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19.01.2005 23:49:00
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Washington Mutual Announces Fourth Quarter and Annual 2004 Earnings; B
Business Editors
SEATTLE--(BUSINESS WIRE)--Jan. 19, 2005--Washington Mutual, Inc. (NYSE:WM) today announced fourth quarter 2004 net income of $668 million, or 76 cents per diluted share versus $842 million, or 93 cents per diluted share for the same period in the previous year. The company also announced 2004 annual net income of $2.88 billion, or $3.26 per diluted share compared to $3.88 billion, or $4.21 per diluted share in 2003.
The difference in net income from the fourth quarter of 2003 was primarily due to several unusual items in that period, including a reversal of reserves for loan and lease losses. For the year, the difference in net income from 2003 reflects not only the above unusual items, but also lower securities gains and lower home loan mortgage banking income, reflecting a steep decline in national mortgage originations.
Washington Mutual's Board of Directors declared a cash dividend of 46 cents per share on the company's common stock, up from 45 cents per share in the previous quarter. Dividends on the common stock are payable on February 15, 2005 to shareholders of record as of January 31, 2005.
"As we embark on a new five-year strategic plan, we leave 2004 with strong momentum in all areas of our business," said Kerry Killinger, chairman and chief executive officer. "I am particularly pleased with the success of the retail bank as well as the progress we're making to improve the efficiency of our mortgage operations. Within the commercial group, we also have a great opportunity to build on our industry leading multi-family lending business."
Killinger added: "Our teams are focused on delivering great service to our customers, executing our new strategic plan and delivering superior long-term returns to our shareholders."
Key fourth quarter and 2004 highlights:
| -- | Total assets grew $32.74 billion or 12 percent from year end 2003, and increased $19.09 billion or 7 percent from the third quarter, ending the year at $307.92 billion; |
| -- | Net interest margin was up slightly at 2.79 percent in the fourth quarter compared to 2.77 percent in the third quarter but declined from 2.90 percent in the fourth quarter of 2003; |
| -- | Net income in the fourth quarter in the Retail Banking and Financial Services segment grew by 51 percent over the fourth quarter of 2003, driven by a higher mortgage portfolio balance, record growth during the year in the home equity loans and lines of credit portfolio, and a 9 percent increase in depositor and other retail banking fees; |
| -- | For the year we added 250 new retail banking stores, including 69 new stores in the fourth quarter; |
| -- | The Mortgage Banking segment continued to make progress in transforming its business as noninterest expense of $2.61 billion in 2004 declined $469 million, or 15 percent from the prior year; |
| -- | The company achieved its goal of limiting noninterest expense to $7.5 billion for the year, while continuing to grow its retail banking and multi-family businesses; |
| -- | Nonperforming assets as a percentage of total assets were 0.58 percent, down slightly from 0.61 percent as of September 30, 2004 and down from 0.70 percent as of December 31, 2003; |
| -- | The company announced that former JPMorgan Chase executive Steve Rotella has joined the company as President and Chief Operating Officer. |
FOURTH QUARTER AND 2004 FINANCIAL SUMMARY
Net Interest Income
Net interest income was $1.85 billion in the fourth quarter of 2004, up 6 percent from $1.74 billion in both the third quarter of 2004 and the fourth quarter of 2003. The increase from the prior quarter reflects a 6 percent increase in average total interest-earning assets. The net interest margin in the fourth quarter was 2.79 percent, up slightly from the third quarter, but down 11 basis points from 2.90 percent in the fourth quarter of 2003.
For 2004, net interest income was $7.12 billion, a decrease of $513 million from $7.63 billion in 2003. This decrease was primarily attributable to a 29 basis point decline in the net interest margin year over year, reflecting declining asset yields in the first half of the year, rising short term interest rates and lower noninterest bearing custodial and escrow deposit balances in the mortgage business.
Noninterest Income
Noninterest income was $1.22 billion in the fourth quarter of 2004, compared with $1.26 billion in the third quarter of 2004 and $1.47 billion in the fourth quarter of 2003. The decline from the fourth quarter of 2003 was driven primarily by lower home loan mortgage banking income.
For the year, noninterest income was $4.61 billion, down 21 percent from $5.85 billion in 2003. The decline was primarily the result of significantly lower securities gains and lower home loan mortgage banking income.
Noninterest Expense
The company achieved its goal of limiting annual noninterest expense to $7.5 billion, while executing on its targeted growth and retail expansion of 250 new stores in 2004. These expenses included $274 million of technology-related and restructuring charges. Excluding technology-related and restructuring costs of $110 million in the fourth quarter and $71 million in the third quarter, noninterest expense increased $30 million quarter over quarter due to a decrease in our deferral rate for loan origination expenses. The company's efficiency ratio was 63.18 percent, compared with 62.19 percent for the third quarter of 2004 and 65.51 percent in the fourth quarter of 2003.
Lending
Total loan volume was $63.22 billion in the fourth quarter, compared with $61.83 billion in the third quarter of 2004 and $69.90 billion in the fourth quarter of 2003, reflecting the company's ability to generate assets throughout the interest rate cycle.
While fourth quarter fixed rate home loan volume declined 46 percent compared with the fourth quarter of 2003, adjustable rate home loan volume was up 27 percent, while home equity loan and line of credit and multi-family volumes rose 17 percent and 36 percent, respectively. The home loan volume included a 55 percent increase in specialty mortgage finance loan volumes.
During the fourth quarter of 2004, ARMs represented 68 percent of the company's home loan volume, compared with 67 percent in the third quarter of 2004 and 48 percent in the fourth quarter of 2003.
Credit Quality
At December 31, 2004, nonperforming assets as a percentage of total assets were 0.58 percent, down slightly from 0.61 percent at September 30, 2004 and down from 0.70 percent at December 31, 2003. Net charge offs for the quarter were $38 million versus $97 million in the fourth quarter of 2003, which included a one-time charge off of $39 million that resulted from the sale of the franchise finance loan portfolio. Net charge offs for the third quarter of 2004 were $27 million. The company's fourth quarter provision for loan and lease losses was $37 million, while the allowance for loan and lease losses was $1.30 billion at December 31, 2004.
Balance Sheet and Capital Management
Total assets increased $19.09 billion from the end of the third quarter to $307.92 billion at year end, primarily the result of a $13.56 billion increase in loans held for sale.
Total deposits increased $4.96 billion from the previous quarter to $173.66 billion as of December 31, 2004, as a result of increases of $4.40 billion in wholesale deposits and $665 million in retail deposits.
The company's ratio of tangible common equity to tangible assets was 5.05 percent at the end of 2004. In addition, the capital ratios of the company's banking subsidiaries continued to exceed the federal regulatory requirements for classification as "well-capitalized" institutions, the highest regulatory standard.
FOURTH QUARTER AND 2004 OPERATING SEGMENT RESULTS
Retail Banking and Financial Services Financial Performance
Net income for the company's Retail Banking and Financial Services segment was $565 million in the fourth quarter, up 12 percent from $506 million in the third quarter and up 51 percent from $374 million in the fourth quarter of 2003. Net interest income performance was strong reflecting the growth in average balances of home equity loans and lines of credit and the mortgage loan portfolio.
For the year net income was $1.98 billion, up 32 percent from the prior year due to an increase in net interest income, reflecting a 35 percent increase in average loans outstanding. At the same time, noninterest income grew 10 percent, primarily driven by a 10 percent year-over-year growth in depositor and other retail banking fees.
Highlights of the Retail Banking and Financial Services Segment included:
-- Total retail deposits of $132.67 billion were up $665 million
from the prior quarter and $4.22 billion, or 3 percent from
the fourth quarter of 2003;
-- The company's retail banking network grew to 1,939 retail
stores with 250 new stores opened in 2004, including 69 opened
during the fourth quarter;
-- Record volume in home equity loans and lines of credit in 2004
led to a 58 percent annual increase in the portfolio to $43.65
billion at year end 2004;
-- The cross-sell ratio for the average mature retail banking
household increased to 5.90 products and services, up from
5.83 at the end of the third quarter of 2004;
-- WM Advisors assets under management grew by $4.33 billion, or
24 percent, over the past year to $22.20 billion at December
31, 2004.
Mortgage Banking Financial Performance
Net income for the Mortgage Banking segment was $138 million in the fourth quarter compared with $270 million in the third quarter of 2004 and $232 million in the fourth quarter of 2003.
For the year, net income was $570 million, down $728 million from $1.30 billion in 2003, reflecting a steep decline in national mortgage originations. The slowing mortgage market led to reduced loan volumes and a 45 percent decline in average loan balances, as well as a decline in custodial and escrow deposit balances. Overall there was a 48 percent reduction in net interest income. In addition, the $682 million decline in noninterest income was partially offset by a $469 million reduction in noninterest expense reflecting the improved efficiencies and continued expense reductions in the Mortgage Banking segment.
Highlights of the Mortgage Banking Segment included:
-- Total home loan volume for the quarter, excluding specialty
mortgage finance, was $41.59 billion, compared to $40.22
billion in the third quarter of 2004 and $51.50 billion in the
fourth quarter of 2003;
-- MSR performance for the quarter, including amortization and
the effect of hedges, contributed a net cost of $277 million,
compared to a net cost of $123 million in the third quarter;
-- Noninterest expense of $635 million for the quarter was up
slightly from the previous quarter due to a decrease in our
deferral rate for loan origination expenses, but down $230
million from $865 million in the fourth quarter of 2003. For
the year, noninterest expense of $2.61 billion was down $469
million from $3.08 billion in 2003 reflecting the reduction in
loan volume related expenses and the streamlining of business
operations.
Commercial Group Financial Performance
Net income for the Commercial Group was $129 million, compared with $146 million in the previous quarter and $112 million from continuing operations in the fourth quarter of 2003. Net income for the year was $633 million compared with $696 million from continuing operations for 2003. The difference in net income from the prior year was primarily due to certain previously disclosed transactions occurring in the second half of 2003 totaling $170 million pre-tax.
Highlights of the Commercial Group included:
-- Multi-family loan volume in 2004 was a record $8.16 billion,
up slightly from 2003 despite a rising interest rate
environment;
-- The average balance for multi-family loans grew 9 percent year
over year and contributed significantly to the total
Commercial Group average loan growth of $3.31 billion or 9
percent;
-- Total average deposits of $7.79 billion in the fourth quarter
of 2004 increased 27 percent from $6.13 billion in the fourth
quarter of 2003.
