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: January 17, 2008

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 January17, 2008, Washington Mutual, Inc. issued a press release and held a conference call regarding its results of operations and financial condition for the quarterand year ended December 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 remarksfor 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 yearended December 31, 2007, as part of its Form 10-K 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 January 17, 2008.
99.2	Financial supplement of Washington Mutual, Inc.
99.3	Management’s prepared remarks for Washington Mutual, Inc.'s conference call held on January 17, 2008.

SIGNATURE

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

		WASHINGTON MUTUAL, INC.
Dated:	January 17, 2008		By:	/s/ Stewart M. Landefeld
			Stewart M. Landefeld
			Executive Vice President

EX-99.1

Exhibit 99.1

Washington Mutual, Inc.

(NYSE: WM)

January 17, 2008

WaMu Reports Fourth Quarter Net Loss Per Share of $2.19

Reflecting Previously Announced After-tax Charge to Writedown

Home Loans Goodwill of $1.6 Billion and Elevated Loan Loss Provisioning

Declares Cash Dividend of 15 Cents

WaMu today announced a fourth quarter 2007 net loss of $1.87 billion, or $2.19 per diluted share. The company attributed the loss to the $1.6 billion after-tax charge to writedown Home Loans goodwill and the higher level of provisioning stemming from the housing market weakness. Due to fourth quarter results, the company recorded a net loss of $67 million, or $0.12 per diluted share, for all of 2007.

“We announced in December a series of proactive steps being taken to manage through the unprecedented market conditions that this company and others in the financial services industry face,” said WaMu Chairman and Chief Executive Officer Kerry Killinger.

“These actions included:

·      The raising of $2.9 billion in net proceeds through the issuance of convertible preferred stock that increased the year-end tangible capital to tangible asset ratio to 6.67 percent, $3.7 billion above the company’s targeted ratio of 5.50 percent.

·      A reduction in the quarterly cash dividend rate on the company’s common stock to 15 cents per share.

·      A major expense reduction initiative projected to reduce 2008 noninterest expense by $500 million to $8.0 billion or less.

·      A significant acceleration in the strategic focus of our Home Loans business that emphasizes mortgage lending through our retail banking stores and other retail distribution channels.

The substantial infusion of new capital, dividend reduction, significant expense reductions, and the major change in our home loans business all combine to further fortify WaMu’s strong capital and liquidity position.”

Killinger added that the Retail Banking, Card Services and Commercial businesses delivered steady performance in 2007. In particular, the Retail Bank, which is the cornerstone of the franchise, continued its strong growth opening more than 1.1 million net new checking accounts for the year. The company plans to continue to leverage the Retail Bank’s distribution network by opening additional stores and adding more than 1 million net new checking accounts in 2008.

FOURTH QUARTER AND FULL YEAR FINANCIAL SUMMARY AND HIGHLIGHTS

Selected Financial Summary	Three Months Ended									Year Ended
($ in millions, except per share data)	Dec. 31, 2007			Sept. 30, 2007			Dec. 31, 2006			Dec. 31, 2007			Dec. 31, 2006
Income Statement
Net interest income	$	2,047		$	2,014		$	1,998		$	8,177		$	8,121
Provision for loan losses		1,534			967			344			3,107			816
Noninterest income		1,365			1,379			1,592			6,042			6,377
Noninterest expense		4,166			2,191			2,257			10,600			8,807
Minority interest expense		65			53			34			203			105
Income (loss) from continuing operations before income taxes		(2,353	)		182			955			309			4,770
Income taxes (benefit)		(486	)		(4	)		315			376			1,656
Income (loss) from continuing operations		(1,867	)		186			640			(67	)		3,114
Discontinued operations		-			-			418			-			444
Net income (loss)	$	(1,867	)	$	186		$	1,058		$	(67	)	$	3,558
Diluted earnings (loss) per common share	$	(2.19	)	$	0.20		$	1.10		$	(0.12	)	$	3.64
Balance Sheet
Total assets, end of period	$	327,913		$	330,110		$	346,288		$	327,913		$	346,288
Average total assets		325,276			320,475			353,056			323,389			348,758
Average interest-earning assets		287,988			283,263			314,784			286,666			312,178
Average total deposits		185,636			198,649			214,801			200,380			203,829
Profitability Ratios
Return on average common equity		(32.64	)%		3.03	%		16.03	%		(0.42	)%		13.52	%
Net interest margin		2.85			2.86			2.58			2.85			2.60
Efficiency ratio		122.13			64.55			62.87			74.55			60.75
Nonperforming assets/total assets		2.17			1.65			0.80			2.17			0.80
Tangible equity/total tangible assets		6.67			5.60			6.04			6.67			6.04

·     Solid revenues and continued focus on expense control. Total revenue (net interest income plus noninterest income) of $3.41 billion in the fourth quarter was solid, reflecting the strength of the franchise as evidenced by the company’s strong net interest income and growth in fee income. Total revenue for the quarter was negatively impacted by continued illiquidity in the capital markets, resulting in reductions to noninterest income from net market valuation losses of $528 million on the company’s trading and available-for-sale securities portfolios. Fourth quarter noninterest expense, excluding the $1.78 billion pretax charge to writedown Home Loans goodwill, was $2.39 billion, up $200 million from the prior quarter due primarily to $143 million associated with the expense reduction steps announced in December. The company is projecting a $500 million reduction in 2008 noninterest expense to $8.0 billion or less.

·     Net interest income remains strong. Net interest income has remained strong at approximately $2.0 billion per quarter over the past five quarters. During this period, the net interest margin has grown to 2.85 percent in the fourth quarter from 2.58 percent in the fourth quarter of 2006. The growth in net interest margin more than offset an 8 percent decline in average interest-earning assets during a year in which the company sought to deemphasize balance sheet growth.

·     Depositor and other retail banking fees up 13 percent year-over-year. During 2007, WaMu attracted over 1.1 million net new checking accounts, surpassing its goal for a second year of adding more than 1 million net new accounts per year. This growth, along with the company’s success in building profitable customer relationships through superior service and cross sales, led to a 13 percent year-over-year increase in depositor and other retail banking fees.

Noninterest income reflects continued disruption in the capital markets. Noninterest income of $1.37 billion in the fourth quarter continued to reflect the illiquidity in the capital markets. During the quarter, the company reported net losses of $267 million in the company’s trading securities portfolio, which included a market valuation loss of $159 million on credit card retained interests. The company also recognized a net loss of $261 million on its portfolio of securities designated as available for sale due to $271 million of impairment losses on mortgage-backed securities. Noninterest income of $6.04 billion for 2007 was down 5 percent from the prior year as disruption in the capital markets during the second half of 2007 more than offset the growth in fee income.

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·     Increase in loan loss provision reflects further weakening in housing market. The company’s provision of $1.53 billion was within the most recently communicated guidance range of $1.5 to $1.6 billion. This higher level of provisioning reflects the nationwide housing market weakness that has increased delinquencies and the level of charge-offs. During the quarter, net charge-offs of $747 million were also in line with guidance. The quarter’s provision was approximately double the level of net charge-offs, bringing the allowance for loan losses to $2.57 billion at year end.

·     Proactive expense management. During the fourth quarter, the company took steps to substantially adjust its Home Loans business due to its expectation that national mortgage originations will shrink to $1.5 trillion, down about 40% from 2007. The resizing of the Home Loans business along with other reductions in corporate support functions resulted in $143 million of additional fourth quarter noninterest expense. The company also incurred a fourth quarter pretax charge of $1.78 billion for the writedown of all goodwill associated with the Home Loans Group. For 2007, noninterest expense of $8.83 billion (which excludes the goodwill charge) was in line with the previous year, despite more stores and growth within the company.

FOURTH QUARTER AND FULL YEAR SEGMENT RESULTS

Retail Banking Group

Selected Segment Information	Three Months Ended						Year Ended
(in millions, except accounts and households)	Dec. 31, 2007		Sept. 30, 2007		Dec. 31, 2006		Dec. 31, 2007		Dec. 31, 2006
Net interest income	$	1,261	$	1,306	$	1,247	$	5,142	$	5,201
Provision for loan losses		663		318		47		1,134		167
Noninterest income		850		833		774		3,254		2,914
Noninterest expense		1,215		1,150		1,098		4,567		4,364
Net income		278		456		563		1,874		2,288
Average loans	$	145,486	$	147,357	$	172,013	$	149,409	$	177,401
Average retail deposits		142,733		144,921		143,513		144,233		140,344
Net change in number of retail    checking accounts		74,493		310,360		179,784		1,118,872		1,231,564
Net change in retail households		41,000		161,000		123,000		625,000		848,000

·     Solid performance offset by increase in provision. The Retail Bank has continued to perform well with a year over year 12 percent increase in noninterest income that far exceeded the 5 percent increase in noninterest expense. The increase in noninterest income was driven by the 13 percent growth in depositor and other retail banking fees. The modest year over year increase in noninterest expense reflected the company’s investment in its retail banking network. The quarter’s decline in net income reflected the increase in the provision for loan losses as the performance of the company’s home loan and home equity loan portfolios remained under pressure from further deterioration in the housing market.

·     Growth in net new checking accounts exceeds annual goal for second year. During 2007, the Retail Bank again exceeded its goal of adding more than 1 million net new checking accounts, growing the average balance of noninterest checking accounts by 7 percent year over year. WaMu’s highly successful free checking account is the primary product for many consumers and provides the basis for cross sells and deepening customer relationships. This product has helped grow the number of households 7 percent year over year to just under 10 million. During the fourth quarter, the pace of checking account growth slowed due to normal seasonality and the closure of inactive accounts.

3

Card Services Group (managed basis)

Selected Segment Information	Three Months Ended									Year Ended
(in millions)	Dec. 31, 2007			Sept. 30, 2007			Dec. 31, 2006			Dec. 31, 2007			Dec. 31, 2006
Net interest income	$	694		$	674		$	652		$	2,659		$	2,496
Provision for loan losses		591			611			555			2,113			1,647
Noninterest income		315			400			451			1,581			1,528
Noninterest expense		338			364			318			1,337			1,205
Net income		92			66			142			540			724
Average managed receivables	$	26,665		$	25,718		$	22,875		$	25,066		$	21,294
Period end managed receivables		27,239			26,227			23,501			27,239			23,501
30+ day managed delinquency rate		6.47	%		5.73	%		5.25	%		6.47	%		5.25	%
Managed net credit losses		6.90			6.37			5.84			6.53			5.83

·     Solid performance impacted by capital markets disruption. Net income of $92 million was up from the third quarter, but still reflects the difficulty in the capital markets. Net interest income continued to grow with the increase in managed receivable balances, the benefit of which was partially offset by a decline in yields that reflects the lower Prime rate and higher proportion of better credit quality, but lower-yielding retail accounts. Included in fourth quarter noninterest income were market valuation losses of $159 million on the company’s credit card retained interests. Included in third and fourth quarter noninterest expense were charges of $38 million and $50 million for VISA related litigation liabilities, which in the fourth quarter was partially offset by lower marketing expenses.

·     Retail channel drives new account growth. Card Services continues to focus on WaMu’s Retail Bank customers for new account growth and they accounted for 37 percent of the quarter’s credit card account production, compared with 32 percent in the third quarter and 28 percent a year ago. During the quarter, Card Services opened 653,000 new credit card accounts, or 292,000 less than in the third quarter, reflecting the selective reduction in marketing activities as the company places more emphasis on its retail channel. Strong customer acquisition contributed to the increase in year-end managed receivables to $27.24 billion, up 16 percent compared with the end of 2006.

·     Credit losses in line with expectations. Net credit losses of 6.90 percent of managed receivables were higher than in the third quarter and a year ago as the economy softened and unemployment levels increased. At 6.47 percent of period-end managed receivables, the 30+ day managed delinquency rate was also up from prior periods as delinquencies continue to rise from historically low levels. The year-over-year increase in the loan loss provision reflected the company’s strong managed receivable growth and worsening credit trends.

Commercial Group

Selected Segment Information	Three Months Ended									Year Ended
(in millions)	Dec. 31, 2007			Sept. 30, 2007			Dec. 31, 2006			Dec. 31, 2007		Dec. 31, 2006
Net interest income	$	200		$	200		$	201		$	820	$	719
Provision for loan losses		19			12			(70	)		24		(82	)
Noninterest income		(10	)		(34	)		41			35		99
Noninterest expense		66			67			73			282		259
Net income		94			58			148			375		396
Loan volume	$	4,800		$	4,054		$	4,019		$	16,873	$	12,854
Average loans		40,129			38,333			37,552			38,975		33,230

·     Solid quarterly results. Net income of $94 million was up from $58 million in the third quarter with the improvement in noninterest income. Gain on sale, net of hedging, improved from the third quarter, but is still far below 2006 levels. For the full year, noninterest income was down due to lower gain on sale, as well as losses on the valuation of assets. The increase in noninterest expense for the full year was primarily due to a 31 percent increase in loan volumes.

4

The increase in the provision from the prior quarter reflected the strong loan growth. The provision in the fourth quarter of 2006 included a $60 million reduction in the allowance related to refinements in the company’s estimate of the allowance attributable to multi-family loans.

·     Loan volume continues to be strong. During the fourth quarter, loan volume of $4.8 billion was up 18 percent from the prior quarter and up 19 percent from a year ago. Full year loan volume of $16.87 billion was up 31 percent with growth in both multi-family and nonresidential lending. The growth in multi-family lending was driven by the acquisition of Commercial Capital Bancorp in 2006 and the growth in existing markets, as well as entry into new markets. Other commercial real estate lending continued to benefit from leveraging the existing multi-family footprint.

