SEATTLE--(BUSINESS WIRE)--
WaMu (NYSE:WM) today announced a second quarter 2008 net loss of
$3.33 billion as it significantly increased its loan loss reserves by
$3.74 billion to $8.46 billion. The quarter's loss compares with the
first quarter net loss of $1.14 billion and net income of $830 million
during the second quarter of 2007. The quarter's financial results
reflect an elevated level of provisioning due in large part to changes
in the company's provisioning assumptions in response to continued
declines in housing prices nationwide. These changes had the effect of
accelerating provisions into the quarter. The quarter's provision was
$5.9 billion compared with $2.2 billion of net charge-offs. The
company now expects the remaining cumulative losses in its residential
mortgage portfolios to be toward the upper end of the range it
disclosed in April, and continues to expect 2008 to be the peak year
for provisioning.
The company's tangible equity to total tangible assets capital
ratio increased during the second quarter to 7.79 percent from 6.40
percent in the first quarter, resulting in approximately $7 billion of
capital in excess of its targeted 5.50 percent level. The increase
reflects the effects of the $7.2 billion capital raise, the reduction
of the company's balance sheet by $10 billion and the loss for the
quarter. The company also maintained strong levels of liquidity during
the quarter, with over $40 billion of readily available liquidity at
quarter end.
"In the face of unprecedented housing and mortgage market
conditions, we are continuing to execute on a comprehensive plan
designed to ensure that we have strong capital and liquidity, an
appropriately-sized expense base and a strong, profitable retail
franchise," said WaMu Chief Executive Officer Kerry Killinger. "Our
recent $7.2 billion capital raise, combined with the other proactive
steps we have taken this quarter to strengthen our banking franchise
and further expense reductions, continue to move us toward achieving
these goals."
Killinger also said that the company now expects to realize
annualized cost savings of approximately $1 billion which will
contribute to improved pretax, pre-provision earnings. "We remain
confident that we have sufficient capital to successfully manage our
way through this challenging period," Killinger added.
The company reported a second quarter diluted loss per share of
$6.58, which included a previously disclosed one-time earnings per
share reduction in the amount of $3.24 related to the company's
capital issuance in April. Excluding this one-time reduction, the
company's second quarter loss per common share was $3.34. This
non-cash reduction in earnings per share, which resulted in a
reclassification within stockholders' equity, had no effect on the
company's capital ratios or the net loss recorded in the second
quarter.
SECOND QUARTER FINANCIAL SUMMARY AND HIGHLIGHTS
----------------------------------------------------------------------
Selected
Financial
Summary Three Months Ended
----------------------------------------------------
($ in millions,
except per share Jun. 30, Mar. 31, Dec. 31, Sept. 30, Jun. 30,
data) 2008 2008 2007 2007 2007
---------- ---------- ---------- --------- ---------
Income Statement
Net interest
income $ 2,296 $ 2,175 $ 2,047 $ 2,014 $ 2,034
Provision for
loan losses 5,913 3,511 1,534 967 372
Noninterest
income 561 1,569 1,365 1,379 1,758
Foreclosed asset
expense 217 155 133 82 56
Goodwill
impairment
charge - - 1,775 - -
All other
noninterest
expense 2,186 1,997 2,258 2,109 2,082
Minority interest
expense 75 75 65 53 42
---------- ---------- ---------- --------- ---------
Income (loss)
before income
taxes (5,534) (1,994) (2,353) 182 1,240
Income taxes (2,206) (856) (486) (4) 410
---------- ---------- ---------- --------- ---------
Net income (loss) $ (3,328) $ (1,138) $ (1,867) $ 186 $ 830
Diluted earnings
per common share $ (6.58) $ (1.40) $ (2.19) $ 0.20 $ 0.92
Less : effect of
conversion
feature (3.24) - - - -
---------- ---------- ---------- --------- ---------
Diluted earnings
per common share
excluding effect
of conversion
feature $ (3.34) $ (1.40) $ (2.19) $ 0.20 $ 0.92
Balance Sheet
Total assets, end
of period $309,731 $319,668 $327,913 $330,110 $312,219
Average total
assets 314,882 319,928 325,276 320,475 316,004
Average interest-
earning assets 285,503 285,265 287,988 283,263 279,836
Average total
deposits 184,610 184,304 185,636 198,649 206,765
Profitability
Ratios
Return on average
common equity (69.25)% (23.27)% (32.64)% 3.03% 13.74%
Net interest
margin 3.22 3.05 2.86 2.86 2.91
Efficiency ratio 84.11 57.49 122.13 64.55 56.38
Nonperforming
assets/total
assets 3.62 2.87 2.17 1.65 1.29
Allowance for
loan losses/
nonperforming
loans 87.26 60.25 41.99 41.27 47.63
Tangible
equity/total
tangible assets 7.79 6.40 6.67 5.60 6.07
----------------------------------------------------------------------
-- Capital ratios improve. The tangible equity to total tangible
assets ratio at June 30 was 7.79 percent compared with 6.40
percent as of Mar. 31, reflecting the April capital raise of
$7.2 billion and despite significant provisioning to cover
credit costs. Also contributing to the improved capital ratios
this quarter was a decrease in total assets of approximately
$10 billion, which freed up approximately $550 million in
capital. Additional asset reductions are expected as the
company continues to prudently manage the size of its balance
sheet.
-- Net interest margin up 17 basis points to 3.22 percent. The
quarter's increase in net interest income to $2.30 billion was
driven by the 17 basis point expansion in the net interest
margin. The margin improved as decreases in rates paid on
interest bearing liabilities outpaced the decline in asset
yields, while generally lower cost retail deposits grew as a
percentage of funding. This expansion occurred despite an
increase in nonperforming loans from the first quarter.
-- Company builds reserves to $8.46 billion. During the second
quarter, the company increased the provision for loan losses
to $5.91 billion from $3.51 billion in the first quarter. The
company expects remaining cumulative losses in its residential
mortgage portfolios to be at the upper end of the range of
losses it disclosed at the time of its capital raise in April,
and for 2008 to be the peak year for provisioning. The
increase in provision for loan losses reflected the further
decline in house prices which increased expected loss
severities, increased delinquencies, reduced availability of
credit, and the weakening economy. Total net charge-offs in
the loan portfolio rose to $2.17 billion from $1.37 billion in
the prior quarter. Nonperforming assets grew to 3.62 percent
of total assets at June 30 from 2.87 percent at the end of the
first quarter. At the same time, early stage delinquencies for
the subprime and home equity portfolios showed early signs of
stabilization in the quarter. Approximately one third of the
second quarter provision for loan losses related to
significant changes in key assumptions the company used to
estimate incurred losses in its loan portfolio in response to
the increasingly adverse credit trends. Specifically, the
company shortened the historical time period used to evaluate
default frequencies for its prime mortgage portfolio from a
three-year period to a one-year period to reflect the evolving
risk profile of the loan portfolio and adjusted its severity
assumptions for all single family mortgages to reflect the
continuing decline in home prices. Year to date, the company
has provided $9.42 billion for loan losses in comparison with
net charge-offs of $3.54 billion, increasing the reserve to
$8.46 billion at June 30. As a percentage of loans held in
portfolio, the reserve stands at 3.53 percent, up from 1.05
percent at the end of 2007. In addition, the company's
coverage ratio of the reserve to nonperforming loans was 87.26
percent, more than double the 41.99 percent at the end of last
year.
-- Decline in noninterest income reflects further market stress
and restructuring of home loans business. Despite the 9
percent quarter over quarter increase in depositor and other
retail banking fees, noninterest income of $561 million in the
second quarter was down from $1.6 billion in the prior
quarter. During the second quarter, the company recognized
other than temporary impairment losses of $407 million in the
company's available-for-sale securities portfolio, compared
with $67 million in the prior quarter. Net trading losses of
$305 million were up from net losses of $216 million in the
first quarter primarily due to a reduction in the value of
retained interests from credit card securitizations reflecting
market conditions. The decrease in revenue from the sales and
servicing of home mortgage loans reflects lower volumes in the
mortgage origination pipeline due to the company's exit from
wholesale lending and closing of its home loan centers. Also
impacting the quarter was a $171 million provision for
repurchase reserves, up from a provision of $56 million in the
first quarter. Mortgage servicing revenue was down $247
million primarily due to declines in the value of MSR risk
management instruments that more than offset the increase in
the MSR fair value.
-- Company expands expense initiatives targeting $1 billion in
savings. Noninterest expense of $2.40 billion in the quarter
included $207 million in restructuring and resizing costs
related to Home Loans activities as well as other corporate
initiatives and foreclosed asset expense of $217 million, up
from $155 million in the first quarter. During the quarter,
the company implemented a series of additional initiatives
designed to significantly reduce expense levels going forward.
These initiatives included the previously announced wholesale
and home loans center closures and other savings across
functions that primarily supported home loans activities that
have been discontinued. These actions will result in total
annualized cost savings of approximately $1 billion, while
incurring restructuring and resizing costs of approximately
$450 million, of which $207 million were recorded in the
second quarter.
-- Net loss per share includes one-time adjustment. The company
reported a second quarter diluted net loss per share of $6.58,
which included a one-time earnings per share non-cash
reduction in the amount of $3.24 per common share. The
reduction was recorded as a result of the June conversion of
the preferred stock issued in connection with the company's
capital transaction in April. This non-cash adjustment, which
had no effect on the company's capital ratios or the net loss
recorded in the second quarter, reduced retained earnings by
$3.29 billion, with a corresponding increase to capital
surplus-common stock. Excluding this one-time reduction, the
company's second quarter diluted net loss per common share was
$3.34.
SECOND QUARTER SEGMENT RESULTS
Retail Banking Group
----------------------------------------------------------------------
Selected Segment
Information Three Months Ended
------------------------------------------------
($ in millions,
except accounts and Jun. 30, Mar. 31, Dec. 31, Sept. 30, Jun. 30,
households) 2008 2008 2007 2007 2007
--------- --------- --------- --------- --------
Net interest income $ 1,210 $ 1,203 $ 1,262 $ 1,306 $ 1,291
Provision for loan
losses 3,823 2,300 663 318 91
Noninterest income 842 775 850 833 820
Inter-segment revenue 7 9 5 9 16
Noninterest expense 1,232 1,221 1,212 1,149 1,131
--------- --------- --------- --------- --------
Income (loss) before
income taxes (2,996) (1,534) 242 681 905
Income taxes (959) (491) (39) 225 340
--------- --------- --------- --------- --------
Net income (loss) $ (2,037) $ (1,043) $ 281 $ 456 $ 565
Average loans $138,671 $142,720 $145,486 $147,357 $149,716
Average retail
deposits 149,509 146,734 142,733 144,921 145,252
Net change in number
of retail
checking accounts 254,957 256,069 74,493 310,360 406,243
Net change in retail
households 94,000 154,000 37,000 161,000 228,000
----------------------------------------------------------------------
-- Revenue growth driven by increase in depositor fee income,
expenses held steady. Net interest income was up slightly from
the first quarter as the drop in the overall cost of deposits
outpaced the decline in variable rate loan yields. Noninterest
income, comprised primarily of depositor and other retail
banking fees, was up 9 percent quarter over quarter. Depositor
fees totaled $767 million in the second quarter, up 9 percent
from the seasonally slow first quarter. The company continues
to have strong checking account growth adding 254,957 net new
accounts in the quarter.