About Washington Mutual
With a history dating back to 1889, Washington Mutual is a retailer of financial services that provides a diversified line of products and services to consumers and commercial clients. At December 31, 2004, Washington Mutual and its subsidiaries had assets of $307.92 billion. Washington Mutual currently operates more than 2,400 retail banking, mortgage lending, commercial banking and financial services offices throughout the nation. Washington Mutual's press releases are available at www.wamunewsroom.com.
Webcast information: A conference call to discuss the company's financial results will be held on Thursday, January 20, 2005, at 10:30 a.m. EST and will be hosted by Kerry Killinger, chairman and chief executive officer, and Tom Casey, executive vice president and chief financial officer. The conference call is available by telephone or on the Internet. The dial-in number for the live conference call is 888-780-9655. Participants calling from outside the United States may dial 712-421-1601. The passcode "WaMu" is required to access the call. Via the Internet, the conference call is available on the Investor Relations portion of the company's web site at www.wamu.com/ir. A transcript of the prepared remarks will be on the company's web site for 30 days following the call. A recording of the conference call will be available after 1 p.m. EST on Thursday, January 20, 2005, through 11:59 p.m. EST on Saturday, January 29, 2005. The recorded message will be available at 866-511-5153. Callers from outside the United States may dial 203-369-1953.
Forward-Looking Statement
Our Form 10-K/A for 2003 and other documents that we filed with the Securities and Exchange Commission have forward-looking statements. In addition, our senior management may make forward-looking statements orally to analysts, investors, the media and others. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could" or "may." Forward-looking statements provide our expectations or predictions of future conditions, events or results. They are not guarantees of future performance. By their nature, forward-looking statements are subject to risks and uncertainties. These statements speak only as of the date they are made. We do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward looking statements were made. There are a number of factors, many of which are beyond our control that could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. Some of these factors are described in detail in our Form 10K/A for 2003 and include:
-- General business and economic conditions, including movements
in interest rates, may significantly affect our earnings;
-- If we are unable to effectively manage the volatility of our
mortgage banking business, our earnings could be adversely
affected;
-- Our retail banking business faces competition for loans and
deposits from banking and nonbanking companies, which may have
a disparate impact on our operations in our emerging markets;
and
-- Changes in the regulation of financial services companies and
housing government-sponsored enterprises could adversely
affect our business.
WM-1 Washington Mutual, Inc. Consolidated Statements of Income (dollars in millions, except per share data) (unaudited)
Quarter Ended ---------------------------------------------------------------------- Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, 2004 2004 2004 2004 2003 ---------------------------------------------------------------------- Interest Income Loans held for sale $ 393 $ 341 $ 406 $ 332 $ 441 Loans held in portfolio 2,421 2,226 2,111 2,067 1,967 Available-for-sale securities 157 163 180 265 353 Other interest and dividend income 95 81 55 57 38 ---------------------------------------------------------------------- Total interest income 3,066 2,811 2,752 2,721 2,799 Interest Expense Deposits 604 539 458 443 491 Borrowings 612 532 500 546 565 ---------------------------------------------------------------------- Total interest expense 1,216 1,071 958 989 1,056 ---------------------------------------------------------------------- Net interest income 1,850 1,740 1,794 1,732 1,743 Provision (reversal of reserve) for loan and lease losses 37 56 60 56 (202) ---------------------------------------------------------------------- Net interest income after provision (reversal of reserve) for loan and lease losses 1,813 1,684 1,734 1,676 1,945 Noninterest Income Home loan mortgage banking income, net 352 504 - 531 592 Depositor and other retail banking fees 515 514 507 463 472 Securities fees and commissions 110 104 105 107 103 Insurance income 47 61 57 61 49 Portfolio loan related income 101 109 103 87 96 Gain (loss) from other available-for- sale securities (23) 11 41 21 (13) Loss on extinguishment of borrowings - (147) (1) (89) - Other income 115 108 82 56 166 ---------------------------------------------------------------------- Total noninterest income 1,217 1,264 894 1,237 1,465 Noninterest Expense Compensation and benefits 839 841 849 899 877 Occupancy and equipment 462 404 393 400 569 Telecommunications and outsourced information services 115 118 123 123 125 Depositor and other retail banking losses 61 54 40 40 40 Amortization of other intangible assets 13 14 14 15 15 Advertising and promotion 57 76 84 58 88 Professional fees 54 34 32 39 78 Other expense 337 328 313 306 309 ---------------------------------------------------------------------- Total noninterest expense 1,938 1,869 1,848 1,880 2,101 ---------------------------------------------------------------------- Income from continuing operations before income taxes 1,092 1,079 780 1,033 1,309 Income taxes 424 405 291 385 488 ---------------------------------------------------------------------- Income from continuing operations, net of taxes 668 674 489 648 821 ---------------------------------------------------------------------- Discontinued Operations Income (loss) from discontinued operations before income taxes - - - (32) 34 Gain on disposition of discontinued operations - - - 676 - Income taxes - - - 245 13 ---------------------------------------------------------------------- Income from discontinued operations, net of taxes - - - 399 21 --------------------- --------- --------- --------- --------- -------- Net Income $ 668 $ 674 $ 489 $ 1,047 $ 842 ===================== ========= ========= ========= ========= ========
Basic Earnings Per Common Share: Income from continuing operations $ 0.77 $ 0.78 $ 0.57 $ 0.75 $ 0.93 Income from discontinued operations, net - - - 0.46 0.02 -------- -------- -------- -------- -------- Net income 0.77 0.78 0.57 1.21 0.95
Diluted Earnings Per Common Share: Income from continuing operations $ 0.76 $ 0.76 $ 0.55 $ 0.73 $ 0.91 Income from discontinued operations, net - - - 0.45 0.02 -------- -------- -------- -------- -------- Net income 0.76 0.76 0.55 1.18 0.93
Dividends declared per common share 0.45 0.44 0.43 0.42 0.41 Basic weighted average number of common shares outstanding (in thousands) 863,055 862,004 860,496 863,299 883,539 Diluted weighted average number of common shares outstanding (in thousands) 883,991 882,323 883,414 886,467 904,840
WM-2 Washington Mutual, Inc. Consolidated Statements of Income (dollars in millions, except per share data) (unaudited)
Year Ended --------------------------------------------------------------------- Dec. 31, Dec. 31, 2004 2003 ---------------------------------------------------------------------- Interest Income Loans held for sale $ 1,472 $ 2,501 Loans held in portfolio 8,825 7,668 Available-for-sale securities 764 1,738 Other interest and dividend income 289 256 ---------------------------------------------------------------------- Total interest income 11,350 12,163 Interest Expense Deposits 2,043 2,165 Borrowings 2,191 2,369 ---------------------------------------------------------------------- Total interest expense 4,234 4,534 ---------------------------------------------------------------------- Net interest income 7,116 7,629 Provision for loan and lease losses 209 42 ---------------------------------------------------------------------- Net interest income after provision for loan and lease losses 6,907 7,587 Noninterest Income Home loan mortgage banking income, net 1,387 1,974 Depositor and other retail banking fees 1,999 1,818 Securities fees and commissions 426 395 Insurance income 226 188 Portfolio loan related income 401 439 Gain from other available-for-sale securities 50 676 Loss on extinguishment of borrowings (237) (129) Other income 360 489 ---------------------------------------------------------------------- Total noninterest income 4,612 5,850 Noninterest Expense Compensation and benefits 3,428 3,304 Occupancy and equipment 1,659 1,592 Telecommunications and outsourced information services 479 554 Depositor and other retail banking losses 195 154 Amortization of other intangible assets 56 61 Advertising and promotion 276 278 Professional fees 158 267 Other expense 1,284 1,198 ---------------------------------------------------------------------- Total noninterest expense 7,535 7,408 ---------------------------------------------------------------------- Income from continuing operations before income taxes 3,984 6,029 Income taxes 1,505 2,236 ---------------------------------------------------------------------- Income from continuing operations, net of taxes 2,479 3,793 ---------------------------------------------------------------------- Discontinued Operations Income (loss) from discontinued operations before income taxes (32) 137 Gain on disposition of discontinued operations 676 - Income taxes 245 50 ---------------------------------------------------------------------- Income from discontinued operations, net of taxes 399 87 ---------------------------------------------------------------------- Net Income $ 2,878 $ 3,880 ======================================================================
Basic Earnings Per Common Share: Income from continuing operations $ 2.88 $ 4.20 Income from discontinued operations, net 0.46 0.09 -------- -------- Net income 3.34 4.29
Diluted Earnings Per Common Share: Income from continuing operations $ 2.81 $ 4.12 Income from discontinued operations, net 0.45 0.09 -------- -------- Net income 3.26 4.21
Dividends declared per common share 1.74 1.40 Basic weighted average number of common shares outstanding (in thousands) 862,215 903,666 Diluted weighted average number of common shares outstanding (in thousands) 884,050 921,757
WM-3 Washington Mutual, Inc. Consolidated Statements of Financial Condition (dollars in millions, except per share data) (unaudited)
Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, 2004 2004 2004 2004 2003 ---------------------------------------------------------------------- Assets Cash and cash equivalents $ 4,455 $ 4,689 $ 5,133 $ 6,045 $ 7,018 Federal funds sold and securities purchased under agreements to resell 82 30 70 1,783 19 Available-for-sale securities, total amortized cost of $19,047, $16,312, $19,392, $22,843 and $36,858: Mortgage-backed securities 14,923 10,168 10,042 10,766 10,695 Investment securities 4,296 6,319 9,337 12,565 26,012 Loans held for sale 42,743 29,184 27,795 34,207 20,837 Loans held in portfolio 207,071 206,158 194,543 186,380 175,150 Allowance for loan and lease losses (1,301) (1,322) (1,293) (1,260) (1,250) ---------------------------------------------------------------------- Total loans held in portfolio, net of allowance for loan and lease losses 205,770 204,836 193,250 185,120 173,900 Investment in Federal Home Loan Banks 4,059 3,883 3,965 3,916 3,462 Mortgage servicing rights 5,906 6,112 7,501 5,239 6,354 Goodwill 6,196 6,196 6,196 6,196 6,196 Assets of discontinued operations - - - - 4,184 Other assets 19,488 17,411 15,255 14,931 16,501 --------------------- --------- --------- --------- --------- -------- Total assets $307,918 $288,828 $278,544 $280,768 $275,178 ===================== ========= ========= ========= ========= ======== Liabilities Deposits: Noninterest- bearing deposits $ 32,780 $ 32,250 $ 33,343 $ 35,714 $ 29,968 Interest-bearing deposits 140,878 136,445 129,123 125,267 123,213 ---------------------------------------------------------------------- Total deposits 173,658 168,695 162,466 160,981 153,181 Federal funds purchased and commercial paper 4,045 7,025 2,293 4,501 2,011 Securities sold under agreements to repurchase 15,944 15,611 15,764 18,306 28,333 Advances from Federal Home Loan Banks 70,074 59,758 61,379 58,494 48,330 Other borrowings 18,498 12,747 12,113 13,692 15,483 Liabilities of discontinued operations - - - - 3,578 Other liabilities 4,473 4,172 4,160 4,411 4,520 ---------------------------------------------------------------------- Total liabilities 286,692 268,008 258,175 260,385 255,436 Stockholders' equity 21,226 20,820 20,369 20,383 19,742 --------------------- --------- --------- --------- --------- -------- Total liabilities and stockholders' equity $307,918 $288,828 $278,544 $280,768 $275,178 ====================================================================== Common shares outstanding at end of period (in thousands)(1) 874,262 873,085 872,246 868,953 880,986 Book value per common share(2) $ 24.45 $ 24.01 $ 23.51 $ 23.62 $ 22.56 Tangible book value per common share(2) 17.45 16.99 16.47 16.53 15.58 Employees at end of period(3) 52,579 55,488 57,274 59,173 63,720
(1) Includes 6,000,000 shares held in escrow in all periods reported.