Home Loans Group

Selected Segment Information	Three Months Ended									Year Ended
(in millions)	Dec. 31, 2007			Sept. 30, 2007			Dec. 31, 2006			Dec. 31, 2007			Dec. 31, 2006
Net interest income	$	230		$	191		$	270		$	878		$	1,165
Provision for loan losses		511			323			47			985			189
Noninterest income		329			183			125			1,061			1,296
Noninterest expense		2,319			553			533			3,939			2,295
Net (loss)		(1,964	)		(342	)		(124	)		(2,460	)		(50	)
Loan volume	$	19,089		$	26,434		$	37,532		$	115,241		$	171,569
Average loans		52,278			43,737			51,048			48,131			47,586

·     Results impacted by goodwill charge and increased credit costs. Home Loans reported a fourth quarter loss of $1.96 billion, up from a loss of $342 million in the third quarter as mortgage market conditions continued to deteriorate. The Home Loans segment wrote off all goodwill on its balance sheet, which resulted in a pretax charge to noninterest expense of $1.78 billion. Additionally, increasing levels of subprime delinquencies and charge-offs drove the loan loss provision $188 million higher than in the prior quarter.

Net interest income was up from the third quarter as loan balances increased due to retention of nonconforming loan production in the segment’s portfolio. Noninterest income was up due to favorable gain on sale compared with the third quarter as that quarter included mark to market valuation losses on loans transferred to portfolio. Expenses (excluding the goodwill charge) were down slightly reflecting third quarter staffing reductions and lower production related costs with the reduced amount of lending. Actions taken in the fourth quarter to resize the Home Loans’ business included elimination of approximately 2,600 positions, closure of approximately 190 home loan centers and sales offices and closure of 9 loan processing and call centers.

·     Home loan volume reflects distressed housing market. Fourth quarter loan volume of $19.09 billion was down 28 percent from the third quarter. During the fourth quarter, the company discontinued all remaining lending through its subprime mortgage channel.

COMPANY UPDATES

·     On Dec. 12, WaMu priced a public offering of 3,000,000 shares of 7.75% Series R Non-Cumulative Perpetual Convertible Preferred Stock with a liquidation preference of $1,000 per share, resulting in an aggregate liquidation preference of $3.0 billion. Each share of series R Preferred Stock will pay, when and if declared by the company’s board of directors, dividends in cash at a rate of 7.75% per annum, payable quarterly. The first dividend payment date will be Mar. 17, 2008.

·     On Jan. 15, WaMu’s Board of Directors declared a cash dividend of 15 cents per share on the company’s common stock. Dividends on the common stock are payable on Feb. 15, 2008 to shareholders of record as of Jan. 31, 2008. In addition to declaring a dividend on the company’s common stock, the company will pay a dividend of $0.3596 per depository share of Series K Preferred Stock to be payable on Mar. 17, 2008 to holders of record on Mar. 3, 2008 and a dividend of $19.1597 per share of Series R Preferred Stock to be payable on Mar. 17, 2008 to holders of record on Mar. 3, 2008.

5

ABOUT WAMU

WaMu, through its subsidiaries, is one of the nation’s leading consumer and small business banks. At Dec. 31, 2007, WaMu and its subsidiaries had assets of $327.91 billion. The company has a history dating back to 1889 and its subsidiary banks currently operate approximately 2,500 consumer and small business banking stores throughout the nation. WaMu’s financial reports and news releases are available at www.wamu.com/ir.

WEBCAST INFORMATION

A conference call to discuss the company’s financial results will be held on Thursday, Jan. 17, 2008, at 5:00 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 210-234-0002. 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 at least 30 days. A recording of the conference call will be available from 7:00 p.m. ET on Thursday, Jan. 17, 2008, through 11:59 p.m. ET on Wednesday, Jan. 30, 2008. The recorded message will be available at 800-395-7443. Callers from outside the United States may dial 203-369-3271.

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 and “Cautionary Statements” in our Forms 10-Q for the quarters ended March 31, 2007, June 30, 2007 and September 30, 2007 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;

§   Reputational risk;

§   Liquidity risk; and

§   Valuation risk.

There are other factors not described in our 2006 Form 10-K and Forms 10-Q for the quarters ended March 31, 2007, June 30, 2007 and September 30, 2007 which are beyond the Company’s ability to anticipate or control that could cause results to differ.

6

####

Media Contact	Investor Relations Contact
Derek Aney	Alan Magleby
206-500-6094(Seattle)	206-500-4148 (Seattle)
212-326-6075 (New York)	212-702-6955 (New York)
derek.aney@wamu.net	alan.magleby@wamu.net

7

EX-99.2

Exhibit 99.2

WM - 1

Washington Mutual, Inc.
Selected Financial Information
(dollars in millions, except per share data)
(unaudited)
	Quarter Ended															Year Ended
	Dec. 31,			Sept. 30,			June 30,			Mar. 31,			Dec. 31,			Dec. 31,			Dec. 31,
	2007			2007			2007			2007			2006			2007			2006
PROFITABILITY
Net income (loss)	$	(1,867	)	$	186		$	830		$	784		$	1,058		$	(67	)	$	3,558
Net interest income		2,047			2,014			2,034			2,081			1,998			8,177			8,121
Noninterest income		1,365			1,379			1,758			1,541			1,592			6,042			6,377
Noninterest expense		4,166			2,191			2,138			2,105			2,257			10,600			8,807
Diluted earnings per common share:
Income (loss) from continuing operations	$	(2.19	)	$	0.20		$	0.92		$	0.86		$	0.66		$	(0.12	)	$	3.18
Income from discontinued operations		-			-			-			-			0.44			-			0.46
Net income (loss)		(2.19	)		0.20			0.92			0.86			1.10			(0.12	)		3.64
Diluted weighted average number of common shares outstanding
(in thousands)		855,532			876,002			893,090			899,706			955,817			866,183			975,406
Net interest margin		2.85	%		2.86	%		2.90	%		2.79	%		2.58	%		2.85	%		2.60	%
Dividends declared per common share	$	0.56		$	0.56		$	0.55		$	0.54		$	0.53		$	2.21		$	2.06
Book value per common share (period end)(1)		24.55			27.18			27.27			27.30			28.21			24.55			28.21
Return on average assets		(2.30	) %		0.23	%		1.05	%		0.95	%		1.20	%		(0.02	) %		1.02	%
Return on average common equity		(32.64	)		3.03			13.74			12.99			16.03			(0.42	)		13.52
Efficiency ratio(2)(3)		122.13			64.55			56.38			58.13			62.87			74.55			60.75
ASSET QUALITY
Nonperforming assets(4)to total assets		2.17	%		1.65	%		1.29	%		1.02	%		0.80	%		2.17	%		0.80	%
Allowance as a percentage of loans held in portfolio		1.05			0.80			0.73			0.71			0.72			1.05			0.72
CREDIT PERFORMANCE
Provision for loan losses	$	1,534		$	967		$	372		$	234		$	344		$	3,107		$	816
Net charge-offs		747			421			271			183			136			1,623			510
CAPITAL ADEQUACY
Capital Ratios for WMI:
Tangible equity to total tangible assets(5)		6.67	%		5.60	%		6.07	%		5.78	%		6.04	%		6.67	%		6.04	%
Tier 1 capital to average total assets(6)		6.84			5.86			6.09			5.87			6.35			6.84			6.35
Total risk-based capital to total risk-weighted assets(6)		12.35			10.67			11.04			11.17			11.77			12.35			11.77
Capital Ratios for WMB (well-capitalized minimum)(7):
Tier 1 capital to adjusted total assets (5.00%)		7.02			6.41			7.52			7.04			7.10			7.02			7.10
Adjusted Tier 1 capital to total risk-weighted assets (6.00%)		8.25			7.62			8.77			8.32			8.69			8.25			8.69
Total risk-based capital to total risk-weighted assets (10.00%)		12.12			11.26			12.80			12.37			12.56			12.12			12.56
SUPPLEMENTAL DATA
Average balance sheet:
Total loans held in portfolio	$	241,690		$	227,348		$	216,004		$	222,617		$	239,265		$	226,968		$	239,094
Total interest-earning assets(2)		287,988			283,263			279,836			295,700			314,784			286,666			312,178
Total assets		325,276			320,475			316,004			331,905			353,056			323,389			348,758
Total deposits		185,636			198,649			206,765			210,764			214,801			200,380			203,829
Total stockholders' equity		23,947			23,994			24,436			24,407			26,700			24,194			26,406
Period-end balance sheet:
Total loans held in portfolio, net		241,815			235,243			213,434			215,481			223,330			241,815			223,330
Total assets		327,913			330,110			312,219			319,985			346,288			327,913			346,288
Total deposits		181,926			194,280			201,380			210,209			213,956			181,926			213,956
Total stockholders' equity		24,584			23,941			24,210			24,578			26,969			24,584			26,969
Common shares outstanding at the end of period (in thousands)(8)		869,036			868,802			875,722			888,111			944,479			869,036			944,479
Employees at end of period		49,403			49,748			49,989			49,693			49,824			49,403			49,824

(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 cash flow hedging instruments, 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 $3.92 billion for December 31, 2007, $2.94 billion for September 30, 2007 and June 30, 2007, and $2.45 billion for March 31, 2007 and December 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 December 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
	Dec. 31,			Sept. 30,			June 30,			Mar. 31,			Dec. 31,
	2007			2007			2007			2007			2006
Interest Income
Loans held for sale	$	160		$	248		$	421		$	562		$	515
Loans held in portfolio		4,156			3,992			3,786			3,900			4,053
Available-for-sale securities		380			392			351			332			392
Trading assets		101			108			108			113			102
Other interest and dividend income		79			116			82			101			148
Total interest income		4,876			4,856			4,748			5,008			5,210
Interest Expense
Deposits		1,464			1,650			1,723			1,772			1,843
Borrowings		1,365			1,192			991			1,155			1,369
Total interest expense		2,829			2,842			2,714			2,927			3,212
Net interest income		2,047			2,014			2,034			2,081			1,998
Provision for loan losses		1,534			967			372			234			344
Net interest income after provision for loan losses		513			1,047			1,662			1,847			1,654
Noninterest Income
Revenue from sales and servicing of home mortgage loans		358			161			300			125			164
Revenue from sales and servicing of consumer loans		375			418			403			443			372
Depositor and other retail banking fees		769			740			720			665			692
Credit card fees		214			209			183			172			182
Securities fees and commissions		63			67			70			60			54
Insurance income		29			29			29			29			30
Loss on trading assets		(267	)		(153	)		(145	)		(108	)		(81	)
Gain (loss) on other available-for-sale securities		(261	)		(99	)		7			35			(1	)
Other income		85			7			191			120			180
Total noninterest income		1,365			1,379			1,758			1,541			1,592
Noninterest Expense
Compensation and benefits		877			910			977			1,002			945
Occupancy and equipment		488			371			354			376			476
Telecommunications and outsourced information services		134			135			132			129			133
Depositor and other retail banking losses		72			71			58			61			64
Advertising and promotion		108			125			113			98			107
Professional fees		89			52			55			38			89
Foreclosed asset expense		133			82			56			39			34
Goodwill impairment charge		1,775			-			-			-			-
Other expense		490			445			393			362			409
Total noninterest expense		4,166			2,191			2,138			2,105			2,257
Minority interest expense		65			53			42			43			34
Income (loss) from continuing operations before income taxes		(2,353	)		182			1,240			1,240			955
Income taxes		(486	)		(4	)		410			456			315
Income (loss) from continuing operations		(1,867	)		186			830			784			640
Discontinued Operations(1)
Income from discontinued operations before income taxes		-			-			-			-			2
Gain on disposition of discontinued operations		-			-			-			-			667
Income taxes		-			-			-			-			251
Income from discontinued operations		-			-			-			-			418
Net Income (Loss)	$	(1,867	)	$	186		$	830		$	784		$	1,058
Net Income (Loss) Applicable to Common Stockholders	$	(1,875	)	$	178		$	822		$	777		$	1,050
Basic Earnings Per Common Share:
Income (loss) from continuing operations	$	(2.19	)	$	0.21		$	0.95		$	0.89		$	0.68
Income from discontinued operations		-			-			-			-			0.45
Net Income (Loss)		(2.19	)		0.21			0.95			0.89			1.13
Diluted Earnings Per Common Share:
Income (loss) from continuing operations	$	(2.19	)	$	0.20		$	0.92		$	0.86		$	0.66
Income from discontinued operations		-			-			-			-			0.44
Net Income (Loss)		(2.19	)		0.20			0.92			0.86			1.10
Dividends declared per common share		0.56			0.56			0.55			0.54			0.53
Basic weighted average number of common shares outstanding (in thousands)		855,518			857,005			868,968			874,816			931,484
Diluted weighted average number of common shares outstanding (in thousands)		855,532			876,002			893,090			899,706			955,817

