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Washington Mutual Announces Strong Third Quarter Earnings; Company Continues Steady Growth; Board of Directors Increases Cash Dividend

To view a printable version of the Q3 2002 Financial Statements, click here.

To view a downloadable version of the Q3 2002 Financial Statements, click here.

SEATTLE--(BUSINESS WIRE)--Oct. 15, 2002--Washington Mutual, Inc. (NYSE:WM) today announced strong third quarter earnings of $976 million, or $1.01 per diluted share, for the quarter ended September 30, 2002, up 7 percent on a per share basis from $832 million, or 94 cents per diluted share for the same period a year ago.

Comparatives for 2001 do not include results from Dime Bancorp, Inc. (Dime), which Washington Mutual acquired on January 4, 2002 or the results of operations of HomeSide Lending, Inc. (HomeSide), certain operations of which Washington Mutual acquired on March 1, 2002 and the stock of which Washington Mutual acquired on October 1, 2002. In addition, new accounting rules eliminated the amortization of goodwill in 2002. The impact of goodwill amortization on net income in the third quarter of 2001 was $37 million, or 5 cents per diluted share.

Highlights of the recently completed quarter included:

  • Solid growth in the company's consumer banking business, including a 28 percent increase in depositor and other retail banking fees, year over year; and quarterly retail checking account growth of more than 274,000 net new accounts;

  • record loan volume of $75.48 billion, an increase of 59 percent year over year, including record SFR loan volume;

  • stable credit performance;

  • continued successful management of the company's mortgage servicing rights; and

  • the repurchase of more than 26 million shares of the company's common stock.

"Washington Mutual's third quarter results represent the successful execution of our strategies and the continuation of solid growth in the key drivers of our business," said Kerry Killinger, the company's chairman, president and CEO. "In addition, our employees continued to make excellent progress toward our goal of building a leading growth retailer of consumer financial services."

BOARD OF DIRECTORS INCREASES DIVIDEND

Based on the company's continued strong operating fundamentals and financial performance, Washington Mutual's Board of Directors declared a cash dividend of 28 cents per share on the company's common stock, up from 27 cents per share in the previous quarter. Dividends on the common stock are payable on November 15, 2002 to shareholders of record as of October 31, 2002.

SECOND-QUARTER RESULTS

Net Interest and Noninterest Income

Net interest income in the third quarter of 2002 was $1.92 billion, up 6 percent from $1.82 billion in the prior year's third quarter but down from $2.10 billion in the second quarter of 2002, as expected.

The net interest spread for the quarter was 3.13 percent, compared with 3.22 percent for the same period a year earlier and 3.37 percent in the second quarter of 2002. The margin was 3.36 percent in the most recent quarter versus 3.53 percent in the third quarter of 2001 and

  • 3.54 percent in the second quarter of 2002. The decline in the margin reflected the effect of last year's Federal Reserve rate cuts on asset yields and an increase in borrowing rates that resulted from the company's interest-rate risk management initiatives.

Depositor and other retail banking fees were $426 million, up 28 percent from $333 million a year earlier. In addition, during the third quarter, the company added more than 274,000 net new retail checking accounts.

Low residential mortgage rates enabled the company to generate a record amount of salable SFR loan volume. During the quarter, the company recognized gains from SFR mortgage loans of $402 million.

Anticipated higher prepayment rates within the company's mortgage servicing rights (MSR) portfolio resulted in the addition of $1.85 billion to the impairment reserve. However, the impairment was offset by the company's successful MSR risk management activities.

"Our MSR risk management activities continue to be effective and we believe the company is positioned to offset potential impairments to the value of the MSR portfolio should interest rates fall further," Killinger said.

Washington Mutual continues to monitor the size of its mortgage servicing asset, while exploring opportunities to limit its excess servicing rights.

In the third quarter, as part of the active management of its mortgage servicing asset, the company sold $111 million in excess servicing rights in a privately placed transaction for no material loss or gain. During the second quarter, the company sold $711 million in excess servicing rights.

Lending

The third quarter saw total loan volume of $75.48 billion for the quarter, up 59 percent from $47.45 billion one year ago.