-- Quarterly results adversely impacted by higher loan loss
provisioning. The quarter's net loss reflected the increase in
the provision for loan losses due in large part to changes in
the company's provisioning assumptions in response to
continued declines in housing prices nationwide.
-- Average retail deposits up 2 percent. Average retail deposits
of $149.51 billion were up $2.78 billion during the quarter
reflecting the growth in money market accounts. Retail deposit
balances at the end of the quarter were down $3.40 billion to
$148.25 billion reflecting the reduction in higher cost
promotional certificates of deposit during the quarter. The
average cost of retail deposits during the quarter was 2.23
percent, down from 2.65 percent in the prior quarter.
Card Services Group (managed basis)
Selected Segment
Information Three Months Ended
---------------------------------------------
Jun. 30, Mar. 31, Dec. 31, Sept. 30, Jun. 30,
($ in millions) 2008 2008 2007 2007 2007
-------- -------- -------- --------- --------
Net interest income $ 769 $ 765 $ 694 $ 674 $ 649
Provision for loan
losses 911 626 591 611 523
Noninterest income 187 418 315 400 393
Inter-segment expense 5 5 - - -
Noninterest expense 297 260 338 364 306
-------- -------- -------- --------- --------
Income (loss) before
income taxes (257) 292 80 99 213
Income taxes (82) 93 (12) 33 80
-------- -------- -------- --------- --------
Net income (loss) $ (175) $ 199 $ 92 $ 66 $ 133
Average managed
receivables $26,314 $26,889 $26,665 $25,718 $24,234
Period end managed
receivables 26,430 26,378 27,239 26,227 24,987
30+ day managed
delinquency rate 7.05% 6.89% 6.47% 5.73% 5.11%
Managed net credit
losses 10.84 9.32 6.90 6.37 6.49
----------------------------------------------------------------------
-- Revenue down primarily due to higher credit costs and
valuation adjustments. Net interest income was flat with the
prior quarter as lower funding costs were offset by a lower
balance of average receivables and declines in interest rates
charged on card receivables. Noninterest income was down from
the prior quarter reflecting reduced value of retained
interests due to market conditions. In addition, noninterest
income during the first quarter included an $85 million
benefit received from the company's share of VISA's IPO.
Noninterest expense was flat with the prior quarter, excluding
the $38 million partial recovery of VISA litigation expense
recorded in that quarter.
-- Provision up but delinquencies stabilizing. The increase in
the provision to $911 million from $626 million reflected
higher managed net credit losses and an increase in reported
receivables as maturing securitizations resulted in on-balance
sheet funding of new originations. Managed net credit losses
of 10.84 percent reflected the increase in contractual and
bankruptcy losses in the face of a weaker economy. Reflecting
the previous actions taken to reduce the company's loss
exposure, the 30+ day managed delinquency rate of 7.05 percent
was up slightly from the prior quarter.
-- Total managed receivables flat with prior quarter. Total
managed receivables at quarter end remained level at $26.43
billion. During the quarter, Card Services opened 755,301 new
credit card accounts, up from 666,407 in the prior quarter.
Approximately 35 percent of the new accounts came through the
retail channel as the company continued to leverage its retail
network.
Commercial Group
Selected Segment
Information Three Months Ended
---------------------------------------------
Jun. 30, Mar. 31, Dec. 31, Sept. 30, Jun. 30,
($ in millions) 2008 2008 2007 2007 2007
-------- -------- -------- --------- --------
Net interest income $ 203 $ 196 $ 200 $ 200 $ 208
Provision for loan
losses 17 29 19 12 2
Noninterest income 5 (8) (10) (34) 63
Noninterest expense 63 68 66 67 74
-------- -------- -------- --------- --------
Income before income
taxes 128 91 105 87 195
Income taxes 41 29 11 28 73
-------- -------- -------- --------- --------
Net income $ 87 $ 62 $ 94 $ 59 $ 122
Loan volume $ 3,768 $ 2,835 $ 4,800 $ 4,054 $ 4,348
Average loans 41,891 40,934 40,129 38,333 38,789
----------------------------------------------------------------------
-- Net income up $25 million to $87 million. Net interest income
of $203 million was up modestly from the prior quarter due to
loan growth and improved net interest margin. Noninterest
income was up slightly from the first quarter as a result of
lower trading asset write-downs and higher gain on sale driven
by an increase in volume. The low level of noninterest expense
continued to reflect ongoing expense efficiencies.
-- Provision down, strong credit trends continue. The provision
for loan losses was down for the quarter with a corresponding
decline in net charge-offs. Charge-offs during the quarter
remained low at an annualized rate of only 2 basis points
reflecting the portfolio's conservative underwriting, low
loan-to-value ratios, and small balance lending.
-- Loan volume and balances up. Loan volume of $3.77 billion was
up 33 percent from the prior quarter and average loans of
$41.89 billion were up 2 percent as the company continued to
invest in this business.
Home Loans Group
Selected Segment
Information Three Months Ended
---------------------------------------------
Jun. 30, Mar. 31, Dec. 31, Sept. 30, Jun. 30,
($ in millions) 2008 2008 2007 2007 2007
-------- -------- -------- --------- --------
Net interest income $ 240 $ 250 $ 229 $ 191 $ 211
Provision for loan
losses 1,637 907 511 323 101
Noninterest income (97) 319 329 183 389
Inter-segment expense 2 4 5 9 16
Noninterest expense(a) 484 499 2,319 554 547
-------- -------- -------- --------- --------
Income (loss) before
income taxes (1,980) (841) (2,277) (512) (64)
Income taxes (635) (269) (312) (169) (24)
-------- -------- -------- --------- --------
Net (loss) $(1,345) $ (572) $(1,965) $ (343) $ (40)
Loan volume $ 8,462 $13,774 $19,089 $26,434 $35,938
Average loans 54,880 55,672 52,278 43,737 43,312
(a) Includes $1.78 billion goodwill charge in fourth quarter 2007.
----------------------------------------------------------------------
-- Results reflect reduced mortgage market participation. Net
interest income fell slightly from the prior quarter
reflecting a higher level of nonaccruals and a decline in loan
balances on lower production. Noninterest income was down from
the first quarter due to the decline in gain on sale from
lower loan commitment volume and the increase in the provision
for repurchase reserves reflecting an increase in repurchase
demands related to prime home mortgage loans. The repurchase
reserve totaled $283 million at the end of the quarter, up
from $178 million at Mar. 31. The quarterly gain on sale
variance was also impacted by $68 million in additional gains
in the first quarter from sales of loans locked prior to the
adoption of new accounting pronouncements impacting gain on
sale recognition. Noninterest income also reflected mortgage
servicing revenue down $247 million, primarily due to declines
in the value of MSR risk management instruments that more than
offset the increase in MSR fair value.
-- Expense declines reflect consolidation of Home Loans business.
Despite the increase in foreclosed asset expense to $149
million from $118 million, noninterest expense of $484 million
in the second quarter was down 3 percent from the first
quarter with the further consolidation of the home loans
business. The number of employees was reduced to 7,338 at the
end of the second quarter from 9,135 at the end of the first
quarter.
-- Credit costs remain elevated. The increase in the provision to
$1.64 billion from $907 million in the first quarter was
driven by an acceleration in delinquencies and charge-offs,
while subprime delinquencies showed signs of stabilization
during the quarter. Total charge-offs rose to $807 million, up
$341 million from the prior quarter.
-- Production volume reduced as a result of management's actions.
Home loans segment volume of $8.46 billion was down 39 percent
from first quarter levels reflecting the company's decision to
exit wholesale lending and close all remaining home loan
centers.
COMPANY UPDATES
-- On July 22, WaMu announced that the Human Resources Committee
of the Board of Directors determined that, in light of the
company's 2008 financial performance to date, including the
impact of mortgage-related loan loss provisions and foreclosed
asset expense, the company's Chief Executive Officer,
President and Chief Operating Officer and Chief Financial
Officer will not receive annual incentive payments under the
company's 2008 Leadership Bonus Plan.
-- On July 15, WaMu's Board of Directors declared a cash dividend
of $0.01 per share on the company's common stock. Dividends on
the common stock are payable on Aug. 15, 2008 to shareholders
of record as of Jul. 31, 2008. In addition to declaring a
dividend on the company's common stock, the company will pay a
dividend of $0.2528 per depository share of Series K Preferred
Stock to be payable on Sept. 15, 2008 to holders of record on
Sept. 1, 2008, a dividend of $19.8056 per share of Series R
Preferred Stock to be payable on Sept. 15, 2008 to holders of
record on Sept. 1, 2008.
-- On Jun. 27, WaMu announced that a search had been initiated to
replace James Corcoran, President of the Retail Bank who left
WaMu to pursue other career opportunities.
-- On Jun. 24, WaMu shareholders approved an amendment to
increase the number of authorized common stock from
1,600,000,000 to 3,000,000,000, the conversion of the Series S
and Series T Perpetual Contingent Convertible Non-Voting
Preferred Stock into common stock and the ability of the
warrants to be exercised to purchase common stock. On Jun. 30,
the Series S and Series T preferred stock was converted into
common stock.
-- On Jun. 4, WaMu announced that Michael S. Solender had been
named the company's Executive Vice President and Chief Legal
Officer. Solender reports to Kerry Killinger, WaMu's CEO, and
is a member of the company's Executive Committee.
-- On Jun. 2, WaMu announced that effective Jul. 1, independent
director Stephen E. Frank would assume the role of independent
Board Chair while Kerry Killinger would continue to lead the
company as Chief Executive Officer and serve as a director.
-- On Jun. 2, WaMu announced that under its new majority voting
standard, in uncontested director elections, nominees must
receive a majority of votes cast to be re-elected.
-- On Apr. 29, WaMu announced that it named John P. McMurray as
the company's Chief Enterprise Risk Officer.
ABOUT WAMU
WaMu, through its subsidiaries, is one of the nation's leading
consumer and small business banks. At Jun. 30, 2008, WaMu and its
subsidiaries had assets of $309.73 billion. The company has a history
dating back to 1889 and its subsidiary banks currently operate
approximately 2,300 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 Tuesday, Jul. 22, 2008, at 5:00 p.m. ET and will be hosted
by Kerry Killinger, Chief Executive Officer, Tom Casey, Executive Vice
President and Chief Financial Officer and John McMurray, Executive
Vice president and Chief Enterprise Risk Officer. The conference call
is available by telephone or on the Internet. The dial-in number for
the live conference call is 888-324-6919. Participants calling from
outside the United States may dial 312-470-7289. 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 recording of the conference call will be
available from approximately 7:00 p.m. ET on Tuesday, Jul. 22, 2008
through 11:59 p.m. on Friday, Aug. 1, 2008. The recorded message will
be available at 888-568-0151. Callers from outside the United States
may dial 203-369-3462.
FORWARD LOOKING 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 2007 Annual Report on
Form 10-K, as amended, and Quarterly Report on Form 10-Q for the
quarter ended March 31, 2008 which include:
-- Economic conditions that negatively affect housing prices and
the job market that have resulted, and may continue to result,
in deterioration in credit quality of the company's loan
portfolio.