(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)
	Year Ended
	Dec. 31,			Dec. 31,
	2007			2006
Interest Income
Loans held for sale	$	1,391		$	1,807
Loans held in portfolio		15,835			15,533
Available-for-sale securities		1,455			1,460
Trading assets		430			606
Other interest and dividend income		378			501
Total interest income		19,489			19,907
Interest Expense
Deposits		6,610			6,263
Borrowings		4,702			5,523
Total interest expense		11,312			11,786
Net interest income		8,177			8,121
Provision for loan losses		3,107			816
Net interest income after provision for loan losses		5,070			7,305
Noninterest Income
Revenue from sales and servicing of home mortgage loans		944			768
Revenue from sales and servicing of consumer loans		1,639			1,527
Depositor and other retail banking fees		2,893			2,567
Credit card fees		778			637
Securities fees and commissions		260			215
Insurance income		116			127
Loss on trading assets		(673	)		(154	)
Loss on other available-for-sale securities		(319	)		(9	)
Other income		404			699
Total noninterest income		6,042			6,377
Noninterest Expense
Compensation and benefits		3,766			3,937
Occupancy and equipment		1,589			1,711
Telecommunications and outsourced information services		530			554
Depositor and other retail banking losses		262			229
Advertising and promotion		445			443
Professional fees		233			227
Foreclosed asset expense		309			117
Goodwill impairment charge		1,775			-
Other expense		1,691			1,589
Total noninterest expense		10,600			8,807
Minority interest expense		203			105
Income from continuing operations before income taxes		309			4,770
Income taxes		376			1,656
Income (loss) from continuing operations		(67	)		3,114
Discontinued Operations(1)
Income from discontinued operations before income taxes		-			42
Gain on disposition of discontinued operations		-			667
Income taxes		-			265
Income from discontinued operations		-			444
Net Income (Loss)	$	(67	)	$	3,558
Net Income (Loss) Applicable to Common Stockholders	$	(98	)	$	3,550
Basic Earnings Per Common Share:
Income (loss) from continuing operations	$	(0.11	)	$	3.27
Income from discontinued operations		-			0.47
Net Income (Loss)		(0.11	)		3.74
Diluted Earnings Per Common Share:
Income (loss) from continuing operations	$	(0.12	)	$	3.18
Income from discontinued operations		-			0.46
Net Income (Loss)		(0.12	)		3.64
Dividends declared per common share		2.21			2.06
Basic weighted average number of common shares outstanding (in thousands)		864,004			948,371
Diluted weighted average number of common shares outstanding (in thousands)		866,183			975,406

(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)
	Dec. 31,			Sept. 30,			June 30,			Mar. 31,			Dec. 31,
	2007			2007			2007			2007			2006
Assets
Cash and cash equivalents	$	9,560		$	11,370		$	4,167		$	4,047		$	6,948
Federal funds sold and securities purchased under agreements to resell		1,877			4,042			3,267			8,279			3,743
Trading assets		2,768			3,797			5,534			5,290			4,434
Available-for-sale securities, total amortized cost of $27,789, $28,725,
$28,934, $22,921, and $25,073:
Mortgage-backed securities		19,249			20,562			20,393			16,543			18,601
Investment securities		8,291			7,844			7,947			6,296			6,377
Total available-for-sale securities		27,540			28,406			28,340			22,839			24,978
Loans held for sale		5,403			7,586			19,327			26,874			44,970
Loans held in portfolio		244,386			237,132			214,994			217,021			224,960
Allowance for loan losses		(2,571	)		(1,889	)		(1,560	)		(1,540	)		(1,630	)
Loans held in portfolio, net		241,815			235,243			213,434			215,481			223,330
Investment in Federal Home Loan Banks		3,351			2,808			1,596			2,230			2,705
Mortgage servicing rights		6,278			6,794			7,231			6,507			6,193
Goodwill		7,287			9,062			9,056			9,052			9,050
Other assets		22,034			21,002			20,267			19,386			19,937
Total assets	$	327,913		$	330,110		$	312,219		$	319,985		$	346,288
Liabilities
Deposits:
Noninterest-bearing deposits	$	30,389		$	31,341		$	33,557		$	34,367		$	33,386
Interest-bearing deposits		151,537			162,939			167,823			175,842			180,570
Total deposits		181,926			194,280			201,380			210,209			213,956
Federal funds purchased and commercial paper		2,003			2,482			3,390			563			4,778
Securities sold under agreements to repurchase		4,148			4,732			9,357			8,323			11,953
Advances from Federal Home Loan Banks		63,852			52,530			21,412			24,735			44,297
Other borrowings		38,958			40,887			40,313			39,430			32,852
Other liabilities		8,523			8,313			9,212			9,694			9,035
Minority interests		3,919			2,945			2,945			2,453			2,448
Total liabilities		303,329			306,169			288,009			295,407			319,319
Stockholders' equity
Preferred stock		3,392			492			492			492			492
Capital surplus - common stock		2,630			2,575			2,715			3,121			5,825
Accumulated other comprehensive loss		(359	)		(390	)		(568	)		(268	)		(287	)
Retained earnings		18,921			21,264			21,571			21,233			20,939
Total stockholders' equity		24,584			23,941			24,210			24,578			26,969
Total liabilities and stockholders' equity	$	327,913		$	330,110		$	312,219		$	319,985		$	346,288

WM - 5

Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
	Quarter Ended
	Dec. 31,			Sept. 30,			June 30,			Mar. 31,				Dec. 31,
	2007			2007			2007			2007				2006
Stockholders' Equity Rollforward
Balance, beginning of period	$	23,941		$	24,210		$	24,578		$	26,969			$	26,458
Net income (loss)		(1,867	)		186			830			784				1,058
Cumulative effect from the adoption of new accounting pronouncements		-			-			-			(6	)	(1)		(157	)	(2)
Other comprehensive income (loss), net of income taxes		31			177			(300	)		19				50
Cash dividends declared on common stock		(482	)		(485	)		(484	)		(476	)			(496	)
Cash dividends declared on preferred stock		(8	)		(8	)		(8	)		(7	)			(8	)
Cash dividends returned(3)		15			-			-			-				-
Common stock repurchased and retired(4)		-			(199	)		(500	)		(2,797	)			-
Common stock issued		54			60			94			92				64
Preferred stock issued		2,900			-			-			-				-
Balance, end of period	$	24,584		$	23,941		$	24,210		$	24,578			$	26,969

(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)	Represents accumulated dividends on shares returned from escrow.
(4)	The Company repurchased zero, 7.2 million, 13.5 million,  61.4 million and 1.7 million shares of its common stock during the three months ended December 31, 2007, September 30, 2007, June 30, 2007, March 31, 2007 and December 31, 2006.  At December 31, 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															Year Ended
	Dec. 31,			Sept. 30,			June 30,			Mar. 31,			Dec. 31,			Dec. 31,			Dec. 31,
	2007			2007			2007			2007			2006			2007			2006
RETAIL BANKING GROUP
Condensed income statement:
Net interest income	$	1,261		$	1,306		$	1,291		$	1,284		$	1,247		$	5,142		$	5,201
Provision for loan losses		663			318			91			62			47			1,134			167
Noninterest income		850			833			820			751			774			3,254			2,914
Inter-segment revenue		5			9			16			18			15			48			58
Noninterest expense		1,215			1,150			1,132			1,070			1,098			4,567			4,364
Income from continuing operations before income taxes		238			680			904			921			891			2,743			3,642
Income taxes		(40	)		224			339			346			340			869			1,392
Income from continuing operations		278			456			565			575			551			1,874			2,250
Income from discontinued operations		-			-			-			-			12			-			38
Net income	$	278		$	456		$	565		$	575		$	563		$	1,874		$	2,288
Performance and other data:
Efficiency ratio		57.40	%		53.53	%		53.24	%		52.13	%		53.95	%		54.09	%		53.39	%
Average loans	$	145,486		$	147,357		$	149,716		$	155,206		$	172,013		$	149,409		$	177,401
Average assets		155,103			157,196			159,518			165,047			182,240			159,184			187,735
Average deposits:
Checking deposits:
Noninterest bearing		22,748			22,860			23,107			22,331			21,873			22,763			21,274
Interest bearing		26,328			28,406			30,282			31,739			33,010			29,169			36,391
Total checking deposits		49,076			51,266			53,389			54,070			54,883			51,932			57,665
Savings and money market deposits		44,623			43,524			43,814			43,103			41,442			43,769			38,843
Time deposits		49,034			50,131			48,049			46,857			47,188			48,532			43,836
Average deposits		142,733			144,921			145,252			144,030			143,513			144,233			140,344
Loan volume		3,417			5,172			5,760			4,576			4,154			18,926			20,354
Employees at end of period		28,784			28,263			28,131			27,837			27,629			28,784			27,629
CARD SERVICES GROUP
Managed basis(1)
Condensed income statement:
Net interest income	$	694		$	674		$	649		$	641		$	652		$	2,659		$	2,496
Provision for loan losses		591			611			523			388			555			2,113			1,647
Noninterest income		315			400			393			474			451			1,581			1,528
Noninterest expense		338			364			306			329			318			1,337			1,205
Income before income taxes		80			99			213			398			230			790			1,172
Income taxes		(12	)		33			80			149			88			250			448
Net income	$	92		$	66		$	133		$	249		$	142		$	540		$	724
Performance and other data:
Efficiency ratio		33.51	%		33.91	%		29.33	%		29.51	%		28.83	%		31.53	%		29.96	%
Average loans	$	26,665		$	25,718		$	24,234		$	23,604		$	22,875		$	25,066		$	21,294
Average assets		28,961			28,206			26,762			26,039			25,472			27,502			23,888
Employees at end of period		2,860			2,878			2,827			2,579			2,611			2,860			2,611
Securitization adjustments
Condensed income statement:
Net interest income	$	(454	)	$	(456	)	$	(459	)	$	(414	)	$	(437	)	$	(1,783	)	$	(1,686	)
Provision for loan losses		(335	)		(288	)		(294	)		(282	)		(280	)		(1,200	)		(943	)
Noninterest income		119			168			165			132			157			583			743
Performance and other data:
Average loans		(16,007	)		(14,488	)		(13,888	)		(12,507	)		(12,811	)		(14,233	)		(12,165	)
Average assets		(14,180	)		(12,841	)		(12,287	)		(10,961	)		(11,035	)		(12,577	)		(10,337	)
Adjusted basis
Condensed income statement:
Net interest income	$	240		$	218		$	190		$	227		$	215		$	876		$	810
Provision for loan losses		256			323			229			106			275			913			704
Noninterest income		434			568			558			606			608			2,164			2,271
Noninterest expense		338			364			306			329			318			1,337			1,205
Income before income taxes		80			99			213			398			230			790			1,172
Income taxes		(12	)		33			80			149			88			250			448
Net income	$	92		$	66		$	133		$	249		$	142		$	540		$	724
Performance and other data:
Average loans	$	10,658		$	11,230		$	10,346		$	11,097		$	10,064		$	10,833		$	9,129
Average assets		14,781			15,365			14,475			15,078			14,437			14,925			13,551

(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															Year Ended
(This table is continued from "WM-6.")	Dec. 31,			Sept. 30,			June 30,			Mar. 31,			Dec. 31,			Dec. 31,			Dec. 31,
	2007			2007			2007			2007			2006			2007			2006
COMMERCIAL GROUP
Condensed income statement:
Net interest income	$	200		$	200		$	208		$	211		$	201		$	820		$	719
Provision for loan losses		19			12			2			(10	)		(70	)		24			(82	)
Noninterest income		(10	)		(34	)		63			15			41			35			99
Noninterest expense		66			67			74			74			73			282			259
Income before income taxes		105			87			195			162			239			549			641
Income taxes		11			29			73			61			91			174			245
Net income	$	94		$	58		$	122		$	101		$	148		$	375		$	396
Performance and other data:
Efficiency ratio		34.49	%		40.26	%		27.42	%		32.85	%		30.18	%		32.93	%		31.68	%
Average loans	$	40,129		$	38,333		$	38,789		$	38,641		$	37,552		$	38,975		$	33,230
Average assets		42,333			40,661			41,181			41,001			40,216			41,296			35,565
Average deposits		9,762			13,816			15,294			12,028			12,189			12,722			10,364
Loan volume		4,800			4,054			4,348			3,671			4,019			16,873			12,854
Employees at end of period		1,406			1,426			1,409			1,356			1,416			1,406			1,416
HOME LOANS GROUP
Condensed income statement:
Net interest income	$	230		$	191		$	211		$	244		$	270		$	878		$	1,165
Provision for loan losses		511			323			101			49			47			985			189
Noninterest income		329			183			389			161			125			1,061			1,296
Inter-segment expense		5			9			16			18			15			48			58
Noninterest expense		2,319			553			547			521			533			3,939			2,295
Loss before income taxes		(2,276	)		(511	)		(64	)		(183	)		(200	)		(3,033	)		(81	)
Income taxes		(312	)		(169	)		(24	)		(69	)		(76	)		(573	)		(31	)
Net loss	$	(1,964	)	$	(342	)	$	(40	)	$	(114	)	$	(124	)	$	(2,460	)	$	(50	)
Performance and other data:
Efficiency ratio		418.90	%		151.23	%		93.54	%		134.57	%		140.22	%		208.33	%		95.48	%
Average loans	$	52,278		$	43,737		$	43,312		$	53,254		$	51,048		$	48,131		$	47,586
Average assets		66,130			61,068			60,314			71,367			71,503			64,695			72,772
Average deposits		6,714			7,780			8,372			8,501			11,208			7,836			11,535
Loan volume		19,089			26,434			35,938			33,780			37,532			115,241			171,569
Employees at end of period		11,323			12,162			12,661			12,947			12,934			11,323			12,934
CORPORATE SUPPORT/TREASURY AND OTHER
Condensed income statement:
Net interest income (expense)	$	(18	)	$	(39	)	$	(4	)	$	(22	)	$	(69	)	$	(86	)	$	(304	)
Provision for loan losses		85			(9	)		(51	)		27			45			51			(162	)
Noninterest income		(201	)		(91	)		60			94			152			(137	)		303
Noninterest expense		228			57			79			111			235			475			684
Minority interest expense		65			53			42			43			34			203			105
Loss from continuing operations before income taxes		(597	)		(231	)		(14	)		(109	)		(231	)		(952	)		(628	)
Income taxes		(156	)		(46	)		(36	)		(69	)		(102	)		(308	)		(296	)
Income (loss) from continuing operations		(441	)		(185	)		22			(40	)		(129	)		(644	)		(332	)
Income from discontinued operations		-			-			-			-			406			-			406
Net income (loss)	$	(441	)	$	(185	)	$	22		$	(40	)	$	277		$	(644	)	$	74
Performance and other data:
Average loans	$	1,482		$	1,420		$	1,367		$	1,345		$	1,310		$	1,403		$	1,126
Average assets		48,215			47,570			41,817			40,891			46,233			44,651			40,722
Average deposits		26,427			32,132			37,847			46,205			47,891			35,589			41,586
Loan volume		171			113			72			107			144			462			308
Employees at end of period		5,030			5,019			4,961			4,974			5,234			5,030			5,234

