EX-99.2 3 a5517246ex99_2.htm EXHIBIT 99.2 a5517246ex99_2.htm
Exhibit 99.2
WM-1 
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions, except per share data)
(unaudited)
 
             
    
Quarter Ended
   
Nine Months Ended
 
    
Sept. 30,
   
June 30,
   
Mar. 31,
   
Dec. 31,
   
Sept. 30,
   
Sept. 30,
   
Sept. 30,
 
    
2007
   
2007
   
2007
   
2006
   
2006
   
2007
   
2006
 
PROFITABILITY
                                         
    Net income
 
$
210
   
$
830
   
$
784
   
$
1,058
   
$
748
   
$
1,825
   
$
2,501
 
    Net interest income
   
2,014
     
2,034
     
2,081
     
1,998
     
1,947
     
6,131
     
6,123
 
    Noninterest income
   
1,379
     
1,758
     
1,541
     
1,592
     
1,570
     
4,678
     
4,786
 
    Noninterest expense
   
2,153
     
2,138
     
2,105
     
2,257
     
2,184
     
6,396
     
6,551
 
    Diluted earnings per common share:
                                                       
        Income from continuing operations
 
$
0.23
   
$
0.92
   
$
0.86
   
$
0.66
   
$
0.76
   
$
2.02
   
$
2.51
 
        Income from discontinued operations
   
-
     
-
     
-
     
0.44
     
0.01
     
-
     
0.03
 
        Net income
   
0.23
     
0.92
     
0.86
     
1.10
     
0.77
     
2.02
     
2.54
 
    Diluted weighted average number of
common shares outstanding
                                                       
    (in thousands)
   
876,002
     
893,090
     
899,706
     
955,817
     
967,376
     
889,534
     
981,997
 
    Net interest margin
    2.86 %     2.90 %     2.79 %     2.58 %     2.53 %     2.85 %     2.64 %
    Dividends declared per common share
 
$
0.56
   
$
0.55
   
$
0.54
   
$
0.53
   
$
0.52
   
$
1.65
   
$
1.53
 
    Book value per common share
(period end)(1)
   
27.21
     
27.27
     
27.30
     
28.21
     
27.65
     
27.21
     
27.65
 
    Return on average assets
    0.26 %     1.05 %     0.95 %     1.20 %     0.86 %     0.75 %     0.96 %
    Return on average common equity
   
3.45
     
13.74
     
12.99
     
16.03
     
11.47
     
10.10
     
12.68
 
    Efficiency ratio(2)(3)
   
63.42
     
56.38
     
58.13
     
62.87
     
62.09
     
59.18
     
60.05
 
                                                          
ASSET QUALITY
                                                       
    Nonperforming assets(4) to total assets
    1.65 %     1.29 %     1.02 %     0.80 %     0.69 %     1.65 %     0.69 %
    Allowance as a percentage of loans held
in portfolio
   
0.80
     
0.73
     
0.71
     
0.72
     
0.64
     
0.80
     
0.64
 
                                                          
CREDIT PERFORMANCE
                                                       
    Provision for loan and lease losses
 
$
967
   
$
372
   
$
234
   
$
344
   
$
166
   
$
1,574
   
$
472
 
    Net charge-offs
   
421
     
271
     
183
     
136
     
154
     
876
     
375
 
                                                          
CAPITAL ADEQUACY
                                                       
    Capital Ratios for WMI:
                                                       
        Tangible equity to total tangible assets(5)
    5.61 %     6.07 %     5.78 %     6.04 %     5.86 %     5.61 %     5.86 %
        Total risk-based capital to total
risk-weighted assets(6)
   
10.53
     
11.04
     
11.17
     
11.77
     
11.10
     
10.53
     
11.10
 
        Tier 1 capital to average total assets(6)
   
5.86
     
6.09
     
5.87
     
6.35
     
6.28
     
5.86
     
6.28
 
    Capital Ratios for WMB (well-capitalized
minimum)(7):
                                                       
        Tier 1 capital to adjusted total
assets (5.00%)
   
6.40
     
7.02
     
6.70
     
6.79
     
6.47
     
6.40
     
6.47
 
        Adjusted tier 1 capital to total
risk-weighted assets (6.00%)
   
7.47
     
8.14
     
7.88
     
8.28
     
8.12
     
7.47
     
8.12
 
        Total risk-based capital to total
risk-weighted assets (10.00%)
   
11.07
     
12.17
     
11.94
     
12.16
     
11.30
     
11.07
     
11.30
 
                                                          
SUPPLEMENTAL DATA
                                                       
    Average balance sheet:
                                                       
       Total loans held in portfolio
 
$
227,348
   
$
216,004
   
$
222,617
   
$
239,265
   
$
242,165
   
$
222,007
   
$
239,037
 
       Total interest-earning assets(2)
   
283,263
     
279,836
     
295,700
     
314,784
     
312,827
     
286,221
     
311,300
 
       Total assets
   
320,475
     
316,004
     
331,905
     
353,056
     
349,542
     
322,753
     
347,310
 
       Total deposits
   
198,649
     
206,765
     
210,764
     
214,801
     
208,912
     
205,348
     
200,131
 
       Total stockholders' equity
   
23,994
     
24,436
     
24,407
     
26,700
     
26,147
     
24,278
     
26,308
 
    Period-end balance sheet:
                                                       
       Total loans held in portfolio, net
   
235,243
     
213,434
     
215,481
     
223,330
     
240,215
     
235,243
     
240,215
 
       Total assets
   
330,110
     
312,219
     
319,985
     
346,288
     
348,877
     
330,110
     
348,877
 
       Total deposits
   
194,280
     
201,380
     
210,209
     
213,956
     
210,882
     
194,280
     
210,882
 
       Total stockholders' equity
   
23,965
     
24,210
     
24,578
     
26,969
     
26,458
     
23,965
     
26,458
 
       Common shares outstanding at the
end of period (in thousands)(8)
   
868,802
     
875,722
     
888,111
     
944,479
     
945,098
     
868,802
     
945,098
 
       Employees at end of period
   
49,748
     
49,989
     
49,693
     
49,824
     
51,056
     
49,748
     
51,056
 

(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. Minority interests of $2.94 billion for September 30, 2007 and June 30, 2007, $2.45 billion for March 31, 2007 and December 31, 2006 and $1.96 billion for September 30, 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 September 30, 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
 
   
Sept. 30
   
June 30,
   
Mar. 31,
   
Dec. 31,
   
Sept. 30,
 
   
2007
 
 
2007
   
2007
   
2006
   
2006
 
Interest Income
                             
      Loans held for sale
 
$
248
   
$
421
   
$
562
   
$
515
   
$
435
 
      Loans held in portfolio
   
3,992
     
3,786
     
3,900
     
4,053
     
4,012
 
      Available-for-sale securities
   
392
     
351
     
332
     
392
     
379
 
      Trading assets
   
108
     
108
     
113
     
102
     
140
 
      Other interest and dividend income
   
116
     
82
     
101
     
148
     
139
 
            Total interest income
   
4,856
     
4,748
     
5,008
     
5,210
     
5,105
 
Interest Expense
                                       
      Deposits
   
1,650
     
1,723
     
1,772
     
1,843
     
1,739
 
      Borrowings
   
1,192
     
991
     
1,155
     
1,369
     
1,419
 
            Total interest expense
   
2,842
     
2,714
     
2,927
     
3,212
     
3,158
 
                  Net interest income
   
2,014
     
2,034
     
2,081
     
1,998
     
1,947
 
      Provision for loan and lease losses
   
967
     
372
     
234
     
344
     
166
 
                  Net interest income after provision for loan and lease losses
   
1,047
     
1,662
     
1,847
     
1,654
     
1,781
 
Noninterest Income
                                       
      Revenue from sales and servicing of home mortgage loans
   
161
     
300
     
125
     
164
     
118
 
      Revenue from sales and servicing of consumer loans
   
418
     
403
     
443
     
372
     
355
 
      Depositor and other retail banking fees
   
740
     
720
     
665
     
692
     
655
 
      Credit card fees
   
209
     
183
     
172
     
182
     
165
 
      Securities fees and commissions
   
67
     
70
     
60
     
54
     
52
 
      Insurance income
   
29
     
29
     
29
     
30
     
31
 
      Gain (loss) on trading assets
    (153 )     (145 )     (108 )     (81 )    
68
 
      Gain (loss) from sales of other available-for-sale securities
    (99 )    
7
     
35
      (1 )     (1 )
      Other income
   
7
     
191
     
120
     
180
     
127
 
             Total noninterest income
   
1,379
     
1,758
     
1,541
     
1,592
     
1,570
 
Noninterest Expense
                                       
      Compensation and benefits
   
910
     
977
     
1,002
     
945
     
939
 
      Occupancy and equipment
   
371
     
354
     
376
     
476
     
408
 
      Telecommunications and outsourced information services
   
135
     
132
     
129
     
133
     
142
 
      Depositor and other retail banking losses
   
71
     
58
     
61
     
64
     
57
 
      Advertising and promotion
   
125
     
113
     
98
     
107
     
124
 
      Professional fees
   
52
     
55
     
38
     
89
     
57
 
      Other expense
   
489
     
449
     
401
     
443
     
457
 
             Total noninterest expense
   
2,153
     
2,138
     
2,105
     
2,257
     
2,184
 
      Minority interest expense
   
53
     
42
     
43
     
34
     
34
 
                         Income from continuing operations before income taxes
   
220
     
1,240
     
1,240
     
955
     
1,133
 
                         Income taxes
   
10
     
410
     
456
     
315
     
394
 
                                Income from continuing operations
   
210
     
830
     
784
     
640
     
739
 
Discontinued Operations(1)
                                       