-- Access to market-based liquidity sources that may be
negatively impacted if market conditions persist or if further
ratings downgrades occur and could lead to increased funding
costs and reduced gain on sale.
-- The need to raise additional capital due to significant
additional losses which could have a dilutive effect on
existing shareholders and could affect the ability to pay
dividends.
-- Changes in interest rates.
-- Features of certain of the company's loan products that may
result in increased credit risk.
-- Estimates used by the company to determine the fair value of
certain of our assets that may prove to be imprecise and
result in significant changes in valuation.
-- Risks related to the company's credit card operations that
could adversely affect the credit card portfolio and our
ability to continue growing the credit card business.
-- Operational risk which may result in incurring financial and
reputational losses.
-- Failure to comply with laws and regulations.
-- Changes in the regulation of financial services companies,
housing government-sponsored enterprises, mortgage originators
and servicers, and credit card lenders.
-- General business, economic and market conditions and continued
deterioration in these conditions.
-- Damage to the company's professional reputation and business
as a result of allegations and negative public opinion as well
as pending and threatened litigation.
-- Significant competition from banking and nonbanking companies.
There are other factors not described in our 2007 Form 10-K, as
amended, and Form 10-Q for the quarter ended March 31, 2008 which are
beyond the company's ability to anticipate or control that could cause
results to differ.
WM-1
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions, except per share data)
(unaudited)
Quarter Ended
----------------------------------------------------------------------
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
2008 2008 2007 2007 2007
---------------------------------------------------------- -----------
PROFITABILITY
Net income
(loss) $ (3,328) $ (1,138) $ (1,867) $ 186 $ 830
Net interest
income 2,296 2,175 2,047 2,014 2,034
Noninterest
income 561 1,569 1,365 1,379 1,758
Noninterest
expense 2,403 2,152 4,166 2,191 2,138
Diluted earnings
per common
share:
Diluted
earnings per
common share $ (6.58) $ (1.40) $ (2.19) $ 0.20 $ 0.92
Less: Effect of
conversion
feature(1) (3.24) - - - -
----------- --------- --------- -------- --------
Diluted
earnings per
common share
excluding
effect of
conversion
feature (3.34) (1.40) (2.19) 0.20 0.92
Diluted weighted
average number
of common
shares
outstanding (in
thousands) 1,016,081 856,923 855,532 876,002 893,090
Net interest
margin on a
taxable-
equivalent
basis(2) 3.22 % 3.05 % 2.86 % 2.86 % 2.91 %
Dividends
declared per
common share $ 0.01 $ 0.15 $ 0.56 $ 0.56 $ 0.55
Book value per
common share
(period end)(3) 13.35 21.74 24.55 27.18 27.27
Tangible common
equity per
common share
(period end)(4) 9.01 13.26 15.89 16.43 16.59
Return on
average assets (4.23)% (1.42)% (2.30)% 0.23 % 1.05 %
Return on
average common
equity (69.25) (23.27) (32.64) 3.03 13.74
Efficiency
ratio(5) 84.11 57.49 122.13 64.55 56.38
ASSET QUALITY
Nonperforming
assets(6) to
total assets 3.62 % 2.87 % 2.17 % 1.65 % 1.29 %
Allowance as a
percentage of
loans held in
portfolio 3.53 1.94 1.05 0.80 0.73
CREDIT
PERFORMANCE
Provision for
loan losses $ 5,913 $ 3,511 $ 1,534 $ 967 $ 372
Net charge-offs 2,171 1,368 747 421 271
CAPITAL ADEQUACY
Capital Ratios
for WMI:
Tangible equity
to total
tangible
assets(7) 7.79 % 6.40 % 6.67 % 5.60 % 6.07 %
Tier 1 capital
to average
total assets
(leverage)(8) 7.80 6.56 6.84 5.86 6.09
Total risk-
based capital
to total risk-
weighted
assets(8) 13.98 12.25 12.34 10.67 11.04
Capital Ratios
for WMB (well-
capitalized
minimum)(9):
Tier 1 capital
to adjusted
total assets
(leverage)
(5.00%) 7.10 6.94 7.05 6.41 7.52
Adjusted Tier 1
capital to
total risk-
weighted
assets (6.00%) 8.44 8.13 8.33 7.62 8.77
Total risk-
based capital
to total risk-
weighted
assets
(10.00%) 12.49 12.21 12.22 11.26 12.80
SUPPLEMENTAL DATA
Average balance
sheet:
Total loans
held in
portfolio $ 241,737 $244,186 $241,690 $227,348 $216,004
Total interest-
earning assets 285,503 285,265 287,988 283,263 279,836
Total assets 314,882 319,928 325,276 320,475 316,004
Total deposits 184,610 184,304 185,636 198,649 206,765
Total
stockholders'
equity 27,558 24,066 23,947 23,994 24,436
Period-end
balance sheet:
Total loans
held in
portfolio, net 231,171 238,100 241,815 235,243 213,434
Total assets 309,731 319,668 327,913 330,110 312,219
Total deposits 181,923 188,049 181,926 194,280 201,380
Total
stockholders'
equity 26,086 22,449 24,584 23,941 24,210
Common shares
outstanding at
the end of
period (in
thousands)(10) 1,705,344 882,610 869,036 868,802 875,722
Employees at
end of period 43,198 45,883 49,403 49,748 49,989
Six Months Ended
-------------------------------------------------------
June 30, June 30,
2008 2007
-------------------------------------------------------
PROFITABILITY
Net income (loss) $ (4,466) $ 1,614
Net interest
income 4,471 4,115
Noninterest
income 2,129 3,299
Noninterest
expense 4,555 4,244
Diluted earnings
per common
share:
Diluted earnings
per common
share $ (8.43) $ 1.78
Less: Effect of
conversion
feature(1) (3.51) -
----------- ---------
Diluted
earnings per
common share
excluding
effect of
conversion
feature (4.92) 1.78
Diluted weighted
average number
of common shares
outstanding (in
thousands) 936,502 896,304
Net interest
margin on a
taxable-
equivalent
basis(2) 3.14 % 2.85 %
Dividends
declared per
common share $ 0.16 $ 1.09
Book value per
common share
(period end)(3) 13.35 27.27
Tangible common
equity per common
share (period
end)(4) 9.01 16.59
Return on average
assets (2.81)% 1.00 %
Return on average
common equity (45.67) 13.36
Efficiency
ratio(5) 69.01 57.24
ASSET QUALITY
Nonperforming
assets(6) to
total assets 3.62 % 1.29 %
Allowance as a
percentage of
loans held in
portfolio 3.53 0.73
CREDIT PERFORMANCE
Provision for
loan losses $ 9,423 $ 606
Net charge-offs 3,538 454
CAPITAL ADEQUACY
Capital Ratios
for WMI:
Tangible equity
to total
tangible
assets(7) 7.79 % 6.07 %
Tier 1 capital
to average
total assets
(leverage)(8) 7.80 6.09
Total risk-based
capital to
total risk-
weighted
assets(8) 13.98 11.04
Capital Ratios
for WMB (well-
capitalized
minimum)(9):
Tier 1 capital
to adjusted
total assets
(leverage)
(5.00%) 7.10 7.52
Adjusted Tier 1
capital to
total risk-
weighted assets
(6.00%) 8.44 8.77
Total risk-based
capital to
total risk-
weighted assets
(10.00%) 12.49 12.80
SUPPLEMENTAL DATA
Average balance
sheet:
Total loans held
in portfolio $ 242,961 $219,292
Total interest-
earning assets 285,384 287,724
Total assets 317,405 323,911
Total deposits 184,457 208,753
Total
stockholders'
equity 25,812 24,422
Period-end
balance sheet:
Total loans held
in portfolio,
net 231,171 213,434
Total assets 309,731 312,219
Total deposits 181,923 201,380
Total
stockholders'
equity 26,086 24,210
Common shares
outstanding at
the end of
period (in
thousands)(10) 1,705,344 875,722
Employees at end
of period 43,198 49,989
_______________________
(1) This one-time earnings per share reduction represents a
beneficial conversion feature that was recorded upon the June
2008 conversion of the preferred shares issued in connection
with the April 2008 capital transaction. This non-cash
adjustment, which had no effect on the Company's capital ratios
or the net loss recorded in the second quarter, was provided to
facilitate the comparison of earnings per share to the prior
reporting periods presented on this schedule.
(2) Includes taxable-equivalent adjustments primarily related to tax-
exempt income on U.S. states and political subdivisions
securities and loans related to the Company's community lending
and investment activities. The federal statutory tax rate was
35% for the periods presented.
(3) Excludes six million shares held in escrow.
(4) Excludes goodwill and intangible assets (except MSR).
(5) The efficiency ratio is defined as noninterest expense divided by
total revenue (net interest income and noninterest income).
(6) Excludes nonaccrual loans held for sale.
(7) 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 $3.91 billion, $3.91 billion, $3.92
billion, $2.94 billion and $2.94 billion at June 30, 2008, March
31, 2008, December 31, 2007, September 30, 2007 and June 30,
2007 are included in the numerator.
(8) The capital ratios are estimated as if Washington Mutual, Inc.
were a bank holding company subject to Federal Reserve Board
capital requirements.
(9) Capital ratios for Washington Mutual Bank ("WMB") at June 30,
2008 are preliminary.
(10) 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
----------------------------------------------------------------------
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
2008 2008 2007 2007 2007
----------------------------------------------------------------------
Interest Income
Loans held for
sale $ 52 $ 87 $ 160 $ 248 $ 421
Loans held in
portfolio 3,604 3,954 4,156 3,992 3,786
Available-for-
sale securities 335 357 380 392 351
Trading assets 117 116 101 108 108
Other interest
and dividend
income 94 77 79 116 82
----------------------------------------------------------------------
Total interest
income 4,202 4,591 4,876 4,856 4,748
Interest Expense
Deposits 1,115 1,329 1,464 1,650 1,723
Borrowings 791 1,087 1,365 1,192 991
----------------------------------------------------------------------
Total interest
expense 1,906 2,416 2,829 2,842 2,714
----------------------------------------------------------------------
Net interest
income 2,296 2,175 2,047 2,014 2,034
Provision for
loan losses 5,913 3,511 1,534 967 372
----------------------------------------------------------------------
Net interest
income
(expense)
after
provision
for loan
losses (3,617) (1,336) 513 1,047 1,662
Noninterest Income
Revenue (expense)
from sales and
servicing of
home mortgage
loans (109) 411 358 161 300
Revenue from
sales and
servicing of
consumer loans 159 248 375 418 403
Depositor and
other retail
banking fees 767 704 769 740 720
Credit card fees 177 181 214 209 183
Securities fees
and commissions 64 58 63 67 70
Insurance income 32 30 29 29 29
Loss on trading
assets (305) (216) (267) (153) (145)
Gain (loss) on
other available-
for-sale
securities (402) 18 (261) (99) 7
Gain (loss) on
extinguishment
of borrowings 100 13 - 1 (14)
Other income 78 122 85 6 205
----------------------------------------------------------------------
Total
noninterest
income 561 1,569 1,365 1,379 1,758
Noninterest
Expense
Compensation and
benefits 939 914 877 910 977
Occupancy and
equipment 460 358 488 371 354
Telecommunications
and outsourced
information
services 123 130 134 135 132
Depositor and
other retail
banking losses 61 63 72 71 58
Advertising and
promotion 103 105 108 125 113
Professional fees 57 39 89 52 55
Foreclosed asset
expense 217 155 133 82 56
Goodwill
impairment
charge - - 1,775 - -
Other expense 443 388 490 445 393
----------------------------------------------------------------------
Total
noninterest
expense 2,403 2,152 4,166 2,191 2,138
Minority interest
expense 75 75 65 53 42
----------------------------------------------------------------------
Income (loss)
before
income taxes (5,534) (1,994) (2,353) 182 1,240
Income taxes (2,206) (856) (486) (4) 410
----------------------------------------------------------------------
Net Income (Loss) $ (3,328) $ (1,138) $ (1,867) $ 186 $ 830
======================================================================
Preferred
dividends
declared (71) (65) (8) (8) (8)
Beneficial
conversion
feature (3,290) - - - -
----------------------------------------------------------------------
Net Income (Loss)
Applicable to
Common
Stockholders $ (6,689) $ (1,203) $ (1,875) $ 178 $ 822
======================================================================
Earnings Per
Common Share:
Basic $ (6.58) $ (1.40) $ (2.19) $ 0.21 $ 0.95
Diluted (6.58) (1.40) (2.19) 0.20 0.92
Dividends declared
per common share 0.01 0.15 0.56 0.56 0.55
Basic weighted
average number of
common shares
outstanding (in
thousands) 1,016,081 856,923 855,518 857,005 868,968
Diluted weighted
average number of
common shares
outstanding (in
thousands) 1,016,081 856,923 855,532 876,002 893,090
WM-3
Washington Mutual, Inc.