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

WM - 8

Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
	Quarter Ended															Year Ended
(This table is continued from "WM-7.")	Dec. 31,			Sept. 30,			June 30,			Mar. 31,			Dec. 31,			Dec. 31,			Dec. 31,
	2007			2007			2007			2007			2006			2007			2006
RECONCILING ADJUSTMENTS
Condensed income statement:
Net interest income(1)	$	134		$	138		$	138		$	137		$	134		$	547		$	530
Noninterest income (expense)(2)		(37	)		(80	)		(132	)		(86	)		(108	)		(335	)		(506	)
Income before income taxes		97			58			6			51			26			212			24
Income taxes(3)		23			(75	)		(22	)		38			(26	)		(36	)		(102	)
Net income	$	74		$	133		$	28		$	13		$	52		$	248		$	126
Performance and other data:
Average loans(4)	$	(1,286	)	$	(1,385	)	$	(1,301	)	$	(1,479	)	$	(1,573	)	$	(1,362	)	$	(1,587	)
Average assets(4)		(1,286	)		(1,385	)		(1,301	)		(1,479	)		(1,573	)		(1,362	)		(1,587	)
TOTAL CONSOLIDATED
Condensed income statement:
Net interest income	$	2,047		$	2,014		$	2,034		$	2,081		$	1,998		$	8,177		$	8,121
Provision for loan losses		1,534			967			372			234			344			3,107			816
Noninterest income		1,365			1,379			1,758			1,541			1,592			6,042			6,377
Noninterest expense		4,166			2,191			2,138			2,105			2,257			10,600			8,807
Minority interest expense		65			53			42			43			34			203			105
Income (loss) from continuing operations before income taxes		(2,353	)		182			1,240			1,240			955			309			4,770
Income taxes		(486	)		(4	)		410			456			315			376			1,656
Income (loss) from continuing operations		(1,867	)		186			830			784			640			(67	)		3,114
Income from discontinued operations		-			-			-			-			418			-			444
Net income (loss)	$	(1,867	)	$	186		$	830		$	784		$	1,058		$	(67	)	$	3,558
Performance and other data:
Efficiency ratio		122.13	%		64.55	%		56.38	%		58.13	%		62.87	%		74.55	%		60.75	%
Average loans	$	248,747		$	240,692		$	242,229		$	258,064		$	270,414		$	247,389		$	266,885
Average assets		325,276			320,475			316,004			331,905			353,056			323,389			348,758
Average deposits		185,636			198,649			206,765			210,764			214,801			200,380			203,829
Loan volume		27,477			35,773			46,118			42,134			45,849			151,502			205,085
Employees at end of period		49,403			49,748			49,989			49,693			49,824			49,403			49,824

(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
	Dec. 31, 2007							Sept. 30, 2007							Dec. 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	$	1,673		4.65	%	$	20	$	4,349		5.43	%	$	60	$	5,597		5.33	%	$	76
Trading assets		3,114		12.89			101		4,509		9.54			108		4,855		8.39			102
Available-for-sale securities(2):
Mortgage-backed securities		20,104		5.47			275		20,815		5.60			291		22,176		5.60			311
Investment securities		8,029		5.22			105		7,721		5.21			101		6,437		5.04			81
Loans held for sale		7,057		8.99			160		13,344		7.41			248		31,149		6.59			515
Loans held in portfolio:
Loans secured by real estate:
Home loans(3)(4)		108,496		6.58			1,785		97,398		6.48			1,579		114,645		6.04			1,729
Home equity loans and lines of credit(4)		60,135		7.15			1,083		57,469		7.56			1,094		52,850		7.54			1,004
Subprime mortgage channel(5)		19,341		6.38			309		20,405		6.63			338		20,982		6.81			357
Home construction(6)		2,136		6.99			37		2,056		6.90			35		2,060		6.62			34
Multi-family		31,331		6.54			513		30,058		6.63			498		30,348		6.52			494
Other real estate		8,969		6.89			155		7,418		6.99			131		6,732		6.88			118
Total loans secured by real estate		230,408		6.72			3,882		214,804		6.83			3,675		227,617		6.55			3,736
Consumer:
Credit card		9,134		9.76			225		10,332		10.28			268		9,597		11.28			273
Other		213		15.77			8		233		14.83			8		280		12.54			9
Commercial		1,935		8.47			41		1,979		8.25			41		1,771		7.72			35
Total loans held in portfolio		241,690		6.86			4,156		227,348		7.01			3,992		239,265		6.76			4,053
Other		6,321		3.74			59		5,177		4.33			56		5,305		5.35			72
Total interest-earning assets		287,988		6.76			4,876		283,263		6.84			4,856		314,784		6.60			5,210
Noninterest-earning assets:
Mortgage servicing rights		6,472							6,901							6,230
Goodwill		8,907							9,056							9,011
Other assets		21,909							21,255							23,031
Total assets	$	325,276						$	320,475						$	353,056
Liabilities
Interest-bearing liabilities:
Deposits:
Interest-bearing checking deposits	$	26,425		2.15			143	$	28,492		2.36			169	$	33,098		2.78			232
Savings and money market deposits		54,622		3.14			432		57,377		3.32			480		53,314		3.34			449
Time deposits		73,741		4.78			889		80,719		4.92			1,001		93,415		4.90			1,162
Total interest-bearing deposits		154,788		3.75			1,464		166,588		3.93			1,650		179,827		4.05			1,843
Federal funds purchased and commercial paper		3,385		4.96			42		2,991		5.40			41		6,781		5.40			93
Securities sold under agreements to repurchase		4,273		4.80			52		8,617		5.34			116		12,177		5.43			169
Advances from Federal Home Loan Banks		56,146		5.13			726		34,128		5.39			464		46,005		5.31			625
Other		39,268		5.52			545		40,567		5.60			571		34,420		5.54			482
Total interest-bearing liabilities		257,860		4.36			2,829		252,891		4.46			2,842		279,210		4.53			3,212
Noninterest-bearing sources:
Noninterest-bearing deposits		30,848							32,061							34,974
Other liabilities		8,956							8,584							10,111
Minority interests		3,665							2,945							2,061
Stockholders' equity		23,947							23,994							26,700
Total liabilities and stockholders' equity	$	325,276						$	320,475						$	353,056
Net interest spread and net interest income				2.40		$	2,047				2.38		$	2,014				2.07		$	1,998
Impact of noninterest-bearing sources				0.45							0.48							0.51
Net interest margin				2.85							2.86							2.58

(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 $364 million, $345 million and $333 million for the three months ended December 31, 2007, September 30, 2007 and December 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 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)
	Year Ended
	Dec. 31, 2007							Dec. 31, 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	$	3,475		5.31	%	$	184	$	4,718		5.20	%	$	245
Trading assets		4,546		9.45			430		7,829		7.74			606
Available-for-sale securities(2):
Mortgage-backed securities		19,647		5.49			1,078		21,534		5.41			1,165
Investment securities		7,334		5.13			377		5,992		4.92			295
Loans held for sale		20,421		6.81			1,391		27,791		6.50			1,807
Loans held in portfolio:
Loans secured by real estate:
Home loans(3)(4)		98,547		6.49			6,396		120,320		5.83			7,011
Home equity loans and lines of credit(4)		56,285		7.46			4,197		52,265		7.33			3,833
Subprime mortgage channel(5)		20,125		6.62			1,333		20,202		6.31			1,275
Home construction(6)		2,074		6.79			141		2,061		6.46			133
Multi-family		30,162		6.59			1,988		27,386		6.28			1,721
Other real estate		7,504		6.98			524		5,797		6.93			402
Total loans secured by real estate		214,697		6.79			14,579		228,031		6.30			14,375
Consumer:
Credit card		10,113		10.55			1,067		8,733		11.19			977
Other		242		13.90			34		444		11.12			50
Commercial		1,916		8.10			155		1,886		6.94			131
Total loans held in portfolio		226,968		6.98			15,835		239,094		6.50			15,533
Other		4,275		4.53			194		5,220		4.90			256
Total interest-earning assets		286,666		6.80			19,489		312,178		6.38			19,907
Noninterest-earning assets:
Mortgage servicing rights		6,616							7,667
Goodwill		9,018							8,489
Other assets		21,089							20,424
Total assets	$	323,389						$	348,758
Liabilities
Interest-bearing liabilities:
Deposits:
Interest-bearing checking deposits	$	29,261		2.42			709	$	36,477		2.63			960
Savings and money market deposits		56,459		3.27			1,846		48,866		2.96			1,446
Time deposits		82,551		4.91			4,055		84,106		4.59			3,857
Total interest-bearing deposits		168,271		3.93			6,610		169,449		3.70			6,263
Federal funds purchased and commercial paper		3,096		5.30			164		7,347		5.06			371
Securities sold under agreements to repurchase		8,330		5.32			443		15,257		5.12			781
Advances from Federal Home Loan Banks		37,144		5.28			1,963		56,619		4.99			2,828
Other		38,157		5.59			2,132		28,796		5.36			1,543
Total interest-bearing liabilities		254,998		4.44			11,312		277,468		4.25			11,786
Noninterest-bearing sources:
Noninterest-bearing deposits		32,109							34,380
Other liabilities		9,155							8,865
Minority interests		2,933							1,639
Stockholders' equity		24,194							26,406
Total liabilities and stockholders' equity	$	323,389						$	348,758
Net interest spread and net interest income				2.36		$	8,177				2.13		$	8,121
Impact of noninterest-bearing sources				0.49							0.47
Net interest margin				2.85							2.60

(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 $1.41 billion and $1.07 billion for the years ended December 31, 2007 and December 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 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
	Sept. 30, 2007			Dec. 31,		Sept. 30,		June 30,		Mar. 31,		Dec. 31,
	to Dec. 31, 2007			2007		2007		2007		2007		2006
Deposits
Retail deposits:
Checking deposits:
Noninterest bearing	$	(245	)	$	23,476	$	23,721	$	24,142	$	24,400	$	22,838
Interest bearing		(1,564	)		25,713		27,277		29,592		31,523		32,723
Total checking deposits		(1,809	)		49,189		50,998		53,734		55,923		55,561
Savings and money market deposits		1,627			44,987		43,360		43,617		44,058		41,943
Time deposits(1)		(1,330	)		49,410		50,740		48,140		47,262		46,821
Total retail deposits		(1,512	)		143,586		145,098		145,491		147,243		144,325
Commercial business and other deposits		(5,269	)		11,267		16,536		19,186		17,741		15,175
Brokered deposits:
Consumer		605			18,089		17,484		17,153		18,995		22,299
Institutional		(5,592	)		2,515		8,107		11,025		17,256		22,339
Custodial and escrow deposits(2)		(586	)		6,469		7,055		8,525		8,974		9,818
Total deposits	$	(12,354	)	$	181,926	$	194,280	$	201,380	$	210,209	$	213,956

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

	Dec. 31,		Sept. 30,		June 30,		Mar. 31,		Dec. 31,
	2007		2007		2007		2007		2006
Retail Deposit Accounts(number of accounts)
Noninterest-bearing checking		10,960,270		10,824,548		10,449,887		9,983,313		9,611,706
Interest-bearing checking		1,273,673		1,334,902		1,399,203		1,459,534		1,503,365
Savings and money market		7,118,349		7,087,311		6,936,870		6,708,784		6,525,772
Total transaction accounts, end of period(1)		19,352,292		19,246,761		18,785,960		18,151,631		17,640,843
Net change in noninterest-bearing checking accounts		135,722		374,661		466,574		371,607		208,634
Net change in checking accounts		74,493		310,360		406,243		327,776		179,784