                         Income from discontinued operations before income taxes
   
-
     
-
     
-
     
2
     
14
 
                         Gain on disposition of discontinued operations
   
-
     
-
     
-
     
667
     
-
 
                         Income taxes
   
-
     
-
     
-
     
251
     
5
 
                                Income from discontinued operations
   
-
     
-
     
-
     
418
     
9
 
Net Income
 
$
210
   
$
830
   
$
784
   
$
1,058
   
$
748
 
Net Income Available to Common Stockholders
 
$
202
   
$
822
   
$
777
   
$
1,050
   
$
748
 
                                         
Basic Earnings Per Common Share:
                                       
      Income from continuing operations
 
$
0.24
   
$
0.95
   
$
0.89
   
$
0.68
   
$
0.78
 
      Income from discontinued operations
   
-
     
-
     
-
     
0.45
     
0.01
 
             Net Income
   
0.24
     
0.95
     
0.89
     
1.13
     
0.79
 
                                         
Diluted Earnings Per Common Share:
                                       
      Income from continuing operations
 
$
0.23
   
$
0.92
   
$
0.86
   
$
0.66
   
$
0.76
 
      Income from discontinued operations
   
-
     
-
     
-
     
0.44
     
0.01
 
             Net Income
   
0.23
     
0.92
     
0.86
     
1.10
     
0.77
 
                                         
Dividends declared per common share
   
0.56
     
0.55
     
0.54
     
0.53
     
0.52
 
Basic weighted average number of common shares outstanding
(in thousands)
   
857,005
     
868,968
     
874,816
     
931,484
     
941,898
 
Diluted weighted average number of common shares outstanding
(in thousands)
   
876,002
     
893,090
     
899,706
     
955,817
     
967,376
 

(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 Income
(dollars in millions, except per share data)
(unaudited)
 
   
Nine Months Ended
 
   
Sept. 30,
   
Sept. 30,
 
   
2007
   
2006
 
Interest Income
           
      Loans held for sale
 
$
1,232
   
$
1,292
 
      Loans held in portfolio
   
11,678
     
11,480
 
      Available-for-sale securities
   
1,075
     
1,068
 
      Trading assets
   
329
     
503
 
      Other interest and dividend income
   
299
     
354
 
            Total interest income
   
14,613
     
14,697
 
Interest Expense
               
      Deposits
   
5,145
     
4,420
 
      Borrowings
   
3,337
     
4,154
 
            Total interest expense
   
8,482
     
8,574
 
                  Net interest income
   
6,131
     
6,123
 
      Provision for loan and lease losses
   
1,574
     
472
 
                  Net interest income after provision for loan and lease losses
   
4,557
     
5,651
 
Noninterest Income
               
      Revenue from sales and servicing of home mortgage loans
   
586
     
603
 
      Revenue from sales and servicing of consumer loans
   
1,264
     
1,155
 
      Depositor and other retail banking fees
   
2,125
     
1,875
 
      Credit card fees
   
564
     
456
 
      Securities fees and commissions
   
197
     
161
 
      Insurance income
   
87
     
97
 
      Loss on trading assets
    (406 )     (74 )
      Loss from sales of other available-for-sale securities
    (58 )     (8 )
      Other income
   
319
     
521
 
             Total noninterest income
   
4,678
     
4,786
 
Noninterest Expense
               
      Compensation and benefits
   
2,889
     
2,992
 
      Occupancy and equipment
   
1,102
     
1,235
 
      Telecommunications and outsourced information services
   
396
     
421
 
      Depositor and other retail banking losses
   
190
     
165
 
      Advertising and promotion
   
337
     
335
 
      Professional fees
   
145
     
138
 
      Other expense
   
1,337
     
1,265
 
             Total noninterest expense
   
6,396
     
6,551
 
      Minority interest expense
   
138
     
71
 
                         Income from continuing operations before income taxes
   
2,701
     
3,815
 
                         Income taxes
   
876
     
1,341
 
                                Income from continuing operations
   
1,825
     
2,474
 
Discontinued Operations(1)
               
                         Income from discontinued operations before income taxes
   
-
     
42
 
                         Income taxes
   
-
     
15
 
                                Income from discontinued operations
   
-
     
27
 
Net Income
 
$
1,825
   
$
2,501
 
Net Income Available to Common Stockholders
 
$
1,802
   
$
2,501
 
                 
Basic Earnings Per Common Share:
               
      Income from continuing operations
 
$
2.08
   
$
2.59
 
      Income from discontinued operations
   
-
     
0.03
 
             Net Income
   
2.08
     
2.62
 
                 
Diluted Earnings Per Common Share:
               
      Income from continuing operations
 
$
2.02
   
$
2.51
 
      Income from discontinued operations
   
-
     
0.03
 
             Net Income
   
2.02
     
2.54
 
                 
Dividends declared per common share
   
1.65
     
1.53
 
Basic weighted average number of common shares outstanding (in thousands)
   
866,864
     
954,062
 
Diluted weighted average number of common shares outstanding (in thousands)
   
889,534
     
981,997
 

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

WM-4
 
Washington Mutual, Inc.
Consolidated Statements of Financial Condition
(dollars in millions)
(unaudited)
 
   
Sept. 30,
   
June 30,
   
Mar. 31,
   
Dec. 31,
   
Sept. 30,
 
   
2007
   
2007
   
2007
   
2006
   
2006
 
Assets
                             
   Cash and cash equivalents
 
$
11,370
   
$
4,167
   
$
4,047
   
$
6,948
   
$
6,649
 
   Federal funds sold and securities purchased under agreements to resell
   
4,042
     
3,267
     
8,279
     
3,743
     
5,102
 
   Trading assets
   
3,797
     
5,534
     
5,290
     
4,434
     
5,391
 
   Available-for-sale securities, total amortized cost of $28,725, $28,934,
                                       
      $22,921, $25,073 and $29,136:
                                       
         Mortgage-backed securities
   
20,562
     
20,393
     
16,543
     
18,601
     
22,847
 
         Investment securities
   
7,844
     
7,947
     
6,296
     
6,377
     
6,170
 
            Total available-for-sale securities
   
28,406
     
28,340
     
22,839
     
24,978
     
29,017
 
   Loans held for sale
   
7,586
     
19,327
     
26,874
     
44,970
     
23,720
 
   Loans held in portfolio
   
237,132
     
214,994
     
217,021
     
224,960
     
241,765
 
   Allowance for loan and lease losses
    (1,889 )     (1,560 )     (1,540 )     (1,630 )     (1,550 )
            Loans held in portfolio, net
   
235,243
     
213,434
     
215,481
     
223,330
     
240,215
 
   Investment in Federal Home Loan Banks
   
2,808
     
1,596
     
2,230
     
2,705
     
3,013
 
   Mortgage servicing rights
   
6,794
     
7,231
     
6,507
     
6,193
     
6,288
 
   Goodwill
   
9,062
     
9,056
     
9,052
     
9,050
     
8,368
 
   Other assets
   
21,002
     
20,267
     
19,386
     
19,937
     
21,114
 
            Total assets
 
$
330,110
   
$
312,219
   
$
319,985
   
$
346,288
   
$
348,877
 
Liabilities
                                       
   Deposits:
                                       
        Noninterest-bearing deposits
 
$
31,341
   
$
33,557
   
$
34,367
   
$
33,386
   
$
34,667
 
        Interest-bearing deposits
   
162,939
     
167,823
     
175,842
     
180,570
     
176,215
 
            Total deposits
   
194,280
     
201,380
     
210,209
     
213,956
     
210,882
 
   Federal funds purchased and commercial paper
   
2,482
     
3,390
     
563
     
4,778
     
5,282
 
   Securities sold under agreements to repurchase
   
4,732
     
9,357
     
8,323
     
11,953
     
13,665
 
   Advances from Federal Home Loan Banks
   
52,530
     
21,412
     
24,735
     
44,297
     
47,247
 
   Other borrowings
   
40,887
     
40,313
     
39,430
     
32,852
     
33,883
 
   Other liabilities
   
8,289
     
9,212
     
9,694
     
9,035
     
9,501
 
   Minority interests
   
2,945
     
2,945
     
2,453
     
2,448
     
1,959
 
            Total liabilities
   
306,145
     
288,009
     
295,407
     
319,319
     
322,419
 
Stockholders' equity
                                       
    Preferred stock
   
492
     
492
     
492
     
492
     
492
 
    Capital surplus - common stock
   
2,575
     
2,715
     
3,121
     
5,825
     
5,761
 
    Accumulated other comprehensive loss
    (390 )     (568 )     (268 )     (287 )     (180 )
    Retained earnings
   
21,288
     
21,571
     
21,233
     
20,939
     
20,385
 
            Total stockholders' equity
   
23,965
     
24,210
     
24,578
     
26,969
     
26,458
 
            Total liabilities and stockholders' equity
 
$
330,110
   
$
312,219
   
$
319,985
   
$
346,288
   
$
348,877
 

WM-5
 
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
   
Quarter Ended
 
   
Sept. 30,
   
June 30,
   
Mar. 31,
   
Dec. 31,
   
Sept. 30,
 
   
2007
   
2007
   
2007
   
2006
   
2006
 
Stockholders' Equity Rollforward
                             
Balance, beginning of period
 
$
24,210
   
$
24,578
   
$
26,969
   
$
26,458
   
$
26,131
 
Net income
   
210
     
830
     
784
     
1,058
     
748
 
Cumulative effect from the adoption of new accounting pronouncements
   
-
     
-
      (6 )(1)     (157 )(2)    
-
 
Other comprehensive income (loss), net of income taxes
   
177
      (300 )    
19
     
50
     
419
 
Cash dividends declared on common stock
    (485 )     (484 )     (476 )     (496 )     (497 )
Cash dividends declared on preferred stock
    (8 )     (8 )     (7 )     (8 )    
-
 
Common stock repurchased and retired(3)
    (199 )     (500 )     (2,797 )    
-
      (930 )
Common stock issued
   
60
     
94
     
92
     
64
     
95
 
Preferred stock issued
   
-
     
-
     
-
     
-
     
492
 
Balance, end of period
 
$
23,965
   
$
24,210
   
$
24,578
   
$
26,969
   
$
26,458
 

(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)
The Company repurchased 7.2 million, 13.5 million,  61.4 million, 1.7 million and 18.8 million shares of its common stock in the three months ended September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006 and September 30, 2006.  At September 30, 2007, the total remaining common stock repurchase authority was 47.5 million shares.