(2) Excludes 6,000,000 shares held in escrow in all periods reported.
(3) Includes 2,346 employees reported as part of discontinued operations at December 31, 2003.
WM-4 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Quarter Ended ---------------------------------------------------------------------- Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, 2004 2004 2004 2004 2003 ---------------------------------------------------------------------- Stockholders' Equity Rollforward Balance, beginning of period $20,820 $20,369 $20,383 $19,742 $20,441 Net income 668 674 489 1,047 842 Other comprehensive income (loss), net of tax 49 98 (210) 512 (105) Cash dividends declared on common stock (390) (381) (372) (367) (368) Cash dividends returned(1) - - - - 45 Common stock repurchased and retired - - - (712) (1,269) Common stock issued 79 60 79 161 156 ---------------------------------------------------------------------- Balance, end of period $21,226 $20,820 $20,369 $20,383 $19,742 ======================================================================
(1) Represents accumulated dividends on shares returned from escrow.
WM-5 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Quarter Ended ---------------------------------------------------------------------- Dec. 31,Sept. 30, June 30, Mar. 31, Dec. 31, 2004 2004 2004 2004 2003 ---------------------------------------------------------------------- RETAIL BANKING AND FINANCIAL SERVICES GROUP Condensed income statement: Net interest income $ 1,323 $ 1,255 $ 1,224 $ 1,187 $ 1,074 Provision for loan and lease losses 34 42 43 58 49 Noninterest income 717 715 703 623 647 Inter-segment revenue 8 3 7 6 20 Noninterest expense 1,132 1,116 1,115 1,071 1,072 ---------------------------------------------------------------------- Income before income taxes 882 815 776 687 620 Income taxes 317 309 294 260 246 ---------------------------------------------------------------------- Net income $ 565 $ 506 $ 482 $ 427 $ 374 ====================================================================== Performance and other data: Efficiency ratio(1) 48.95% 49.97% 50.97% 51.86% 54.14% Average loans $177,204 $167,569 $158,966 $149,377 $135,338 Average assets 189,872 180,003 171,343 161,359 147,281 Average deposits 132,771 131,850 128,680 128,000 128,651 Employees at end of period 30,107 30,069 29,640 29,077 29,364
MORTGAGE BANKING GROUP Condensed income statement: Net interest income $ 293 $ 287 $ 369 $ 288 $ 403 Provision for loan and lease losses - - - - - Noninterest income 566 769 208 761 867 Inter-segment expense 8 3 7 6 20 Noninterest expense 635 619 671 682 865 ---------------------------------------------------------------------- Income (expense) before income taxes 216 434 (101) 361 385 Income taxes (benefit) 78 164 (38) 136 153 ---------------------------------------------------------------------- Net income (loss) $ 138 $ 270 $ (63)$ 225 $ 232 ====================================================================== Performance and other data: Efficiency ratio(1) 68.51% 53.78% 108.54% 60.45% 65.00% Average loans $ 24,880 $ 22,611 $ 26,999 $ 19,871 $ 24,677 Average assets 44,209 40,047 44,573 38,918 48,090 Average deposits 15,121 15,385 19,837 14,877 18,347 Employees at end of period 14,197 16,826 18,916 21,203 22,541
COMMERCIAL GROUP Condensed income statement: Net interest income $ 322 $ 325 $ 342 $ 343 $ 364 Provision for loan and lease losses 11 8 10 16 65 Noninterest income 61 65 102 86 53 Noninterest expense 184 160 144 151 174 ---------------------------------------------------------------------- Income from continuing operations before income taxes 188 222 290 262 178 Income taxes 59 76 102 92 66 ---------------------------------------------------------------------- Income from continuing operations 129 146 188 170 112 Income from discontinued operations, net of taxes - - - - 21 ---------------------------------------------------------------------- Net income $ 129 $ 146 $ 188 $ 170 $ 133 ====================================================================== Performance and other data: Efficiency ratio(1) 40.21% 33.37% 25.90% 28.44% 34.64% Average loans $ 40,917 $ 38,799 $ 38,496 $ 36,984 $ 37,801 Average assets 45,668 43,724 43,749 42,805 46,306 Average deposits 7,791 7,811 6,898 6,049 6,130 Employees at end of period(2) 3,100 3,248 3,207 3,130 5,627
Year Ended ----------------- Dec. 31, Dec. 31, 2004 2003 ---------------------- -------- -------- RETAIL BANKING AND FINANCIAL SERVICES GROUP Condensed income statement: Net interest income $ 4,989 $ 3,872 Provision for loan and lease losses 177 183 Noninterest income 2,758 2,500 Inter-segment revenue 24 179 Noninterest expense 4,434 3,939 ---------------------- -------- -------- Income before income taxes 3,160 2,429 Income taxes 1,180 931 ---------------------- -------- -------- Net income $ 1,980 $ 1,498 ====================== ======== ======== Performance and other data: Efficiency ratio(1) 50.39% 52.24% Average loans $163,329 $120,705 Average assets 175,696 132,427 Average deposits 130,337 125,440 Employees at end of period 30,107 29,364
MORTGAGE BANKING GROUP Condensed income statement: Net interest income $ 1,237 $ 2,382 Provision for loan and lease losses - 14 Noninterest income 2,304 2,986 Inter-segment expense 24 179 Noninterest expense 2,607 3,076 ---------------------- ----------------- Income (expense) before income taxes 910 2,099 Income taxes (benefit) 340 801 ---------------------- ----------------- Net income (loss) $ 570 $ 1,298 ====================== ================= Performance and other data: Efficiency ratio(1) 68.19% 55.28% Average loans $ 23,591 $ 42,990 Average assets 41,938 70,308 Average deposits 16,299 27,112 Employees at end of period 14,197 22,541
COMMERCIAL GROUP Condensed income statement: Net interest income $ 1,332 $ 1,321 Provision for loan and lease losses 45 103 Noninterest income 314 472 Noninterest expense 639 602 ---------------------- ----------------- Income from continuing operations before income taxes 962 1,088 Income taxes 329 392 ---------------------- ----------------- Income from continuing operations 633 696 Income from discontinued operations, net of taxes - 87 ---------------------- ----------------- Net income $ 633 $ 783 ====================== ================= Performance and other data: Efficiency ratio(1) 31.67% 26.95% Average loans $ 38,804 $ 35,490 Average assets 43,990 44,037 Average deposits 7,141 5,407 Employees at end of period(2) 3,100 5,627
(This table is continued on "WM-6".)
(1) The efficiency ratio is defined as noninterest expense, excluding a cost of capital charge on goodwill, divided by total revenue (net interest income and noninterest income).
(2) Includes 2,346 employees reported as part of discontinued operations at December 31, 2003.