Consolidated Statements of Income
(dollars in millions, except per share data)
(unaudited)
Six Months Ended
----------------------------------------------------------------------
June 30, June 30,
2008 2007
----------------------------------------------------------------------
Interest Income
Loans held for sale $ 138 $ 984
Loans held in portfolio 7,559 7,686
Available-for-sale securities 691 682
Trading assets 233 221
Other interest and dividend income 171 183
----------------------------------------------------------------------
Total interest income 8,792 9,756
Interest Expense
Deposits 2,443 3,495
Borrowings 1,878 2,146
----------------------------------------------------------------------
Total interest expense 4,321 5,641
----------------------------------------------------------------------
Net interest income 4,471 4,115
Provision for loan losses 9,423 606
----------------------------------------------------------------------
Net interest income (expense) after
provision for loan losses (4,952) 3,509
Noninterest Income
Revenue from sales and servicing of home
mortgage loans 302 425
Revenue from sales and servicing of consumer
loans 407 846
Depositor and other retail banking fees 1,470 1,385
Credit card fees 358 355
Securities fees and commissions 122 131
Insurance income 63 58
Loss on trading assets (521) (253)
Gain (loss) on other available-for-sale
securities (384) 41
Gain (loss) on extinguishment of borrowings 113 (7)
Other income 199 318
----------------------------------------------------------------------
Total noninterest income 2,129 3,299
Noninterest Expense
Compensation and benefits 1,853 1,979
Occupancy and equipment 818 731
Telecommunications and outsourced information
services 253 261
Depositor and other retail banking losses 124 119
Advertising and promotion 208 211
Professional fees 96 93
Foreclosed asset expense 372 95
Other expense 831 755
----------------------------------------------------------------------
Total noninterest expense 4,555 4,244
Minority interest expense 151 85
----------------------------------------------------------------------
Income (loss) before income taxes (7,529) 2,479
Income taxes (3,063) 865
----------------------------------------------------------------------
Net Income (Loss) $ (4,466) $ 1,614
======================================================================
Preferred dividends declared (136) (15)
Beneficial conversion feature (3,290) -
----------------------------------------------------------------------
Net Income (Loss) Applicable to Common
Stockholders $ (7,892) $ 1,599
======================================================================
Earnings Per Common Share:
Basic $ (8.43) $ 1.83
Diluted (8.43) 1.78
Dividends declared per common share 0.16 1.09
Basic weighted average number of common shares
outstanding (in thousands) 936,502 871,876
Diluted weighted average number of common shares
outstanding (in thousands) 936,502 896,304
WM-4
Washington Mutual, Inc.
Consolidated Statements of Financial Condition
(dollars in millions)
(unaudited)
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
2008 2008 2007 2007 2007
----------------------------------------------------------------------
Assets
Cash and cash
equivalents $ 7,235 $ 10,089 $ 9,560 $ 11,370 $ 4,167
Federal funds sold
and securities
purchased under
agreements to
resell 2,750 2,527 1,877 4,042 3,267
Trading assets 2,308 2,483 2,768 3,797 5,534
Available-for-sale
securities, total
amortized cost of
$25,756, $24,907,
$27,789, $28,725
and $28,934:
Mortgage-backed
securities 18,241 18,140 19,249 20,562 20,393
Investment
securities 6,134 5,466 8,291 7,844 7,947
----------------------------------------------------------------------
Total
available-for-
sale
securities 24,375 23,606 27,540 28,406 28,340
Loans held for sale 1,877 4,941 5,403 7,586 19,327
Loans held in
portfolio 239,627 242,814 244,386 237,132 214,994
Allowance for loan
losses (8,456) (4,714) (2,571) (1,889) (1,560)
----------------------------------------------------------------------
Loans held in
portfolio, net 231,171 238,100 241,815 235,243 213,434
Investment in
Federal Home Loan
Banks 3,498 3,514 3,351 2,808 1,596
Mortgage servicing
rights 6,175 5,726 6,278 6,794 7,231
Goodwill 7,284 7,283 7,287 9,062 9,056
Other assets 23,058 21,399 22,034 21,002 20,267
----------------------------------------------------------------------
Total assets $309,731 $319,668 $327,913 $330,110 $312,219
======================================================================
Liabilities
Deposits:
Noninterest-
bearing deposits $ 31,112 $ 31,911 $ 30,389 $ 31,341 $ 33,557
Interest-bearing
deposits 150,811 156,138 151,537 162,939 167,823
----------------------------------------------------------------------
Total deposits 181,923 188,049 181,926 194,280 201,380
Federal funds
purchased and
commercial paper 75 250 2,003 2,482 3,390
Securities sold
under agreements
to repurchase 214 215 4,148 4,732 9,357
Advances from
Federal Home Loan
Banks 58,363 64,009 63,852 52,530 21,412
Other borrowings 30,590 32,710 38,958 40,887 40,313
Other liabilities 8,566 8,072 8,523 8,313 9,212
Minority interests 3,914 3,914 3,919 2,945 2,945
----------------------------------------------------------------------
Total
liabilities 283,645 297,219 303,329 306,169 288,009
Stockholders' Equity
Preferred stock 3,392 3,392 3,392 492 492
Capital surplus -
common stock 12,916 2,646 2,630 2,575 2,715
Accumulated other
comprehensive loss (1,079) (1,141) (359) (390) (568)
Retained earnings 10,857 17,552 18,921 21,264 21,571
----------------------------------------------------------------------
Total
stockholders'
equity 26,086 22,449 24,584 23,941 24,210
----------------------------------------------------------------------
Total
liabilities
and
stockholders'
equity $309,731 $319,668 $327,913 $330,110 $312,219
======================================================================
WM-5
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
Quarter Ended
----------------------------------------------------------------------
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
2008 2008 2007 2007 2007
----------------------------------------------------------------------
Stockholders' Equity
Rollforward
Balance, beginning of
period $22,449 $24,584 $23,941 $24,210 $24,578
Net income (loss) (3,328) (1,138) (1,867) 186 830
Cumulative effect from
the adoption of new
accounting
pronouncements - (36)(1) - - -
Other comprehensive
income (loss), net of
income taxes 62 (782) 31 177 (300)
Cash dividends
declared on common
stock (10) (130) (482) (485) (484)
Preferred stock
activity:
Preferred share
conversion(2) (3,290) - - - -
Cash dividends
declared (71) (65) (8) (8) (8)
-------- -------- -------- --------- --------
Total preferred
stock activity (3,361) (65) (8) (8) (8)
Cash dividends
returned(3) 4 - 15 - -
Common stock activity:
Capital surplus-
common stock
attributable to
preferred share
conversion(2) 3,290 - - - -
Common stock
issued(4) 6,980 16 54 60 94
Common stock
repurchased and
retired(5) - - - (199) (500)
-------- -------- -------- --------- --------
Total common stock
activity 10,270 16 54 (139) (406)
Preferred stock issued - - 2,900 - -
----------------------------------------------------------------------
Balance, end of period $26,086 $22,449 $24,584 $23,941 $24,210
======================================================================
(1) As of January 1, 2008, the Company adopted FASB Statement No. 157,
Fair Value Measurements ("Statement No. 157"), EITF Issue No. 06-
4, Accounting for Deferred Compensation and Postretirement
Benefit Aspects of Endorsement Split-Dollar Life Insurance
Arrangements ("Issue No. 06-4") and EITF Issue No. 06-10,
Accounting for Collateral Assignment Split-Dollar Life Insurance
Arrangements ("Issue No. 06-10"). The cumulative effect, net of
income taxes, from the adoption of Statement No. 157, Issue No.
06-4 and Issue No. 06-10 was $1 million, $(35) million and $(2)
million.
(2) The preferred share conversion adjustment represents a beneficial
conversion feature that was recorded upon the June 2008
conversion of the preferred shares issued in connection with the
April 2008 capital transaction. This non-cash conversion
adjustment, which did not affect the net loss recorded in the
second quarter of 2008, reduced retained earnings and
correspondingly increased capital surplus-common stock.
(3) Represents accumulated dividends on shares returned from escrow.
(4) Includes 647 million shares of common stock converted on June 30,
2008 at $8.75 per share from 56,570 preferred shares issued in
April 2008.