WM-6
 
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
 
   
Quarter Ended
   
Nine Months Ended
 
   
Sept. 30,
   
June 30,
   
Mar. 31,
   
Dec. 31,
   
Sept. 30,
   
Sept. 30,
   
Sept. 30,
 
   
2007
   
2007
   
2007
   
2006
   
2006
   
2007
   
2006
 
RETAIL BANKING GROUP
                                         
    Condensed income statement:
                                         
        Net interest income
 
$
1,302
   
$
1,283
   
$
1,275
   
$
1,239
   
$
1,260
   
$
3,861
   
$
3,929
 
        Provision for loan and lease losses
   
318
     
91
     
62
     
47
     
53
     
471
     
120
 
        Noninterest income
   
833
     
819
     
751
     
774
     
738
     
2,404
     
2,140
 
        Inter-segment revenue
   
14
     
21
     
22
     
17
     
17
     
57
     
47
 
        Noninterest expense
   
1,155
     
1,137
     
1,074
     
1,100
     
1,079
     
3,367
     
3,268
 
        Income from continuing operations
before income taxes
   
676
     
895
     
912
     
883
     
883
     
2,484
     
2,728
 
        Income taxes
   
223
     
336
     
342
     
337
     
337
     
901
     
1,043
 
            Income from continuing operations
   
453
     
559
     
570
     
546
     
546
     
1,583
     
1,685
 
            Income from discontinued operations
   
-
     
-
     
-
     
12
     
9
     
-
     
27
 
                Net income
 
$
453
   
$
559
   
$
570
   
$
558
   
$
555
   
$
1,583
   
$
1,712
 
    Performance and other data:
                                                       
        Efficiency ratio
    53.75 %     53.56 %     52.43 %     54.22 %     53.55 %     53.26 %     53.44 %
        Average loans
 
$
147,357
   
$
149,716
   
$
155,206
   
$
172,013
   
$
180,829
   
$
150,731
   
$
179,216
 
        Average assets
   
157,196
     
159,518
     
165,047
     
182,240
     
191,288
     
160,559
     
189,587
 
        Average deposits:
                                                       
           Checking deposits:
                                                       
           Noninterest bearing
   
22,860
     
23,107
     
22,331
     
21,873
     
21,440
     
22,768
     
21,072
 
           Interest bearing
   
28,406
     
30,282
     
31,739
     
33,010
     
34,792
     
30,130
     
37,531
 
           Total checking deposits
   
51,266
     
53,389
     
54,070
     
54,883
     
56,232
     
52,898
     
58,603
 
           Savings and money market deposits
   
43,524
     
43,814
     
43,103
     
41,442
     
38,317
     
43,482
     
37,967
 
           Time deposits
   
50,131
     
48,049
     
46,857
     
47,188
     
45,405
     
48,358
     
42,706
 
              Average deposits
   
144,921
     
145,252
     
144,030
     
143,513
     
139,954
     
144,738
     
139,276
 
        Loan volume
   
6,469
     
5,753
     
5,079
     
5,331
     
4,965
     
17,301
     
16,274
 
        Employees at end of period
   
28,263
     
28,131
     
27,837
     
27,629
     
27,998
     
28,263
     
27,998
 
CARD SERVICES GROUP
                                                       
  Managed basis(1)
                                                       
    Condensed income statement:
                                                       
Net interest income
 
$
689
   
$
660
   
$
653
   
$
664
   
$
633
   
$
2,004
   
$
1,866
 
Provision for loan and lease losses
   
611
     
523
     
388
     
555
     
345
     
1,523
     
1,092
 
Noninterest income
   
399
     
393
     
474
     
451
     
343
     
1,267
     
1,076
 
Inter-segment expense
   
5
     
5
     
4
     
2
     
2
     
14
     
4
 
Noninterest expense
   
320
     
300
     
325
     
316
     
294
     
946
     
884
 
Income before income taxes
   
152
     
225
     
410
     
242
     
335
     
788
     
962
 
Income taxes
   
50
     
84
     
154
     
92
     
128
     
288
     
368
 
                Net income
 
$
102
   
$
141
   
$
256
   
$
150
   
$
207
   
$
500
   
$
594
 
    Performance and other data:
                                                       
Efficiency ratio
    29.56 %     28.68 %     28.96 %     28.40 %     30.16 %     29.06 %     30.08 %
Average loans
 
$
25,718
   
$
24,234
   
$
23,604
   
$
22,875
   
$
21,706
   
$
24,527
   
$
20,762
 
Average assets
   
28,206
     
26,762
     
26,039
     
25,472
     
24,236
     
27,010
     
23,354
 
Employees at end of period
   
2,878
     
2,827
     
2,579
     
2,611
     
2,667
     
2,878
     
2,667
 
                                                         
  Securitization adjustments
                                                       
    Condensed income statement:
                                                       
Net interest income
 
$
(456 )  
$
(459 )  
$
(414 )  
$
(437 )  
$
(411 )  
$
(1,330 )  
$
(1,249 )
Provision for loan and lease losses
    (288 )     (294 )     (282 )     (280 )     (220 )     (865 )     (662 )
Noninterest income
   
168
     
165
     
132
     
157
     
191
     
465
     
587
 
    Performance and other data:
                                                       
Average loans
    (14,488 )     (13,888 )     (12,507 )     (12,811 )     (12,169 )     (13,635 )     (11,947 )
Average assets
    (12,841 )     (12,287 )     (10,961 )     (11,035 )     (10,330 )     (12,036 )     (10,101 )
                                                         
  Adjusted basis
                                                       
    Condensed income statement:
                                                       
Net interest income
 
$
233
   
$
201
   
$
239
   
$
227
   
$
222
   
$
674
   
$
617
 
Provision for loan and lease losses
   
323
     
229
     
106
     
275
     
125
     
658
     
430
 
Noninterest income
   
567
     
558
     
606
     
608
     
534
     
1,732
     
1,663
 
Inter-segment expense
   
5
     
5
     
4
     
2
     
2
     
14
     
4
 
Noninterest expense
   
320
     
300
     
325
     
316
     
294
     
946
     
884
 
Income before income taxes
   
152
     
225
     
410
     
242
     
335
     
788
     
962
 
Income taxes
   
50
     
84
     
154
     
92
     
128
     
288
     
368
 
                Net income
 
$
102
   
$
141
   
$
256
   
$
150
   
$
207
   
$
500
   
$
594
 
    Performance and other data:
                                                       
Average loans
 
$
11,230
   
$
10,346
   
$
11,097
   
$
10,064
   
$
9,537
   
$
10,892
   
$
8,815
 
Average assets
   
15,365
     
14,475
     
15,078
     
14,437
     
13,906
     
14,974
     
13,253
 

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

(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-7
 
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
 
   
Quarter Ended
   
Nine Months Ended
 
(This table is continued from "WM-6.")
 
Sept. 30,
   
June 30,
   
Mar. 31,
   
Dec. 31,
   
Sept. 30,
   
Sept. 30,
   
Sept. 30,
 
   
2007
   
2007
   
2007
   
2006
   
2006
   
2007
   
2006
 
COMMERCIAL GROUP
                                         
    Condensed income statement:
                                         
        Net interest income
 
$
193
   
$
195
   
$
200
   
$
189
   
$
159
   
$
588
   
$
488
 
        Provision for loan and lease losses
   
12
     
2
      (10 )     (69 )     (2 )    
5
      (12 )
        Noninterest income
    (34 )    
62
     
14
     
40
     
25
     
41
     
54
 
        Noninterest expense
   
67
     
74
     
74
     
72
     
60
     
214
     
184
 
        Income before income taxes
   
80
     
181
     
150
     
226
     
126
     
410
     
370
 
        Income taxes
   
26
     
68
     
56
     
86
     
48
     
150
     
141
 
                Net income
 
$
54
   
$
113
   
$
94
   
$
140
   
$
78
   
$
260
   
$
229
 
    Performance and other data:
                                                       
        Efficiency ratio
    41.88 %     28.77 %     34.52 %     31.49 %     32.21 %     34.03 %     33.92 %
        Average loans
 
$
38,333
   
$
38,789
   
$
38,641
   
$
37,552
   
$
32,414
   
$
38,586
   
$
31,774
 
        Average assets
   
40,661
     
41,181
     
41,001
     
40,216
     
34,560
     
40,946
     
33,997
 
        Average deposits
   
7,851
     
6,160
     
3,762
     
3,609
     
2,323
     
5,939
     
2,274
 
        Loan volume
   
4,054
     
4,348
     
3,671
     
4,019
     
3,104
     
12,073
     
8,835
 
        Employees at end of period
   
1,421
     
1,404
     
1,351
     
1,409
     
1,242
     
1,421
     
1,242
 
HOME LOANS GROUP
                                                       
    Condensed income statement:
                                                       
