			14,797
Total short-term adjustable-rate loans		(7,017	)		71,631			78,648			83,517			84,245			85,950
Medium-term adjustable-rate loans(3)		150			29,924			29,774			47,740			52,032			49,391
Fixed-rate loans		(276	)		9,506			9,782			9,928			9,424			8,660
Total home loans		(7,143	)		111,061			118,204			141,185			145,701			144,001
Home equity loans and lines of credit		1,199			56,123			54,924			54,364			52,981			51,872
Home construction(4)		(11	)		2,071			2,082			2,077			2,082			2,095
Multi-family		(646	)		29,515			30,161			27,407			26,749			26,151
Other real estate		(17	)		6,728			6,745			5,869			5,537			5,353
Total loans secured by real estate(5)		(6,618	)		205,498			212,116			230,902			233,050			229,472
Consumer:
Credit card		(1,371	)		9,490			10,861			8,807			8,451			7,906
Other		(15	)		261			276			281			287			602
Commercial		65			1,772			1,707			1,775			1,715			2,024
Total loans held in portfolio(6)		(7,939	)		217,021			224,960			241,765			243,503			240,004
Less: allowance for loan and lease losses		90			(1,540	)		(1,630	)		(1,550	)		(1,663	)		(1,642	)
Total net loans held in portfolio	$	(7,849	)	$	215,481		$	223,330		$	240,215		$	241,840		$	238,362

(1)	Short-term is defined as adjustable-rate loans that reprice within one year.
(2)	The total amount by which the unpaid principal balance of Option ARM loans exceeded their original principal amount was $1.12 billion, $888 million, $681 million, $474 million and $298 million at March 31, 2007, December 31, 2006, September 30, 2006, June 30, 2006 and March 31, 2006.
(3)	Medium-term is defined as adjustable-rate loans that reprice after one year.
(4)	Represents loans to builders for the purpose of financing the acquisition, development and construction of single-family residences for sale and construction loans made directly to the intended occupant of a single-family residence.
(5)	Includes subprime mortgage channel loans, comprising mortgage loans purchased from recognized subprime lenders and mortgage loans originated under the Long Beach Mortgage name and held in its investment portfolio as follows:

Subprime Mortgage Channel	Mar. 31,		Dec. 31,		Sept. 30,		June 30,		Mar. 31,
	2007		2006		2006		2006		2006
Home loans	$	17,610	$	18,725	$	20,083	$	20,498	$	20,238
Home equity loans and lines of credit		2,749		2,042		1,522		424		12
Total	$	20,359	$	20,767	$	21,605	$	20,922	$	20,250

⁽⁶⁾ Includes net unamortized deferred loan origination costs of $1.43 billion, $1.48 billion, $1.61 billion, $1.62 billion and $1.61 billion at March 31, 2007, December 31, 2006, September 30, 2006, June 30, 2006 and March 31, 2006.

WM-12

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

						Weighted				Weighted				Weighted
	Change from					Average				Average				Average
	Dec. 31, 2006			Mar. 31,		Coupon		Dec. 31,		Coupon		Mar. 31,		Coupon
	to Mar. 31, 2007			2007		Rate		2006		Rate		2006		Rate
Selected Loans Secured by Real Estate and MBS
Home loans held in portfolio:
Short-term adjustable-rate loans(1):
Option ARMs	$	(5,427	)	$	58,130		7.74%	$	63,557		7.44%	$	70,169		6.34%
Other ARMs		(1,590	)		13,501		7.25		15,091		7.17		15,781		6.64
Total short-term adjustable-rate loans		(7,017	)		71,631		7.65		78,648		7.39		85,950		6.39
Medium-term adjustable-rate loans(2)		150			29,924		5.86		29,774		5.77		49,391		5.61
Fixed-rate loans		(276	)		9,506		6.68		9,782		6.65		8,660		6.54
Total home loans held in portfolio		(7,143	)		111,061		7.08		118,204		6.92		144,001		6.13
Home equity loans and lines of credit:
Short-term (Prime-based or treasury-based)(1)		(359	)		33,854		8.45		34,213		8.40		37,181		7.79
Fixed-rate loans		1,558			22,269		7.62		20,711		7.45		14,691		6.69
Total home equity loans and lines of credit		1,199			56,123		8.12		54,924		8.04		51,872		7.48
Multi-family loans held in portfolio:
Short-term adjustable-rate loans(1):
Option ARMs		(791	)		8,373		7.29		9,164		7.18		9,506		6.13
Other ARMs		306			7,779		7.01		7,473		7.12		6,280		6.27
Total short-term adjustable-rate loans		(485	)		16,152		7.15		16,637		7.15		15,786		6.19
Medium-term adjustable-rate loans(2)		(212	)		11,545		5.78		11,757		5.68		8,791		5.35
Fixed-rate loans		51			1,818		6.39		1,767		6.44		1,574		6.51
Total multi-family loans held in portfolio		(646	)		29,515		6.57		30,161		6.54		26,151		5.93
Total selected loans held in portfolio secured by real estate(3)		(6,590	)		196,699		7.30		203,289		7.17		222,024		6.42
Loans held for sale(4)		(18,330	)		26,394		6.44		44,724		6.32		24,843		6.53
MBS(5):
Short-term adjustable-rate MBS(1)		(93	)		5,963		5.71		6,056		5.68		8,763		5.13
Medium-term adjustable-rate MBS(2)		(6	)		2,453		5.09		2,459		5.08		4,020		4.93
Fixed-rate MBS		(2,025	)		7,523		5.25		9,548		5.27		8,605		5.21
Total MBS(6)		(2,124	)		15,939		5.40		18,063		5.38		21,388		5.13
Total selected loans secured by real estate and MBS	$	(27,044	)	$	239,032		7.08	$	266,076		6.90	$	268,255		6.33

(1)	Short-term is defined as adjustable-rate loans and MBS that reprice within one year.
(2)	Medium-term is defined as adjustable-rate loans and MBS that reprice after one year.
(3)	At March 31, 2007, December 31, 2006, and March 31, 2006, adjustable-rate loans with lifetime caps were $162.24 billion, $169.60 billion, and $193.55 billion with a lifetime weighted average cap rate of 12.31%, 12.29% and 12.16%.
(4)	Excludes credit card and student loans.
(5)	Includes only those securities designated as available-for-sale. Excludes principal-only strips and interest-only strips.
(6)	At March 31, 2007, December 31, 2006, and March 31, 2006, the par value of adjustable-rate MBS with lifetime caps were $8.16 billion, $8.17 billion and $12.92 billion with a lifetime weighted average cap rate of 10.55%, 10.54% and 10.36%.