WM-6 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Quarter Ended ---------------------------------------------------------------------- (This table is continued Dec. 31, Sept. 30, June 30, Mar. 31,Dec. 31, from "WM-5".) 2004 2004 2004 2004 2003 ---------------------------------------------------------------------- CORPORATE SUPPORT/TREASURY AND OTHER Condensed income statement: Net interest expense $ (201)$ (237)$ (247)$ (189)$ (195) Provision for loan and lease losses - - - - 4 Noninterest income (expense) 12 (123) 24 (69) 138 Noninterest expense 199 186 128 186 202 --------------------------------------------------------------------- Income (expense) from continuing operations (388) (546) (351) (444) (263) Income taxes (benefit) (151) (205) (131) (165) (98) ---------------------------------------------------------------------- Income (expense) from continuing operations (237) (341) (220) (279) (165) Income from discontinued operations, net of taxes - - - 399 - ---------------------------------------------------------------------- Net income (loss) $ (237)$ (341)$ (220)$ 120 $ (165) ====================================================================== Performance and other data: Average assets $ 19,275 $ 21,717 $ 26,020 $ 29,992 $ 37,675 Average deposits 18,190 13,820 9,391 5,028 5,558 Employees at end of period 5,175 5,345 5,511 5,763 6,188
RECONCILING ADJUSTMENTS Condensed income statement: Net interest income(3) $ 113 $ 110 $ 106 $ 103 $ 97 Provision (reversal of reserve) for loan and lease losses(4) (8) 6 7 (18) (320) Noninterest income (expense)(5) (139) (162) (143) (164) (240) Noninterest (income) expense(6) (212) (212) (210) (210) (212) ---------------------------------------------------------------------- Income before income taxes 194 154 166 167 389 Income taxes(7) 121 61 64 62 121 ---------------------------------------------------------------------- Net income $ 73 $ 93 $ 102 $ 105 $ 268 ====================================================================== Performance and other data: Average loans(8) $ (1,622)$ (1,600)$ (1,553)$ (1,505)$ (1,421) Average assets(8)(9) (1,866) (1,822) (1,745) (1,668) (1,912)
TOTAL CONSOLIDATED Condensed income statement: Net interest income $ 1,850 $ 1,740 $ 1,794 $ 1,732 $ 1,743 Provision (reversal of reserve) for loan and lease losses 37 56 60 56 (202) Noninterest income 1,217 1,264 894 1,237 1,465 Noninterest expense 1,938 1,869 1,848 1,880 2,101 ---------------------------------------------------------------------- Income from continuing operations before income taxes 1,092 1,079 780 1,033 1,309 Income taxes 424 405 291 385 488 ---------------------------------------------------------------------- Income from continuing operations 668 674 489 648 821 Income from discontinued operations, net of taxes - - - 399 21 ---------------------------------------------------------------------- Net income $ 668 $ 674 $ 489 $ 1,047 $ 842 ====================================================================== Performance and other data: Efficiency ratio(10) 63.18% 62.19% 68.77% 63.34% 65.51% Average loans $241,379 $227,379 $222,908 $204,727 $196,395 Average assets 297,158 283,669 283,940 271,406 277,440 Average deposits 173,873 168,866 164,806 153,954 158,686 Employees at end of period(2) 52,579 55,488 57,274 59,173 63,720
Year Ended ---------------------------------------------------------------------- (This table is continued Dec. 31, Dec. 31, from "WM-5".) 2004 2003 ---------------------------------------------------------------------- CORPORATE SUPPORT/TREASURY AND OTHER Condensed income statement: Net interest expense $ (874)$ (302) Provision for loan and lease losses - 4 Noninterest income (expense) (156) 644 Noninterest expense 699 634 ---------------------------------------------------------------------- Income (expense) from continuing operations (1,729) (296) Income taxes (benefit) (652) (110) ---------------------------------------------------------------------- Income (expense) from continuing operations (1,077) (186) Income from discontinued operations, net of taxes 399 - ---------------------------------------------------------------------- Net income (loss) $ (678)$ (186) ====================================================================== Performance and other data: Average assets $ 24,230 $ 38,168 Average deposits 11,631 5,626 Employees at end of period 5,175 6,188
RECONCILING ADJUSTMENTS Condensed income statement: Net interest income(3) $ 432 $ 356 Provision (reversal of reserve) for loan and lease losses(4) (13) (262) Noninterest income (expense)(5) (608) (752) Noninterest (income) expense(6) (844) (843) ---------------------------------------------------------------------- Income before income taxes 681 709 Income taxes(7) 308 222 ---------------------------------------------------------------------- Net income $ 373 $ 487 ====================================================================== Performance and other data: Average loans(8) $ (1,570)$ (1,260) Average assets(8)(9) (1,776) (1,821)
TOTAL CONSOLIDATED Condensed income statement: Net interest income $ 7,116 $ 7,629 Provision (reversal of reserve) for loan and lease losses 209 42 Noninterest income 4,612 5,850 Noninterest expense 7,535 7,408 ---------------------------------------------------------------------- Income from continuing operations before income taxes 3,984 6,029 Income taxes 1,505 2,236 ---------------------------------------------------------------------- Income from continuing operations 2,479 3,793 Income from discontinued operations, net of taxes 399 87 ---------------------------------------------------------------------- Net income $ 2,878 $ 3,880 ====================================================================== Performance and other data: Efficiency ratio(10) 64.25% 54.96% Average loans $224,154 $197,925 Average assets 284,078 283,119 Average deposits 165,408 163,585 Employees at end of period(2) 52,579 63,720
(2) Includes 2,346 employees reported as part of discontinued operations at December 31, 2003.
(3) Represents the difference between home loan premium amortization recorded by the Retail Banking and Financial Services segment and the amount recognized in the Company's Consolidated Statements of Income. For management reporting purposes, loans that are held in portfolio by the Retail Banking and Financial Services segment are treated as if they are purchased from the Mortgage Banking segment. Since the cost basis of these loans includes an assumed profit factor paid to the Mortgage Banking segment, the amortization of loan premiums recorded by the Retail Banking and Financial Services segment includes this assumed profit factor and must therefore be eliminated as a reconciling adjustment.
(4) Represents the difference between the long-term, normalized net charge-off ratio used to assess expected loan and lease losses for the operating segments and the "losses inherent in the loan portfolio" methodology used by the Company.
(5) Represents the difference between gain from mortgage loans recorded by the Mortgage Banking segment and the gain from mortgage loans recognized in the Company's Consolidated Statements of Income. As the Mortgage Banking segment holds no loans in portfolio, all loans originated or purchased by this segment are considered to be salable for management reporting purposes. (6) Represents the corporate offset for the cost of capital related to goodwill that has been allocated to the segments.
(7) Represents the tax effect of reconciling adjustments.
(8) Includes the inter-segment offset for inter-segment loan premiums that the Retail Banking and Financial Services segment recognized from the transfer of portfolio loans from the Mortgage Banking segment.
(9) Includes the impact to the allowance for the loan and lease losses per the following table that results from the difference between the long-term, normalized net charge-off ratio used to assess expected loan and lease losses for the operating segments and the "losses inherent in the loan portfolio" methodology used by the Company. ---------------------------------------------------------------------- Quarter Ended Year Ended ---------------------------------------------------------------------- Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, Dec. 31, Dec. 31, 2004 2004 2004 2004 2003 2004 2003 ---------------------------------------------------------------------- $ (244) $ (222) $ (192) $ (163) $(491) $ (206) $ (561) ----------------------------------------------------------------------
(10) The efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income).
WM-7
Washington Mutual, Inc. Selected Financial Information (dollars in millions, except per share data) (unaudited)
Quarter Ended ------------------------------------------------------------------- Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, 2004 2004 2004 2004 2003 -------------------- --------- --------- --------- --------- --------- PROFITABILITY Net interest income$ 1,850 $ 1,740 $ 1,794 $ 1,732 $ 1,743 Net interest margin 2.79 % 2.77 % 2.86 % 2.89 % 2.90 % Noninterest income $ 1,217 $ 1,264 $ 894 $ 1,237 $ 1,465 Noninterest expense 1,938 1,869 1,848 1,880 2,101 Basic earnings per common share: Income from continuing operations $ 0.77 $ 0.78 $ 0.57 $ 0.75 $ 0.93 Income from discontinued operations, net - - - 0.46 0.02 Net income 0.77 0.78 0.57 1.21 0.95 Diluted earnings per common share: Income from continuing operations $ 0.76 $ 0.76 $ 0.55 $ 0.73 $ 0.91 Income from discontinued operations, net - - - 0.45 0.02 Net income 0.76 0.76 0.55 1.18 0.93 Dividends declared per common share $ 0.45 $ 0.44 $ 0.43 $ 0.42 $ 0.41 Return on average assets(1) 0.90 % 0.95 % 0.69 % 1.54 % 1.21 % Return on average common equity(1) 12.71 13.03 9.63 20.85 16.83 Efficiency ratio(2)(3) 63.18 62.19 68.77 63.34 65.51
ASSET QUALITY Nonaccrual loans(4)(5) $ 1,534 $ 1,471 $ 1,396 $ 1,542 $ 1,626 Foreclosed assets(5) 261 281 286 307 311 Total nonperforming assets(5) 1,795 1,752 1,682 1,849 1,937 Nonperforming assets/total assets(5) 0.58 % 0.61 % 0.60 % 0.66 % 0.70 % Restructured loans(5) $ 34 $ 38 $ 79 $ 107 $ 111 Total nonperforming assets and restructured loans(5) 1,829 1,790 1,761 1,956 2,048 Allowance for loan and lease losses(5) 1,301 1,322 1,293 1,260 1,250 Allowance as a percentage of total loans held in portfolio(5) 0.63 % 0.64 % 0.66 % 0.68 % 0.71 % Provision (reversal of reserve) for loan and lease losses $ 37 $ 56 $ 60 $ 56 $ (202) Net charge-offs(5) 38 27 24 46 97
CAPITAL ADEQUACY(5) Stockholders' equity/total assets 6.89 % 7.21 % 7.31 % 7.26 % 7.17 % Tangible common equity(6)/total tangible assets(6) 5.05 5.26 5.32 5.21 5.26 Estimated total risk-based capital/risk- weighted assets(7) 11.13 10.64 10.39 10.53 10.94
SUPPLEMENTAL DATA Average balance sheet: Total loans held for sale $ 33,083 $ 28,220 $ 33,096 $ 24,464 $ 29,606 Total loans held in portfolio 208,296 199,159 189,812 180,263 166,789 Total interest- earning assets 266,375 252,235 251,264 239,979 241,718 Total assets 297,158 283,669 283,940 271,406 277,440 Total interest- bearing deposits 139,938 135,600 127,670 123,336 125,201 Total noninterest- bearing deposits 33,935 33,266 37,136 30,618 33,485 Total stockholders' equity 21,025 20,703 20,288 20,088 20,027 Period-end balance sheet: Loans held for sale 42,743 29,184 27,795 34,207 20,837 Loans held in portfolio, net of allowance for loan and lease losses 205,770 204,836 193,250 185,120 173,900 Interest-earning assets(2) 273,174 255,742 245,752 249,617 236,175 Total assets 307,918 288,828 278,544 280,768 275,178 Interest-bearing deposits 140,878 136,445 129,123 125,267 123,213 Noninterest- bearing deposits 32,780 32,250 33,343 35,714 29,968 Total stockholders' equity 21,226 20,820 20,369 20,383 19,742
(1) Includes income from continuing and discontinued operations through the period ending March 31, 2004.
(2) Based on continuing operations.
(3) The efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income).
(4) Excludes nonaccrual loans held for sale.
(5) As of quarter end.
(6) Excludes unrealized net gain/loss on available-for-sale securities and derivatives, goodwill and intangible assets, but includes MSR.
(7) Estimate of what the total risk-based capital ratio would be if Washington Mutual, Inc. were a bank holding company that is subject to Federal Reserve Board capital Requirement.