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

	Dec. 31,			Sept. 30,			June 30,			Mar. 31,			Dec. 31,
	2007			2007			2007			2007			2006
Retail Banking Stores
Stores, beginning of period		2,212			2,235			2,228			2,225			2,225
Stores opened during the quarter		50			10			11			6			81		(1)
Stores closed during the quarter		(5	)		(33	)		(4	)		(3	)		(81	)
Stores, end of period		2,257			2,212			2,235			2,228			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
	Dec. 31,		Sept. 30,		June 30,		Mar. 31,		Dec. 31,
	2007		2007		2007		2007		2006
Loan Volume
Home loans:
Short-term adjustable-rate loans(1):
Option ARMs	$	2,372	$	5,865	$	7,888	$	7,777	$	9,487
Other ARMs		10		111		22		36		13
Total short-term adjustable-rate loans		2,382		5,976		7,910		7,813		9,500
Medium-term adjustable-rate loans(2)		7,545		10,177		14,953		13,567		17,323
Fixed-rate loans		7,382		6,176		8,172		8,824		7,351
Total home loan volume		17,309		22,329		31,035		30,204		34,174
Home equity loans and lines of credit		4,619		8,544		9,988		7,600		6,944
Home construction(3)		378		483		426		298		298
Multi-family		3,412		2,856		3,067		2,663		2,977
Other real estate		1,487		1,285		1,246		1,080		1,182
Total loans secured by real estate(4)		27,205		35,497		45,762		41,845		45,575
Commercial		272		276		356		289		274
Total loan volume	$	27,477	$	35,773	$	46,118	$	42,134	$	45,849
Loan Volume by Channel
Retail	$	17,341	$	21,223	$	24,707	$	21,171	$	22,417
Wholesale		9,536		13,387		17,020		14,746		16,834
Purchased		600		1,163		4,391		6,217		6,398
Correspondent		-		-		-		-		200
Total loan volume by channel	$	27,477	$	35,773	$	46,118	$	42,134	$	45,849
Refinancing Activity(5)
Home loan refinancing	$	12,297	$	14,722	$	22,637	$	22,552	$	25,060
Home equity loans and lines of credit		46		143		157		550		599
Home construction loans		30		30		20		12		2
Multi-family and other real estate		1,436		1,225		1,378		1,131		1,254
Total refinancing	$	13,809	$	16,120	$	24,192	$	24,245	$	26,915

(1)	Short-term adjustable-rate loans reprice within one year.
(2)	Medium-term adjustable-rate loans 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 $22 million, $483 million, $2.45 billion, $3.48 billion and $6.07 billion for the three months ended December 31, 2007, September 30, 2007, June 30, 2007, March 31, 2007 and December 31, 2006.
(5)	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)
	Year Ended
	Dec. 31,		Dec. 31,
	2007		2006
Loan Volume
Home loans:
Short-term adjustable-rate loans(1):
Option ARMs	$	23,902	$	42,594
Other ARMs		180		3,384
Total short-term adjustable-rate loans		24,082		45,978
Medium-term adjustable-rate loans(2)		46,242		64,936
Fixed-rate loans		30,554		47,469
Total home loan volume		100,878		158,383
Home equity loans and lines of credit		30,752		31,037
Home construction(3)		1,584		1,481
Multi-family		11,997		9,428
Other real estate		5,097		3,668
Total loans secured by real estate(4)		150,308		203,997
Commercial		1,194		1,088
Total loan volume	$	151,502	$	205,085
Loan Volume by Channel
Retail	$	84,442	$	89,688
Wholesale		54,690		64,501
Purchased		12,370		37,310
Correspondent		-		13,586
Total loan volume by channel	$	151,502	$	205,085
Refinancing Activity(5)
Home loan refinancing	$	72,209	$	102,589
Home equity loans and lines of credit		897		1,665
Home construction loans		91		39
Multi-family and other real estate		5,169		3,590
Total refinancing	$	78,366	$	107,883

(1)	Short-term adjustable-rate loans reprice within one year.
(2)	Medium-term adjustable-rate loans 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  $6.44 billion and $30.76 billion for the years ended December 31, 2007 and December 31, 2006.
(5)	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
	Sept. 30, 2007			Dec. 31,			Sept. 30,			June 30,			Mar. 31,			Dec. 31,
	to Dec. 31, 2007			2007			2007			2007			2007			2006
Loans Held in Portfolio
Loans secured by real estate:
Home:
Short-term adjustable-rate loans(1):
Option ARMs(2)	$	(877	)	$	56,969		$	57,846		$	53,455		$	58,130		$	63,557
Other ARMs		753			16,231			15,478			13,538			13,501			15,091
Total short-term adjustable-rate loans		(124	)		73,200			73,324			66,993			71,631			78,648
Medium-term adjustable-rate loans(3)		3,266			41,274			38,008			29,647			29,924			29,774
Fixed-rate loans		192			12,005			11,813			9,505			9,506			9,782
Total home loans		3,334			126,479			123,145			106,145			111,061			118,204
Home equity loans and lines of credit		1,657			63,488			61,831			58,631			56,123			54,924
Home construction(4)		116			2,226			2,110			2,058			2,071			2,082
Multi-family		923			31,754			30,831			29,290			29,515			30,161
Other real estate		1,189			9,524			8,335			6,879			6,728			6,745
Total loans secured by real estate(5)		7,219			233,471			226,252			203,003			205,498			212,116
Consumer:
Credit card		40			8,831			8,791			9,913			9,490			10,861
Other		(19	)		205			224			243			261			276
Commercial		14			1,879			1,865			1,835			1,772			1,707
Total loans held in portfolio(6)		7,254			244,386			237,132			214,994			217,021			224,960
Less: allowance for loan losses		(682	)		(2,571	)		(1,889	)		(1,560	)		(1,540	)		(1,630	)
Total loans held in portfolio, net	$	6,572		$	241,815		$	235,243		$	213,434		$	215,481		$	223,330

(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 $1.73 billion, $1.50 billion, $1.30 billion, $1.12 billion and $888 million at December 31, 2007, September 30, 2007, June 30, 2007, March 31, 2007 and December 31, 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	Dec. 31,		Sept. 30,		June 30,		Mar. 31,		Dec. 31,
	2007		2007		2007		2007		2006
Home loans	$	16,092	$	17,285	$	17,602	$	17,610	$	18,725
Home equity loans and lines of credit		2,525		2,711		2,855		2,749		2,042
Total	$	18,617	$	19,996	$	20,457	$	20,359	$	20,767

(6) Includes net unamortized deferred loan costs of $1.45 billion, $1.44 billion, $1.58 billion, $1.71 billion and $1.88 billion at December 31, 2007, September 30, 2007, June 30, 2007, March 31, 2007 and December 31, 2006.

WM - 15

Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
						Weighted					Weighted					Weighted
	Change from					Average					Average					Average
	Sept. 30, 2007			Dec. 31,		Coupon			Sept. 30,		Coupon			Dec. 31,		Coupon
	to Dec. 31, 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	$	(877	)	$	56,969		7.69	%	$	57,846		7.61	%	$	63,557		7.44	%
Other ARMs		753			16,231		6.99			15,478		7.19			15,091		7.17
Total short-term adjustable-rate loans		(124	)		73,200		7.54			73,324		7.52			78,648		7.39
Medium-term adjustable-rate loans(2)		3,266			41,274		6.45			38,008		6.33			29,774		5.77
Fixed-rate loans		192			12,005		6.75			11,813		6.74			9,782		6.65
Total home loans held in portfolio		3,334			126,479		7.11			123,145		7.09			118,204		6.92
Home equity loans and lines of credit:
Adjustable-rate		2,124			53,099		7.52			50,975		7.94			44,685		8.21
Fixed-rate		(467	)		10,389		7.72			10,856		7.75			10,239		7.29
Total home equity loans and lines of credit		1,657			63,488		7.55			61,831		7.91			54,924		8.04
Multi-family loans held in portfolio:
Short-term adjustable-rate loans(1):
Option ARMs		(787	)		6,294		7.12			7,081		7.25			9,164		7.18
Other ARMs		(269	)		8,110		6.40			8,379		6.53			7,473		7.12
Total short-term adjustable-rate loans		(1,056	)		14,404		6.71			15,460		6.86			16,637		7.15
Medium-term adjustable-rate loans(2)		1,943			15,451		6.14			13,508		6.12			11,757		5.68
Fixed-rate loans		36			1,899		6.28			1,863		6.31			1,767		6.44
Total multi-family loans held in portfolio		923			31,754		6.41			30,831		6.50			30,161		6.54
Total selected loans held in portfolio secured by real estate(3)		5,914			221,721		7.13			215,807		7.24			203,289		7.17
Loans held for sale(4)		(1,854	)		4,373		6.12			6,227		6.36			44,724		6.32
Total selected loans secured by real estate	$	4,060		$	226,094		7.12		$	222,034		7.21		$	248,013		7.01

(1)	Short-term adjustable-rate loans reprice within one year.
(2)	Medium-term adjustable-rate loans reprice after one year.
(3)	At December 31, 2007, September 30, 2007 and December 31, 2006, adjustable-rate loans with lifetime caps were $182.12 billion, $175.21 billion and $169.60 billion with a lifetime weighted average cap rate of 12.49%, 12.44% and 12.29%.
(4)	Excludes credit card and student loans.

	Sept. 30, 2007			Dec. 31, 2006
	to Dec. 31, 2007			to Dec. 31, 2007
Rollforward of Loans Held for Sale
Balance, beginning of period	$	7,586		$	44,970
Mortgage loans originated, purchased and transferred from held in portfolio		9,424			83,372
Mortgage loans transferred to held in portfolio		(577	)		(20,255	)
Mortgage loans sold and other(1)		(10,700	)		(103,468	)
Net change in consumer loans held for sale		(330	)		784
Balance, end of period	$	5,403		$	5,403
Rollforward of Home Loans Held in Portfolio
Balance, beginning of period	$	123,145		$	118,204
Loans originated, purchased and transferred from held for sale		8,644			44,656
Loan payments, transferred to held for sale and other		(5,310	)		(36,381	)
Balance, end of period	$	126,479		$	126,479

(1) The unpaid principal balance ("UPB") of home loans sold was $8.35 billion and $92.93 billion for the three and twelve months ended December 31, 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	Dec. 31,			Sept. 30,			June 30,			Mar. 31,			Dec. 31,
	2007			2007			2007			2007			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	$	7		$	(169	)	$	66		$	149		$	64
Revaluation gain (loss) from derivatives economically hedging loans held for sale		(12	)		(53	)		126			(54	)		91
Gain (loss) from home mortgage loans and originated mortgage-backed securities,
net of hedging and risk management instruments		(5	)		(222	)		192			95			155
Home mortgage loan servicing revenue:
Home mortgage loan servicing revenue(2)		490			516			526			514			497
Change in MSR fair value due to payments on loans and other		(255	)		(351	)		(401	)		(356	)		(375	)
Net mortgage loan servicing revenue		235			165			125			158			122
Change in MSR fair value due to valuation inputs or assumptions		(390	)		(201	)		530			(96	)		(80	)
Revaluation gain (loss) from derivatives economically hedging MSR		518			419			(547	)		(32	)		(33	)
Home mortgage loan servicing revenue, net of  MSR valuation
changes and derivative risk management instruments		363			383			108			30			9
Total revenue from sales and servicing of home mortgage loans	$	358		$	161		$	300		$	125		$	164

	Year Ended
Detail of Revenue from Sales and Servicing of Home Mortgage Loans	Dec. 31,			Dec. 31,
	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	$	52		$	626
Revaluation gain from derivatives economically hedging loans held for sale		7			109
Gain from home mortgage loans and originated mortgage-backed securities,
net of hedging and risk management instruments		59			735
Home mortgage loan servicing revenue:
Home mortgage loan servicing revenue(2)		2,047			2,181
Change in MSR fair value due to payments on loans and other		(1,363	)		(1,654	)
Net mortgage loan servicing revenue		684			527
Change in MSR fair value due to valuation inputs or assumptions		(157	)		299
Revaluation gain (loss) from derivatives economically hedging MSR		358			(636	)
Adjustment to MSR fair value for MSR sale		-			(157	)
Home mortgage loan servicing revenue, net of  MSR valuation
changes and derivative risk management instruments		885			33
Total revenue from sales and servicing of home mortgage loans	$	944		$	768

(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
	Dec. 31,			Sept. 30,			June 30,			Mar. 31,			Dec. 31,
	2007			2007			2007			2007			2006
MSR Valuation and Risk Management:
Change in MSR fair value due to valuation inputs or assumptions	$	(390	)	$	(201	)	$	530		$	(96	)	$	(80	)
Gain (loss) on MSR risk management instruments:
Revaluation gain (loss) from derivatives		518			419			(547	)		(32	)		(33	)
Revaluation gain (loss) from certain trading securities		-			4			(4	)		4			(5	)
Total gain (loss) on MSR risk management instruments		518			423			(551	)		(28	)		(38	)
Total changes in MSR valuation and risk management	$	128		$	222		$	(21	)	$	(124	)	$	(118	)

	Year Ended
	Dec. 31,			Dec. 31,
	2007			2006
MSR Valuation and Risk Management(1):
Change in MSR fair value due to valuation inputs or assumptions	$	(157	)	$	299
Gain (loss) on MSR risk management instruments:
Revaluation gain (loss) from derivatives		358			(636	)
Revaluation gain (loss) from certain trading securities		4			(55	)
Loss from certain available-for-sale securities		-			(1	)
Total gain (loss) on MSR risk management instruments		362			(692	)
Total changes in MSR valuation and risk management	$	205		$	(393	)

(1) Excludes $157 million downward adjustment to MSR fair value recognized in the year ended December 31, 2006.