       Net interest income
 
$
183
   
$
215
   
$
245
   
$
273
   
$
276
   
$
644
   
$
904
 
       Provision for loan and lease losses
   
323
     
101
     
49
     
47
     
84
     
474
     
141
 
       Noninterest income
   
184
     
391
     
162
     
126
     
314
     
736
     
1,176
 
       Inter-segment expense
   
9
     
16
     
18
     
15
     
15
     
43
     
43
 
       Noninterest expense
   
554
     
548
     
521
     
534
     
528
     
1,622
     
1,765
 
       Income (loss) before income taxes
    (519 )     (59 )     (181 )     (197 )     (37 )     (759 )    
131
 
       Income taxes (benefit)
    (171 )     (22 )     (68 )     (75 )     (14 )     (261 )    
50
 
                Net income (loss)
 
$
(348 )  
$
(37 )  
$
(113 )  
$
(122 )  
$
(23 )  
$
(498 )  
$
81
 
    Performance and other data:
                                                       
       Efficiency ratio
    154.63 %     92.82 %     133.90 %     138.93 %     92.00 %     121.30 %     86.65 %
       Average loans
 
$
43,737
   
$
43,312
   
$
53,254
   
$
51,048
   
$
45,407
   
$
46,733
   
$
46,419
 
       Average assets
   
61,068
     
60,314
     
71,367
     
71,503
     
70,563
     
64,212
     
73,199
 
       Average deposits
   
13,745
     
17,506
     
16,767
     
19,788
     
20,659
     
15,995
     
19,120
 
       Loan volume
   
26,434
     
35,857
     
34,022
     
37,532
     
41,241
     
96,312
     
134,037
 
       Employees at end of period
   
12,167
     
12,666
     
12,952
     
12,941
     
13,857
     
12,167
     
13,857
 
CORPORATE SUPPORT/TREASURY AND OTHER
                                                       
    Condensed income statement:
                                                       
       Net interest income (expense)
 
$
(35 )  
$
2
   
$
(15 )  
$
(64 )  
$
(107 )  
$
(49 )  
$
(210 )
       Provision for loan and lease losses
    (9 )     (51 )    
27
     
44
      (94 )     (34 )     (207 )
       Noninterest income
    (108 )    
43
     
81
     
142
     
75
     
16
     
137
 
       Noninterest expense
   
57
     
79
     
111
     
235
     
223
     
247
     
450
 
       Minority interest expense
   
53
     
42
     
43
     
34
     
34
     
138
     
71
 
       Loss from continuing operations before
income taxes
    (244 )     (25 )     (115 )     (235 )     (195 )     (384 )     (387 )
       Income taxes (benefit)
    (58 )     (40 )     (71 )     (103 )     (90 )     (170 )     (197 )
              Loss from continuing operations
    (186 )    
15
      (44 )     (132 )     (105 )     (214 )     (190 )
              Income from discontinued operations
   
-
     
-
     
-
     
406
     
-
     
-
     
-
 
                      Net income (loss)
 
$
(186 )  
$
15
   
$
(44 )  
$
274
   
$
(105 )  
$
(214 )  
$
(190 )
    Performance and other data:
                                                       
       Average loans
 
$
1,420
   
$
1,367
   
$
1,345
   
$
1,310
   
$
1,245
   
$
1,377
   
$
1,063
 
       Average assets
   
47,570
     
41,817
     
40,891
     
46,233
     
40,825
     
43,450
     
38,865
 
       Average deposits
   
32,132
     
37,847
     
46,205
     
47,891
     
45,976
     
38,676
     
39,461
 
       Loan volume
   
113
     
72
     
107
     
144
     
58
     
292
     
163
 
       Employees at end of period
   
5,019
     
4,961
     
4,974
     
5,234
     
5,292
     
5,019
     
5,292
 

(This table is continued on "WM-8.")

WM-8
 
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
 
   
Quarter Ended
   
Nine Months Ended
 
(This table is continued from "WM-7.")
 
Sept. 30,
   
June 30,
   
Mar. 31,
   
Dec. 31,
   
Sept. 30,
   
Sept. 30,
   
Sept. 30,
 
   
2007
   
2007
   
2007
   
2006
   
2006
   
2007
   
2006
 
RECONCILING ADJUSTMENTS
                                         
    Condensed income statement:
                                         
       Net interest income(1)
 
$
138
   
$
138
   
$
137
   
$
134
   
$
137
   
$
413
   
$
395
 
       Noninterest income (expense)(2)
    (63 )     (115 )     (73 )     (98 )     (116 )     (251 )     (384 )
       Income before income taxes
   
75
     
23
     
64
     
36
     
21
     
162
     
11
 
       Income taxes (benefit)(3)
    (60 )     (16 )    
43
      (22 )     (15 )     (32 )     (64 )
                      Net income
 
$
135
   
$
39
   
$
21
   
$
58
   
$
36
   
$
194
   
$
75
 
    Performance and other data:
                                                       
       Average loans(4)
 
$
(1,385 )  
$
(1,301 )  
$
(1,479 )  
$
(1,573 )  
$
(1,600 )  
$
(1,388 )  
$
(1,591 )
       Average assets(4)
    (1,385 )     (1,301 )     (1,479 )     (1,573 )     (1,600 )     (1,388 )     (1,591 )
                                                         
TOTAL CONSOLIDATED
                                                       
    Condensed income statement:
                                                       
       Net interest income
 
$
2,014
   
$
2,034
   
$
2,081
   
$
1,998
   
$
1,947
   
$
6,131
   
$
6,123
 
       Provision for loan and lease losses
   
967
     
372
     
234
     
344
     
166
     
1,574
     
472
 
       Noninterest income
   
1,379
     
1,758
     
1,541
     
1,592
     
1,570
     
4,678
     
4,786
 
       Noninterest expense
   
2,153
     
2,138
     
2,105
     
2,257
     
2,184
     
6,396
     
6,551
 
       Minority interest expense
   
53
     
42
     
43
     
34
     
34
     
138
     
71
 
       Income from continuing operations before
income taxes
   
220
     
1,240
     
1,240
     
955
     
1,133
     
2,701
     
3,815
 
       Income taxes
   
10
     
410
     
456
     
315
     
394
     
876
     
1,341
 
          Income from continuing operations
   
210
     
830
     
784
     
640
     
739
     
1,825
     
2,474
 
          Income from discontinued operations
   
-
     
-
     
-
     
418
     
9
     
-
     
27
 
                      Net income
 
$
210
   
$
830
   
$
784
   
$
1,058
   
$
748
   
$
1,825
   
$
2,501
 
    Performance and other data:
                                                       
       Efficiency ratio
    63.42 %     56.38 %     58.13 %     62.87 %     62.09 %     59.18 %     60.05 %
       Average loans
 
$
240,692
   
$
242,229
   
$
258,064
   
$
270,414
   
$
267,832
   
$
246,931
   
$
265,696
 
       Average assets
   
320,475
     
316,004
     
331,905
     
353,056
     
349,542
     
322,753
     
347,310
 
       Average deposits
   
198,649
     
206,765
     
210,764
     
214,801
     
208,912
     
205,348
     
200,131
 
       Loan volume
   
37,070
     
46,030
     
42,879
     
47,026
     
49,368
     
125,978
     
159,309
 
       Employees at end of period
   
49,748
     
49,989
     
49,693
     
49,824
     
51,056
     
49,748
     
51,056
 

(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.
(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-9
 
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
 
   
Quarter Ended
 
   
Sept. 30, 2007
   
June 30, 2007
   
Sept. 30, 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
 
$
4,349
      5.43 %  
$
60
   
$
3,964
      5.39 %  
$
53
   
$
5,085
      5.38 %  
$
70
 
   Trading assets
   
4,509
     
9.54
     
108
     
4,995
     
8.67
     
108
     
6,264
     
8.92
     
140
 
   Available-for-sale securities(2)
    28,536       5.49       392       26,559       5.28       351       28,398       5.33       379  
   Loans held for sale
   
13,344
     
7.41
     
248
     
26,225
     
6.43
     
421
     
25,667
     
6.75
     
435
 
   Loans held in portfolio:
                                                                       
      Loans secured by real estate:
                                                                       
         Home loans(3)(4)
   
97,398
     
6.48
     
1,579
     
90,818
     
6.44
     
1,462
     
123,355
     
5.94
     
1,830
 
         Home equity loans and lines
 of credit(4)
   
57,469
     
7.56
     
1,094
     
54,431
     
7.59
     
1,031
     
52,646
     
7.53
     
998
 
         Subprime mortgage channel(5)
   
20,405
     
6.63
     
338
     
20,152
     
6.80
     
343
     
20,207
     
6.26
     
316
 
         Home construction(6)
   
2,056
     
6.90
     
35
     
2,043
     
6.72
     
34
     
2,059
     
6.41
     
33
 
         Multi-family
   
30,058
     
6.63
     
498
     
29,419
     
6.63
     
488
     
27,100
     
6.42
     
435
 
         Other real estate
   
7,418
     
6.99
     
131
     
6,843
     
7.03
     
120
     
5,696
     
6.76
     
98
 
           Total loans secured by real estate
   
214,804
     
6.83
     
3,675
     
203,706
     
6.83
     
3,478
     
231,063
     
6.41
     
3,710
 
      Consumer:
                                                                       