WM-8
Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Quarter Ended ---------------------------------------------------------------------- Dec. 31, 2004 ------------------------- Interest Income/ Balance Rate Expense ---------------------------------------------------------------------- Average Balances and Weighted Average Interest Rates Assets Interest-earning assets: Federal funds sold and securities purchased under agreements to resell $ 560 1.92% $ 3 Available-for-sale securities(1): Mortgage-backed securities 11,398 3.85 110 Investment securities 4,387 4.27 47 Loans held for sale(2) 33,083 4.74 393 Loans held in portfolio(2): Loans secured by real estate: Home 113,352 4.30 1,218 Purchased subprime 17,389 4.87 212 ------------------------------------------------------ ------- Total home loans 130,741 4.37 1,430 Home equity loans and lines of credit 42,034 4.93 520 Home construction(3) 2,434 5.87 36 Multi-family 21,922 4.92 270 Other real estate 6,133 6.03 93 ------------------------------------------------------ ------- Total loans secured by real estate 203,264 4.62 2,349 Consumer 813 10.20 21 Commercial business 4,219 4.78 51 ------------------------------------------------------ ------- Total loans held in portfolio 208,296 4.64 2,421 Other 8,651 4.28 92 ------------------------------------------------------ ------- Total interest-earning assets 266,375 4.59 3,066 Noninterest-earning assets: Mortgage servicing rights 5,928 Goodwill 6,196 Other(4) 18,659 ------------------------------------------------------ Total assets $297,158 ====================================================== Liabilities
Interest-bearing liabilities: Deposits: Interest-bearing checking deposits $ 52,171 1.32 173 Savings and money market deposits 44,017 1.36 151 Time deposits 43,750 2.53 280 ------------------------------------------------------ ------- Total interest-bearing deposits 139,938 1.71 604 Federal funds purchased and commercial paper 4,828 1.98 24 Securities sold under agreements to repurchase 13,528 2.09 72 Advances from Federal Home Loan Banks 63,053 2.34 376 Other 15,164 3.70 140 ------------------------------------------------------ ------- Total interest-bearing liabilities 236,511 2.03 1,216 Noninterest-bearing sources: Noninterest-bearing deposits 33,935 Other liabilities(5) 5,687 Stockholders' equity 21,025 ------------------------------------------------------ Total liabilities and stockholders' equity $297,158 ====================================================== Net interest spread and net interest income 2.56 $1,850 ======= Impact of noninterest-bearing sources 0.23 Net interest margin 2.79
Quarter Ended ---------------------------------------------------------------------- Sept. 30, 2004 Dec. 31, 2003 ------------------------ ------------------------ Interest Interest Income/ Income/ Balance Rate Expense Balance Rate Expense ---------------------------------------------------------------------- Average Balances and Weighted Average Interest Rates Assets Interest-earning assets: Federal funds sold and securities purchased under agreements to resell $ 922 1.44% $ 3 $ 414 2.26% $ 2 Available-for-sale securities(1): Mortgage-backed securities 9,726 3.85 94 12,584 4.14 130 Investment securities 7,597 3.62 69 27,386 3.24 223 Loans held for sale(2) 28,220 4.83 341 29,606 5.95 441 Loans held in portfolio(2): Loans secured by real estate: Home 108,594 4.19 1,137 94,713 4.41 1,045 Purchased subprime 16,279 4.57 186 11,799 5.05 149 ------------------------------ ------- --------- -------- Total home loans 124,873 4.24 1,323 106,512 4.48 1,194 Home equity loans and lines of credit 38,329 4.55 438 25,850 4.71 306 Home construction(3) 2,693 5.41 36 2,160 5.61 31 Multi-family 21,240 4.90 260 20,177 5.07 256 Other real estate 6,364 5.78 93 6,941 6.39 111 ------------------------------ ----------------- -------- Total loans secured by real estate 193,499 4.44 2,150 161,640 4.69 1,898 Consumer 860 10.17 22 1,066 9.02 24 Commercial business 4,800 4.43 54 4,083 4.32 45 ------------------------------ ------- --------- -------- Total loans held in portfolio 199,159 4.46 2,226 166,789 4.71 1,967 Other 6,611 4.70 78 4,939 2.87 36 ------------------------------ ------- --------- -------- Total interest-earning assets 252,235 4.45 2,811 241,718 4.62 2,799 Noninterest-earning assets: Mortgage servicing rights 6,698 6,408 Goodwill 6,196 6,196 Other(4) 18,540 23,118 ------------------------------ --------- Total assets $283,669 $277,440 ============================== ========= Liabilities
Interest-bearing liabilities: Deposits: Interest-bearing checking deposits $ 54,377 1.25 172 $ 67,896 1.44 247 Savings and money market deposits 43,278 1.27 138 27,550 0.82 56 Time deposits 37,945 2.40 229 29,755 2.50 188 ------------------------------ ------- --------- -------- Total interest-bearing deposits 135,600 1.58 539 125,201 1.56 491 Federal funds purchased and commercial paper 2,733 1.54 10 3,872 1.08 11 Securities sold under agreements to repurchase 14,213 2.75 100 27,394 2.17 152 Advances from Federal Home Loan Banks 59,227 2.02 306 44,837 2.47 283 Other 12,922 3.62 116 13,675 3.51 119 ------------------------------ ------- --------- -------- Total interest-bearing liabilities 224,695 1.89 1,071 214,979 1.94 1,056 Noninterest-bearing sources: Noninterest-bearing deposits 33,266 33,485 Other liabilities(5) 5,005 8,949 Stockholders' equity 20,703 20,027 ------------------------------ --------- Total liabilities and stockholders' equity $283,669 $277,440 ============================== ========= Net interest spread and net interest income 2.56 $1,740 2.68 $1,743 ======= ======== Impact of noninterest-bearing sources 0.21 0.22 Net interest margin 2.77 2.90 ---------------------
(1) The average balance and yield are based on average amortized cost balances.
(2) Nonaccrual loans are included in the average loan amounts outstanding.
(3) Represents loans to builders for the purpose of financing the acquisition, development and construction of single-family residences for sale and construction loans made directly to the intended occupant of a single-family residence.
(4) Includes assets of continuing and discontinued operations for the three months ended December 31, 2003.
(5) Includes liabilities of continuing and discontinued operations for the three months ended December 31, 2003.
WM-9
Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Year Ended ---------------------------------------------------------------------- Dec. 31, 2004 Dec. 31, 2003 -------------------- --------------------- Interest Interest Income/ Income/ Balance Rate Expense Balance Rate Expense ------------------------------------------------ --------------------- Average Balances and Weighted Average Interest Rates Assets Interest-earning assets: Federal funds sold and securities purchased under agreements to resell $ 884 1.42% $ 13 $ 2,570 1.45% $ 37 Available-for-sale securities(1): Mortgage-backed securities 10,255 3.99 409 20,977 4.91 1,030 Investment securities 10,732 3.30 355 18,742 3.77 708 Loans held for sale(2) 29,721 4.95 1,472 45,438 5.51 2,501 Loans held in portfolio(2): Loans secured by real estate: Home 107,518 4.21 4,529 86,443 4.77 4,124 Purchased subprime 15,767 4.84 763 10,794 5.43 586 ------------------------------- ------- --------- ------- Total home loans 123,285 4.29 5,292 97,237 4.84 4,710 Home equity loans and lines of credit 35,859 4.69 1,683 21,163 4.98 1,053 Home construction(3) 2,489 5.50 137 2,062 5.90 122 Multi-family 21,090 4.96 1,046 19,409 5.30 1,029 Other real estate 6,396 5.94 380 7,243 6.35 460 ------------------------------- ------- --------- ------- Total loans secured by real estate 189,119 4.51 8,538 147,114 5.01 7,374 Consumer 899 10.11 91 1,208 8.87 107 Commercial business 4,415 4.43 196 4,165 4.49 187 ------------------------------- ------- --------- ------- Total loans held in portfolio 194,433 4.54 8,825 152,487 5.03 7,668 Other 6,476 4.27 276 5,109 4.27 219 ------------------------------- ------- --------- ------- Total interest-earning assets 252,501 4.50 11,350 245,323 4.96 12,163 Noninterest-earning assets: Mortgage servicing rights 6,406 5,721 Goodwill 6,196 6,198 Other(4) 18,975 25,877 ------------------------------- --------- Total assets $284,078 $283,119 =============================== ========= Liabilities
Interest-bearing liabilities: Deposits: Interest-bearing checking deposits $ 59,826 1.28 766 $ 62,723 1.69 1,057 Savings and money market deposits 35,927 1.11 399 28,085 0.94 263 Time deposits 35,917 2.44 878 31,416 2.69 845 ------------------------------- ------- --------- ------- Total interest-bearing deposits 131,670 1.55 2,043 122,224 1.77 2,165 Federal funds purchased and commercial paper 3,522 1.50 53 3,158 1.18 37 Securities sold under agreements to repurchase 16,660 2.26 377 22,318 2.44 545 Advances from Federal Home Loan Banks 58,622 2.16 1,268 49,441 2.62 1,296 Other 13,724 3.59 493 13,315 3.68 491 ------------------------------- ------- --------- ------- Total interest-bearing liabilities 224,198 1.89 4,234 210,456 2.15 4,534 Noninterest-bearing sources: Noninterest-bearing deposits 33,738 41,361 Other liabilities(5) 5,614 10,724 Stockholders' equity 20,528 20,578 ------------------------------- --------- Total liabilities and stockholders' equity $284,078 $283,119 =============================== ========= Net interest spread and net interest income 2.61 $7,116 2.81 $7,629 ====== ====== Impact of noninterest-bearing sources 0.21 0.30 Net interest margin 2.82 3.11 ----------------------
(1) The average balance and yield are based on average amortized cost balances.
(2) Nonaccrual loans are included in the average loan amounts outstanding.
(3) Represents loans to builders for the purpose of financing the acquisition, development and construction of single-family residences for sale and construction loans made directly to the intended occupant of a single-family residence.
(4) Includes assets of continuing and discontinued operations for the twelve months ended December 31, 2003.
(5) Includes liabilities of continuing and discontinued operations for the twelve months ended December 31, 2003.