	Dec. 31, 2006
	to Mar. 31, 2007
Rollforward of Loans Held for Sale
Balance, beginning of period	$	44,970
Mortgage loans originated, purchased and transferred from held in portfolio		30,057
Mortgage loans transferred to held in portfolio		(1,753	)
Mortgage loans sold and other(1)		(46,635	)
Net change in consumer loans held for sale		235
Balance, end of period	$	26,874
Rollforward of Home Loans Held in Portfolio
Balance, beginning of period	$	118,204
Loans originated, purchased and transferred from held for sale		17,007
Loan payments, transferred to held for sale and other		(24,150	)
Balance, end of period	$	111,061

⁽¹⁾ The unpaid principal balance ("UPB") of home loans sold was $45.25 billion for the three months ended March 31, 2007.

WM-13

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Quarter Ended
Detail of Revenue from Sales and Servicing of Home Mortgage Loans	Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
	2007			2006			2006			2006			2006
Gain from home mortgage loans and originated mortgage-backed securities, net of hedging and risk management instruments(1):
Gain from home mortgage loans and originated mortgage-backed securities	$	149		$	64		$	206		$	190		$	166
Revaluation gain (loss) from derivatives economically hedging loans held for sale		(54	)		91			(87	)		61			43
Gain from home mortgage loans and originated mortgage-backed securities,
net of hedging and risk management instruments		95			155			119			251			209
Home mortgage loan servicing revenue (expense):
Home mortgage loan servicing revenue(2)		514			497			525			586			572
Change in MSR fair value due to payments on loans and other		(356	)		(375	)		(410	)		(460	)		(409	)
Net mortgage loan servicing revenue		158			122			115			126			163
Change in MSR fair value due to valuation inputs or assumptions		(96	)		(80	)		(469	)		435			413
Revaluation gain (loss) from derivatives economically hedging MSR		(32	)		(33	)		353			(433	)		(522	)
Adjustment to MSR fair value for MSR sale		-			-			-			(157	)		-
Home mortgage loan servicing revenue (expense), net of MSR valuation
changes and derivative risk management instruments		30			9			(1	)		(29	)		54
Total revenue from sales and servicing of home mortgage loans	$	125		$	164		$	118		$	222		$	263

(1)	Originated mortgage-backed securities represent available-for-sale securities retained on the balance sheet subsequent to the securitization of mortgage loans that were originated by the Company.
(2)	Includes contractualy specified servicing fees, late charges and loan pool expenses (the shortfall of the scheduled interest required to be remitted to investors and that which is collected from borrowers upon payoff).

	Quarter Ended
	Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
	2007			2006			2006			2006			2006
MSR Valuation and Risk Management(1):
Change in MSR fair value due to valuation inputs or assumptions	$	(96	)	$	(80	)	$	(469	)	$	435		$	413
Gain (loss) on MSR risk management instruments:
Revaluation gain (loss) from derivatives		(32	)		(33	)		353			(433	)		(522	)
Revaluation gain (loss) from certain trading securities		4			(5	)		39			(47	)		(42	)
Loss from certain available-for-sale securities		-			-			(1	)		-			-
Total gain (loss) on MSR risk management instruments		(28	)		(38	)		391			(480	)		(564	)
Total changes in MSR valuation and risk management	$	(124	)	$	(118	)	$	(78	)	$	(45	)	$	(151	)

⁽¹⁾ Excludes $157 million downward adjustment to MSR fair value recognized in the three months ended June 30, 2006.

WM-14

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Quarter Ended
	Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
	2007			2006			2006			2006			2006
Rollforward of Mortgage Servicing Rights(1)
Balance, beginning of period	$	6,193		$	6,288		$	9,162		$	8,736		$	8,041
Home loans:
Additions		760			357			533			607			633
Change in MSR fair value due to payments on loans and other		(356	)		(375	)		(410	)		(460	)		(409	)
Change in MSR fair value due to valuation inputs or
assumptions		(96	)		(80	)		(469	)		435			413
Adjustment to MSR fair value for MSR sale		-			-			-			(157	)		-
Fair value basis adjustment(2)		-			-			-			-			57
Sale of MSR		-			1			(2,527	)		-			-
Net change in commercial real estate MSR		6			2			(1	)		1			1
Balance, end of period	$	6,507		$	6,193		$	6,288		$	9,162		$	8,736
Rollforward of Mortgage Loans Serviced for Others
Balance, beginning of period	$	444,696		$	439,208		$	570,352		$	569,501		$	563,208
Home loans:
Additions		44,526			25,833			29,899			30,949			35,026
Sale of servicing		24			-			(141,842	)		(9	)		-
Loan payments and other		(22,469	)		(20,744	)		(19,288	)		(30,368	)		(29,063	)
Net change in commercial real estate loans		1,005			399			87			279			330
Balance, end of period	$	467,782		$	444,696		$	439,208		$	570,352		$	569,501

	Mar. 31,		Dec. 31,		Sept. 30,		June 30,		Mar. 31,
	2007		2006		2006		2006		2006
Total Servicing Portfolio
Mortgage loans serviced for others	$	467,782	$	444,696	$	439,208	$	570,352	$	569,501
Consumer loans serviced for others		13,645		12,415		13,112		12,644		12,194
Servicing on retained MBS without MSR		1,082		1,140		1,199		1,262		1,334
Servicing on owned loans		226,217		251,766		245,925		247,489		245,469
Subservicing portfolio		465		84,797		137,089		552		588
Total servicing portfolio	$	709,191	$	794,814	$	836,533	$	832,299	$	829,086

	March 31, 2007
	Unpaid		Weighted
	Principal		Average
	Balance		Servicing Fee
			(in basis points,
Mortgage Loans Serviced for Others by Loan Type			annualized)
Agency	$	247,330		31
Private		186,931		55
Subprime mortgage channel-home		33,521		51
Total mortgage loans serviced for others(3)	$	467,782		42

(1)	MSR as a percentage of mortgage loans serviced for others was 1.39%, 1.39%, 1.43%, 1.61% and 1.53% at March 31, 2007, December 31, 2006, September 30, 2006, June 30, 2006 and March 31, 2006.
(2)	Pursuant to the adoption of Statement No. 156 on January 1, 2006, the Company applied the fair value method of accounting to its mortgage servicing assets. The valuation allowance of $914 million was written off against the recorded value of the MSR, and the $57 million difference between the net carrying value and fair value of the MSR was recorded as an increase to the basis of the Company's mortgage servicing rights.
(3)	Weighted average coupon rate was 6.30% at March 31, 2007.