         Credit card
   
10,332
     
10.28
     
268
     
10,101
     
10.44
     
263
     
9,058
     
11.39
     
260
 
         Other
   
233
     
14.83
     
8
     
254
     
12.44
     
8
     
284
     
12.57
     
9
 
      Commercial
   
1,979
     
8.25
     
41
     
1,943
     
7.73
     
37
     
1,760
     
7.33
     
33
 
           Total loans held in portfolio
   
227,348
     
7.01
     
3,992
     
216,004
     
7.02
     
3,786
     
242,165
     
6.61
     
4,012
 
  Other
   
5,177
     
4.33
     
56
     
2,089
     
5.47
     
29
     
5,248
     
5.21
     
69
 
           Total interest-earning assets
   
283,263
     
6.84
     
4,856
     
279,836
     
6.79
     
4,748
     
312,827
     
6.51
     
5,105
 
Noninterest-earning assets:
                                                                       
   Mortgage servicing rights
   
6,901
                     
6,782
                     
7,201
                 
   Goodwill
   
9,056
                     
9,054
                     
8,339
                 
   Other assets
   
21,255
                     
20,332
                     
21,175
                 
           Total assets
 
$
320,475
                   
$
316,004
                   
$
349,542
                 
Liabilities
                                                                       
Interest-bearing liabilities:
                                                                       
   Deposits:
                                                                       
      Interest-bearing checking deposits
 
$
28,492
     
2.36
     
169
   
$
30,373
     
2.51
     
190
   
$
34,866
     
2.90
     
255
 
      Savings and money market deposits
   
57,377
     
3.32
     
480
     
58,969
     
3.33
     
490
     
49,144
     
3.19
     
396
 
      Time deposits
   
80,719
     
4.92
     
1,001
     
84,330
     
4.96
     
1,043
     
90,001
     
4.76
     
1,088
 
           Total interest-bearing deposits
   
166,588
     
3.93
     
1,650
     
173,672
     
3.98
     
1,723
     
174,011
     
3.95
     
1,739
 
   Federal funds purchased and
commercial paper
   
2,991
     
5.40
     
41
     
2,169
     
5.36
     
29
     
7,382
     
5.31
     
99
 
   Securities sold under agreements
to repurchase
   
8,617
     
5.34
     
116
     
8,416
     
5.35
     
112
     
15,676
     
5.39
     
216
 
   Advances from Federal Home
Loan Banks
   
34,128
     
5.39
     
464
     
22,063
     
5.36
     
295
     
52,886
     
5.28
     
711
 
   Other
   
40,567
     
5.60
     
571
     
39,886
     
5.57
     
555
     
27,815
     
5.59
     
393
 
           Total interest-bearing liabilities
   
252,891
     
4.46
     
2,842
     
246,206
     
4.42
     
2,714
     
277,770
     
4.48
     
3,158
 
Noninterest-bearing sources:
                                                                       
   Noninterest-bearing deposits
   
32,061
                     
33,093
                     
34,901
                 
   Other liabilities
   
8,584
                     
9,610
                     
8,765
                 
   Minority interests
   
2,945
                     
2,659
                     
1,959
                 
   Stockholders' equity
   
23,994
                     
24,436
                     
26,147
                 
           Total liabilities and
stockholders' equity
 
$
320,475
                   
$
316,004
                   
$
349,542
                 
   Net interest spread and net
interest income
           
2.38
   
$
2,014
             
2.37
   
$
2,034
             
2.03
   
$
1,947
 
   Impact of noninterest-bearing sources
           
0.48
                     
0.53
                     
0.50
         
   Net interest margin
           
2.86
                     
2.90
                     
2.53
         

(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 $345 million, $344 million and $296 million for the three months ended September 30, 2007, June 30, 2007 and September 30, 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 the 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.

WM-10
 
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
 
   
Nine Months Ended
 
   
Sept. 30, 2007
   
Sept. 30, 2006
 
               
Interest
               
Interest
 
               
Income/
               
Income/
 
   
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
 
$
4,083
      5.41 %  
$
165
   
$
4,422
      5.04 %  
$
169
 
   Trading assets
   
5,029
     
8.73
     
329
     
8,831
     
7.60
     
503
 
   Available-for-sale securities(2)
    26,593       5.39       1,075       27,160       5.24       1,068  
   Loans held for sale
   
24,924
     
6.59
     
1,232
     
26,659
     
6.45
     
1,292
 
   Loans held in portfolio:
                                               
      Loans secured by real estate:
                                               
         Home loans(3)(4)
   
95,194
     
6.46
     
4,611
     
122,232
     
5.76
     
5,282
 
         Home equity loans and lines of credit(4)
   
54,988
     
7.57
     
3,114
     
52,068
     
7.26
     
2,830
 
         Subprime mortgage channel(5)
   
20,389
     
6.70
     
1,025
     
19,939
     
6.14
     
918
 
         Home construction(6)
   
2,053
     
6.72
     
103
     
2,062
     
6.41
     
99
 
         Multi-family
   
29,768
     
6.61
     
1,476
     
26,388
     
6.19
     
1,226
 
         Other real estate
   
7,011
     
7.02
     
368
     
5,482
     
6.85
     
284
 
           Total loans secured by real estate
   
209,403
     
6.82
     
10,697
     
228,171
     
6.22
     
10,639
 
      Consumer:
                                               
         Credit card
   
10,443
     
10.78
     
842
     
8,442
     
11.16
     
704
 
         Other
   
251
     
13.37
     
25
     
499
     
10.84
     
40
 
      Commercial
   
1,910
     
7.98
     
114
     
1,925
     
6.67
     
97
 
           Total loans held in portfolio
   
222,007
     
7.02
     
11,678
     
239,037
     
6.41
     
11,480
 
  Other
   
3,585
     
5.01
     
134
     
5,191
     
4.74
     
185
 
           Total interest-earning assets
   
286,221
     
6.81
     
14,613
     
311,300
     
6.30
     
14,697
 
Noninterest-earning assets:
                                               
   Mortgage servicing rights
   
6,665
                     
8,151
                 
   Goodwill
   
9,054
                     
8,313
                 
   Other assets
   
20,813
                     
19,546
                 
           Total assets
 
$
322,753
                   
$
347,310
                 
Liabilities
                                               
Interest-bearing liabilities:
                                               
   Deposits:
                                               
      Interest-bearing checking deposits
 
$
30,216
     
2.50
     
566
   
$
37,615
     
2.59
     
728
 
      Savings and money market deposits
   
57,079
     
3.31
     
1,413
     
47,367
     
2.81
     
997
 
      Time deposits
   
85,520
     
4.95
     
3,166
     
80,970
     
4.42
     
2,695
 
           Total interest-bearing deposits
   
172,815
     
3.98
     
5,145
     
165,952
     
3.55
     
4,420
 
   Federal funds purchased and commercial paper
   
2,999
     
5.43
     
122
     
7,537
     
4.92
     
279
 
   Securities sold under agreements to repurchase
   
9,698
     
5.40
     
392
     
16,294
     
4.95
     
612
 
   Advances from Federal Home Loan Banks
   
30,740
     
5.38
     
1,237
     
60,197
     
4.84
     
2,203
 
   Other
   
37,782
     
5.61
     
1,586
     
26,901
     
5.23
     
1,060
 
           Total interest-bearing liabilities
   
254,034
     
4.46
     
8,482
     
276,881
     
4.11
     
8,574
 
Noninterest-bearing sources:
                                               
   Noninterest-bearing deposits
   
32,533
                     
34,179
                 
   Other liabilities
   
9,222
                     
8,445
                 
   Minority interests
   
2,686
                     
1,497
                 
   Stockholders' equity
   
24,278
                     
26,308
                 
           Total liabilities and stockholders' equity
 
$
322,753
                   
$
347,310
                 
   Net interest spread and net interest income
           
2.35
   
$
6,131
             
2.19
   
$
6,123
 
   Impact of noninterest-bearing sources
           
0.50
                     
0.45
         
   Net interest margin
           
2.85
                     
2.64
         

(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 $1.05 billion and $735 million for the nine months ended September 30, 2007 and September 30, 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 the 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.

WM-11
 
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
 
 
 
Change from
June 30, 2007
   
Sept. 30,
   
June 30,
   
Mar. 31,
   
Dec. 31,
   
Sept. 30,
 
   
to Sept. 30, 2007
   
2007
   
2007
   
2007
   
2006
   
2006
 
Deposits
                                   
   Retail deposits:
                                   
      Checking deposits:
                                   
         Noninterest bearing
 
$
(421 )  
$
23,721
   
$
24,142
   
$
24,400
   
$
22,838
   
$
22,466
 
         Interest bearing
    (2,315 )    
27,277
     
29,592
     
31,523
     
32,723
     
33,761
 
            Total checking deposits
    (2,736 )    
50,998
     
53,734
     
55,923
     
55,561
     
56,227
 
      Savings and money market deposits
    (257 )    
43,360
     
43,617
     
44,058
     
41,943
     
39,481
 
      Time deposits(1)
   
2,600
     
50,740
     
48,140
     
47,262
     
46,821
     
47,361
 
            Total retail deposits
    (393 )    
145,098
     
145,491
     
147,243
     
144,325
     
143,069
 
      Commercial business and other deposits
    (2,650 )    
16,536
     
19,186
     
17,741
     
15,175
     
15,831
 
      Brokered deposits:
                                               
         Consumer
   
331
     
17,484
     
17,153
     
18,995
     
22,299
     
22,430
 
         Institutional
    (2,918 )    
8,107
     
11,025
     
17,256
     
22,339
     
18,236
 
      Custodial and escrow deposits(2)
    (1,470 )    
7,055
     
8,525
     
8,974
     
9,818
     
11,316
 
            Total deposits
 
$
(7,100 )  
$
194,280
   
$
201,380
   
$
210,209
   
$
213,956
   
$
210,882
 

(1)
Weighted average remaining maturity of time deposits was 7 months at September 30, 2007, 8 months at June 30, 2007, 9 months at March 31, 2007 and December 31, 2006 and 10 months at September 30, 2006.
(2)
Substantially all custodial and escrow deposits reside in noninterest-bearing checking accounts.      