WM - 18

Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
	Quarter Ended
		Dec. 31,			Sept. 30,			June 30,			Mar. 31,			Dec. 31,
		2007			2007			2007			2007			2006
Rollforward of Mortgage Servicing Rights(1)
Balance, beginning of period		$	6,794		$	7,231		$	6,507		$	6,193		$	6,288
Home loans:
Additions			127			116			592			760			357
Change in MSR fair value due to payments on loans and other			(255	)		(351	)		(401	)		(356	)		(375	)
Change in MSR fair value due to valuation inputs or
assumptions			(390	)		(201	)		530			(96	)		(80	)
Sale of MSR			-			-			-			-			1
Net change in commercial real estate MSR			2			(1	)		3			6			2
Balance, end of period		$	6,278		$	6,794		$	7,231		$	6,507		$	6,193
Rollforward of Mortgage Loans Serviced for Others
Balance, beginning of period		$	463,436		$	474,867		$	467,782		$	444,696		$	439,208
Home loans:
Additions			7,814			8,700			29,949			44,550			25,833
Loan payments and other			(15,739	)		(20,716	)		(24,213	)		(22,469	)		(20,744	)
Net change in commercial real estate loans			973			585			1,349			1,005			399
Balance, end of period		$	456,484		$	463,436		$	474,867		$	467,782		$	444,696
		Dec. 31,			Sept. 30,			June 30,			Mar. 31,			Dec. 31,
		2007			2007			2007			2007			2006
Total Servicing Portfolio
Mortgage loans serviced for others		$	456,484		$	463,436		$	474,867		$	467,782		$	444,696
Consumer loans serviced for others			17,379			16,078			14,745			13,645			12,415
Servicing on retained MBS without MSR			942			980			1,023			1,082			1,140
Servicing on owned loans			238,344			232,392			218,122			226,217			251,766
Subservicing portfolio			399			418			439			465			84,797
Total servicing portfolio		$	713,548		$	713,304		$	709,196		$	709,191		$	794,814

	December 31, 2007
	Unpaid		Weighted
	Principal		Average
	Balance		Servicing Fee
			(in basis points,
Mortgage Loans Serviced for Others by Loan Type			annualized)
Agency	$	249,259		31
Private		176,989		57
Subprime mortgage channel-home		30,236		51
Total mortgage loans serviced for others(2)	$	456,484		42

(1)	MSR as a percentage of mortgage loans serviced for others was 1.38%, 1.47%, 1.52%, 1.39% and 1.39% at December 31, 2007, September 30, 2007, June 30, 2007, March 31, 2007 and December 31, 2006.
(2)	Weighted average coupon rate was 6.31% at December 31, 2007.

WM - 19

Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
	Quarter Ended
		Dec. 31,			Sept. 30,			June 30,			Mar. 31,			Dec. 31,
		2007			2007			2007			2007			2006
Allowance for Loan Losses
Balance, beginning of quarter		$	1,889		$	1,560		$	1,540		$	1,630		$	1,550
Allowance transferred to loans held for sale			(105	)		(217	)		(81	)		(148	)		(158	)
Allowance acquired through business combinations/other			-			-			-			7			30
Provision for loan losses			1,534			967			372			234			344
			3,318			2,310			1,831			1,723			1,766
Loans charged off:
Loans secured by real estate:
Home loans(1)			(105	)		(52	)		(21	)		(35	)		(16	)
Home equity loans and lines of credit(1)			(249	)		(104	)		(55	)		(29	)		(13	)
Subprime mortgage channel(2)			(277	)		(146	)		(103	)		(40	)		(52	)
Home construction(3)			-			-			(1	)		-			(4	)
Multi-family			(4	)		-			-			-			-
Other real estate			(1	)		(1	)		(1	)		-			(1	)
Total loans secured by real estate			(636	)		(303	)		(181	)		(104	)		(86	)
Consumer:
Credit card			(126	)		(120	)		(106	)		(96	)		(68	)
Other			(2	)		(2	)		(2	)		(3	)		(3	)
Commercial			(32	)		(20	)		(15	)		(9	)		(9	)
Total loans charged off			(796	)		(445	)		(304	)		(212	)		(166	)
Recoveries of loans previously charged off:
Loans secured by real estate:
Home loans(1)			4			1			1			1			-
Home equity loans and lines of credit(1)			4			3			3			3			2
Subprime mortgage channel(2)			4			1			11			1			4
Home construction(3)			2			-			-			-			-
Other real estate			2			2			-			-			-
Total loans secured by real estate			16			7			15			5			6
Consumer:
Credit card			31			14			15			16			18
Other			-			-			-			6			3
Commercial			2			3			3			2			3
Total recoveries of loans previously charged off			49			24			33			29			30
Net charge-offs			(747	)		(421	)		(271	)		(183	)		(136	)
Balance, end of quarter		$	2,571		$	1,889		$	1,560		$	1,540		$	1,630
Net charge-offs (annualized) as a percentage
of average loans held in portfolio			1.24	%		0.74	%		0.50	%		0.33	%		0.23	%
Allowance as a percentage of loans held in portfolio			1.05			0.80			0.73			0.71			0.72

(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.  Charge-offs in the second quarter of 2007 include $26 million of amounts primarily related to uncollected borrower expenses incurred in prior periods by and owed to a third party loan servicer.
(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)
	Dec. 31,			Sept. 30,			June 30,			Mar. 31,			Dec. 31,
	2007			2007			2007			2007			2006
Nonperforming Assets
Nonaccrual loans(1)(2):
Loans secured by real estate:
Home loans(3)	$	2,302		$	1,452		$	991		$	690		$	640
Home equity loans and lines of credit(3)		835			533			378			297			231
Subprime mortgage channel(4)		2,721			2,356			1,707			1,503			1,283
Home construction(5)		56			44			47			41			27
Multi-family		131			120			69			60			46
Other real estate		53			49			52			52			51
Total nonaccrual loans secured by real estate		6,098			4,554			3,244			2,643			2,278
Consumer		1			1			1			1			1
Commercial		24			22			30			28			16
Total nonaccrual loans held in portfolio		6,123			4,577			3,275			2,672			2,295
Foreclosed assets(6)		979			874			750			587			480
Total nonperforming assets(7)	$	7,102		$	5,451		$	4,025		$	3,259		$	2,775
Total nonperforming assets
as a percentage of total assets		2.17	%		1.65	%		1.29	%		1.02	%		0.80	%

(1)	Nonaccrual loans held for sale, which are excluded from the nonaccrual balances presented above, were $4 million, $7 million, $171 million, $195 million and $185 million at December 31, 2007, September 30, 2007, June 30, 2007, March 31, 2007 and December 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 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 $37 million, $46 million, $49 million, $72 million and $99 million at December 31, 2007, September 30, 2007, June 30, 2007, March 31, 2007 and December 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”).
(7)	Excludes accruing restructured loans of $251 million, $287 million, $285 million, $355 million and $330 million at December 31, 2007, September 30, 2007, June 30, 2007, March 31, 2007 and December 31, 2006.

EX-99.3

Exhibit 99.3

Washington Mutual, Inc.

Prepared Remarks for Fourth Quarter 2007 Earnings Conference Call

January 17, 2008

Please see the Cautionary Statements at the end of this document

  Remarks of Kerry Killinger Chairman and CEO

Good afternoon, everyone. Thank you for joining us today as we review the results for the fourth quarter and full year of 2007.

Joining me today on the call is Tom Casey, our CFO, who will discuss our quarterly performance in more detail and update our 2008 earnings drivers. Our President, Steve Rotella, will also be available to answer questions at the end of our remarks this afternoon.

Fourth Quarter and Full-year 2007 Earnings

Earlier today, we announced our financial results for the fourth quarter and full-year of 2007. As you all know, the second half of 2007 has been a period of extreme stress and turmoil for the mortgage and credit markets. Our financial performance reflects that market impact, as well as proactive efforts on our part to better position the company for a difficult environment going into 2008.

For the fourth quarter, we reported a net loss of $1.9 billion or $2.19 per share. As we announced in December, the loss was due to loan loss provisioning of $1.5 billion and a $1.6 billion after-tax non-cash writedown of Home Loans segment goodwill. Due to the fourth quarter results, we also reported a net loss of $67 million or $0.12 per diluted share for the full year 2007.

Clearly, these results are disappointing, and as CEO, I take responsibility.  Yes, the environment was extraordinarily difficult, but we have to do better.  It is also my responsibility, along with the management team, to take the necessary actions to return the company to strong profitability.  And we will.

We took the following significant steps in December to bolster the company’s capital and streamline operations in anticipation of continued stress in the mortgage and credit markets:

·      The issuance of convertible preferred stock, raising $2.9 billion of new capital and increasing our year-end tangible capital ratio to 6.67 percent, or $3.7 billion above our targeted ratio of 5.50 percent or more.

·      A reduction in the quarterly cash dividend rate on the company’s common stock to 15 cents per share.

·      A major expense reduction initiative projected to reduce 2008 noninterest expense by $500 million to $8.0 billion or less.

·      And, a significant acceleration in the strategic focus of our Home Loans business, with increased emphasis on mortgage lending through our retail banking stores and other retail distribution channels.

The combination of these critical steps further fortifies WaMu’s strong capital and liquidity position and enables the company to continue to pursue various initiatives, particularly in our retail banking business which is at the core of our business strategy.   I want all of you to know that we are not done.  We are committed to making changes, no matter how difficult, that will speed our return to profitability.

  Prepared Remarks - January 17, 2008 Page 2

So now, let’s turn our attention to the topic of credit. Our credit performance and near-term outlook are essentially unchanged from the projections we made in our press release in December. The fourth quarter provision totaled $1.5 billion, roughly twice fourth quarter net charge-offs of $747 million, both within our December guidance.

Clearly, the current downturn in housing is acute and deeper than expected. We continue to see declining home prices, elevated inventories of unsold homes and increased foreclosure activity. As has been very well-publicized, home values are declining nationally and the downturn has been more severe in some of WaMu’s larger markets, like California, than it has been nationally. However, I’d like to point out that we continue to support measures that could strengthen the housing market, including:

·      Aggressive easing by the Fed,

·      Temporarily raising the conforming limits for GSEs,

·      Government economic stimulus actions, and

·      Continued efforts by lenders to help borrowers remain in their homes.

Foreseeing a difficult credit environment in 2008, we issued guidance in December significantly increasing our first quarter provisioning to a range of $1.8 to $2.0 billion and Tom will go into much more detail about our credit profile and outlook in his remarks.

  Prepared Remarks - January 17, 2008 Page 3

Reflecting the strength of our franchise, the company generated revenue of $3.4 billion in the fourth quarter, a combination of strong net interest income and growth in depositor and other retail banking fee income. We achieved those revenues despite the continued illiquidity in the capital markets during the quarter, which resulted in net losses on the company’s trading and available-for-sale securities portfolios of $528 million. Without those net valuation losses, our quarterly revenue would have increased to $3.9 billion.

We expect the revenue strength of our businesses, together with a capital cushion of $3.7 billion above our target tangible capital ratio of 5.50 percent at year end, to enable us to manage through a severe credit period and return to our targeted levels of financial performance thereafter.

Retail Banking

The Retail Bank continued to perform well in 2007 delivering a year-over-year 12 percent increase in noninterest income which far exceeded the 5 percent increase in noninterest expense. The modest increase in noninterest expense was driven by a rise in staffing levels as we opened new retail stores throughout the year, along with the continuing emphasis on growing the company’s small business activities.

  Prepared Remarks - January 17, 2008 Page 4

The quarter’s decline in net income to $278 million from $456 million in the third quarter reflected the increase in the provision for loan losses in the segment’s home loan and home equity loan portfolios, which were pressured by the deteriorating housing market. Pretax income from our Retail Banking network excluding the loan loss provision totaled $3.3 billion in 2007, up 14 percent from $2.9 billion in 2006.

  Prepared Remarks - January 17, 2008 Page 5

We continued our strong customer growth trend in 2007. We added 1.1 million net new checking accounts during the year, exceeding our goal of adding more than one million net new checking accounts for the second consecutive year. Reflecting the growth in new accounts, the average balance in noninterest checking accounts was up by 7 percent year over year. And the continued attractiveness of our Free Checking product led to a 7 percent increase in retail banking households to end the year with just under 10 million households. The pace of increase in net new checking accounts slowed somewhat in the fourth quarter due to normal seasonality and the closure of inactive accounts. Checking account sales both in our stores and online continued to be solid during the fourth quarter and we expect net new checking to show a nice increase in the first quarter of 2008.

As we look forward, we expect the Retail Bank to continue its strong growth trend and continue to target more than one million net new checking accounts this year and expect to open between 100 and 150 new financial stores in our existing markets in 2008.

Card Services

Net income of $92 million in the fourth quarter for our Card Services group was up from $66 million for the third quarter. Earnings were reduced, however, by valuation losses of $159 million on retained interests, reflecting continued illiquidity in the capital markets which drove higher discount rates. The quarter also included a charge of $50 million arising from the VISA related litigation liabilities. Visa also filed documents with the SEC in preparation for an initial public offering. In connection with our ownership interest in Visa, we expect to recognize a benefit from their planned IPO.

  Prepared Remarks - January 17, 2008 Page 6

Managed receivables at year end increased 16 percent over the past twelve months. However, with a slowing of the economy and modestly higher rates of unemployment, we are cutting back on direct marketing and focusing our efforts to grow new accounts from WaMu’s retail customer base. We opened 653,000 new credit card accounts in the fourth quarter. While overall account growth was down 31 percent on a linked quarter basis, the percentage of new customers from our retail channel has increased to 37 percent of the quarter’s production, compared with 28 percent a year ago.

As we have said in the past, the primary external variable impacting Card’s credit quality is the level of unemployment. In line with our expectations, we saw net credit losses increase to 6.90 percent of average managed receivables from 6.37 percent in the prior quarter. At the same time, the period-end 30+ day managed delinquency rate increased to 6.47 percent from 5.73 percent in the third quarter.