WM-15

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Quarter Ended
	Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
	2007			2006			2006			2006			2006
Allowance for Loan and Lease Losses
Balance, beginning of quarter	$	1,630		$	1,550		$	1,663		$	1,642		$	1,695
Allowance transferred to loans held for sale		(148	)		(158	)		(125	)		(87	)		(30	)
Allowance acquired through business combinations/other		7			30			-			-			-
Provision for loan and lease losses		234			344			166			224			82
		1,723			1,766			1,704			1,779			1,747
Loans charged off:
Loans secured by real estate:
Home loans(1)		(35	)		(16	)		(12	)		(11	)		(12	)
Home equity loans and lines of credit(1)		(29	)		(13	)		(8	)		(6	)		(4	)
Subprime mortgage channel(2)		(40	)		(52	)		(47	)		(21	)		(20	)
Home construction(3)		-			(4	)		(3	)		-			-
Other real estate		-			(1	)		(2	)		-			(3	)
Total loans secured by real estate		(104	)		(86	)		(72	)		(38	)		(39	)
Consumer:
Credit card		(96	)		(68	)		(98	)		(94	)		(63	)
Other		(3	)		(3	)		(3	)		(6	)		(7	)
Commercial		(9	)		(9	)		(6	)		(4	)		(8	)
Total loans charged off		(212	)		(166	)		(179	)		(142	)		(117	)
Recoveries of loans previously charged off:
Loans secured by real estate:
Home loans(1)		1			-			-			1			-
Home equity loans and lines of credit(1)		3			2			2			3			1
Subprime mortgage channel(2)		1			4			-			1			1
Multi-family		-			-			-			1			-
Other real estate		-			-			-			1			1
Total loans secured by real estate		5			6			2			7			3
Consumer:
Credit card		16			18			16			15			4
Other		6			3			4			3			4
Commercial		2			3			3			1			1
Total recoveries of loans previously charged off		29			30			25			26			12
Net charge-offs		(183	)		(136	)		(154	)		(116	)		(105	)
Balance, end of quarter	$	1,540		$	1,630		$	1,550		$	1,663		$	1,642
Net charge-offs (annualized) as a percentage
of average loans held in portfolio		0.33	%		0.23	%		0.26	%		0.19	%		0.18	%
Allowance as a percentage of total loans held in portfolio		0.71			0.72			0.64			0.68			0.68

(1)	Excludes home loans and home equity loans and lines of credit in the subprime mortgage channel.
(2)	Represents mortgage loans purchased from recognized subprime lenders and mortgage loans originated under the Long Beach Mortgage name and held in its investment portfolio.
(3)	Represents loans to builders for the purpose of financing the acquisition, development and construction of single-family residences for sale and construction loans made directly to the intended occupant of a single-family residence.

WM-16

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
	2007			2006			2006			2006			2006
Nonperforming Assets and Restructured Loans
Nonaccrual loans(1)(2):
Loans secured by real estate:
Home loans(3)	$	690		$	640		$	568		$	512		$	490
Home equity loans and lines of credit(3)		297			231			162			103			91
Subprime mortgage channel (4)		1,503			1,283			1,121			1,092			1,013
Home construction(5)		41			27			35			31			15
Multi-family		60			46			31			19			21
Other real estate		52			51			53			56			69
Total nonaccrual loans secured by real estate		2,643			2,278			1,970			1,813			1,699
Consumer		1			1			1			1			6
Commercial		28			16			16			16			26
Total nonaccrual loans held in portfolio		2,672			2,295			1,987			1,830			1,731
Foreclosed assets(6)		587			480			405			330			309
Total nonperforming assets	$	3,259		$	2,775		$	2,392		$	2,160		$	2,040
As a percentage of total assets		1.02	%		0.80	%		0.69	%		0.62	%		0.59	%
Restructured loans	$	16		$	18		$	19		$	20		$	21
Total nonperforming assets and restructured loans	$	3,275		$	2,793		$	2,411		$	2,180		$	2,061

(1)	Nonaccrual loans held for sale, which are excluded from the nonaccrual balances presented above, were $195 million, $185 million, $129 million, $122 million, and $201 million at March 31, 2007, December 31, 2006, September 30, 2006, June 30, 2006, and March 31, 2006. Loans held for sale are accounted for at lower of aggregate cost or fair value, with valuation changes included as adjustments to noninterest income.
(2)	Credit card loans are exempt under regulatory rules from being classified as nonaccrual because they are charged off when they are determined to be uncollectible, or by the end of the month in which the account becomes 180 days past due.
(3)	Excludes home loans and home equity loans and lines of credit in the subprime mortgage channel.
(4)	Represents mortgage loans purchased from recognized subprime lenders and mortgage loans originated under the Long Beach Mortgage name and held in its investment portfolio.
(5)	Represents loans to builders for the purpose of financing the acquisition, development and construction of single-family residences for sale and construction loans made directly to the intended occupant of a single-family residence.
(6)	Forclosed real estate securing Government National Mortgage Association (“GNMA”) loans of $72 million, $99 million, $129 million, $142 million, and $167 million at March 31, 2007, December 31, 2006, September 30, 2006, June 30, 2006, and March 31, 2006 have been excluded. These assets are fully collectible as the corresponding GNMA loans are insured by the Federal Housing Administration (“FHA”) or guaranteed by the Department of Veterans Affairs (“VA”).