(5) The Company repurchased zero shares of its common stock during the
three months ended June 30, 2008, March 31, 2008 and December 31,
2007, and 7.2 million and 13.5 million shares of its common stock
during the three months ended September 30, 2007 and June 30,
2007. At June 30, 2008, 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
---------------------------------------------------------------------
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
2008 2008 2007 2007 2007
---------------------------------------------------------------------
RETAIL BANKING
GROUP
Condensed income
statement:
Net interest
income $ 1,210 $ 1,203 $ 1,262 $ 1,306 $ 1,291
Provision for
loan losses 3,823 2,300 663 318 91
Noninterest
income 842 775 850 833 820
Inter-segment
revenue 7 9 5 9 16
Noninterest
expense 1,232 1,221 1,212 1,149 1,131
---------------------------------------------------------------------
Income (loss)
before income
taxes (2,996) (1,534) 242 681 905
Income taxes (959) (491) (39) 225 340
---------------------------------------------------------------------
Net income
(loss) $ (2,037) $ (1,043) $ 281 $ 456 $ 565
=====================================================================
Performance and
other data:
Efficiency
ratio 59.82% 61.48% 57.25% 53.48% 53.19%
Average loans $138,671 $142,720 $145,486 $147,357 $149,716
Average assets 145,800 151,609 155,100 157,194 159,515
Average
deposits:
Checking
deposits:
Noninterest
bearing 24,753 23,425 22,748 22,860 23,107
Interest
bearing 22,557 24,306 26,328 28,406 30,282
---------------------------------------------------------------------
Total checking
deposits 47,310 47,731 49,076 51,266 53,389
Savings and
money market
deposits 54,928 47,904 44,623 43,524 43,814
Time deposits 47,271 51,099 49,034 50,131 48,049
---------------------------------------------------------------------
Average
deposits 149,509 146,734 142,733 144,921 145,252
Loan volume 655 1,238 3,417 5,172 5,760
Employees at
end of period 27,857 28,736 29,147 28,636 28,523
CARD SERVICES GROUP
Managed basis(1)
Condensed income
statement:
Net interest
income $ 769 $ 765 $ 694 $ 674 $ 649
Provision for
loan losses 911 626 591 611 523
Noninterest
income 187 418 315 400 393
Inter-segment
expense 5 5 - - -
Noninterest
expense 297 260 338 364 306
---------------------------------------------------------------------
Income (loss)
before income
taxes (257) 292 80 99 213
Income taxes (82) 93 (12) 33 80
---------------------------------------------------------------------
Net income
(loss) $ (175) $ 199 $ 92 $ 66 $ 133
=====================================================================
Performance and
other data:
Efficiency
ratio 31.25% 22.04% 33.51% 33.91% 29.33%
Average loans $ 26,314 $ 26,889 $ 26,665 $ 25,718 $ 24,234
Average assets 28,844 29,244 28,961 28,206 26,762
Employees at
end of period 2,940 2,881 2,860 2,878 2,827
Securitization
adjustments
Condensed
income
statement:
Net interest
income $ (506) $ (503) $ (454) $ (456) $ (459)
Provision for
loan losses (530) (470) (335) (288) (294)
Noninterest
income (24) 33 119 168 165
Performance and
other data:
Average loans (16,872) (17,391) (16,007) (14,488) (13,888)
Average assets (14,739) (15,075) (14,180) (12,841) (12,287)
Adjusted basis
Condensed income
statement:
Net interest
income $ 263 $ 262 $ 240 $ 218 $ 190
Provision for
loan losses 381 156 256 323 229
Noninterest
income 163 451 434 568 558
Inter-segment
expense 5 5 - - -
Noninterest
expense 297 260 338 364 306
---------------------------------------------------------------------
Income (loss)
before income
taxes (257) 292 80 99 213
Income taxes (82) 93 (12) 33 80
---------------------------------------------------------------------
Net income
(loss) $ (175) $ 199 $ 92 $ 66 $ 133
=====================================================================
Performance and
other data:
Average loans $ 9,442 $ 9,498 $ 10,658 $ 11,230 $ 10,346
Average assets 14,105 14,169 14,781 15,365 14,475
Six Months Ended
------------------------------------------
June 30, June 30,
2008 2007
------------------------------------------
RETAIL BANKING
GROUP
Condensed income
statement:
Net interest
income $ 2,413 $ 2,575
Provision for
loan losses 6,122 153
Noninterest
income 1,617 1,571
Inter-segment
revenue 15 34
Noninterest
expense 2,453 2,201
------------------------------------------
Income (loss)
before income
taxes (4,530) 1,826
Income taxes (1,450) 685
------------------------------------------
Net income
(loss) $ (3,080) $ 1,141
==========================================
Performance and
other data:
Efficiency
ratio 60.63% 52.65%
Average loans $140,695 $152,445
Average assets 148,704 162,264
Average
deposits:
Checking
deposits:
Noninterest
bearing 24,089 22,722
Interest
bearing 23,431 31,006
------------------------------------------
Total checking
deposits 47,520 53,728
Savings and
money market
deposits 51,417 43,460
Time deposits 49,185 47,456
------------------------------------------
Average
deposits 148,122 144,644
Loan volume 1,893 10,338
Employees at
end of period 27,857 28,523
CARD SERVICES GROUP
Managed basis(1)
Condensed income
statement:
Net interest
income $ 1,534 $ 1,290
Provision for
loan losses 1,537 912
Noninterest
income 604 867
Inter-segment
expense 9 -
Noninterest
expense 557 635
------------------------------------------
Income (loss)
before income
taxes 35 610
Income taxes 11 229
------------------------------------------
Net income
(loss) $ 24 $ 381
==========================================
Performance and
other data:
Efficiency
ratio 26.16% 29.42%
Average loans $ 26,601 $ 23,921
Average assets 29,044 26,403
Employees at
end of period 2,940 2,827
Securitization
adjustments
Condensed
income
statement:
Net interest
income $ (1,010) $ (874)
Provision for
loan losses (1,000) (577)
Noninterest
income 10 297
Performance and
other data:
Average loans (17,131) (13,201)
Average assets (14,907) (11,627)
Adjusted basis
Condensed income
statement:
Net interest
income $ 524 $ 416
Provision for
loan losses 537 335
Noninterest
income 614 1,164
Inter-segment
expense 9 -
Noninterest
expense 557 635
------------------------------------------
Income (loss)
before income
taxes 35 610
Income taxes 11 229
------------------------------------------
Net income
(loss) $ 24 $ 381
==========================================
Performance and
other data:
Average loans $ 9,470 $ 10,720
Average assets 14,137 14,776
(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
----------------------------------------------------------------------
(This table is
continued from "WM-
6.") June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
2008 2008 2007 2007 2007
----------------------------------------------------------------------
COMMERCIAL GROUP
Condensed income
statement:
Net interest
income $ 203 $ 196 $ 200 $ 200 $ 208
Provision for
loan losses 17 29 19 12 2
Noninterest
income 5 (8) (10) (34) 63
Noninterest
expense 63 68 66 67 74
----------------------------------------------------------------------
Income before
income taxes 128 91 105 87 195
Income taxes 41 29 11 28 73
----------------------------------------------------------------------
Net
income $ 87 $ 62 $ 94 $ 59 $ 122
======================================================================
Performance and
other data:
Efficiency
ratio 30.34% 36.09% 34.39% 40.26% 27.42%
Average loans $ 41,891 $40,934 $ 40,129 $ 38,333 $38,789
Average assets 43,875 43,004 42,336 40,663 41,184
Average
deposits 6,632 7,474 9,762 13,816 15,294
Loan volume 3,768 2,835 4,800 4,054 4,348
Employees at
end of period 1,342 1,358 1,502 1,524 1,508
HOME LOANS GROUP
Condensed income
statement:
Net interest
income $ 240 $ 250 $ 229 $ 191 $ 211
Provision for
loan losses 1,637 907 511 323 101
Noninterest
income (97) 319 329 183 389
Inter-segment
expense 2 4 5 9 16
Noninterest
expense 484 499 2,319 554 547
----------------------------------------------------------------------
Loss before
income taxes (1,980) (841) (2,277) (512) (64)
Income taxes (635) (269) (312) (169) (24)
----------------------------------------------------------------------
Net loss $ (1,345) $ (572) $ (1,965) $ (343) $ (40)
======================================================================
Performance and
other data:
Efficiency
ratio 344.70% 88.26% 419.52% 151.63% 93.71%
Average loans $ 54,880 $55,672 $ 52,278 $ 43,737 $43,312
Average assets 65,074 66,841 66,172 61,106 60,342
Average
deposits 5,202 5,469 6,714 7,780 8,372
Loan volume 8,462 13,774 19,089 26,434 35,938
Employees at
end of period 7,338 9,135 11,812 12,668 13,150
CORPORATE
SUPPORT/TREASURY AND
OTHER
Condensed income
statement:
Net interest
income
(expense) $ 254 $ 132 $ (18) $ (39) $ (4)
Provision for
loan losses 55 119 85 (9) (51)
Noninterest
income (327) 86 (201) (91) 60
Noninterest
expense 327 104 231 57 80
Minority
interest
expense 75 75 65 53 42
----------------------------------------------------------------------
Loss before
income taxes (530) (80) (600) (231) (15)
Income taxes (247) (68) (157) (46) (37)
----------------------------------------------------------------------
Net
income
(loss) $ (283) $ (12) $ (443) $ (185) $ 22
======================================================================
Performance and
other data:
Average loans $ 1,648 $ 1,556 $ 1,482 $ 1,420 $ 1,367
Average assets 47,151 45,525 48,173 47,532 41,789
Average
deposits 23,267 24,627 26,427 32,132 37,847
Loan volume 84 143 171 113 72
Employees at
end of period 3,721 3,773 4,082 4,042 3,981
Six Months Ended
-------------------------------------------------- -------------------
(This table is continued from "WM-6.") June 30, June 30,
2008 2007
-------------------------------------------------- -------------------
COMMERCIAL GROUP
Condensed income statement:
Net interest income $ 400 $ 420
Provision for loan losses 47 (7)
Noninterest income (3) 78
Noninterest expense 131 148
-------------------------------------------------- -------------------
Income before income taxes 219 357
Income taxes 70 134
-------------------------------------------------- -------------------
Net income $ 149 $ 223
================================================== ===================
Performance and other data:
Efficiency ratio 33.07% 29.89%
Average loans $ 41,413 $ 38,715
Average assets 43,439 41,094
Average deposits 7,053 13,671
Loan volume 6,603 8,018
Employees at end of period 1,342 1,508
HOME LOANS GROUP
Condensed income statement:
Net interest income $ 490 $ 455
Provision for loan losses 2,544 150
Noninterest income 221 550
Inter-segment expense 6 34
Noninterest expense 983 1,069
-------------------------------------------------- -------------------
Loss before income taxes (2,822) (248)
Income taxes (904) (93)
-------------------------------------------------- -------------------
Net loss $ (1,918) $ (155)
================================================== ===================
Performance and other data:
Efficiency ratio 139.26% 110.07%
Average loans $ 55,275 $ 48,255
Average assets 65,958 65,831
Average deposits 5,335 8,436
Loan volume 22,236 69,718
Employees at end of period 7,338 13,150
CORPORATE SUPPORT/TREASURY AND OTHER
Condensed income statement:
Net interest income (expense) $ 386 $ (26)
Provision for loan losses 173 (25)
Noninterest income (241) 154
Noninterest expense 431 191
Minority interest expense 151 85
-------------------------------------------------- -------------------
Loss before income taxes (610) (123)
Income taxes (316) (106)
-------------------------------------------------- -------------------
Net income (loss) $ (294) $ (17)
================================================== ===================
Performance and other data:
Average loans $ 1,602 $ 1,356
Average assets 46,338 41,335
Average deposits 23,947 42,002
Loan volume 226 179
Employees at end of period 3,721 3,981
(This table is continued on "WM-8.")