WM-10
Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Dec. 31, Sept. 30, June 30, 2004 2004 2004 ---------------------------------------------------------------------- Deposits Retail deposits: Checking deposits: Noninterest bearing $ 17,463 $ 16,178 $ 15,666 Interest bearing 51,099 52,378 59,395 ---------------------------------------------------------------------- Total checking deposits 68,562 68,556 75,061 Savings and money market deposits 36,836 38,620 30,413 Time deposits(1) 27,268 24,825 23,990 ---------------------------------------------------------------------- Total retail deposits 132,666 132,001 129,464 Commercial business deposits 7,611 7,369 7,176 Wholesale deposits 18,448 14,052 8,874 Custodial and escrow deposits(2) 14,933 15,273 16,952 ---------------------------------------------------------------------- Total deposits $173,658 $168,695 $162,466 ======================================================================
(1) Weighted average remaining maturity of time deposits was 16 months at December 31, 2004, September 30, 2004, June 30, 2004 and March 31, 2004, and 14 months at December 31, 2003.
(2) Substantially all custodial and escrow deposits reside in noninterest-bearing checking accounts.
Dec. 31, Sept. 30, June 30, 2004 2004 2004 ---------------------------------------------------------------------- Transaction Accounts(1) Accounts, beginning of period 13,905,707 13,579,961 13,193,298 Net accounts opened during the quarter 186,027 325,746 386,663 ---------------------------------------------------------------------- Accounts, end of period 14,091,734 13,905,707 13,579,961 ======================================================================
(1) Transaction accounts include retail checking, small business checking, retail savings and small business savings. The information provided refers to the number of accounts.
Dec. 31, Sept. 30, June 30, 2004 2004 2004 ---------------------------------------------------------------------- Retail Banking Stores Stores, beginning of period 1,872 1,816 1,755 Net stores opened during the quarter 67 56 61 ---------------------------------------------------------------------- Stores, end of period 1,939 1,872 1,816 ======================================================================
(1) The Company consolidated 79 grocery store locations into larger, existing, retail banking stores.
Dec. 31, Sept. 30, June 30, 2004 2004 2004 ---------------------------------------------------------------------- Assets Under Management $ 22,196 $ 20,617 $ 20,106 ======================================================================
Mar. 31, Dec. 31, 2004 2003 ---------------------------------------------------------------------- Deposits Retail deposits: Checking deposits: Noninterest bearing $ 15,107 $ 13,724 Interest bearing 66,618 67,990 ---------------------------------------------------------------------- Total checking deposits 81,725 81,714 Savings and money market deposits 22,452 22,131 Time deposits(1) 24,128 24,605 ---------------------------------------------------------------------- Total retail deposits 128,305 128,450 Commercial business deposits 6,426 6,433 Wholesale deposits 6,219 2,579 Custodial and escrow deposits(2) 20,031 15,719 ---------------------------------------------------------------------- Total deposits $160,981 $153,181 ======================================================================
(1) Weighted average remaining maturity of time deposits was 16 months at December 31, 2004, September 30, 2004, June 30, 2004 and March 31, 2004, and 14 months at December 31, 2003.
(2) Substantially all custodial and escrow deposits reside in noninterest-bearing checking accounts.
Mar. 31, Dec. 31, 2004 2003 ---------------------------------------------------------------------- Transaction Accounts(1) Accounts, beginning of period 12,794,902 12,507,374 Net accounts opened during the quarter 398,396 287,528 ---------------------------------------------------------------------- Accounts, end of period 13,193,298 12,794,902 ======================================================================
(1) Transaction accounts include retail checking, small business checking, retail savings and small business savings. The information provided refers to the number of accounts.
Mar. 31, Dec. 31, 2004 2003 ---------------------------------------------------------------------- Retail Banking Stores Stores, beginning of period 1,776 1,677 Net stores opened during the quarter (21)(1) 99 ---------------------------------------------------------------------- Stores, end of period 1,755 1,776 ======================================================================
(1) The Company consolidated 79 grocery store locations into larger, existing, retail banking stores.
Mar. 31, Dec. 31, 2004 2003 ---------------------------------------------------------------------- Assets Under Management $ 19,438 $ 17,868 ======================================================================
WM-11
Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Quarter Ended ---------------------------------------------------------------------- Dec. Sept. June Mar. Dec. 31, 30, 30, 31, 31, 2004 2004 2004 2004 2003 ---------------------------------------------------------------------- Loan Volume Home loans: Adjustable rate $26,141 $25,589 $29,753 $21,822 $23,397 Fixed rate 15,448 14,635 26,076 21,564 28,105 Specialty mortgage finance(1) 9,362 7,536 7,323 7,113 6,031 ---------------------------------------------------------------------- Total home loan volume 50,951 47,760 63,152 50,499 57,533 Home equity loans and lines of credit 9,307 10,527 11,572 8,416 7,922 Home construction(2) 293 640 839 609 1,013 Multi-family 2,240 2,050 2,346 1,525 1,647 Other real estate 257 352 760 370 655 ---------------------------------------------------------------------- Total loans secured by real estate 63,048 61,329 78,669 61,419 68,770 Consumer 77 138 63 58 72 Commercial business 96 358 789 688 1,061 ---------------------------------------------------------------------- Total loan volume $63,221 $61,825 $79,521 $62,165 $69,903 ====================================================================== Loan Volume by Channel Retail $28,766 $30,285 $37,720 $28,126 $31,630 Wholesale 18,441 16,079 19,534 15,419 16,334 Purchased/correspondent 16,014 15,461 22,267 18,620 21,939 ---------------------------------------------------------------------- Total loan volume by channel $63,221 $61,825 $79,521 $62,165 $69,903 ====================================================================== Refinancing Activity(3) Home loan refinancing $30,752 $23,834 $40,201 $33,233 $36,817 Home equity loans and lines of credit and consumer 336 360 1,147 1,107 848 Home construction(2) 13 9 13 12 6 Multi-family and other real estate 565 621 883 575 690 ---------------------------------------------------------------------- Total refinancing $31,666 $24,824 $42,244 $34,927 $38,361 ====================================================================== Home Loan Volume by Index Short-term adjustable-rate loans(4): Treasury indices $18,967 $18,883 $16,467 $13,440 $13,021 COFI 846 145 167 110 151 Other 57 45 812 218 628 ---------------------------------------------------------------------- Total short-term adjustable-rate loans 19,870 19,073 17,446 13,768 13,800 Medium-term adjustable-rate loans(5) 14,890 12,866 17,536 12,814 13,667 Fixed-rate loans 16,191 15,821 28,170 23,917 30,066 ---------------------------------------------------------------------- Total home loan volume $50,951 $47,760 $63,152 $50,499 $57,533 ======================================================================
Note: Pursuant to regulatory guidance issued in December 2003, buyouts of delinquent mortgages contained within Government National Mortgage Association (GNMA) loan servicing pools must be classified as loans on the balance sheet. Accordingly, total home loan volume includes GNMA pool buy-out volume of $785 million, $898 million, $689 million, $1.05 billion and $1.30 billion for the quarters ended December 31, 2004, September 30, 2004, June 30, 2004, March 31, 2004 and December 31, 2003.
(1) Represents purchased subprime loan portfolios and mortgages originated by Long Beach Mortgage Company.
(2) 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.
(3) Includes loan refinancing entered into by both new and pre-existing loan customers.
(4) Short-term is defined as adjustable-rate loans that reprice within one year or less.
(5) Medium-term is defined as adjustable-rate loans that reprice after one year.
WM-12 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Year Ended ---------------------------------------------------------------------- Dec. 31, Dec. 31, 2004 2003 ---------------------------------------------------------------------- Loan Volume Home loans: Adjustable rate $103,305 $ 99,899 Fixed rate 77,723 263,604 Specialty mortgage finance(1) 31,334 20,678 ---------------------------------------------------------------------- Total home loan volume 212,362 384,181 Home equity loans and lines of credit 39,822 29,639 Home construction(2) 2,382 3,682 Multi-family 8,161 8,065 Other real estate 1,740 1,969 ---------------------------------------------------------------------- Total loans secured by real estate 264,467 427,536 Consumer 336 339 Commercial business 1,930 4,370 ---------------------------------------------------------------------- Total loan volume $266,733 $432,245 ====================================================================== Loan Volume by Channel Retail $124,897 $169,546 Wholesale 69,474 95,671 Purchased/correspondent 72,362 167,028 ---------------------------------------------------------------------- Total loan volume by channel $266,733 $432,245 ====================================================================== Refinancing Activity(3) Home loan refinancing $128,020 $297,983 Home equity loans and lines of credit and consumer 2,950 4,775 Home construction(2) 47 47 Multi-family and other real estate 2,644 3,453 ---------------------------------------------------------------------- Total refinancing $133,661 $306,258 ====================================================================== Home Loan Volume by Index Short-term adjustable-rate loans(4): Treasury indices $ 67,756 $ 30,147 COFI 1,268 722 Other 1,132 1,404 ---------------------------------------------------------------------- Total short-term adjustable-rate loans 70,156 32,273 Medium-term adjustable-rate loans(5) 58,107 81,404 Fixed-rate loans 84,099 270,504 ---------------------------------------------------------------------- Total home loan volume $212,362 $384,181 ====================================================================== Note: Pursuant to regulatory guidance issued in December 2003, buyouts of delinquent mortgages contained within Government National Mortgage Association (GNMA) loan servicing pools must be classified as loans on the balance sheet. Accordingly, total home loan volume includes GNMA pool buy-out volume of $3.42 billion and $6.94 billion for the years ended December 31, 2004 and December 31, 2003.
(1) Represents purchased subprime loan portfolios and mortgages originated by Long Beach Mortgage Company.
(2) 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.
(3) Includes loan refinancing entered into by both new and pre- existing loan customers.
(4) Short-term is defined as adjustable-rate loans that reprice within one year or less.
(5) Medium-term is defined as adjustable-rate loans that reprice after one year.