EX-99.3

Exhibit 99.3

 

Washington Mutual, Inc.

Prepared Remarks for First Quarter 2007 Earnings Conference Call

April 17, 2007

Please see the Cautionary Statements at the end of this document

   
Remarks of Kerry Killinger Chairman and CEO

Good afternoon, everyone. Thank you all for joining us today as we review our first quarter 2007 results.

As Alan mentioned, joining me today on the call is Tom Casey, our CFO. And our President, Steve Rotella, will also be available to answer questions at the end of our remarks.

First Quarter 2007 Earnings

Earlier today at our Annual Shareholders’ meeting, we announced our first quarter net income of $784 million, or $0.86 per share, compared to $985 million, or $0.98 per share in the first quarter of 2006. First quarter 2006 net income included an $85 million after tax partial settlement related to Home Savings goodwill litigation and $9 million from discontinued operations.

Earnings per share from continuing operations were up 30 percent from the fourth quarter of 2006. Reflecting these results and the company’s strong financial position, the Board once again increased the quarterly cash dividend, for the 47^th consecutive quarter, by one cent, to 55 cents per share.

While we’re not at our full earnings potential, I am pleased with the solid results delivered by our team, despite a quarter that was challenged by a number of environmental factors - we have an inverted yield curve, slowing housing markets and unprecedented deterioration in the subprime mortgage business. Our performance demonstrates the continued strength of our diversified business model.

We experienced very strong account and customer growth during the first quarter. In Retail Banking, net new checking accounts were up 82 percent on a linked quarter basis and we added 782,000 new credit card accounts.

| Prepared Remarks - April 17, 2007 Page 2

During the first quarter, our net interest margin increased 21 basis points to 2.79 percent, reflecting the asset repositioning initiated in the fourth quarter, the continued upward repricing of our assets and the ongoing discipline in deposit pricing.

In Home Loans, which felt the brunt of the environmental challenges during the quarter, we were encouraged by improved performance in our prime lending business. However, the first quarter was a period of dramatic increases in subprime credit spreads, creating a very challenging environment for all market participants and driving a loss of $113 million in Home Loans. The major contributors to this result were net losses on sales of subprime loans, part of which was from adjustments to reflect declines in market values of loans held for sale and a decrease in the value of the subprime mortgage residuals, which together totaled $164 million after tax.

I’ll comment in more detail on the subprime mortgage environment and our overall credit quality thoughts in a few minutes, but first let me walk you through the first quarter’s results of our efficiency initiatives and individual business operations.

On the efficiency front, the hard work of 2006 paid off in a 7 percent reduction in noninterest expense on a linked quarter basis. The progress of our efforts is reflected in the reduction of our annual expense run rate by approximately $700 million, or 8 percent, to $8.4 billion based on the first quarter of this year compared to a $9.1 billion annual run rate for the fourth quarter of 2005.

When we embarked on our program to improve our efficiency, our focus was on driving greater productivity across the enterprise. It was to be more than just a cost-cutting exercise. During 2006, while we reduced annual operating costs by $700 million, we also added 1.23 million net new checking accounts, opened 144 new retail stores and added more than 3.2 million new credit card accounts, growing our managed cards receivable by 18 percent. This was a bold initiative and one of the larger efficiency programs ever embarked on by a top ten banking organization in the country.

Well, we have accomplished our goals and have delivered the efficiencies and the growth outlined in that plan. This process was painful as we reduced our employee base by about 18%. But it also means we are now positioned to efficiently grow our businesses. So while we remain disciplined on managing expenses and continuous improvement, our entire management team is intensely focused on improving the revenues generated from our expense base. We believe there is excellent operating leverage in our company and we are working very hard to realize the full earnings potential for our shareholders.

Retail Banking

Now, for a look at our businesses. Our largest and most profitable business, Retail Banking, continued its strong performance in the first quarter. Net income from continuing operations of $569 million was up 4 percent from the fourth quarter of 2006 and, excluding the contribution from portfolio management, was up 5 percent on a linked quarter basis and 21 percent from the same quarter a year ago.

| Prepared Remarks - April 17, 2007 Page 3

I’m very pleased with the fast start that our Retail Banking team got off to, growing net new checking accounts by 328,000. That pace was up 82 percent on a linked quarter basis. The execution of our strategy of attracting new customers with our free checking product and then cross selling other core banking products to them continues to be very successful.

Small business continues to be an attractive opportunity for us. During the first quarter we grew those accounts by 58,000, up 68 percent on a linked quarter basis. To ensure that we maintain and deepen these customer relationships we are adding experienced staff and attractive new services to support our small business clients.

A key proof point of the Retail Banking business model is the ongoing growth of depositor and retail banking fees which were up 15 percent from the first quarter a year ago.

After opening 55 new retail banking stores in the fourth quarter of 2006 and adding another 26 stores as part of the CCBI acquisition, we opened 6 stores in the first quarter. As in prior years, we expect the largest portion of our new store openings to occur in the second half of the year. We have an annual goal of opening one million net new checking accounts each year which requires a balance of strong growth by our current network of stores, our Internet channel (which is wamu.com) and our call centers complemented by the strategic addition of new stores. Given the strong account growth produced by our existing outlets in the first quarter, we believe we can achieve our growth targets with new store openings in the range of 100 to 125 for the year.

| Prepared Remarks - April 17, 2007 Page 4

Card Services

The Card Services Group delivered another strong performance in the first quarter with net income for the quarter of $256 million, up 24 percent from $207 million in the same quarter a year ago and 72 percent on a linked quarter basis. This performance was outstanding, but it was influenced by a higher than average level of securitizations during the quarter, following very strong receivables growth in the fourth quarter.

The Card Services strategy of continuing to market nationally through its outstanding direct marketing capability and partners program while also selling to WaMu retail customers continues to drive excellent results. During the first quarter we added 782,000 new credit card accounts of which about one third came from the WaMu retail channel.

The Credit Card 30-plus day delinquencies of 5.15 percent were down slightly at quarter end from 5.25 percent at the end of 2006. Net credit losses of 6.31 percent for the quarter increased from 5.84 percent on a linked quarter basis, but remain comfortably within our range of expected losses for this portfolio.