WM-8
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
Quarter Ended
----------------------------------------------------------------------
(This table is
continued from "WM-
7.") June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
2008 2008 2007 2007 2007
----------------------------------------------------------------------
RECONCILING
ADJUSTMENTS
Condensed income
statement:
Net interest
income(1) $ 126 $ 132 $ 134 $ 138 $ 138
Noninterest
income
(expense)(2) (25) (54) (37) (80) (132)
----------------------------------------------------------------------
Income before
income taxes 101 78 97 58 6
Income
taxes(3) (324) (150) 23 (75) (22)
----------------------------------------------------------------------
Net
income $ 425 $ 228 $ 74 $ 133 $ 28
======================================================================
Performance and
other data:
Average
loans(4) $ (1,123) $ (1,220) $ (1,286) $ (1,385) $ (1,301)
Average
assets(4) (1,123) (1,220) (1,286) (1,385) (1,301)
TOTAL CONSOLIDATED
Condensed income
statement:
Net interest
income $ 2,296 $ 2,175 $ 2,047 $ 2,014 $ 2,034
Provision for
loan losses 5,913 3,511 1,534 967 372
Noninterest
income 561 1,569 1,365 1,379 1,758
Noninterest
expense 2,403 2,152 4,166 2,191 2,138
Minority
interest
expense 75 75 65 53 42
----------------------------------------------------------------------
Income (loss)
before
income taxes (5,534) (1,994) (2,353) 182 1,240
Income taxes (2,206) (856) (486) (4) 410
----------------------------------------------------------------------
Net
income
(loss) $ (3,328) $ (1,138) $ (1,867) $ 186 $ 830
======================================================================
Performance and
other data:
Efficiency
ratio 84.11% 57.49% 122.13% 64.55% 56.38%
Average loans $245,409$249,160$248,747$240,692$242,229
Average
assets 314,882 319,928 325,276 320,475 316,004
Average
deposits 184,610 184,304 185,636 198,649 206,765
Loan volume 12,969 17,990 27,477 35,773 46,118
Employees at
end of
period 43,198 45,883 49,403 49,748 49,989
Six Months Ended
-------------------------------------------------- -------------------
(This table is continued from "WM-7.") June 30, June 30,
2008 2007
-------------------------------------------------- -------------------
RECONCILING ADJUSTMENTS
Condensed income statement:
Net interest income(1) $ 258 $ 275
Noninterest income (expense)(2) (79) (218)
-------------------------------------------------- -------------------
Income before income taxes 179 57
Income taxes(3) (474) 16
-------------------------------------------------- -------------------
Net income $ 653 $ 41
================================================== ===================
Performance and other data:
Average loans(4) $ (1,171) $ (1,389)
Average assets(4) (1,171) (1,389)
TOTAL CONSOLIDATED
Condensed income statement:
Net interest income $ 4,471 $ 4,115
Provision for loan losses 9,423 606
Noninterest income 2,129 3,299
Noninterest expense 4,555 4,244
Minority interest expense 151 85
-------------------------------------------------- -------------------
Income (loss) before income taxes (7,529) 2,479
Income taxes (3,063) 865
-------------------------------------------------- -------------------
Net income (loss) $ (4,466) $ 1,614
================================================== ===================
Performance and other data:
Efficiency ratio 69.01% 57.24%
Average loans $247,284 $250,102
Average assets 317,405 323,911
Average deposits 184,457 208,753
Loan volume 30,958 88,253
Employees at end of period 43,198 49,989
__________________________
(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
----------------------------------------------------------------------
June 30, 2008
-------------------------
Interest
Income/
Balance Rate Expense
----------------------------------------------------------------------
Average Balances and Weighted Average
Interest Rates
Assets (Taxable-Equivalent Basis(1))
Interest-earning assets(2):
Federal funds sold and securities
purchased under agreements to resell $ 2,161 2.15% $ 11
Trading assets 2,404 19.50 117
Available-for-sale securities(3):
Mortgage-backed securities 19,190 5.67 271
Investment securities 5,287 5.06 67
Loans held for sale 3,672 5.62 52
Loans held in portfolio:
Loans secured by real estate:
Home loans(4)(5) 107,299 5.83 1,563
Home equity loans and lines of
credit(5) 60,964 5.12 777
Subprime mortgage channel(6) 16,933 6.05 256
Home construction(7) 1,973 7.41 37
Multi-family 32,786 6.13 502
Other real estate 10,205 6.26 159
----------------------------------------------------- ---------
Total loans secured by real
estate 230,160 5.73 3,294
Consumer:
Credit card 9,443 11.56 271
Other 180 16.85 8
Commercial 1,954 6.76 33
----------------------------------------------------- ---------
Total loans held in portfolio 241,737 5.98 3,606
Other 11,052 3.01 83
----------------------------------------------------- ---------
Total interest-earning assets 285,503 5.90 4,207
Noninterest-earning assets:
Mortgage servicing rights 6,115
Goodwill 7,283
Other assets 15,981
-----------------------------------------------------
Total assets $314,882
=====================================================
Liabilities
Interest-bearing liabilities:
Deposits:
Interest-bearing checking deposits $ 22,619 1.39 78
Savings and money market deposits 62,078 2.17 335
Time deposits 69,161 4.08 702
----------------------------------------------------- ---------
Total interest-bearing deposits 153,858 2.91 1,115
Federal funds purchased and commercial
paper 79 3.05 1
Securities sold under agreements to
repurchase 406 2.20 2
Advances from Federal Home Loan Banks 60,402 3.36 505
Other 30,839 3.69 283
----------------------------------------------------- ---------
Total interest-bearing
liabilities 245,584 3.12 1,906
---------
Noninterest-bearing sources:
Noninterest-bearing deposits 30,752
Other liabilities 7,075
Minority interests 3,913
Stockholders' equity 27,558
-----------------------------------------------------
Total liabilities and
stockholders' equity $314,882
=====================================================
Net interest spread and net interest
income on a taxable-equivalent basis 2.78 $2,301
=========
Impact of noninterest-bearing sources 0.44
Net interest margin on a taxable-
equivalent basis 3.22
Quarter Ended
----------------------------------------------------------------------
Mar. 31, 2008
-------------------------
Interest
Income/
Balance Rate Expense
----------------------------------------------------------------------
Average Balances and Weighted Average
Interest Rates
Assets (Taxable-Equivalent Basis(1))
Interest-earning assets(2):
Federal funds sold and securities
purchased under agreements to resell $ 2,118 3.48% $ 18
Trading assets 2,726 17.10 116
Available-for-sale securities(3):
Mortgage-backed securities 18,945 5.80 275
Investment securities 6,316 5.39 85
Loans held for sale 4,974 6.98 87
Loans held in portfolio:
Loans secured by real estate:
Home loans(4)(5) 109,773 6.27 1,720
Home equity loans and lines of
credit(5) 61,196 6.28 956
Subprime mortgage channel(6) 18,106 6.33 287
Home construction(7) 2,142 7.65 41
Multi-family 31,962 6.35 507
Other real estate 9,797 6.49 158
------------------------------------------- -------- ---------
Total loans secured by real
estate 232,976 6.31 3,669
Consumer:
Credit card 9,024 10.75 241
Other 195 17.47 8
Commercial 1,991 7.36 37
------------------------------------------- -------- ---------
Total loans held in portfolio 244,186 6.49 3,955
Other 6,000 3.94 59
------------------------------------------- -------- ---------
Total interest-earning assets 285,265 6.45 4,595
Noninterest-earning assets:
Mortgage servicing rights 5,882
Goodwill 7,286
Other assets 21,495
------------------------------------------- --------
Total assets $319,928
=========================================== ========
Liabilities
Interest-bearing liabilities:
Deposits:
Interest-bearing checking deposits $ 24,384 1.75 107
Savings and money market deposits 55,951 2.73 379
Time deposits 74,225 4.57 843
------------------------------------------- -------- ---------
Total interest-bearing deposits 154,560 3.46 1,329
Federal funds purchased and commercial
paper 1,009 3.62 9
Securities sold under agreements to
repurchase 885 3.78 8
Advances from Federal Home Loan Banks 62,799 4.29 670
Other 34,048 4.71 400
------------------------------------------- -------- ---------
Total interest-bearing
liabilities 253,301 3.83 2,416
---------
Noninterest-bearing sources:
Noninterest-bearing deposits 29,744
Other liabilities 8,902
Minority interests 3,915
Stockholders' equity 24,066
------------------------------------------- --------
Total liabilities and
stockholders' equity $319,928
=========================================== ========
Net interest spread and net interest
income on a taxable-equivalent basis 2.62 $2,179
=========
Impact of noninterest-bearing sources 0.43
Net interest margin on a taxable-
equivalent basis 3.05
Quarter Ended
----------------------------------------------------------------------
June 30, 2007
------------------------
Interest
Income/
Balance Rate Expense
----------------------------------------------------------------------
Average Balances and Weighted Average
Interest Rates
Assets (Taxable-Equivalent Basis(1))
Interest-earning assets(2):
Federal funds sold and securities
purchased under agreements to resell $ 3,964 5.39% $ 53
Trading assets 4,995 8.67 108
Available-for-sale securities(3):
Mortgage-backed securities 19,177 5.39 259
Investment securities 7,382 5.15 95
Loans held for sale 26,225 6.43 421
Loans held in portfolio:
Loans secured by real estate:
Home loans(4)(5) 90,818 6.44 1,462
Home equity loans and lines of
credit(5) 54,431 7.59 1,031
Subprime mortgage channel(6) 20,152 6.80 343
Home construction(7) 2,043 6.72 34
Multi-family 29,419 6.65 488
Other real estate 6,843 7.03 120
-------------------------------------------- -------- --------
Total loans secured by real
estate 203,706 6.84 3,478
Consumer:
Credit card 10,101 10.44 263
Other 254 12.44 8
Commercial 1,943 7.73 38
-------------------------------------------- -------- --------
Total loans held in portfolio 216,004 7.02 3,787
Other 2,089 5.47 29
-------------------------------------------- -------- --------
Total interest-earning assets 279,836 6.80 4,752
Noninterest-earning assets:
Mortgage servicing rights 6,782
Goodwill 9,054
Other assets 20,332
-------------------------------------------- --------
Total assets $316,004
============================================ ========
Liabilities
Interest-bearing liabilities:
Deposits:
Interest-bearing checking deposits $ 30,373 2.51 190
Savings and money market deposits 58,969 3.33 490
Time deposits 84,330 4.96 1,043
-------------------------------------------- -------- --------
Total interest-bearing deposits 173,672 3.98 1,723
Federal funds purchased and commercial
paper 2,169 5.36 29
Securities sold under agreements to
repurchase 8,416 5.35 112
Advances from Federal Home Loan Banks 22,063 5.36 295
Other 39,886 5.57 555
-------------------------------------------- -------- --------
Total interest-bearing
liabilities 246,206 4.42 2,714
--------
Noninterest-bearing sources:
Noninterest-bearing deposits 33,093
Other liabilities 9,610
Minority interests 2,659
Stockholders' equity 24,436
-------------------------------------------- --------
Total liabilities and
stockholders' equity $316,004
============================================ ========
Net interest spread and net interest
income on a taxable-equivalent basis 2.38 $2,038
========
Impact of noninterest-bearing sources 0.53
Net interest margin on a taxable-
equivalent basis 2.91
__________________________
(1) Includes taxable-equivalent adjustments primarily related to tax-
exempt income on U.S. states and political subdivisions
securities and loans related to the Company's community lending
and investment activities. The federal statutory tax rate was 35%
for the periods presented.
(2) Nonaccrual assets and related income, if any, are included in
their respective categories.
(3) The average balance and yield are based on average amortized cost
balances.
(4) Capitalized interest recognized in earnings that resulted from
negative amortization within the Option ARM portfolio totaled
$255 million, $336 million and $344 million for the three months
ended June 30, 2008, March 31, 2008 and June 30, 2007.
(5) Excludes home loans and home equity loans and lines of credit in
the subprime mortgage channel.