We expect further softening in the economy during 2008 and therefore are expecting the double digit managed receivables growth of the past two years to decline to mid-single digits as we adjust our management of the portfolio to that environment. In the past we have stated that normal loss rates for our credit card portfolio should be in the range of 7 to 8 percent, however, given the economic softening projected for 2008 we anticipate that range of loss to be somewhat higher in the range of 8.5 to 9.5%. We are coming off a period of cyclical lows for credit card losses, but as we have stated before, we expect that the impact on our risk adjusted margins will be partially mitigated through our risk based pricing and fee strategies.

Commercial Group

The Commercial Group continued to deliver solid operating results in the fourth quarter reporting net income of $94 million, up 62 percent from $58 million in the third quarter. Noninterest income improved somewhat from the third quarter but continued to be negatively impacted by the lack of liquidity in the capital markets in the fourth quarter.

  Prepared Remarks - January 17, 2008 Page 7

Commercial Group loan volume totaled $4.8 billion for the fourth quarter, up 18 percent from the prior quarter, driven by an increase in commercial real estate lending. At the end of the year, the portfolio increased to $40.1 billion, consisting of $30.5 billion in multi-family loans and $9 billion of commercial real estate loans. Credit quality continues to be very strong with net charge-offs for the quarter at less than 1 basis points. Despite the ongoing strong credit quality of our Commercial Group, as with our credit cards, we are tightening our underwriting and planning for less growth of this portfolio in 2008.

Home Loans

As we look at our Home Loans business, it’s clear that the weakness in both the housing and credit markets have led to a fundamental shift within the mortgage industry. The lack of liquidity for loans that are not backed by a mortgage agency guarantee has shifted most lenders toward primarily originating conforming products. At this time, it is only banks with balance sheet capacity that are making nonconforming loans. Reflecting this environment our Home Loans volume declined 28 percent on a linked quarter basis and we saw an increase in the percentage of conforming loan originations. On the positive side we are seeing high quality in the nonconforming loans we are originating but we are limiting our balance sheet growth to preserve our capital. In this environment we estimate the overall mortgage origination market in 2008 will be approximately $1.5 trillion, 40 percent lower than 2007 originations.

  Prepared Remarks - January 17, 2008 Page 8

In December we announced the plan to substantially adjust and resize our Home Loans business to reflect a smaller overall market, by:

·      Discontinuing all remaining lending through our subprime mortgage channel;

·      Closing approximately 190 of 336 home loan centers and sales offices;

·      Closing nine Home Loans processing and call centers;

·      Eliminating approximately 2,600 Home Loans positions, or about 22 percent of the staff;

·      Eliminating approximately 550 corporate and other support positions; and

·      Closing WaMu Capital Corp, our institutional broker-dealer business, as well as our mortgage banker finance warehouse lending operation.

These steps significantly accelerate our focus on mortgage lending through our retail banking stores and other retail distribution channels.

I’ll now turn it over to Tom.

  Prepared Remarks - January 17, 2008 Page 9

Remarks of Tom Casey Executive Vice President and CFO

Thank you, Kerry.

The second half of 2007 was a period of unprecedented challenges in the mortgage and credit markets. The environment has been difficult for all financial institutions – and for Washington Mutual in particular – but I’m pleased with the steps we have taken to strengthen our capital and liquidity position during this period of uncertainty.

My comments today will focus on four key areas:

·      First, in the past six months we have significantly reduced our exposure to market valuation changes. We have reduced the combination of our trading assets and loans held for sale by nearly 70 percent from $25 billion at the end of June to $8 billion at year end. Approximately 40 percent of the $8 billion was conforming loans held for sale to the agencies and are hedged by TBAs.

·      Second, we are proactively managing our way through the housing correction and are focused on managing exposure to those loans most “at risk”;

·      Third, solid operating revenues and a substantial capital cushion above our targeted tangible capital ratio of 5.50 percent and disciplined expense management across all of our businesses are expected to provide us the financial flexibility to manage though this period of expected elevated credit costs.

·      Fourth, we have sufficient liquidity to fund our business operations.

I’ll review each of these issues and our outlook on earnings drivers for 2008 in my remarks this afternoon.

Market Disruptions

Before I go into detail regarding the impact of the housing correction on our loan portfolio I want to address the ongoing deterioration of the capital markets during the fourth quarter. For the quarter we recognized $528 million of net losses in trading assets and available-for-sale securities. These losses were primarily in three areas: remaining trading assets of our institutional broker-dealer operations, credit card retained interests and adjustments in the valuation of available-for-sale securities. While the capital markets remain volatile, we have been proactive in reducing our market valuation exposure as you will see from the details I’m about to review.

Of the $528 million of losses, $267 million related to the mark-to-market on trading assets in the fourth quarter. The $267 million is primarily comprised of two items. The first was a $159 million adjustment related to higher discount rates used in valuing our $1.8 billion in credit card retained interests.

The second relates to $83 million in trading losses by our broker-dealer, WaMu Capital Corp., which is in the process of being closed due to our change in strategy for our Home Loans operations. At year-end, 42 percent of the $507 million of these securities were rated AAA. The book value of those securities rated AA or below, was 69 percent of the securities’ par value.

And, the other area we experienced write downs of assets was on our AFS portfolio where in the fourth quarter we recognized net losses of $261 million. At year-end, 93 percent of the $19 billion in AFS mortgage backed securities were rated AAA and less than 1 percent was below investment grade. All the other than temporary impairment losses recognized in the quarter were on securities rated AA and below. We have included a schedule of our remaining AFS portfolio and you can see that the securities below AAA have been marked down between 20 and 73 percent, depending upon their underlying collateral and rating. In total the book value of those securities was approximately 70 percent of the securities’ par value.

  Prepared Remarks - January 17, 2008 Page 10

AFS MBS Portfolio by asset type  and Investment grade (in millions)	AAA*			AA				A	A	BBB			Below IG			Total
Mortgage Backed Securities
Agency	$	7,193		$	-		$	-		$	-		$	-		$	7,193
Prime		3,801			540			161			73			-			4,575
Alt-A		600			175			68			74			23			940
Subprime		236			88			121			37			9			491
CMBS		6,014			17						10			9			6,050
Total MBS at Fair Value		17,844			820			350			194			41			19,249
Fair Value as % of par value		99.3	%		81.4	%		72.3	%		55.6	%		27.7	%		96.5	%
Percent of Total MBS		93	%		4	%		2	%		1	%		-	%		100	%

* Includes not rated securities that are guaranteed by the U.S. Government or U.S. Government sponsored agencies

Credit Quality and Provision for Loan Losses

Now lets move on to credit quality and provision for loan losses. As Kerry mentioned, the fourth quarter’s net charge-offs and provision for loan losses were consistent with the guidance we provided in December. The provision of $1.5 billion was up from $967 million in the third quarter and net charge-offs grew to $747 million in the fourth quarter from $421 million in the prior quarter. At quarter end, our nonperforming assets ratio totaled 2.17 percent, up from 1.65 percent at the end of the third quarter.

Although we are not seeing significant changes in early stage delinquencies, once a borrower is delinquent it is difficult for them to cure their loan because home prices in many areas of the country are not only deteriorating, but homes are also taking longer to sell. In addition, liquidity for consumers has decreased with far fewer refinancing opportunities, especially for nonconforming loans. We don’t expect to see an end or reversal of this trend until the level of home inventories peaks and starts to decline.

Another driver of the increase is loan modifications for troubled borrowers and rising real estate owned balances. We have been very proactive in modifying loans to keep our borrowers’ in their homes when possible. As a result we have seen a dramatic increase in troubled debt restructurings reported as part of our nonperforming assets. Approximately 56 percent of the $633 million in nonaccrual TDRs were current with revised loan terms at year-end. We expect the level of modifications to continue to rise in 2008 as we continue our proactive practice of modifying loans.

  Prepared Remarks - January 17, 2008 Page 11

During the fourth quarter, we continued to see net charge-offs of subprime and home equity loans dominate net charge offs, accounting for approximately 70 percent of the total charge-offs on residential loans. These loans also continue to drive the majority of the increase in our provision. At year-end, our reserve for loan losses was up 36 percent to $2.6 billion from the end of the third quarter reflecting the effects of increases in NPAs and charge-offs in the second half of the year. The allowance for loan losses is up 65 percent from mid-year 2007.

In order to give you some perspective to evaluate the credit risk of our loan portfolio we have grouped loans that are driving the majority of charge-offs by type, LTV and FICO. We expect the following three groups of high-risk loans to drive the majority of the credit losses going forward:

·      $18.6 billion in subprime loans;

·      $15.1 billion in home equity seconds with combined loan-to-values greater than 80 percent that were originated in 2005 through 2007; and

·      $2.1 billion of prime Option ARMs with loan-to-values greater than 80 percent that were originated in 2005 through 2007.

  Prepared Remarks - January 17, 2008 Page 12

 

The subprime portfolio is comprised of $16.1 billion in home loans and $2.5 billion of home equity loans. You will note that this portfolio comprises 44 percent of our total residential loan net charge-offs but only represents 8 percent of our total real estate loan portfolio. The subprime portfolio is the group of loans that is responsible for the largest increase in our allowance for loan losses in 2007. However, this portfolio is in runoff mode and shrank 7 percent in 2007. As it was the first portfolio to experience problems, we anticipate it will be the first to see delinquencies and losses peak. There has been significant press regarding potential stress to the subprime borrower as a result of their rates adjusting upward. We have been very proactive in working with our subprime customers to modify their loans to minimize that risk.

The second group of loans comes from our home equity portfolio. At year end only 30 percent or $17.8 billion of our home equity loans were second lien and had original CLTVs greater than 80 percent. Of that amount $15.1 billion of those loans were originated between 2005 and 2007 when home values were near their peak. So we have broken these out and identified them as being a high risk group. In the fourth quarter that group of loans comprised 26 percent of our total net residential loan charge-offs but only 8 percent of our total real estate loan portfolio. Over the past two quarters we have seen the number of losses from this portfolio as well as the severity of losses increase as home values have decreased. One additional important fact is that only 6 percent of our home equity loans were originated through our wholesale channel as the majority were originated through our retail channels.

The last category is Option ARM loans. Option ARM loans with original LTVs above 80 percent totaled $3.4 billion, or 6 percent of the total Option ARM portfolio. Approximately two thirds or $2.1 billion of these loans were originated between 2005 and 2007. As you can see we don’t originate many loans at LTVs above 80 percent. However, one of the key credit events in the life of an Option ARM is when the loan recasts and minimum payments can increase dramatically. You can see on the chart that we have approximately $4.8 billion or only 8 percent of the portfolio that will be impacted by recasts in 2008. As a result of recent declines in CMT rates, the MTA index used for most of our Option ARM portfolio has declined which is also taking pressure off these borrowers. The average LTV at origination of our Option ARM portfolio was 72 percent and the current average FICO of 694. As a result, as has been the case historically, many of these borrowers may refinance their loans before the loan is recast. The $2.1 billion of high-risk loans had an average LTV at origination of 90 percent which is why we have broken them out for you.

  Prepared Remarks - January 17, 2008 Page 13

During the fourth quarter, these high risk loans collectively accounted for approximately 70 percent of our total real estate loan net charge-offs, but represented only 19 percent of our total real estate loan portfolio at year end. When you exclude this group of loans, the remaining first lien loans have a weighted average LTV at origination of 66 percent and a current average FICO of 718, and the second lien loans have an average combined LTV at origination of 66 percent and current average FICO of 740. So the remaining portfolio has a solid customer profile with equity cushion to withstand declines in home values.

In contrast to our home loans portfolio, our credit card, multi-family and commercial real estate portfolios continue to perform well. The most significant external factor affecting the performance of our card portfolio is the level of unemployment, which increased during the quarter. A linked quarter increase of 30-plus day managed delinquencies to 6.47 percent from 5.73 percent and managed net credit losses to 6.90 percent from 6.37 percent, were in line with our expectations. We continue to proactively manage the credit quality of this portfolio. As Kerry commented, we are coming off cyclical low levels of losses for credit cards and we expect losses to increase in 2008 and be in the range of 8.5 to 9.5 percent.

I’ll provide my overall guidance for credit provisioning in a moment along with the other 2008 earnings drivers.

Solid Revenues and Disciplined Expense Management

As we evaluate our performance for 2007 and deploy our business plans for 2008, we have good momentum in most of our core operations despite the ongoing disruption in the capital and credit markets.

Net interest income was up slightly in 2007 as an increase in net interest margin to 2.85 percent from 2.60 percent in 2006 more than offset an 8 percent decline in average interest-earning assets as we deemphasized balance sheet growth. Most of this decline was due to our decision to sell most of our home loans production in much of 2006 and the first half of 2007 which resulted in a reduction in average home loan balances of 18 percent year over year. We expect net interest income to grow in 2008 primarily due to reductions we are seeing in the short term rates, specifically 3 month LIBOR.

Noninterest income in 2007 was down 5 percent from 2006 primarily due to approximately $1 billion in trading and AFS losses related to the disruption in the capital markets. Excluding the market valuation losses, noninterest income would have reflected solid improvement, especially by our Retail Bank. During 2007 the Retail Bank added 1.1 million net new checking accounts and generated a 13 percent year-over-year increase in depositor and other retail banking fees. We expect this strong trend in retail banking growth to continue in 2008.

  Prepared Remarks - January 17, 2008 Page 14

We continued to have tight controls on our operating expenses throughout 2007. Noninterest expense, excluding the writedown of goodwill was essentially flat with 2006 despite including $143 million of expenses incurred in the fourth quarter tied to expense reduction efforts targeted to lower 2008 noninterest expense by approximately $500 million.