          
Sept. 30,
   
June 30,
   
Mar. 31,
   
Dec. 31,
   
Sept. 30,
 
          
2007
   
2007
   
2007
   
2006
   
2006
 
Retail Deposit Accounts (number of accounts)
                                   
Noninterest bearing checking
         
10,824,548
     
10,449,887
     
9,983,313
     
9,611,706
     
9,403,072
 
Interest bearing checking
         
1,334,902
     
1,399,203
     
1,459,534
     
1,503,365
     
1,532,215
 
 
Savings and money market
           
7,087,311
     
6,936,870
     
6,708,784
     
6,525,772
     
6,379,068
 
 
Total transaction accounts, end of period(1)
           
19,246,761
     
18,785,960
     
18,151,631
     
17,640,843
     
17,314,355
 
Net change in noninterest bearing checking accounts
         
374,661
     
466,574
     
371,607
     
208,634
     
339,614
 
Net change in checking accounts
         
310,360
     
406,243
     
327,776
     
179,784
     
307,433
 

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

          
Sept. 30,
   
June 30,
   
Mar. 31,
   
Dec. 31,
   
Sept. 30,
 
          
2007
   
2007
   
2007
   
2006
   
2006
 
Retail Banking Stores
                                   
Stores, beginning of period
           
2,235
     
2,228
     
2,225
     
2,225
     
2,201
 
     Stores opened during the quarter
           
10
     
11
     
6
      81 (1)    
25
 
     Stores closed during the quarter
            (33 )     (4 )     (3 )     (81 )     (1 )
Stores, end of period
           
2,212
     
2,235
     
2,228
     
2,225
     
2,225
 

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

WM-12
 
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
 
    
Quarter Ended
 
    
Sept. 30,
   
June 30,
   
Mar. 31,
   
Dec. 31,
   
Sept. 30,
 
    
2007
   
2007
   
2007
   
2006
   
2006
 
Loan Volume
                             
   Home loans:
                             
    Short-term adjustable-rate loans(1):
                             
      Option ARMs
 
$
5,865
   
$
7,888
   
$
7,777
   
$
9,487
   
$
11,601
 
      Other ARMs
   
111
     
22
     
36
     
13
     
42
 
         Total short-term adjustable-rate loans
   
5,976
     
7,910
     
7,813
     
9,500
     
11,643
 
    Medium-term adjustable-rate loans(2)
   
10,177
     
14,953
     
13,567
     
17,323
     
16,707
 
    Fixed-rate loans
   
6,176
     
8,172
     
8,824
     
7,351
     
8,818
 
         Total home loan volume
   
22,329
     
31,035
     
30,204
     
34,174
     
37,168
 
   Home equity loans and lines of credit
   
9,835
     
9,880
     
8,319
     
8,098
     
8,498
 
   Home construction(3)
   
483
     
426
     
298
     
298
     
269
 
   Multi-family
   
2,856
     
3,067
     
2,663
     
2,977
     
2,186
 
   Other real estate
   
1,285
     
1,246
     
1,080
     
1,182
     
983
 
         Total loans secured by real estate(4)
   
36,788
     
45,654
     
42,564
     
46,729
     
49,104
 
   Consumer(5)
   
6
     
20
     
26
     
23
     
26
 
   Commercial
   
276
     
356
     
289
     
274
     
238
 
         Total loan volume
 
$
37,070
   
$
46,030
   
$
42,879
   
$
47,026
   
$
49,368
 
Loan Volume by Channel
                                       
   Retail
 
$
22,520
   
$
25,094
   
$
21,809
   
$
23,594
   
$
21,776
 
   Wholesale
   
13,387
     
16,545
     
14,853
     
16,834
     
15,427
 
   Purchased
   
1,163
     
4,391
     
6,217
     
6,398
     
11,560
 
   Correspondent
   
-
     
-
     
-
     
200
     
605
 
         Total loan volume by channel
 
$
37,070
   
$
46,030
   
$
42,879
   
$
47,026
   
$
49,368
 
Refinancing Activity(6)
                                       
   Home loan refinancing
 
$
14,722
   
$
22,637
   
$
22,552
   
$
25,060
   
$
23,993
 
   Home equity loans and lines of credit and consumer
   
143
     
157
     
550
     
599
     
689
 
   Home construction loans
   
30
     
121
     
276
     
283
     
254
 
   Multi-family and other real estate
   
1,225
     
1,378
     
1,131
     
2,240
     
1,398
 
         Total refinancing
 
$
16,120
   
$
24,293
   
$
24,509
   
$
28,182
   
$
26,334
 

(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 $483 million, $2.45 billion, $3.48 billion, $6.07 billion and $9.40 billion for the three months ended September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006 and September 30, 2006.
(5)
Excludes credit card loan volume.
(6)
Includes loan refinancing entered into by both new and pre-existing loan customers.

WM-13
 
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
 
   
Nine Months Ended
 
   
Sept. 30,
   
Sept. 30,
 
   
2007
   
2006
 
Loan Volume
           
   Home loans:
           
    Short-term adjustable-rate loans(1):
           
      Option ARMs
 
$
21,530
   
$
33,106
 
      Other ARMs
   
170
     
3,372
 
         Total short-term adjustable-rate loans
   
21,700
     
36,478
 
    Medium-term adjustable-rate loans(2)
   
38,697
     
47,613
 
    Fixed-rate loans
   
23,171
     
40,119
 
         Total home loan volume
   
83,568
     
124,210
 
   Home equity loans and lines of credit
   
28,034
     
24,055
 
   Home construction(3)
   
1,206
     
1,183
 
   Multi-family
   
8,585
     
6,450
 
   Other real estate
   
3,611
     
2,486
 
         Total loans secured by real estate(4)
   
125,004
     
158,384
 
   Consumer(5)
   
52
     
111
 
   Commercial
   
922
     
814
 
         Total loan volume
 
$
125,978
   
$
159,309
 
Loan Volume by Channel
               
   Retail
 
$
69,423
   
$
67,344
 
   Wholesale
   
44,785
     
47,668
 
   Purchased
   
11,770
     
30,911
 
   Correspondent
   
-
     
13,386
 
         Total loan volume by channel
 
$
125,978
   
$
159,309
 
Refinancing Activity(6)
               
   Home loan refinancing
 
$
59,911
   
$
77,529
 
   Home equity loans and lines of credit and consumer
   
851
     
1,066
 
   Home construction loans
   
426
     
1,026
 
   Multi-family and other real estate
   
3,734
     
4,173
 
         Total refinancing
 
$
64,922
   
$
83,794
 

(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  $6.42 billion and $24.69 billion for the nine months ended September 30, 2007 and September 30, 2006.
(5)
Excludes credit card loan volume.
(6)
Includes loan refinancing entered into by both new and pre-existing loan customers.

WM-14
 
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
 
    
Change from
                               
   
June 30, 2007
   
Sept. 30,
   
June 30,
   
Mar. 31,
   
Dec. 31,
   
Sept. 30,
 
    
to Sept. 30, 2007
   
2007
   
2007
   
2007
   
2006
   
2006
 
Loans Held in Portfolio
                                   
      Loans secured by real estate:
                                   
         Home:
                                   
Short-term adjustable-rate loans(1):
                               
       Option ARMs(2)
 
$
4,403
   
$
57,858
   
$
53,455
   
$
58,130
   
$
63,557
   
$
67,142
 
       Other ARMs
    (2,826 )    
10,712
     
13,538
     
13,501
     
15,091
     
16,375
 
          Total short-term adjustable-rate loans
   
1,577
     
68,570
     
66,993
     
71,631
     
78,648
     
83,517
 
Medium-term adjustable-rate loans(3)
   
13,115
     
42,762
     
29,647
     
29,924
     
29,774
     
47,740
 
Fixed-rate loans
   
2,308
     
11,813
     
9,505
     
9,506
     
9,782
     
9,928
 
                Total home loans
   
17,000
     
123,145
     
106,145
     
111,061
     
118,204
     
141,185
 
         Home equity loans and lines of credit
   
3,200
     
61,831
     
58,631
     
56,123
     
54,924
     
54,364
 
         Home construction(4)
   
52
     
2,110
     
2,058
     
2,071
     
2,082
     
2,077
 
         Multi-family
   
1,541
     
30,831
     
29,290
     
29,515
     
30,161
     
27,407
 
         Other real estate
   
1,456
     
8,335
     
6,879
     
6,728
     
6,745
     
5,869
 
               Total loans secured by real estate(5)
   
23,249
     
226,252
     
203,003
     
205,498
     
212,116
     
230,902
 
      Consumer:
                                               
         Credit card
    (1,122 )    
8,791
     
9,913
     
9,490
     
10,861
     
8,807
 
         Other
    (19 )    
224
     
243
     
261
     
276
     
281
 
      Commercial
   
30
     
1,865
     
1,835
     
1,772
     
1,707
     
1,775
 
               Total loans held in portfolio(6)
   
22,138
     
237,132
     
214,994
     
217,021
     
224,960
     
241,765
 
   Less: allowance for loan and lease losses
    (329 )     (1,889 )     (1,560 )     (1,540 )     (1,630 )     (1,550 )
               Total loans held in portfolio, net
 
$
21,809
   
$
235,243
   
$
213,434
   
$
215,481
   
$
223,330
   
$
240,215
 

(1)
Short-term adjustable-rate loans reprice within one year.      
(2)
The total amount by which the unpaid principal balance of Option ARM loans exceeded their original principal amount was $1.50 billion, $1.30 billion, $1.12 billion, $888 million and $681 million at September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006 and September 30, 2006.
(3)
Medium-term adjustable-rate loans 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 the investment portfolio as follows:
Subprime Mortgage Channel
         
Sept. 30,
   
June 30,
   
Mar. 31,
   
Dec. 31,
   
Sept. 30,
 
           
2007
   
2007
   
2007
   
2006
   
2006
 
Home loans
         
$
17,285
   
$
17,602
   
$
17,610
   
$
18,725
   
$
20,083
 
Home equity loans and lines of credit
           
2,711
     
2,855
     
2,749
     
2,042
     
1,522
 
         Total
         
$
19,996
   
$
20,457
   
$
20,359
   
$
20,767
   
$
21,605
 
(6)
Includes net unamortized deferred loan origination costs of $1.33 billion, $1.33 billion, $1.43 billion, $1.48 billion and $1.61 billion at September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006 and September 30, 2006.