WM-13 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Change from Sept. 30, 2004 Dec. 31, Sept. 30, to Dec. 31, 2004 2004 2004 ---------------------------------------------------------------------- Loans by Property Type Loans held in portfolio: Loans secured by real estate: Home $ (2,239) $109,991 $112,230 Purchased subprime 1,838 19,143 17,305 ---------------------------------------------------------------------- Total home loans (401) 129,134 129,535
Home equity loans and lines of credit 3,145 43,650 40,505 Home construction(1) (388) 2,344 2,732 Multi-family 642 22,282 21,640 Other real estate (604) 5,664 6,268 ---------------------------------------------------------------------- Total loans secured by real estate 2,394 203,074 200,680 Consumer (39) 792 831 Commercial business (1,442) 3,205 4,647 ---------------------------------------------------------------------- Total loans held in portfolio 913 207,071 206,158 Less: allowance for loan and lease losses 21 (1,301) (1,322) ---------------------------------------------------------------------- Total net loans held in portfolio 934 205,770 204,836 Loans held for sale(2) 13,559 42,743 29,184 ====================================================================== Total net loans $ 14,493 $ 248,513 $ 234,020
June 30, Mar. 31, Dec. 31, 2004 2004 2003 ---------------------------------------------------------------------- Loans by Property Type Loans held in portfolio: Loans secured by real estate: Home $106,312 $104,946 $100,043 Purchased subprime 16,217 15,437 12,973 ---------------------------------------------------------------------- Total home loans 122,529 120,383 113,016 Home equity loans and lines of credit 36,077 31,264 27,647 Home construction(1) 2,605 2,370 2,220 Multi-family 21,156 20,579 20,324 Other real estate 6,513 6,508 6,649 ---------------------------------------------------------------------- Total loans secured by real estate 188,880 181,104 169,856 Consumer 892 954 1,028 Commercial business 4,771 4,322 4,266 ---------------------------------------------------------------------- Total loans held in portfolio 194,543 186,380 175,150 Less: allowance for loan and lease losses (1,293) (1,260) (1,250) ---------------------------------------------------------------------- Total net loans held in portfolio 193,250 185,120 173,900 Loans held for sale(2) 27,795 34,207 20,837 ---------------------------------------------------------------------- Total net loans $221,045 $219,327 $194,737 ======================================================================
(1) 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.
(2) Fair value of loans held for sale was $43.02 billion, $29.32 billion, $27.92 billion, $34.36 billion and $20.84 billion as of December 31, 2004, September 30, 2004, June 30, 2004, March 31, 2004 and December 31, 2003.
WM-14
Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Change from Sept. 30, 2004 Weighted to Dec. Dec. Average Sept. 31, 31, Coupon 30, 2004 2004 Rate 2004 ---------------------------------------------------------------------- Loans Secured by Real Estate and MBS Selected loans held in portfolio secured by real estate(1): Short-term adjustable-rate loans(2): COFI $(668) $7,636 4.91% $8,304 Treasury indices 1,075 73,140 4.25 72,065 Other 3,104 41,686 5.42 38,582 ---------------------------------------------------------------------- Total short-term adjustable- rate loans 3,511 122,462 4.69 118,951 Medium-term adjustable-rate loans(3) 182 52,578 5.40 52,396 Fixed-rate loans (307) 20,026 6.56 20,333 ---------------------------------------------------------------------- Total loans held in portfolio secured by real estate(4) 3,386 195,066 5.07 191,680 Loans held for sale(5) 13,538 42,599 4.70 29,061 ---------------------------------------------------------------------- Total loans secured by real estate 16,924 237,665 5.01 220,741 MBS(6): Short-term adjustable-rate MBS(2): COFI (444) 3,673 3.72 4,117 Treasury indices 1,033 5,583 3.15 4,550 Other 660 668 5.04 8 ---------------------------------------------------------------------- Total short-term adjustable- rate MBS 1,249 9,924 3.49 8,675 Medium-term adjustable-rate MBS(3) 453 702 4.25 249 Fixed-rate MBS 3,148 3,928 5.32 780 ---------------------------------------------------------------------- Total MBS(7) 4,850 14,554 4.02 9,704 ---------------------------------------------------------------------- Total loans secured by real estate and MBS $21,774 $252,219 4.95 $230,445 ======================================================================
Weighted Weighted Average Dec. Average Coupon 31, Coupon Rate 2003 Rate ---------------------------------------------------------------------- Loans Secured by Real Estate and MBS Selected loans held in portfolio secured by real estate(1): Short-term adjustable-rate loans(2): COFI 4.81% $10,766 4.93% Treasury indices 3.97 51,494 3.66 Other 4.97 26,867 4.81 ---------------------------------------------------------------------- Total short-term adjustable-rate loans 4.35 89,127 4.16 Medium-term adjustable-rate loans(3) 5.39 53,576 5.56 Fixed-rate loans 6.61 18,284 6.91 ---------------------------------------------------------------------- Total loans held in portfolio secured by real estate(4) 4.87 160,987 4.94 Loans held for sale(5) 4.87 20,705 6.41 ---------------------------------------------------------------------- Total loans secured by real estate 4.87 181,692 5.10 MBS(6): Short-term adjustable-rate MBS(2): COFI 3.74 5,270 3.87 Treasury indices 2.89 3,401 2.94 Other 3.42 9 3.15 ---------------------------------------------------------------------- Total short-term adjustable-rate MBS 3.30 8,680 3.50 Medium-term adjustable-rate MBS(3) 3.22 - - Fixed-rate MBS 6.47 1,496 6.35 ---------------------------------------------------------------------- Total MBS(7) 3.55 10,176 3.92 ---------------------------------------------------------------------- Total loans secured by real estate and MBS 4.82 $191,868 5.04 ======================================================================
(1) Includes total home loans, home equity loans and lines of credit and multi-family loans.
(2) Short-term is defined as adjustable-rate loans and MBS that reprice within one year or less.
(3) Medium-term is defined as adjustable-rate loans and MBS that reprice after one year.
(4) At December 31, 2004, September 30, 2004 and December 31, 2003, the adjustable-rate loans with lifetime caps were $171.4 billion, $167.6 billion and $138.58 billion with a lifetime weighted average cap rate of 12.31%, 12.24% and 12.21%.
(5) Excludes student loans.
(6) Excludes principal-only strips and interest-only strips.
(7) At December 31, 2004, September 30, 2004 and December 31, 2003, the adjustable-rate MBS with lifetime caps were $10.58 billion, $8.87 billion and $8.12 billion with a lifetime weighted average cap rate of 10.23%, 10.55% and 11.32%.
Sept. 30, Dec. 31, 2004 to 2003 to Dec. 31, Dec. 31, 2004 2004 ---------------------------------------------------------------------- Rollforward of Loans Held for Sale Balance, beginning of period $29,184 $20,837 Loans originated, purchased and transferred from held in portfolio 40,892 153,635 Loans sold, transferred to held in portfolio and other (27,333) (131,729) ---------------------------------------------------------------------- Balance, end of period $42,743 $42,743 ======================================================================
Rollforward of Loans Held in Portfolio Balance, beginning of period $206,158 $175,150 Loans originated, purchased and transferred from held for sale 28,282 120,961 Loan payments, transferred to held for sale and other (27,369) (89,040) ---------------------------------------------------------------------- Balance, end of period $207,071 $207,071 ======================================================================
WM-15
Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Quarter Ended ---------------------------------------------------------------------- Dec. Sept. June Mar. Dec. 31, 30, 30, 31, 31, 2004 2004 2004 2004 2003 ---------------------------------------------------------------------- Home Loan Mortgage Banking Income (Expense) Loan servicing fees $481 $482 $485 $502 $524 Amortization of mortgage servicing rights (636)(589) (546) (750) (604) Net mortgage servicing rights valuation adjustments(1) 257 165 (51) (606) 615 Other, net (62) (62) (89) (66) (75) ---------------------------------------------------------------------- Net home loan servicing income (expense) 40 (4) (201) (920) 460 Revaluation gain (loss) from derivatives: Mortgage servicing rights risk management(2) 14 130 (322) 1,108 (314) Loans held for sale risk management 28 (23) 142 (66) 8 ---------------------------------------------------------------------- Total revaluation gain (loss) from derivatives 42 107 (180) 1,042 (306) Net settlement income from certain interest-rate swaps 53 126 192 167 190 Gain from mortgage loans(3) 155 210 113 171 63 Loan related income 60 65 76 71 124 Gain from sale of originated mortgage-backed securities 2 - - - 61 ---------------------------------------------------------------------- Total home loan mortgage banking income 352 504 - 531 592 ---------------------------------------------------------------------- Impact of other mortgage servicing rights risk management instruments(4): Gain (loss) from certain available-for-sale securities (4) - - 5 (11) Revaluation gain from principal- only mortgage-backed trading securities 36 45 - - - ---------------------------------------------------------------------- Total home loan mortgage banking income, net of other mortgage servicing rights risk management instruments $384 $549 $- $536 $581 ======================================================================
Year Ended ---------------------------------------------------------------------- Dec. Dec. 31, 31, 2004 2003 ---------------------------------------------------------------------- Home Loan Mortgage Banking Income (Expense) Loan servicing fees $1,950 $2,273 Amortization of mortgage servicing rights (2,521)(3,269) Net mortgage servicing rights valuation adjustments(1) (235) 712 Other, net (279) (592) ---------------------------------------------------------------------- Net home loan servicing expense (1,085) (876) Revaluation gain (loss) from derivatives: Mortgage servicing rights risk management(2) 931 526 Loans held for sale risk management 80 (188) ---------------------------------------------------------------------- Total revaluation gain from derivatives 1,011 338 Net settlement income from certain interest-rate swaps 538 543 Gain from mortgage loans(3) 649 1,250 Loan related income 272 399 Gain from sale of originated mortgage-backed securities 2 320 ---------------------------------------------------------------------- Total home loan mortgage banking income 1,387 1,974 ---------------------------------------------------------------------- Impact of other mortgage servicing rights risk management instruments(4): Gain from certain available-for-sale securities 1 305 Revaluation gain from principal-only mortgage- backed trading securities 81 - ---------------------------------------------------------------------- Total home loan mortgage banking income, net of other mortgage servicing rights risk management instruments $1,469 $2,279 ======================================================================
(1) Represents fair value hedge ineffectiveness as well as any impairment/reversal recognized on MSR accounted for under the lower of cost or market value methodology. The Company prospectively applied fair value hedge accounting treatment, as prescribed by Statement of Financial Accounting Standards No. 133, to most of its MSR on April 1, 2004.
(2) Represents the change in fair value from certain derivatives that economically hedge the MSR.
(3) Gain from mortgage loans net of loans held for sale hedging and risk management instruments was a net gain of $180 million for the quarter ended December 31, 2004, compared with a net gain of $187 million for the quarter ended September 30, 2004, a net gain of $252 million for the quarter ended June 30, 2004, a net gain of $112 million for the quarter ended March 31, 2004, and a net gain of $91 million for the quarter ended December 31, 2003. Gain from mortgage loans net of loans held for sale hedging and risk management instruments was a net gain of $729 million for the year ended December 31, 2004, compared with a net gain of $1.09 billion for the year ended December 31, 2003.