It’s the solid business plans in our Retail Bank, Card Services and Commercial Group along with the significant strategic shift of our Home Loans business toward the strength of our retail distribution capabilities that will provide significant revenues in 2008 to help offset the expected increase in credit losses.

Capital and Liquidity

We continue to maintain a strong liquidly position in addition to a strong tangible capital ratio of 6.67 percent. At year-end we had $3.7 billion of capital in excess of our target tangible equity to tangible asset capital ratio of 5.50%. In addition, we exceeded all the well-capitalized banking ratios by a meaningful margin. Our funding comes in large part from retail deposits generated in our stores from our core customers.  We have $144 billion in retail deposits which account for 49% of our total funding.  The remaining wholesale funding is diversified with a staggered maturity profile. At year end we had approximately $29 billion in available excess liquidity.  This amount includes FHLB borrowing capacity, other secured borrowing sources and cash/cash equivalents. 

Strong and Diversified Funding

 Holding Company

    Tangible Equity to tangible assets of 6.67% ($3.7 billion above 5.50% target ratio)

    $4.4 billion in cash at the holding company

    $1.0 billion in debt maturities in 2008 – $1.5 billion in 2009

    No commercial paper outstanding

 WaMu Bank Level

Tier 1 capital leverage ratio of 7.02% ($6.4 billion above 5.00% well-capitalized minimum)

    $144 billion in retail deposit funding (49% of total funding)

    $29 billion in available excess liquidity

    Diversified wholesale funding with staggered maturity profile

Prepared Remarks - January 17, 2008 Page 15

Earnings Driver Guidance

Now lets move on to our earnings drivers. Given the uncertainty of the economy and capital markets, 2008 performance is difficult to predict. However, the following update is our best estimate of earnings drivers for 2008.

2008 Earnings Driver Guidance
Driver	2008 Guidance
1) Average assets	0% – 5% growth
2) Net interest margin	2.90% - 3.05%
3) Credit provisioning	Q1 ‘08 $1.8 billion – $2.0billion
4) Depositor and other retail banking fees	12% – 15% growth
5) Noninterest income	≥ $6.0 billion
6) Noninterest expense	≤ $8.0billion

Average Assets

We ended the year with total assets of $328 billion which was down slightly from the end of the third quarter. Average total assets for all of 2007 were $323 billion. In December we gave a range of 0 to 5 percent growth. As we look at the current environment of a weaker economy and elevated provision levels we are still looking to be in that range but at this point I expect us to be on the low end or just about flat year over year. We also anticipate it to be an ongoing period of elevated credit provisioning. Given that environment, we will be closely managing our capital levels and therefore are expecting very little in the way of asset growth and our guidance is for average assets to be flat to up 5%.

Net Interest Margin

The net interest margin of 2.85 percent for the fourth quarter was essentially flat from the third quarter despite an additional 50 basis points decline in Fed Funds during the quarter, as illiquidity in the capital markets has limited the 3 month LIBOR rate from falling as much as Fed Funds rates.  In addition, deposit pricing pressures have reduced the positive impact from the lower fed funds rate. Since year end 3 month LIBOR has declined approximately 75 basis points due to improved liquidity and the anticipation of further rate cuts by the Fed. This will likely push our NIM to the high-end of our current guidance range of 2.90 to 3.05 percent.

Credit Provision

Our credit provision guidance is unchanged from what we stated in early December. We expect net charge-offs in the first quarter to be up 20 to 30 percent and the provision to be in the range of $1.8 to $2.0 billion. While difficult to predict, we expect the quarterly loan loss provisions for each of the remaining quarters of 2008 to be at a similar level. If actual charge-offs differ from this expectation then the provision will also be impacted.

An additional caveat I need to make to that guidance relates to the management of our credit card portfolio where the timing of securitizations is difficult to predict. Given the uncertainty of the capital market it’s possible our forecast for the timing and amount of card securitizations will change during 2008. If we retain more credit card receivables on our balance sheet we will need to increase the provision. I will keep you updated each quarter.

Prepared Remarks - January 17, 2008 Page 16

Depositor and other retail banking fees

As in 2007, we are expecting to add more than 1 million net new checking accounts in 2008. Given that expectation, our guidance for depositor and other retail banking fees is an increase of 12 to 15 percent in 2008.

Noninterest Income

Noninterest income in the fourth quarter of $1.4 billion equates to an annualized run rate of $5.5 billion. However, the fourth quarter included about $500 million of market valuation adjustments and as I’ve reviewed with you earlier we expect we will have less exposure in that area in 2008. We are also expecting the market for nonconforming residential loans to remain illiquid so have modest projections for gain on sale in 2008. Given these assumptions, our current guidance for noninterest income in 2008 is to be at or above 2007 results of $6 billion.

Noninterest Expense

Noninterest expense for 2007 totaled $10.6 billion but included a $1.8 billion charge for goodwill and $143 million for our expense reduction steps. Again, as we said in December we are targeting a reduction in noninterest expense to $8.0 billion or less in 2008.

In conclusion, although we see good revenue growth and disciplined expense management, the increased credit costs will make 2008 a challenging year. However, we begin the year with a very strong capital position. We have approximately $3.7 billion in capital above our target capital ratio of 5.50 percent. This excess equates to a capital cushion of $5.9 billion on a pretax basis.

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

Prepared Remarks - January 17, 2008 Page 17

  Kerry Killinger Chairman and CEO (continued)

Thanks, Tom.

There's no question that elevated provisioning will impact earnings in 2008.  But it is also inevitable that provisioning will decrease with time.  The key is to separate the cyclical effects from the secular earnings power of the company.  Until 2007, this company had a 10-year average return on average assets of 1.09%, which is consistent with our long term target of earning high teens ROCE.  Until the environment improves, our senior leaders will be primarily focused on credit, capital management, liquidity and expense reduction. 

In addition, I hope it's clear that we will be uncompromising in our commitment to turn this company around.  Performance is paramount.  And to this end, I will not accept a cash bonus for 2007, and bonuses for the management team have been greatly reduced commensurate with our results.  We all understand that we have to do better – and we will. 

We're now focused on 2008, which we know will be a challenging year.  However, we will not lose sight of the fact that we have a powerful banking franchise that is at the center of our business strategies.  Our retail and small business banking efforts are paying off.  Our card services and commercial groups are vital and continue to do well.  Our brand is valuable and strong.  Our core businesses continue to perform, and we’re determined to leverage them to return WaMu to the level of profitability our shareholders expect and deserve.

With that, Tom, Steve and I would be happy to take your questions.

1 Credit Risk Management Q4 2007 Prepared Remarks Appendix January 17, 2008

2Loan Portfolio Mix$244.4 BillionAs of 12/31/07($ in billions)1Single-Family Residential excludes Custom and Builder Construction and home loans in the Subprime Mortgage Channel.2Home Equity excludes home equity loans included in the Subprime Mortgage Channel.3Managed Credit Card balances are $18.4 billion higher.Single-FamilyResidential1$110.445%Home Equity2$61.025%13%Multi-Family

$31.8SubprimeMortgage Channel $18.6 Credit Cards3 $8.8 Other Commercial $11.4 Other $2.4 7% 4% 5% 1%

3 1Excludes Custom and Builder Construction and home loans in the Subprime Mortgage Channel. 2Estimated loan-to-value calculation based on OFHEO September 2007 data (released November 2007). Current FICO = 709 Original LTV = 70% Est. Current LTV2 = 62% Est. Current LTV >90% = 2% Est. Current LTV >80% = 16%Title: Single-Family Residential Portfolio1

4 Current FICO = 694 Original LTV = 72% Est. Current LTV = 66% Est. Current LTV1 >90% = 3% Est. Current LTV >80% = 25% $0.01 $0.16 $0.89 $1.12 $66.3 $71.2 $63.6 $58.1 $1.30 $53.5 Current > original balance as a % of loan balance Option ARM Portfolio Period End Portfolio Balance ($ in billions) $1.50 $57.8 $1.73 $57.0 1Estimated loan-to-value calculation based on OFHEO September 2007 data (released November 2007).

5 Option ARM Portfolio Resets Period End Portfolio Balance ($ in billions)As of 12/31/2007. Assumes that all included balances recast no earlier than five years.

6 Current FICO = 729 Original Combined LTV = 73% Est. Current Combined LTV = 65% Est. Current Combined LTV2 >90% = 10% Est. Current Combined LTV >80% = 29% 1Excludes home equity loans included in the Subprime Mortgage Channel. 2Estimated combined loan-to-value ratio based on OFHEO September 2007 data (released November 2007). Home Equity Loan / Home Equity LOC Portfolio1$43.6 $50.8 $52.9 $53.4 $55.8 $59.1 $61.0

7 1Comprised of mortgage loans purchased from recognized subprime lenders and mortgage loans originated under the Long Beach Mortgage name and held for investment. 2Estimated loan-to-value ratio based on OFHEO September 2007 data (released November 2007). 3Estimated combined loan-to-value ratio based on OFHEO September 2007 data (released November 2007). Home Loans Current FICO = 607 Original LTV = 78% Est. Current LTV = 70% Est. Current LTV2 >90% = 7% Est. Current LTV >80% = 28% Home Equity Current FICO = 673Original Combined LTV = 94% Est. Current Combined LTV = 92% Est. Current Combined LTV3 >90% = 67% Est. Current Combined LTV >80% = 89% $19.2 Subprime Mortgage Channel Portfolio1 $21.2 $20.8 $20.4 $20.5 $20.0 $18.6

8 Subprime Mortgage Channel1 Resets Period End Portfolio Balance ($ in billions)1Comprised of mortgage loans purchased from recognized subprime lenders and mortgage loans originated under the Long Beach Mortgage name and held for investment.

9 1Other Commercial consists of Other Real Estate and Commercial Loans. 2Charge-off for Other Commercial are almost entirely driven from discontinued operations, a $1.9 billion portfolio.

1 $31.2 $32.8 $38.6 $38.0 $38.0 Commercial Portfolio $41.0 $43.2 2

10 1Data presented for periods prior to 4Q ‘05 is for Providian Financial Corp. Managed Card Services Portfolio 1

11 Nonperforming Assets

12 1Net charge-offs and provision for 2005 reflect the acquisition of Providian on 10/1/2005. Allowance for Loan and Lease Losses1

13Current Credit Quality Metrics – Home Loans  Portfolio 1Includes first-lien home loans in the subprime mortgage channel. 2Estimated loan-to-value calculation based on OFHEO September 2007 data (released November 2007). 3Includes the HELOC and HEL portfolios and home equity loans in the subprime mortgage channel. 4Estimated combined loan-to-value calculations based on OFHEO September 2007 data (released November 2007). 5Current FICO scores refreshed with TransUnion data. December 2007

14 Single-family Residential Portfolio1Loan-to-Value at Origination 1Excludes Custom and Builder Construction and home loans in the Subprime Mortgage Channel. 2Excludes accounting adjustments and invalid vintage and OLTV values; negative amortization is included in the loan balances. 3Estimated loan-to-value calculation based on OFHEO September 2007 data (released November 2007).

15 Single-Family Residential Option ARMs1Loan-to-Value at Origination 1Excludes Custom and Builder Construction and home loans in the Subprime Mortgage Channel. 2Excludes accounting adjustments and invalid vintage and OLTV values; negative amortization is included in the loan balances.3Estimated loan-to-value calculation based on OFHEO September 2007 data (released November 2007).

16 1st & 2nd Lien Home Equity Portfolio1Loan-to-Value at Origination 1Excludes home equity loans included in the Subprime Mortgage Channel. 2Excludes accounting adjustments and invalid vintage and CLTV values. 3Estimated loan-to-value calculation based on OFHEO September 2007 data (released November 2007).

17 2nd Lien Home Equity Portfolio1Loan-to-Value at Origination 1Excludes home equity loans included in the Subprime Mortgage Channel. 2Excludes accounting adjustments and invalid vintage and CLTV values. 3Estimated loan-to-value calculation based on OFHEO September 2007 data (released November 2007).

18 Subprime Mortgage Channel1Loan-to-Value at Origination 1Comprised of mortgage loans purchased from recognized subprime lenders and mortgage loans originated under the Long Beach Mortgage name and held for investment. 2Excludes accounting adjustments and invalid vintage and CLTV values. 3Origination loan-to-value used for 1st liens and combined loan-to-value used for 2nd Liens. 4Estimated loan-to-value calculation based on OFHEO September 2007 data (released November 2007).

19 Single-Family ResidentialDelinquency 90+ ($ OTS) Option ARM Delinquency 90+ ($ OTS)Home Equity Delinquency 90+ ($ MBA) Subprime Delinquency 90+ ($ OTS) WaMu delinquencies vs. industry averagesDelinquencies – 2005 to 2007 Vintage 1 SFR 90+ return somewhat better than industry Option ARMs performance slightly better than industry Home equity performance comparable to industry Subprime performance somewhat better than industry 1LoanPerformance TS Securities through November 2007. 2LoanPerformance HELOC/Seconds through November 2007. 1 1 2

20This 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 and “Cautionary Statements” in our Forms 10-Q for the quarters ended March 31, 2007, June 30, 2007 and September 30, 2007 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; Reputational risk;Liquidity risk; and Valuation risk. There are other factors not described in our 2006 Form 10-K and Forms 10-Q for the quarters ended March 31, 2007, June 30, 2007 and September 30, 2007 which are beyond the Company’s ability to anticipate or control that could cause results to differ. Cautionary Statements