WM-15
 
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
 
               
Weighted
         
Weighted
         
Weighted
 
   
Change from
         
Average
         
Average
         
Average
 
   
June 30, 2007
   
Sept. 30,
   
Coupon
   
June 30,
   
Coupon
   
Sept. 30,
   
Coupon
 
   
to Sept. 30, 2007
   
2007
   
Rate
   
2007
   
Rate
   
2006
   
Rate
 
Selected Loans Secured by Real Estate
                               
   Home loans held in portfolio:
                                         
Short-term adjustable-rate loans(1):
                                     
           Option ARMs
 
$
4,403
   
$
57,858
      7.62 %  
$
53,455
      7.74 %  
$
67,142
      7.13 %
           Other ARMs
    (2,826 )    
10,712
     
7.74
     
13,538
     
7.28
     
16,375
     
7.01
 
                Total short-term
adjustable-rate loans
   
1,577
     
68,570
     
7.64
     
66,993
     
7.65
     
83,517
     
7.11
 
       Medium-term adjustable-rate
loans(2)
   
13,115
     
42,762
     
6.30
     
29,647
     
5.99
     
47,740
     
5.72
 
       Fixed-rate loans
   
2,308
     
11,813
     
6.74
     
9,505
     
6.71
     
9,928
     
6.59
 
                Total home loans held
in portfolio
   
17,000
     
123,145
     
7.09
     
106,145
     
7.10
     
141,185
     
6.60
 
   Home equity loans and lines of credit:
                                                       
       Short-term (Prime-based or
treasury-based)(1)
   
1,451
     
36,446
     
8.06
     
34,995
     
8.47
     
35,831
     
8.40
 
       Fixed-rate loans
   
1,749
     
25,385
     
7.69
     
23,636
     
7.68
     
18,533
     
7.16
 
                Total home equity loans and
lines of credit
   
3,200
     
61,831
     
7.91
     
58,631
     
8.15
     
54,364
     
7.98
 
   Multi-family loans held in portfolio:
                                                       
Short-term adjustable-rate loans(1):
                                                 
           Option ARMs
    (569 )    
7,081
     
7.25
     
7,650
     
7.28
     
8,967
     
6.95
 
           Other ARMs
    (614 )    
7,296
     
6.77
     
7,910
     
6.77
     
5,858
     
6.94
 
                Total short-term
adjustable-rate loans
    (1,183 )    
14,377
     
7.01
     
15,560
     
7.02
     
14,825
     
6.95
 
       Medium-term adjustable-rate
loans(2)
   
2,701
     
14,591
     
6.03
     
11,890
     
5.93
     
10,906
     
5.59
 
       Fixed-rate loans
   
23
     
1,863
     
6.31
     
1,840
     
6.35
     
1,676
     
6.45
 
                Total multi-family loans held
in portfolio
   
1,541
     
30,831
     
6.50
     
29,290
     
6.53
     
27,407
     
6.38
 
                Total selected loans held in
portfolio secured by
real estate(3)
   
21,741
     
215,807
     
7.24
     
194,066
     
7.33
     
222,956
     
6.90
 
   Loans held for sale(4)
    (12,772 )    
6,227
     
6.36
     
18,999
     
6.39
     
23,387
     
6.64
 
                Total selected loans secured by
real estate
 
$
8,969
   
$
222,034
     
7.21
   
$
213,065
     
7.25
   
$
246,343
     
6.88
 

(1)
Short-term adjustable-rate loans reprice within one year.
(2)
Medium-term adjustable-rate loans reprice after one year.
(3)
At September 30, 2007, June 30, 2007 and September 30, 2006, adjustable-rate loans with lifetime caps were $175.21 billion, $158.24 billion and $190.36 billion with a lifetime weighted average cap rate of 12.44%, 12.96% and 12.13%.
(4)
Excludes credit card and student loans.
 
   
June 30, 2007
   
Dec. 31, 2006
 
   
to Sept. 30, 2007
   
to Sept. 30, 2007
 
Rollforward of Loans Held for Sale
           
 
 
 
   
 
 
Balance, beginning of period
 
$
19,327    
$
44,970
 
Mortgage loans originated, purchased and transferred from held in portfolio
    14,370       73,948  
Mortgage loans transferred to held in portfolio
    (17,004 )     (19,677 )
Mortgage loans sold and other(1)
    (10,138 )     (92,768 )
Net change in consumer loans held for sale
   
1,031
     
1,113
 
Balance, end of period
 
$
7,586
   
$
7,586
 
                 
Rollforward of Home Loans Held in Portfolio
               
Balance, beginning of period
 
$
106,145    
$
118,204  
Loans originated, purchased and transferred from held for sale
    25,727       36,012  
Loan payments, transferred to held for sale and other
    (8,727 )     (31,071 )
Balance, end of period
 
$
123,145
   
$
123,145
 

(1)
The unpaid principal balance ("UPB") of home loans sold was $9.03 billion and $84.58 billion for the three and nine months ended September 30, 2007.

WM-16
 
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)

    
Quarter Ended
 
Detail of Revenue from Sales and Servicing of Home Mortgage Loans
 
Sept. 30,
   
June 30,
   
Mar. 31,
   
Dec. 31,
   
Sept. 30,
 
    
2007
   
2007
   
2007
   
2006
   
2006
 
Gain (loss) from home mortgage loans and originated mortgage-backed
securities, net of hedging and risk management instruments(1):
                             
Gain (loss) from home mortgage loans and originated mortgage-backed securities
 
$
(169 )  
$
66
   
$
149
   
$
64
   
$
206
 
Revaluation gain (loss) from derivatives economically hedging loans held for sale
    (53 )    
126
      (54 )    
91
      (87 )
Gain (loss) from home mortgage loans and originated
mortgage-backed securities, net of hedging and risk
management instruments
    (222 )    
192
     
95
     
155
     
119
 
Home mortgage loan servicing revenue (expense):
                                       
Home mortgage loan servicing revenue(2)
   
516
     
526
     
514
     
497
     
525
 
Change in MSR fair value due to payments on loans and other
    (351 )     (401 )     (356 )     (375 )     (410 )
        Net mortgage loan servicing revenue
   
165
     
125
     
158
     
122
     
115
 
Change in MSR fair value due to valuation inputs or assumptions
    (201 )    
530
      (96 )     (80 )     (469 )
Revaluation gain (loss) from derivatives economically hedging MSR
   
419
      (547 )     (32 )     (33 )    
353
 
Home mortgage loan servicing revenue (expense), net of  MSR valuation
changes and derivative risk management instruments
   
383
     
108
     
30
     
9
      (1 )
Total revenue from sales and servicing of home mortgage loans
 
$
161
   
$
300
   
$
125
   
$
164
   
$
118
 

                           
Nine Months Ended
 
Detail of Revenue from Sales and Servicing of Home Mortgage Loans
                         
Sept. 30,
   
Sept. 30,
 
                           
2007
   
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
                         
$
45
   
$
563
 
Revaluation gain from derivatives economically hedging loans held for sale
                           
20
     
17
 
Gain from home mortgage loans and originated mortgage-backed
securities, net of hedging and risk management instruments
                           
65
     
580
 
Home mortgage loan servicing revenue:
                                       
Home mortgage loan servicing revenue(2)
                           
1,557
     
1,683
 
Change in MSR fair value due to payments on loans and other
                            (1,109 )     (1,279 )
Net mortgage loan servicing revenue
                           
448
     
404
 
Change in MSR fair value due to valuation inputs or assumptions
                           
233
     
379
 
Revaluation loss from derivatives economically hedging MSR
                            (160 )     (603 )
Adjustment to MSR fair value for MSR sale
                           
-
      (157 )
Home mortgage loan servicing revenue, net of  MSR valuation
changes and derivative risk management instruments
                           
521
     
23
 
        Total revenue from sales and servicing of home mortgage loans
                         
$
586
   
$
603
 

(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 contractually specified servicing fees (net of guarantee fees paid to government housing-sponsored enterprises, where applicable), 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).