(6) Represents mortgage loans purchased from recognized subprime
lenders and mortgage loans originated under the Long Beach
Mortgage name and held in the investment portfolio.
(7) 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)
Six Months Ended
----------------------------------------------------------------------
June 30, 2008
-------------------------
Interest
Income/
Balance Rate Expense
----------------------------------------------------------------------
Average Balances and Weighted Average
Interest Rates
Assets (Taxable-Equivalent Basis(1))
Interest-earning assets(2):
Federal funds sold and securities
purchased under agreements to resell $ 2,139 2.81% $ 30
Trading assets 2,565 18.22 233
Available-for-sale securities(3):
Mortgage-backed securities 19,068 5.74 546
Investment securities 5,802 5.24 152
Loans held for sale 4,323 6.40 138
Loans held in portfolio:
Loans secured by real estate:
Home loans(4)(5) 108,536 6.05 3,283
Home equity loans and lines of
credit(5) 61,080 5.70 1,733
Subprime mortgage channel(6) 17,519 6.19 543
Home construction(7) 2,058 7.54 78
Multi-family 32,374 6.23 1,009
Other real estate 10,001 6.37 317
----------------------------------------------------- ---------
Total loans secured by real
estate 231,568 6.02 6,963
Consumer:
Credit card 9,233 11.16 513
Other 188 17.17 16
Commercial 1,972 7.06 69
----------------------------------------------------- ---------
Total loans held in portfolio 242,961 6.23 7,561
Other 8,526 3.34 141
----------------------------------------------------- ---------
Total interest-earning assets 285,384 6.18 8,801
Noninterest-earning assets:
Mortgage servicing rights 5,998
Goodwill 7,285
Other assets 18,738
-----------------------------------------------------
Total assets $317,405
=====================================================
Liabilities
Interest-bearing liabilities:
Deposits:
Interest-bearing checking deposits $ 23,502 1.58 184
Savings and money market deposits 59,014 2.43 714
Time deposits 71,693 4.33 1,545
----------------------------------------------------- ---------
Total interest-bearing deposits 154,209 3.19 2,443
Federal funds purchased and commercial
paper 544 3.58 10
Securities sold under agreements to
repurchase 646 3.28 10
Advances from Federal Home Loan Banks 61,600 3.83 1,175
Other 32,443 4.23 683
----------------------------------------------------- ---------
Total interest-bearing
liabilities 249,442 3.48 4,321
---------
Noninterest-bearing sources:
Noninterest-bearing deposits 30,248
Other liabilities 7,989
Minority interests 3,914
Stockholders' equity 25,812
-----------------------------------------------------
Total liabilities and
stockholders' equity $317,405
=====================================================
Net interest spread and net interest
income on a taxable-equivalent basis 2.70 $4,480
=========
Impact of noninterest-bearing sources 0.44
Net interest margin on a taxable-
equivalent basis 3.14
Six Months Ended
----------------------------------------------------------------------
June 30, 2007
------------------------
Interest
Income/
Balance Rate Expense
----------------------------------------------------------------------
Average Balances and Weighted Average
Interest Rates
Assets (Taxable-Equivalent Basis(1))
Interest-earning assets(2):
Federal funds sold and securities
purchased under agreements to resell $ 3,947 5.39% $ 105
Trading assets 5,293 8.37 221
Available-for-sale securities(3):
Mortgage-backed securities 18,821 5.44 511
Investment securities 6,785 5.18 176
Loans held for sale 30,810 6.40 984
Loans held in portfolio:
Loans secured by real estate:
Home loans(4)(5) 94,074 6.45 3,033
Home equity loans and lines of
credit(5) 53,726 7.57 2,020
Subprime mortgage channel(6) 20,381 6.74 686
Home construction(7) 2,052 6.63 68
Multi-family 29,621 6.61 979
Other real estate 6,803 7.03 238
-------------------------------------------- -------- --------
Total loans secured by real
estate 206,657 6.81 7,024
Consumer:
Credit card 10,500 11.03 574
Other 261 12.70 17
Commercial 1,874 7.84 73
-------------------------------------------- -------- --------
Total loans held in portfolio 219,292 7.03 7,688
Other 2,776 5.65 78
-------------------------------------------- -------- --------
Total interest-earning assets 287,724 6.80 9,763
Noninterest-earning assets:
Mortgage servicing rights 6,545
Goodwill 9,054
Other assets 20,588
-------------------------------------------- --------
Total assets $323,911
============================================ ========
Liabilities
Interest-bearing liabilities:
Deposits:
Interest-bearing checking deposits $ 31,093 2.57 397
Savings and money market deposits 56,927 3.31 933
Time deposits 87,960 4.96 2,165
-------------------------------------------- -------- --------
Total interest-bearing deposits 175,980 4.00 3,495
Federal funds purchased and commercial
paper 3,003 5.44 81
Securities sold under agreements to
repurchase 10,247 5.43 276
Advances from Federal Home Loan Banks 29,019 5.37 773
Other 36,366 5.62 1,016
-------------------------------------------- -------- --------
Total interest-bearing
liabilities 254,615 4.46 5,641
--------
Noninterest-bearing sources:
Noninterest-bearing deposits 32,773
Other liabilities 9,547
Minority interests 2,554
Stockholders' equity 24,422
-------------------------------------------- --------
Total liabilities and
stockholders' equity $323,911
============================================ ========
Net interest spread and net interest
income on a taxable-equivalent basis 2.34 $4,122
========
Impact of noninterest-bearing sources 0.51
Net interest margin on a taxable-
equivalent basis 2.85
__________________________
(1) Includes taxable-equivalent adjustments primarily related to tax-
exempt income on U.S. states and political subdivisions
securities and loans related to the Company's community lending
and investment activities. The federal statutory tax rate was 35%
for the periods presented.
(2) Nonaccrual assets and related income, if any, are included in
their respective categories.
(3) The average balance and yield are based on average amortized cost
balances.
(4) Capitalized interest recognized in earnings that resulted from
negative amortization within the Option ARM portfolio totaled
$591 million and $706 million for the six months ended June 30,
2008 and June 30, 2007.
(5) Excludes home loans and home equity loans and lines of credit in
the subprime mortgage channel.
(6) Represents mortgage loans purchased from recognized subprime
lenders and mortgage loans originated under the Long Beach
Mortgage name and held in the investment portfolio.
(7) 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
Mar. 31, 2008 June 30, Mar. 31,
to June 30, 2008 2008 2008
----------------------------------------------------------------------
Deposits
Retail deposits:
Checking deposits:
Noninterest bearing $ 304 $ 25,435 $ 25,131
Interest bearing (1,916) 21,715 23,631
----------------------------------------------------------------------
Total checking
deposits (1,612) 47,150 48,762
Savings and money market
deposits 6,699 58,016 51,317
Time deposits(1) (8,488) 43,086 51,574
----------------------------------------------------------------------
Total retail deposits (3,401) 148,252 151,653
Commercial business and
other deposits (1,513) 8,892 10,405
Brokered deposits:
Consumer 1,509 19,248 17,739
Institutional (1,611) 100 1,711
Custodial and escrow
deposits(2) (1,110) 5,431 6,541
----------------------------------------------------------------------
Total deposits $(6,126) $181,923 $188,049
======================================================================
Dec. 31, Sept. 30, June 30,
2007 2007 2007
----------------------------------------------------------------------
Deposits
Retail deposits:
Checking deposits:
Noninterest bearing $ 23,476 $ 23,721 $ 24,142
Interest bearing 25,713 27,277 29,592
----------------------------------------------------------------------
Total checking deposits 49,189 50,998 53,734
Savings and money market deposits 44,987 43,360 43,617
Time deposits(1) 49,410 50,740 48,140
----------------------------------------------------------------------
Total retail deposits 143,586 145,098 145,491
Commercial business and other
deposits 11,267 16,536 19,186
Brokered deposits:
Consumer 18,089 17,484 17,153
Institutional 2,515 8,107 11,025
Custodial and escrow deposits(2) 6,469 7,055 8,525
----------------------------------------------------------------------
Total deposits $181,926 $194,280 $201,380
======================================================================
(1) Weighted average remaining maturity of time deposits was 6 months
at June 30, 2008 and March 31, 2008, 7 months at December 31,
2007 and September 30, 2007 and 8 months at June 30, 2007.
(2) Substantially all custodial and escrow deposits reside in
noninterest-bearing checking accounts.
June 30, Mar. 31,
2008 2008
----------------------------------------------------------------------
Retail Deposit Accounts (number of
accounts)
Noninterest-bearing checking 11,577,907 11,271,406
Interest-bearing checking 1,167,062 1,218,606
Savings and money market 7,474,547 7,293,256
----------------------------------------------------------------------
Total transaction accounts,
end of period(1) 20,219,516 19,783,268
======================================================================
Net change in noninterest-bearing
checking accounts 306,501 311,136
Net change in checking accounts 254,957 256,069
Dec. 31, Sept. 30, June 30,
2007 2007 2007
----------------------------------------------------------------------
Retail Deposit Accounts (number
of accounts)
Noninterest-bearing
checking 10,960,270 10,824,548 10,449,887
Interest-bearing checking 1,273,673 1,334,902 1,399,203
Savings and money market 7,118,349 7,087,311 6,936,870
----------------------------------------------------------------------
Total transaction
accounts, end of
period(1) 19,352,292 19,246,761 18,785,960
======================================================================
Net change in noninterest-
bearing checking accounts 135,722 374,661 466,574
Net change in checking
accounts 74,493 310,360 406,243
__________________________
(1) Transaction accounts include retail checking, small business
checking, retail savings and small business savings.
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
2008 2008 2007 2007 2007
----------------------------------------------------------------------
Retail Banking Stores
Stores, beginning of
period 2,261 2,257 2,212 2,235 2,228
Stores opened
during the
quarter 14 9 50 10 11
Stores closed
during the
quarter (36) (5) (5) (33) (4)
----------------------------------------------------------------------
Stores, end of period 2,239 2,261 2,257 2,212 2,235
======================================================================
WM-12
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
Quarter Ended
----------------------------------------------------------------------
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
2008 2008 2007 2007 2007
----------------------------------------------------------------------
Loan Volume
Home loans:
Short-term
adjustable-rate
loans(1):
Option ARMs $ 11 $ 231 $ 3,945 $ 6,174 $ 7,888
Other ARMs 14 19 10 111 22
----------------------------------------------------------------------
Total short-
term
adjustable-
rate loans 25 250 3,955 6,285 7,910
Medium-term
adjustable-rate
loans(2) 2,338 3,810 5,972 9,868 14,953
Fixed-rate loans 6,131 9,427 7,382 6,176 8,172
----------------------------------------------------------------------
Total home loan
volume 8,494 13,487 17,309 22,329 31,035
Home equity loans and
lines of credit 541 1,297 4,619 8,544 9,988
Home construction(3) 8 128 378 483 426
Multi-family 2,686 2,250 3,412 2,856 3,067
Other real estate 1,106 728 1,487 1,285 1,246
----------------------------------------------------------------------
Total loans
secured by
real estate 12,835 17,890 27,205 35,497 45,762
Commercial 134 100 272 276 356
----------------------------------------------------------------------
Total loan
volume $ 12,969 $ 17,990 $ 27,477 $ 35,773 $ 46,118
======================================================================
Loan Volume by Channel
Retail $ 9,081 $ 10,585 $ 17,341 $ 21,223 $ 24,707
Wholesale 3,732 7,091 9,536 13,387 17,020
Purchased 156 314 600 1,163 4,391
----------------------------------------------------------------------
Total loan
volume by
channel $ 12,969 $ 17,990 $ 27,477 $ 35,773 $ 46,118
======================================================================
Refinancing Activity(4)
Home loan refinancing $ 6,665 $ 10,779 $ 12,297 $ 14,722 $ 22,637
Home equity loans and
lines of credit 8 22 46 143 157
Home construction
loans - 1 30 30 20
Multi-family and
other real estate 1,301 1,033 1,436 1,225 1,378
----------------------------------------------------------------------
Total
refinancing $ 7,974 $ 11,835 $ 13,809 $ 16,120 $ 24,192
======================================================================
(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 loan refinancing entered into by both new and pre-
existing loan customers.