We are very pleased with the ongoing strong credit performance of the card portfolio. It reflects the strong credit culture of the team as well as the overall strength of the economy and particularly the low unemployment rates in most parts of the country. We anticipate that as the economy slows both the delinquency and loss levels will increase somewhat in the coming quarters.

Commercial Group

The Commercial Group continues to be successful in leveraging its low cost producer advantage to expand its leading position in multi-family lending. During the first quarter net income increased 40 percent to $94 million compared to the same quarter a year ago.

| Prepared Remarks - April 17, 2007 Page 5

The strategic acquisition of CCBI last year added to both our origination capability and growth in our portfolio. This is reflected in the strong first quarter lending volumes of $3.7 billion, up 33 percent from last year’s first quarter.

The multi-family loan portfolio continues to exhibit outstanding quality with nonperforming loans of only 20 basis points at the end of the quarter and essentially no losses in the past five years.

Home Loans

The Home Loans Group recorded a net loss of $113 million during the first quarter compared to a $122 million loss for the fourth quarter of 2006. The losses in both quarters were driven by the results in the subprime mortgage lending operations.

While the subprime mortgage industry is going through a shakeout period, we saw improvement and positive momentum in our prime home loans operations. Gain on sale of prime-based loans improved over the prior quarter. The demand for prime-based loans in the secondary market was strong, the margins higher than prior quarters and our application volume increased over the quarter.

| Prepared Remarks - April 17, 2007 Page 6

The progress in reducing our home loans cost structure and improving our efficiencies is starting to come through in our home loans performance. While the difficulty in the subprime sector is causing short-term volatility in our results, we believe that longer term we will benefit from the shakeout of weaker, irrational competitors. When combined with the positive trend in our prime business, we expect a return to profitability for Home Loans later in the year.

Summary

I’ll now turn it over to Tom to go into more detail on our financial performance.

 
Remarks of Tom Casey Executive Vice President and CFO

Thank you, Kerry. As Kerry said, we are making good progress in all our businesses, despite the short-term impact of the volatility in the subprime business.

Yield Curve and Net Interest Margin

An important accomplishment during the first quarter was the 21 basis points increase in our net interest margin to 2.79 percent. The increase was driven primarily by three factors. First, was the sale of $17.3 billion in low-yielding loans as part of our balance sheet repositioning initiated last quarter. Second, was the repricing of our adjustable-rate loans to higher rates and growth in higher-yielding loan categories such as credit cards. And on the liability side of the balance sheet, we continued to be disciplined in our deposit pricing which led to a 2 basis point decline in the cost of total interest bearing deposits during the quarter.

We feel very good about the strength of the margin in the first quarter; however, the yield curve continues to be inverted with the spread between five-year swaps and three-month LIBOR at negative 40 basis points. The forward yield curve at this time doesn’t anticipate a decline in short-term rates until late in the year. So while we were pleased with the NIM performance in the first quarter, we are still operating in a difficult environment and the NIM remains well below our long-term target of 3.00 to 3.10 percent.

| Prepared Remarks - April 17, 2007 Page 7

Asset Growth

Average assets of $331.9 billion for the first quarter declined 6 percent on a linked quarter basis, due primarily to the completion of the asset repositioning we outlined during our fourth quarter call. The remaining decline reflects the normal runoff of single-family residential loans that were not replaced with new production. Looking forward, we expect the opportunities for asset growth to remain limited as long as the current inverted yield curve environment persists.

Subprime Lending Market Environment

As you’re all well aware, the market for subprime loans continued to deteriorate during the first quarter and credit spreads for subprime lending portfolios became extremely wide. For example, BBB- spreads increased from around 200 basis points in the fourth quarter to more than 900 basis points in March. Specifically our results were impacted in two ways. First, loans held for sale. Loans held for sale are recorded at the lower of cost or market value and were significantly impacted by lower liquidity in the secondary market. In the first quarter we recognized subprime losses on sale of loans, part of which was from adjustments to reflect declines in market values of loans held for sale, totaling $164 million pretax.

| Prepared Remarks - April 17, 2007 Page 8

Second, subprime residuals. When subprime loans are sold, the seller typically retains a residual interest, which then must be carried on the balance sheet at fair value. Based on actual, and estimates of future, credit performance, we decreased the value of our subprime mortgage residuals by $88 million pretax during the first quarter. At quarter end, the subprime residuals on the balance sheet were $105 million.

Most of the losses in the subprime secondary market during the past two quarters are tied to the poor credit performance of loans originated during 2006 due to the competitive environment that existed during that period. While subprime credit spreads have remained wide during the first few weeks of April, we have successfully sold loans from our held for sale portfolio at prices that substantiate quarter-end values we recorded. As the first quarter progressed and many competitors exited the market, we continuously modified our subprime pricing and underwriting standards. For example, currently, our subprime pricing has a weighted average coupon of approximately 9 percent and we were not originating loans with a higher than 95 percent LTV. This improved pricing and stronger credit profile should help return profitability to this product going forward.

One additional factor that has plagued much of the industry during the first quarter was the recognition of higher reserves for loan repurchase obligations. We identified that risk and adjusted our reserves during the fourth quarter of last year. During the first quarter, we experienced a steady decline in first payment defaults and investor requests for loan repurchases moderated. As a result, no material adjustment was necessary for the repurchase reserves during the first quarter.

Credit Quality

Now I’ll review our credit quality.

In total, nonperforming assets as a percentage of total assets was 1.02 percent at the end of the first quarter up from 80 basis points at year end. Accounting for about one third, or about 7 basis points, of the increase in the NPA ratio was the fact that period ending total assets decreased 8 percent during the quarter.