(4) Includes only instruments designated for mortgage servicing rights risk management and does not include the effects of instruments held for asset/liability risk management.
WM-16
Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Quarter Ended Year Ended ---------------------------------------------------------------------- Dec. Sept. June Mar. Dec. 31, 30, 30, 31, 31, 2004 2004 2004 2004 2004 ------------------------------ ------ ------- -------- ------- ------- Mortgage Servicing Rights ("MSR") Performance Statement No. 133 MSR accounting valuation adjustments $(123) $ (885) $ 1,707 $ - $ 699 Statement No. 133 fair value hedging adjustments 201 1,316 (1,985) - (468) ------------------------------ ------ ------- -------- ------- ------- Statement No. 133 ineffectiveness 78 431 (278) - 231 Change in value of MSR accounted for under lower of aggregate cost or market value methodology 179 (266) 227 (606) (466) ------------------------------ ------ ------- -------- ------- ------- Net mortgage servicing rights valuation adjustments(1) 257 165 (51) (606) (235) Amortization of mortgage servicing rights (636) (589) (546) (750) (2,521) MSR risk management: Revaluation gain (loss) from derivatives 14 130 (322) 1,108 931 Net settlement income from certain interest- rate swaps 56 126 195 160 538 Gain (loss) from certain available-for-sale securities (4) - - 5 1 Revaluation gain from principal-only mortgage-backed trading securities 36 45 - - 81 ------------------------------ ------ ------- -------- ------- ------- Net MSR valuation less hedging expense $(277) $ (123) $ (724) $ (83) $(1,205) ============================== ====== ======= ======== ======= =======
(1) Represents fair value hedge ineffectiveness as well as any impairment/reversal recognized on MSR accounted for under the lower of cost or market value methodology. The Company began applying fair value hedge accounting treatment, as prescribed by Statement No. 133, to most of its MSR on a prospective basis as of April 1, 2004.
WM-17 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Quarter Ended ------------------------------------------------------------------- Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, 2004 2004 2004 2004 2003 --------------------- --------- --------- --------- --------- -------- Rollforward of Mortgage Servicing Rights ("MSR")(1) Balance, beginning of period $ 6,112 $ 7,501 $ 5,239 $ 6,354 $ 5,870 Home loans: Additions 372 348 874 241 701 Amortization (636) (589) (546) (750) (604) (Impairment) reversal 179 (266) 227 (606) 615 Statement No. 133 MSR accounting valuation adjustments (123) (885) 1,707 - - Sales - - - - (231) Net change in commercial real estate MSR 2 3 - - 3 --------------------- --------- --------- --------- --------- -------- Balance, end of period(2) $ 5,906 $ 6,112 $ 7,501 $ 5,239 $ 6,354 ===================== ========= ========= ========= ========= ======== Rollforward of Valuation Allowance for MSR Impairment Balance, beginning of period $ 2,653 $ 2,417 $ 3,035 $ 2,435 $ 3,075 Impairment (reversal) (179) 266 (227) 606 (615) Other-than- temporary impairment (486) (22) (388) - - Sales - - - - (25) Other (7) (8) (3) (6) - --------------------- --------- --------- --------- --------- -------- Balance, end of period $ 1,981 $ 2,653 $ 2,417 $ 3,035 $ 2,435 ===================== ========= ========= ========= ========= ======== Rollforward of Loans Serviced for Others Balance, beginning of period $551,245 $558,388 $559,807 $582,669 $577,822 Home loans: Additions 27,218 29,699 54,201 22,009 51,480 Sales - - - - (195) Loan payments and other (38,529) (37,035) (56,388) (46,058) (47,062) Net change in commercial real estate loans serviced for others 458 193 768 1,187 624 --------------------- --------- --------- --------- --------- -------- Balance, end of period $540,392 $551,245 $558,388 $559,807 $582,669 ===================== ========= ========= ========= ========= ========
Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, 2004 2004 2004 2004 2003 --------------------- --------- --------- --------- --------- -------- Total Servicing Portfolio Loans serviced for others $540,392 $551,245 $558,388 $559,807 $582,669 Servicing on retained MBS without MSR 1,808 2,713 2,938 3,208 3,455 Servicing on owned loans 229,879 217,592 205,714 204,449 182,604 Subservicing portfolio 461 502 563 1,528 1,852 --------------------- --------- --------- --------- --------- -------- Total servicing portfolio $772,540 $772,052 $767,603 $768,992 $770,580 ===================== ========= ========= ========= ========= ========
December 31, 2004 ---------------------------------------------------------------------- Unpaid Weighted Principal Average Balance Servicing Fee ---------------------------------------------------------------------- (in basis points, Loans Serviced for Others by Loan Type annualized) Government $ 54,009 48 Agency 347,605 30 Private 120,868 36 Specialty home loans 17,910 50 -------------------------------------------------- ------------------- Total loans serviced for others(3) $540,392 34 ================================================== ===================
(1) Net of valuation allowance.
(2) At December 31, 2004, the aggregate MSR fair value was $5.91 billion.
(3) Weighted average coupon rate (annualized) was 5.86% at December 31, 2004.
WM-18
Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Quarter Ended ---------------------------------------------------------------------- Dec. Sept. June Mar. Dec. 31, 30, 30, 31, 31, 2004 2004 2004 2004 2003 ------------------------------ ------- ------- ------- ------- ------- Allowance for Loan and Lease Losses Balance, beginning of quarter $1,322 $1,293 $1,260 $1,250 $1,549 Other (20) - (3) - - Provision (reversal of reserve) for loan and lease losses 37 56 60 56 (202) ------------------------------ ------- ------- ------- ------- ------- 1,339 1,349 1,317 1,306 1,347 Loans charged off: Loans secured by real estate: Home (9) (6) (8) (16) (18) Purchased subprime (10) (11) (9) (9) (11) ------------------------------ ------- ------- ------- ------- ------- Total home loan charge-offs (19) (17) (17) (25) (29) Home equity loans and lines of credit (3) (6) (5) (7) (2) Home construction(1) (1) - - (1) (1) Multi-family (2) - - - (1) Other real estate (1) (1) (1) (8) (52) ------------------------------ ------- ------- ------- ------- ------- Total loans secured by real estate (26) (24) (23) (41) (85) Consumer (17) (11) (11) (14) (14) Commercial business (8) (4) (4) (6) (15) ------------------------------ ------- ------- ------- ------- ------- Total loans charged off (51) (39) (38) (61) (114) Recoveries of loans previously charged off: Loans secured by real estate: Home - - - - 1 Purchased subprime 1 1 1 1 1 ------------------------------ ------- ------- ------- ------- ------- Total home loan recoveries 1 1 1 1 2 Home equity loans and lines of credit 2 - 1 1 - Multi-family - 1 - 2 - Other real estate 2 2 4 2 5 ------------------------------ ------- ------- ------- ------- ------- Total loans secured by real estate 5 4 6 6 7 Consumer 4 5 5 5 5 Commercial business 4 3 3 4 5 ------------------------------ ------- ------- ------- ------- ------- Total recoveries of loans previously charged off 13 12 14 15 17 ------------------------------ ------- ------- ------- ------- ------- Net charge-offs (38) (27) (24) (46) (97) ------------------------------ ------- ------- ------- ------- ------- Balance, end of quarter $1,301 $1,322 $1,293 $1,260 $1,250 ============================== ======= ======= ======= ======= =======
Net charge-offs (annualized) as a percentage of average loans held in portfolio 0.07 % 0.05 % 0.05 % 0.10 % 0.23 % Allowance as a percentage of total loans held in portfolio 0.63 0.64 0.66 0.68 0.71
(1) 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-19 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Dec. Sept. June Mar. Dec. 31, 30, 30, 31, 31, 2004 2004 2004 2004 2003 ------------------------------- ------- ------- ------- ------- ------ Nonperforming Assets and Restructured Loans Nonaccrual loans(1): Loans secured by real estate: Home $ 542 $ 538 $ 535 $ 622 $ 736 Purchased subprime 674 608 585 615 597 ------------------------------- ------- ------- ------- ------- ------ Total home nonaccrual loans 1,216 1,146 1,120 1,237 1,333 Home equity loans and lines of credit 66 50 48 45 47 Home construction(2) 28 31 24 31 35 Multi-family 12 23 20 23 19 Other real estate 162 173 133 153 153 ------------------------------- ------- ------- ------- ------- ------ Total nonaccrual loans secured by real estate 1,484 1,423 1,345 1,489 1,587 Consumer 9 11 9 7 8 Commercial business 41 37 42 46 31 ------------------------------- ------- ------- ------- ------- ------ Total nonaccrual loans held in portfolio 1,534 1,471 1,396 1,542 1,626 Foreclosed assets 261 281 286 307 311 ------------------------------- ------- ------- ------- ------- ------ Total nonperforming assets $1,795 $1,752 $1,682 $1,849 $1,937 As a percentage of total assets 0.58% 0.61% 0.60% 0.66% 0.70% Restructured loans $ 34 $ 38 $ 79 $ 107 $ 111 ------------------------------- ------- ------- ------- ------- ------ Total nonperforming assets and restructured loans $1,829 $1,790 $1,761 $1,956 $2,048 =============================== ======= ======= ======= ======= ======
(1) Excludes nonaccrual loans held for sale of $76 million at December 31, 2004. Prior periods also reflect the exclusion of nonaccrual loans held for sale of $84 million, $99 million, $135 million and $66 million at September 30, 2004, June 30, 2004, March 31, 2004 and December 31, 2003. Loans held for sale are accounted for at lower of aggregate cost or market value, with valuation changes included as adjustments to gain from mortgage loans.
(2) Represents loans to builders for the purpose of financing the acquisition, development and construction of single-family residences for sale and construction loans made directly to the intended occupant of a single-family residence.
--30--SAM/se*
CONTACT: Washington Mutual Media Contact: Alan Gulick, 206-377-3637 alan.gulick@wamu.net or Investor Relations Contact: Alan Magleby, 206-490-5182 alan.magleby@wamu.net
KEYWORD: WASHINGTON INDUSTRY KEYWORD: BANKING EARNINGS DIVIDEND SOURCE: Washington Mutual, Inc.
Copyright Business Wire 2005
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