WM-17
 
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
 
   
Quarter Ended
 
   
Sept. 30,
   
June 30,
   
Mar. 31,
   
Dec. 31,
   
Sept. 30,
 
   
2007
   
2007
   
2007
   
2006
   
2006
 
MSR Valuation and Risk Management:
                             
   Change in MSR fair value due to valuation inputs or assumptions
 
$
(201 )  
$
530
   
$
(96 )  
$
(80 )  
$
(469 )
Gain (loss) on MSR risk management instruments:
                                       
   Revaluation gain (loss) from derivatives
   
419
      (547 )     (32 )     (33 )    
353
 
   Revaluation gain (loss) from certain trading securities
   
4
      (4 )    
4
      (5 )    
39
 
   Loss from certain available-for-sale securities
   
-
     
-
     
-
     
-
      (1 )
        Total gain (loss) on MSR risk management instruments
   
423
      (551 )     (28 )     (38 )    
391
 
             Total changes in MSR valuation and risk management
 
$
222
   
$
(21 )  
$
(124 )  
$
(118 )  
$
(78 )

                           
Nine Months Ended
 
                           
Sept. 30,
   
Sept. 30,
 
                           
2007
   
2006
 
MSR Valuation and Risk Management(1):
                                       
   Change in MSR fair value due to valuation inputs or assumptions
                         
$
233
   
$
379
 
Loss on MSR risk management instruments:
                                       
   Revaluation loss from derivatives
                            (160 )     (603 )
   Revaluation gain (loss) from certain trading securities
                           
4
      (50 )
   Loss from certain available-for-sale securities
                           
-
      (1 )
        Total loss on MSR risk management instruments
                            (156 )     (654 )
             Total changes in MSR valuation and risk management
                         
$
77
   
$
(275 )

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

WM-18
 
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
 
   
Quarter Ended
 
   
Sept. 30,
   
June 30,
   
Mar. 31,
   
Dec. 31,
   
Sept. 30,
 
   
2007
   
2007
   
2007
   
2006
   
2006
 
Rollforward of Mortgage Servicing Rights(1)
                             
   Balance, beginning of period
 
$
7,231
   
$
6,507
   
$
6,193
   
$
6,288
   
$
9,162
 
      Home loans:
                                       
         Additions
   
116
     
592
     
760
     
357
     
533
 
         Change in MSR fair value due to payments on loans and other
    (351 )     (401 )     (356 )     (375 )     (410 )
         Change in MSR fair value due to valuation inputs or
                                       
           assumptions
    (201 )    
530
      (96 )     (80 )     (469 )
         Sale of MSR
   
-
     
-
     
-
     
1
      (2,527 )
      Net change in commercial real estate MSR
    (1 )    
3
     
6
     
2
      (1 )
   Balance, end of period
 
$
6,794
   
$
7,231
   
$
6,507
   
$
6,193
   
$
6,288
 
Rollforward of Mortgage Loans Serviced for Others
                                       
   Balance, beginning of period
 
$
474,867
   
$
467,782
   
$
444,696
   
$
439,208
   
$
570,352
 
      Home loans:
                                       
         Additions
   
8,700
     
29,949
     
44,550
     
25,833
     
29,899
 
         Sale of servicing
   
-
     
-
     
-
     
-
      (141,842 )
         Loan payments and other
    (20,716 )     (24,213 )     (22,469 )     (20,744 )     (19,288 )
      Net change in commercial real estate loans
   
585
     
1,349
     
1,005
     
399
     
87
 
   Balance, end of period
 
$
463,436
   
$
474,867
   
$
467,782
   
$
444,696
   
$
439,208
 

   
Sept. 30,
   
June 30,
   
Mar. 31,
   
Dec. 31,
   
Sept. 30,
 
   
2007
   
2007
   
2007
   
2006
   
2006
 
Total Servicing Portfolio
                                       
      Mortgage loans serviced for others
 
$
463,436
   
$
474,867
   
$
467,782
   
$
444,696
   
$
439,208
 
      Consumer loans serviced for others
   
16,078
     
14,745
     
13,645
     
12,415
     
13,112
 
      Servicing on retained MBS without MSR
   
980
     
1,023
     
1,082
     
1,140
     
1,199
 
      Servicing on owned loans
   
232,392
     
218,122
     
226,217
     
251,766
     
245,925
 
      Subservicing portfolio
   
418
     
439
     
465
     
84,797
     
137,089
 
   Total servicing portfolio
 
$
713,304
   
$
709,196
   
$
709,191
   
$
794,814
   
$
836,533
 

                           
September 30, 2007
 
                           
Unpaid
   
Weighted
 
                           
Principal
   
Average
 
                           
Balance
   
Servicing Fee
 
                                   
(in basis points,
 
Mortgage Loans Serviced for Others by Loan Type
                                 
annualized)
 
      Agency
                         
$
247,878
     
31
 
      Private
                           
183,409
     
57
 
      Subprime mortgage channel-home
                           
32,149
     
51
 
   Total mortgage loans serviced for others(2)
                         
$
463,436
     
43
 

(1)
MSR as a percentage of mortgage loans serviced for others was 1.47%, 1.52%, 1.39%, 1.39% and 1.43% at September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006 and September 30, 2006.
(2)
Weighted average coupon rate was 6.33% at September 30, 2007.           

WM-19
 
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
 
    
Quarter Ended
 
    
Sept. 30,
   
June 30,
   
Mar. 31,
   
Dec. 31,
   
Sept. 30,
 
    
2007
   
2007
   
2007
   
2006
   
2006
 
Allowance for Loan and Lease Losses
                             
   Balance, beginning of quarter
 
$
1,560
   
$
1,540
   
$
1,630
   
$
1,550
   
$
1,663
 
   Allowance transferred to loans held for sale
    (217 )     (81 )     (148 )     (158 )     (125 )
   Allowance acquired through business combinations/other
   
-
     
-
     
7
     
30
     
-
 
   Provision for loan and lease losses
   
967
     
372
     
234
     
344
     
166
 
      
2,310
     
1,831
     
1,723
     
1,766
     
1,704
 
   Loans charged off:
                                       
      Loans secured by real estate:
                                       
         Home loans(1)
    (52 )     (21 )     (35 )     (16 )     (12 )
         Home equity loans and lines of credit(1)
    (104 )     (55 )     (29 )     (13 )     (8 )
         Subprime mortgage channel(2)
    (146 )     (103 )     (40 )     (52 )     (47 )
         Home construction(3)
   
-
      (1 )    
-
      (4 )     (3 )
         Other real estate
    (1 )     (1 )    
-
      (1 )     (2 )
              Total loans secured by real estate
    (303 )     (181 )     (104 )     (86 )     (72 )
      Consumer:
                                       
        Credit card
    (120 )     (106 )     (96 )     (68 )     (98 )
        Other
    (2 )     (2 )     (3 )     (3 )     (3 )
      Commercial
    (20 )     (15 )     (9 )     (9 )     (6 )
              Total loans charged off
    (445 )     (304 )     (212 )     (166 )     (179 )
   Recoveries of loans previously charged off:
                                       
      Loans secured by real estate:
                                       
         Home loans(1)
   
1
     
1
     
1
     
-
     
-
 
         Home equity loans and lines of credit(1)
   
3
     
3
     
3
     
2
     
2
 
         Subprime mortgage channel(2)
   
1
     
11
     
1
     
4
     
-
 
         Other real estate
   
2
     
-
     
-
     
-
     
-
 
              Total loans secured by real estate
   
7
     
15
     
5
     
6
     
2
 
      Consumer:
                                       
         Credit card
   
14
     
15
     
16
     
18
     
16
 
         Other
   
-
     
-
     
6
     
3
     
4
 
      Commercial
   
3
     
3
     
2
     
3
     
3
 
              Total recoveries of loans previously charged off
   
24
     
33
     
29
     
30
     
25
 
                  Net charge-offs
    (421 )     (271 )     (183 )     (136 )     (154 )
   Balance, end of quarter
 
$
1,889
   
$
1,560
   
$
1,540
   
$
1,630
   
$
1,550
 
                                          
   Net charge-offs (annualized) as a percentage
                                       
     of average loans held in portfolio
    0.74 %     0.50 %     0.33 %     0.23 %     0.26 %
   Allowance as a percentage of loans held in portfolio
   
0.80
     
0.73
     
0.71
     
0.72
     
0.64
 

(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 the 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-20
 
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
 
   
Sept. 30,
   
June 30,
   
Mar. 31,
   
Dec. 31,
   
Sept. 30,
 
   
2007
   
2007
   
2007
   
2006
   
2006
 
Nonperforming Assets
                             
  Nonaccrual loans(1)(2):
                             
     Loans secured by real estate:
                             
        Home loans(3)
 
$
1,452
   
$
991
   
$
690
   
$
640
   
$
568
 
        Home equity loans and lines of credit(3)
   
533
     
378
     
297
     
231
     
162
 
        Subprime mortgage channel(4)
   
2,356
     
1,707
     
1,503
     
1,283
     
1,121
 
        Home construction(5)
   
44
     
47
     
41
     
27
     
35
 
        Multi-family
   
120
     
69
     
60
     
46
     
31
 
        Other real estate
   
49
     
52
     
52
     
51
     
53
 
              Total nonaccrual loans secured by real estate
   
4,554
     
3,244
     
2,643
     
2,278
     
1,970
 
     Consumer
   
1
     
1
     
1
     
1
     
1
 
     Commercial
   
22
     
30
     
28
     
16
     
16
 
              Total nonaccrual loans held in portfolio
   
4,577
     
3,275
     
2,672
     
2,295
     
1,987
 
  Foreclosed assets(6)
   
874
     
750
     
587
     
480
     
405
 
              Total nonperforming assets(7)
 
$
5,451
   
$
4,025
   
$
3,259
   
$
2,775
   
$
2,392
 
                       
   Total nonperforming assets
                                       
     as a percentage of total assets
    1.65 %     1.29 %     1.02 %     0.80 %     0.69 %

(1)
Nonaccrual loans held for sale, which are excluded from the nonaccrual balances presented above, were $7 million, $171 million, $195 million, $185 million and $129 million at September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006 and September 30, 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 the 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)
Foreclosed real estate securing Government National Mortgage Association (“GNMA”) loans of $46 million, $49 million, $72 million, $99 million and $129 million at September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006 and September 30, 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”).
(7)
Excludes accruing restructured loans of $287 million, $285 million, $355 million, $330 million and $331 million at September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006 and September 30, 2006.