Net charge-offs for the quarter of $183 million were up $47 million from the fourth quarter. On WM-15 you can see that $30 million of the increase is from credit cards. The increase in credit card charge-offs primarily reflects a reduced level of charge-offs in the fourth quarter of 2006 due to the sale of higher-risk loans from the portfolio in that quarter. The remaining increase in charge-offs came from an increase in home equity and home loans.

| Prepared Remarks - April 17, 2007 Page 9

In the chart in our prepared remarks, you can see that subprime nonperforming loans are over 7 percent. The increase is being driven by loans originated in 2006 that are performing below our expectations, including the transfer of approximately $110 million of subprime nonperforming loans from loans held for sale. However, while we are seeing much higher delinquencies, actual charge-offs remain relatively stable. We continue to monitor this portfolio very carefully and are proactively working with customers and making accommodations when appropriate to minimize losses.

As we look at our other portfolios, we are very comfortable with the continued strong quality they reflect. But because of the increased interest in credit risk this quarter, we have included our portfolio statistics at the end of our prepared remarks, which Kerry will discuss in a moment.

Provision for Loan Losses

Moving on to the provision for loan losses, the provision totaled $234 million for the quarter down from $344 million in the previous quarter, primarily due to a lower provision for credit cards. The credit card provision for the fourth quarter of $275 million reflected very strong total managed card receivables growth, most of which was retained on the balance sheet. In comparison, the card provision of $106 million for the first quarter reflected flattish total managed receivables growth but a much higher level of card securitizations resulting in a reduction of on balance sheet receivables.

| Prepared Remarks - April 17, 2007 Page 10

Non-card provision for loan losses was $128 million up from $69 million in the prior quarter, primarily due to the downturn in the housing sector and the related increase in the level of net charge-offs. During the quarter net charge-offs for home loans and home equity both increased. Going forward we expect both NPAs and charge-offs to increase somewhat as these portfolios continue to season and adjust to the slower housing market. However, overall, these portfolios are good quality and we expect them to perform well despite this less favorable market environment.

Earnings Driver Guidance

So now, let me update you on our earnings drivers for 2007 given the current environment and our expectations for the remainder of the year.

2007 Earnings Driver Guidance
Driver	January 2007 Guidance	April 2007 Guidance
1) Average assets	0% - 5% decline
2) Net interest margin	2.85% - 2.95%
3) Credit provisioning	$1.1 - $1.2 billion	$1.3 - $1.5 billion
4) Depositor and other retail banking fees	10% - 12% growth
5) Noninterest income	$6.7 - $6.9 billion
6) Noninterest expense	$8.4 - $8.5 billion

Average Assets

Given the 6 percent average asset decline during the first quarter and our expectations for continuation of the challenging interest rate environment, our bias is now toward the lower end of our guidance range of zero to down 5 percent. So if we don’t see asset growth opportunities you can expect us to continue to buy back our stock throughout the rest of the year.

Net Interest Margin

As I said earlier, the forward yield curve doesn’t anticipate any decrease in short-term rates by the Fed until late in the year, so that will provide limited benefit for our NIM in 2007. That’s about the same view we had when we last provided NIM guidance in January. So with a NIM of 2.79 percent in the first quarter, we are maintaining our expected NIM in a range of 2.85 to 2.95 percent.

Credit Provision

The further softening of the housing market and rising NPAs in the first quarter lead us to conclude that our guidance for credit provisioning should be increased. In particular, we anticipate a need to increase provisions for subprime and home equity loans where there is less loan-to-value protection. Therefore we are raising our guidance range from $1.1 to $1.2 billion to our current range of $1.3 to $1.5 billion.

Depositor and other retail banking fees

Given our strong first quarter performance of depositor and other retail banking fees up 15 percent over last year’s first quarter, we continue to be comfortable with our guidance for depositor and other retail banking fees of 10 to 12 percent.

| Prepared Remarks - April 17, 2007 Page 11

Noninterest Income

We expect the subprime market to remain somewhat volatile and are not anticipating subprime gain on sale to recover to normal levels in the near term. However, the market demand for prime mortgage loans is strong and given our decision to sell loans rather than grow assets we expect good gain on sale from these products. Therefore, we are maintaining our noninterest income guidance of $6.7 to $6.9 billion for the year.

Noninterest Expense

Operating expenses continue to be well controlled and we remain very comfortable with our full-year guidance range of $8.4 to $8.5 billion for the year.

I’ll now turn it back over to Kerry for his summary comments.

  Kerry Killinger Chairman and CEO (continued)

Thanks, Tom.

Recap

Before we open it up for your questions, I’d like to anticipate some mortgage related questions and make a few additional comments regarding credit quality in general.

Clearly the mortgage industry is contracting from the extended period of strong housing sales and rising prices fueled by low market interest rates, massive liquidity and a strong economy. A correction in housing prices was inevitable and we have been anticipating it for nearly two years now.

First, let’s address the most publicized problem over the quarter, which is subprime lending. Subprime mortgage lending is a small part of our overall business, but it has had an unfavorable impact on our results for the past two quarters. The soft housing market, flat yield curve and aggressive credit competition drove a rapid increase in delinquencies, particularly in loans originated in 2006. Weaker players were unable to find liquidity to sustain their businesses, leading to market disruption and a dramatic increase in subprime credit spreads, with a corresponding decrease in the value of existing subprime assets. Secondary market liquidity has been reduced for all players.

WaMu took several steps to reduce our exposure in this market sector. We tightened credit guidelines, adjusted pricing and sold virtually all of our 2004 and 2005 subprime residuals. In 2006, we sold nearly all of our subprime first mortgage production. At quarter end loans held for investment which were originated through the subprime mortgage channel equaled only 6 percent of our assets. Our subprime mortgage channel production for the first quarter of 2007 was down 51 percent from the same quarter of 2006. In other words, we decided to significantly reduce our market share during a period of above average uncertainty. In hindsight, this was the correct move. Nonetheless, the extreme widening of credit spreads impacted our gain on sale and the value of our residuals in the first quarter.

So we were impacted by credit and market conditions in the first quarter. But the strength of our diversified business model allowed us to weather this storm and we now have an enhanced competitive position from which to gain market share as conditions improve. We have already seen many marginal competitors leave, we have seen improved pricing, we have seen improved credit performance on recent originations as a result of tighter underwriting and we are being contacted each and every day by mortgage professionals wanting to join our team. While being very prudent, we are capturing good opportunities for future growth.

| Prepared Remarks - April 17, 2007 Page 12

We are committed to providing a full range of retail and small business banking products to our customers, who have a variety of credit profiles. Subprime loans provide a valuable source of credit for many customers. So we will continue to provide credit to consumers who need and deserve it.