WM-13
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
Six Months Ended
----------------------------------------------------------------------
June 30, June 30,
2008 2007
----------------------------------------------------------------------
Loan Volume
Home loans:
Short-term adjustable-rate loans(1):
Option ARMs $ 241 $15,666
Other ARMs 34 58
----------------------------------------------------------------------
Total short-term adjustable-rate loans 275 15,724
Medium-term adjustable-rate loans(2) 6,148 28,519
Fixed-rate loans 15,557 16,996
----------------------------------------------------------------------
Total home loan volume 21,980 61,239
Home equity loans and lines of credit 1,839 17,590
Home construction(3) 136 724
Multi-family 4,936 5,729
Other real estate 1,833 2,326
----------------------------------------------------------------------
Total loans secured by real estate 30,724 87,608
Commercial 234 645
----------------------------------------------------------------------
Total loan volume $30,958 $88,253
======================================================================
Loan Volume by Channel
Retail $19,665 $45,878
Wholesale 10,824 31,767
Purchased 469 10,608
----------------------------------------------------------------------
Total loan volume by channel $30,958 $88,253
======================================================================
Refinancing Activity(4)
Home loan refinancing $17,444 $45,190
Home equity loans and lines of credit 30 707
Home construction loans 1 31
Multi-family and other real estate 2,334 2,509
----------------------------------------------------------------------
Total refinancing $19,809 $48,437
======================================================================
(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 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
Mar. 31, 2008 June 30, Mar. 31,
to June 30, 2008 2008 2008
--------------------------------------------------------
Loans Held in
Portfolio
Loans secured by
real estate:
Home:
Short-term
adjustable-rate
loans(1):
Option ARMs(2) $ (2,960) $ 52,886 $ 55,846
Other ARMs (404) 15,128 15,532
--------------------------------------------------------
Total short-
term
adjustable-
rate loans (3,364) 68,014 71,378
Medium-term
adjustable-rate
loans(3) (1,014) 39,203 40,217
Fixed-rate
loans (96) 11,761 11,857
--------------------------------------------------------
Total home
loans (4,474) 118,978 123,452
Home equity loans
and lines of
credit (1,059) 62,487 63,546
Home
construction(4) (186) 1,902 2,088
Multi-family 616 33,144 32,528
Other real
estate 456 10,478 10,022
--------------------------------------------------------
Total loans
secured by
real
estate(5) (4,647) 226,989 231,636
Consumer:
Credit card 1,600 10,589 8,989
Other (9) 177 186
Commercial (131) 1,872 2,003
--------------------------------------------------------
Total loans
held in
portfolio(6) (3,187) 239,627 242,814
Less: allowance
for loan losses (3,742) (8,456) (4,714)
--------------------------------------------------------
Total loans
held in
portfolio,
net $ (6,929) $231,171 $238,100
========================================================
Dec. 31, Sept. 30, June 30,
2007 2007 2007
-------------------------------------------------
Loans Held in
Portfolio
Loans secured by
real estate:
Home:
Short-term
adjustable-rate
loans(1):
Option ARMs(2) $ 58,870 $ 58,137 $ 53,455
Other ARMs 16,231 15,478 13,538
-------------------------------------------------
Total short-
term
adjustable-
rate loans 75,101 73,615 66,993
Medium-term
adjustable-rate
loans(3) 39,373 37,717 29,647
Fixed-rate
loans 12,005 11,813 9,505
-------------------------------------------------
Total home
loans 126,479 123,145 106,145
Home equity loans
and lines of
credit 63,488 61,831 58,631
Home
construction(4) 2,226 2,110 2,058
Multi-family 31,754 30,831 29,290
Other real
estate 9,524 8,335 6,879
-------------------------------------------------
Total loans
secured by
real
estate(5) 233,471 226,252 203,003
Consumer:
Credit card 8,831 8,791 9,913
Other 205 224 243
Commercial 1,879 1,865 1,835
-------------------------------------------------
Total loans
held in
portfolio(6) 244,386 237,132 214,994
Less: allowance
for loan losses (2,571) (1,889) (1,560)
-------------------------------------------------
Total loans
held in
portfolio,
net $241,815 $235,243 $213,434
=================================================
(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 $2.05
billion, $1.93 billion, $1.73 billion, $1.50 billion and $1.30
billion at June 30, 2008, March 31, 2008, December 31, 2007,
September 30, 2007 and June 30, 2007.
(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 June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
2008 2008 2007 2007 2007
-------------------------------------------------------------------
Home loans $13,951 $15,032 $16,092 $17,285 $17,602
Home equity loans
and lines of credit 2,101 2,312 2,525 2,711 2,855
-------------------------------------------------------------------
Total $16,052 $17,344 $18,617 $19,996 $20,457
===================================================================
(6) Includes net unamortized deferred loan costs of $1.31 billion,
$1.42 billion, $1.45 billion, $1.44 billion and $1.58 billion at
June 30, 2008, March 31, 2008, December 31, 2007, September 30,
2007 and June 30, 2007.
WM-15
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
Weighted
Change from Average
Mar. 31, 2008 June 30, Coupon Mar. 31,
to June 30, 2008 2008 Rate 2008
----------------------------------------------------------------
Selected Loans
Secured by Real
Estate
Home loans held
in portfolio:
Short-term
adjustable-rate
loans(1):
Option ARMs $ (2,960) $ 52,886 6.61% $ 55,846
Other ARMs (404) 15,128 6.70 15,532
-------------------------------------------- ---------
Total short-
term
adjustable-
rate loans (3,364) 68,014 6.63 71,378
Medium-term
adjustable-rate
loans(2) (1,014) 39,203 6.36 40,217
Fixed-rate loans (96) 11,761 6.70 11,857
-------------------------------------------- ---------
Total home
loans held
in
portfolio (4,474) 118,978 6.55 123,452
Home equity loans
and lines of
credit:
Adjustable-rate (410) 53,440 5.65 53,850
Fixed-rate (649) 9,047 7.61 9,696
-------------------------------------------- ---------
Total home
equity
loans and
lines of
credit (1,059) 62,487 5.93 63,546
Multi-family
loans held in
portfolio:
Short-term
adjustable-rate
loans(1):
Option ARMs (634) 5,524 5.90 6,158
Other ARMs (353) 7,116 5.72 7,469
-------------------------------------------- ---------
Total short-
term
adjustable-
rate loans (987) 12,640 5.79 13,627
Medium-term
adjustable-rate
loans(2) 1,576 18,393 6.10 16,817
Fixed-rate loans 27 2,111 6.19 2,084
-------------------------------------------- ---------
Total multi-
family
loans held
in
portfolio 616 33,144 5.99 32,528
-------------------------------------------- ---------
Total
selected
loans held
in
portfolio
secured by
real
estate(3) (4,917) 214,609 6.28 219,526
Loans held for
sale(4) (3,064) 1,877 5.72 4,941
-------------------------------------------- ---------
Total
selected
loans
secured by
real estate $ (7,981) $216,486 6.28 $224,467
============================================ =========
Weighted Weighted
Average Average
Coupon June 30, Coupon
Rate 2007 Rate
------------------------------------------------
Selected Loans
Secured by Real
Estate
Home loans held
in portfolio:
Short-term
adjustable-rate
loans(1):
Option ARMs 7.30% $ 53,455 7.74%
Other ARMs 6.94 13,538 7.28
------------------- ---------
Total short-
term
adjustable-
rate loans 7.22 66,993 7.65
Medium-term
adjustable-rate
loans(2) 6.35 29,647 5.99
Fixed-rate loans 6.75 9,505 6.71
------------------- ---------
Total home
loans held
in
portfolio 6.89 106,145 7.10
Home equity loans
and lines of
credit:
Adjustable-rate 6.02 47,699 8.25
Fixed-rate 7.67 10,932 7.70
------------------- ---------
Total home
equity
loans and
lines of
credit 6.27 58,631 8.15
Multi-family
loans held in
portfolio:
Short-term
adjustable-rate
loans(1):
Option ARMs 6.70 7,650 7.28
Other ARMs 6.03 7,910 6.77
------------------- ---------
Total short-
term
adjustable-
rate loans 6.33 15,560 7.02
Medium-term
adjustable-rate
loans(2) 6.12 11,890 5.93
Fixed-rate loans 6.22 1,840 6.35
------------------- ---------
Total multi-
family
loans held
in
portfolio 6.22 29,290 6.53
------------------- ---------
Total
selected
loans held
in
portfolio
secured by
real
estate(3) 6.61 194,066 7.33
Loans held for
sale(4) 5.73 18,999 6.39
------------------- ---------
Total
selected
loans
secured by
real estate 6.59 $213,065 7.25
=================== =========
(1) Short-term adjustable-rate loans reprice within one year.
(2) Medium-term adjustable-rate loans reprice after one year.
(3) At June 30, 2008, March 31, 2008 and June 30, 2007, adjustable-
rate loans with lifetime caps were $180.93 billion, $182.93
billion and $158.24 billion with a lifetime weighted average cap
rate of 12.67%, 12.60% and 12.96%.
(4) Excludes credit card and student loans.
Mar. 31, 2008 Dec. 31, 2007
to June 30, 2008 to June 30, 2008
----------------------------------------------------------------------
Rollforward of Loans Held
for Sale
Balance, beginning of
period $ 4,941 $ 5,403
Mortgage loans originated,
purchased and transferred
from held in portfolio 7,339 18,969
Mortgage loans
transferred to held in
portfolio (27) (373)
Mortgage loans sold and
other(1) (10,376) (21,092)
Net change in consumer
loans held for sale - (1,030)
----------------------------------------------------------------------
Balance, end of period $ 1,877 $ 1,877
======================================================================
Rollforward of Home Loans
Held in Portfolio
Balance, beginning of
period $123,452 $126,479
Loans originated,
purchased and
transferred from held
for sale 1,525 3,790
Loan payments,
transferred to held for
sale and other (5,999) (11,291)
----------------------------------------------------------------------
Balance, end of period $118,978 $118,978
======================================================================
(1) The unpaid principal balance ("UPB") of home loans sold was $9.85
billion and $19.85 billion for the three and six months ended
June 30, 2008.
WM-16
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
Quarter Ended
----------------------------------------------------------------------
Detail of Revenue
(Expense) from Sales
and Servicing of Home
Mortgage Loans Jun