We are of course continuing to study the latest interagency regulatory proposed guidance on subprime mortgage lending. We support prudent underwriting, appropriate and full disclosures to customers and a level playing field for all market participants. So we are very supportive of those actions which strengthen the industry and weed out the marginal and undisciplined players. And we welcome more oversight of the largely unregulated activities of mortgage brokers originating loans for Wall Street securitizations.

We believe the ultimate winners in this industry will be those with substantial capital and liquidity, adequate scale to be efficient, properly diversified and disciplined to achieve attractive returns over the long-term and weather the difficult parts of the economic cycle. We believe we are well positioned on all of those fronts and we intend to prudently expand our share of the mortgage market in targeted areas where the risk adjusted returns meet or exceed our required returns.

Next, let’s look at overall credit quality. With the economy performing well, our card services and commercial portfolios are performing very well. So our current credit challenges are pretty much centered in loans with single family residences as collateral. These principal loan categories are subprime, Alt-A, Option ARMs and home equity. Let’s take a quick look at each of these portfolios.

First, subprime. As we have seen delinquency problems increase in the subprime market generally and in our portfolio as well, we have taken the appropriate steps, including increasing our provision guidance for this uncertainty. At quarter end, our subprime mortgage channel loans totaled $20.4 billion. This portfolio has been built over many years and approximately 60 percent of the portfolio was originated in 2005 or earlier. The first mortgage loans in this portfolio have an average estimated current LTV of 66 percent and an average FICO score of 620. Only 2 percent of these loans have a current estimated LTV in excess of 90 percent. The home equity loans in this portfolio are of good quality for subprime loans, with an average FICO score of 682 and an average combined LTV of 93 percent.

Next, Alt-A. We are an active Alt-A lender, but for us it’s predominately originated for sale. In 2006, our Alt-A volume totaled $25.3 billion and our Alt-A sales were $21.4 billion. At the end of the first quarter, we had $6.1 billion in loans held for sale and our Alt-A residuals totaled just $21 million. In other words, we have very limited credit exposure to the Alt-A market at this time.

Next, Option ARMs. Our Option ARM portfolio was $58.1 billion at the end of the first quarter. It is high quality and continues to perform well, with the average current FICO scores at 699. The portfolio is well seasoned with an average estimated current LTV of 59 percent, as a result of us selling approximately two thirds of our production volume during 2005 and 2006. And only 1 percent of this portfolio had LTVs above 90 percent at time of origination.

| Prepared Remarks - April 17, 2007 Page 13

Finally, prime home equity. Our Home Equity Loan portfolio was $53.4 billion at the end of the first quarter. This portfolio remains very high quality with an average combined original LTV of 71 percent and an average FICO of 729. Only 2 percent of this portfolio had combined LTVs in excess of 90 percent at origination. About 26 percent of this portfolio is first liens. Similar to Option ARMs, we expect delinquencies and losses to rise over the balance of the year, but we view the quality as quite good.

In summary, as we look at our portfolio, we continue to be very satisfied with the overall credit performance. We expect delinquencies and losses to rise, but remain quite manageable and in line with the guidance that Tom reviewed on loan loss provisioning for the year.

As Tom mentioned, attached to our prepared remarks this quarter is a complete risk profile of our individual loan portfolios. This information is usually provided about a week after this call, but we accelerated it due to the interest in credit risk at this time.

With that we would be happy to answer any questions that you have at this time.

Prepared Remarks Appendix - Q1 2007 Credit Risk Management Prepared Remarks Appendix - Q1 2007 Credit Risk Management 2 2 1 Single-Family Residential excludes Custom and Builder Construction and Subprime Mortgage Channel. 2 Managed Credit Cards adds an additional $14.1 billion. 3 Home Equity excludes Home Equity loans included in the Subprime Mortgage Channel. Other $2.3 Other Commercial $8.5 Credit Cards $9.5 Single-Family Residential $93.5 Home Equity $53.4 Multi-Family $29.5 Subprime Mortgage Channel $20.4 43% 25% 14% 9% 4% 1% 4% 2 1 Loan Portfolio Mix $217 billion As of 3/31/07 ($B) 3

Single-Family Residential Portfolio1 Current FICO = 708 $110.0 $114.1 $123.8 $125.2 $121.1 $99.5 $93.5 $0 $20 $40 $60 $80 $100 $120 $140 2004 2005 1Q '06 2Q '06 3Q '06 4Q '06 1Q '07 Period End Portfolio Balance ($B 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% Annual NCO Rate SFR Annual NCO 0.04% 0.03% Single-Family Residential Portfolio1 0. 14% Original LTV = 70% Est. Current LTV = 56% Est. Current LTV >90% = 1% Est. Current LTV >80% = 5% 1 Excludes Custom and Builder Construction and Subprime Mortgage Channel. Option ARM Portfolio Current FICO = 699 Original LTV = 71% Est. Current LTV = 59% Est. Current LTV >90% = 1% Est. Current LTV >80% = 6% Amount by which the current principal balance exceeds the original principal balance Unpaid Principal Balance Negative amortization as a % of the Option ARM portfolio 07 Period End Portfolio Balance ($B 0.00% 1.00% 2.00% 3.00% 4.00% Amount by which the current principal balance exceeds the original principal balance Unpaid Principal Balance Negative amortization as a % of the Option ARM portfolio Option ARM Portfolio Current FICO = 699 Original LTV = 71% Est. Current LTV = 59% Est. Current LTV >90% = 1% Est. Current LTV >80% = 6% $0.04 $0.01 $0.16 $0.89 $1.12 $49.3 $66.3 $71.2 $63.6 $58.1 $49.3 $66.3 $71.0 $57.0 $57.0 $62.7 1.93% 1.40% 0.22% 0.09% 0 $10 $20 $30 $40 $50 $60 $70 $80 2003 2004 2005 2006 1Q '07 Period End Portfolio Balance ($B 0.00% 1.00% 2.00% 3.00% 4.00%

Current FICO = 729 Original Combined LTV = 71% Original Combined LTV >90% = 2% Original Combined LTV >80% = 32% $43.6 $50.8 $52.6 $52.8 $52.9 $53.4 $51.9 $0 $10 $20 $30 $40 $50 $60 2004 2005 1Q '06 2Q '06 3Q '06 4Q '06 1Q '07 Period End Portfolio Balance ($B) 1 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% Annual NCO Rate HEL/HELOC Annual NCO Rate 0.05% 0.04% 0.02% Home 1 Excludes Home Equity loans included in the Subprime Mortgage Channel. Includes mortgage loans purchased from recognized subprime lenders and mortgage loans originated under the Long Beach Mortgage name and held for investment. $0 $5 $10 $15 $20 $25 2004 2005 1Q '06 2Q '06 3Q '06 4Q '06 1Q '07 Period End Portfolio Balance ($B) 0.00% 0.50% 1.00% 1.50% 2.00% Annual NCO Rate Home Equity First Mortgages Annual NCO Rate 0.38% 0.23% 0.23% Subprime Subprime Mortgage Channel Portfolio1 0.76% $20.1 $20.2 $21.2 $19.2 $20.5 $17.6 $2.1 $2.8 Home Loans Current FICO = 620 Original LTV = 78% Est. Current LTV = 66% Est. Current LTV >90% = 2% Est. Current LTV >80% = 15% Home Equity Current FICO = 682 Original Combined LTV = 93% Original Combined LTV >90% = 65% Original Combined LTV >80% = 90% Annual NCO Rate 0.00% 0.50% 1.00% 1.50% 2.00% 0 $5 $10 $15 $20 $25 2004 2005 1Q '06 2Q '06 3Q '06 4Q '06 1Q '07 Period End Portfolio Balance ($B) 0.00% 0.50% 1.00% 1.50% 2.00% Annual NCO Rate Home Equity First Mortgages Annual NCO Rate 0.38% 0.23% 0.23% Subprime Mortgage Channel Portfolio1 0.76% $20.1 $20.2 $21.2 $19.2 $20.5 $17.6 $2.1 $2.8 Home Loans Current FICO = 620 Original LTV = 78% Est. Current LTV = 66% Est. Current LTV >90% = 2% Est. Current LTV >80% = 15% Home Equity Current FICO = 682 Original Combined LTV = 93% Original Combined LTV >90% = 65% Original Combined LTV >80% = 90% $1.5 $0.4 0.41% 0.93% 0.92% $0.1

$0 $10 $20 $30 $40 2004 2005 1Q '06 2Q '06 3Q '06 4Q '06 1Q '07 Period End Portfolio Balance ($B) 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% Annual NCO Rate Other Commercial Multi-Family Lending Annual NCO Rate 0.02% 0.12% 0.01% 0.06% 0.07% $22.3 $25.6 $26.1 $26.7 $29.5 1 Other Commercial consists of Other Real Estate and Commercial Loans. 0.06% 1 $31.2 $32.8 $33.5 $34.0 $30.2 $38.0 0.07% 29.5 1 Other Commercial consists of Other Real Estate and Commercial Loans. $8.5 $7.3 $7.4 $7.2 $8.9 Commercial Portfolio $7.7 $27.4 0.06% 1 $31.2 $32.8 $33.5 $34.0 $30.2 $38.0 0.07% $8.4 $35.1 $38 $0 $5 $10 $15 $20 $25 $30 2004 2005 1Q '06 2Q '06 3Q '06 4Q '06 1Q '07 Period End Managed Receivables ($B) 1 0% 4% 8% 12% 16% 20% Annual NCO Rate Managed Card Services Managed Annual NCO Rate 5.84% 7.72% 11.65% Managed 18.5 $20.0 $20.1 $21.1 $21.9 $23.5 $23.6 $0 $5 $10 $15 $20 $25 $30 2004 2005 1Q '06 2Q '06 3Q '06 4Q '06 1Q '07 Period End Managed Receivables ($B) 1 0% 4% 8% 12% 16% 20% Annual NCO Rate Managed Card Services Managed Annual NCO Rate 5.84% 7.72% 11.65% Managed Card Data presented for periods prior to 4Q ‘05 is for Providian Financial Corp.

Nonperforming Assets $ Nonperforming Assets % Nonperforming Assets 0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 2002 2003 2004 2005 2006 1Q '07 Period End Balance ($MM 0.10% 0.10% 0.30% 0.50% 0.70% 0.90% 1.10% 1.30% NPA Rate 0.93% 0.70% 0.58%

Allowance for loan and lease losses (period end) Net Charge-offs Provision Allowance as a % of loans held in portfolio ($ millions) WaMu acquisition of Providian on 10/1/2005 reflected in data beginning in 4Q ’05 Allowance for Loan and Lease Losses Period End Balance ($MM) 0 $400 $800 $1,200 $1,600 $2,000 2005 2006 1Q '06 1Q '07 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% Allowance as a % of Loans Held in Portfolio $1,695 $1,630 $1,642 $1,540 $244 $510 $105 $183 $316 $816 $82 $234 0.71% 0.68% 0.72% 0.74% 2005 2006 1Q '06 1Q '07 WaMu acquisition of Providian on 10/1/2005 reflected in data beginning in 4Q ’05

0.57% 1.02% $2,483 $1,937 $1,962 $2,775 $3,259 2002 2003 2004 2005 2006 1Q '07

Cautionary Statements This presentation 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 document that are not historical facts. When used in this presentation, the words “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” 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 “Factors That May Affect Future Results” in Washington Mutual’s 2006 Annual Report on Form 10-K include: ⑀⍽ Volatile interest rates and their impact on the mortgage banking business; ⑀⍽ Credit risk; ⑀⍽ Operational risk; ⑀⍽ Risks related to credit card operations; ⑀⍽ Changes in the regulation of financial services companies, housing government-sponsored enterprises and credit card lenders; ⑀⍽ Competition from banking and nonbanking companies; ⑀⍽ General business, economic and market conditions; and ⑀⍽ Reputational risk. There are other factors not described in our 2006 Form 10-K and which are beyond the Company’s ability to anticipate or control that could cause results to differ.