SFR loan volume was $67.62 billion, up 57 percent from $43.09 billion one year ago, and up from the second quarter's record of $50.45 billion. Approximately 42 percent of the third-quarter's SFR volume represented adjustable-rate mortgages and approximately 67 percent of the SFR loan volume was a result of refinances.

Lending volume for loans other than SFR remained strong, totaling $7.86 billion for the most recent quarter, up 80 percent over $4.36 billion in the third quarter of 2001, and compared with $ 7.33 billion during the second quarter of 2002.

Efficiency Ratio

The efficiency ratio, defined as noninterest expense (excluding amortization of other intangible assets and, in 2001, amortization of goodwill) as a percentage of net interest income and noninterest income, was 48.48 percent in the most recent quarter compared with

  • 41.29 percent in the third quarter of 2001 and 47.45 in the second quarter of 2002. The higher efficiency ratio reflects the compression of the net interest margin and the company's strategy of limiting asset growth in today's lower rate environment.

Noninterest expense totaled $1.63 billion in the third quarter of 2002, compared with second quarter 2002's figure of $1.60 billion and $1.15 billion in the third quarter of 2001, due to the Dime and HomeSide acquisitions.

Credit Quality Remains Stable

Killinger said that Washington Mutual's credit quality remains in line with the company's expectations. Total nonperforming assets were $2.50 billion at September 30, 2002, virtually unchanged from $2.51 billion at June 30, 2002.

Reflecting a stable credit environment and a lower level of net charge offs, the provision for loan and lease losses was $135 million, versus $200 million for the same period in the previous year, and $160 million in the second quarter of 2002. The allowance for loan and lease losses was $1.71 billion at September 30, 2002. Net loan charge offs for the third quarter were $88 million, compared with $116 million in the second quarter of 2002.

Balance Sheet and Capital Management

Consolidated assets at September 30, 2002 were $261.10 billion, compared with $261.28 billion at June 30, 2002, primarily reflecting the company's decision to deploy capital to repurchase shares of the company's common stock versus balance sheet growth.

Total deposits increased to $140.61 billion at the end of the third quarter. Deposits in checking, savings and money market accounts increased $13.96 billion from the previous quarter and at September 30, 2002 represented 76 percent of total deposits, compared with 72 percent at June 30, 2002.

Stockholders' equity at September 30, 2002 totaled $20.16 billion and the capital ratios of Washington Mutual's banking subsidiaries continued to exceed regulatory requirements for classification as "well-capitalized," the highest regulatory standard.

During the quarter, the company repurchased approximately 26 million shares of its common stock at an average price of $34.60. The tangible common equity ratio was 5.30 percent at September 30, 2002.

Company Updates

  • Washington Mutual, Inc. completed its acquisition of the stock of the parent company of HomeSide Lending, Inc., the U.S. mortgage unit of the National Australia Bank Limited. The company acquired HomeSide's 1.4 million customer relationships nationwide associated with its $131 billion mortgage servicing portfolio.

  • The Washington Mutual Premium Income Equity Securities (PIES) (NYSE:XWM) settled on August 16, 2002. Holders of the PIES received 2.1704 shares of WM common stock and 1.113 shares of BNKUZ for each PIES. Fractional shares were paid in cash. Because PIES are no longer outstanding, they are being delisted from the New York Stock Exchange at the request of Washington Mutual.

  • John Rostas was hired as senior vice president of operational excellence. He is in charge of evaluating the company's business processes and creating strategies to improve efficiencies. Rostas is from United Technologies, a division of Carrier Corp., Farmington, Conn., where he was the vice president of quality. Prior to Carrier Corp., Rostas served in several divisions at General Electric, including Aerospace and Appliances. His background includes engineering, operations and program management roles.

Outlook

"Having completed three quarters of 2002, we expect it to be yet another record-breaking year for Washington Mutual," Killinger said. "While our business is performing very well, we are cognizant of the importance of closely monitoring economic conditions in the current environment. Therefore, our management team is focused on identifying capital deployment opportunities that combine attractive returns with lower relative risk, while creating long-term value for shareholders."

About Washington Mutual

With a history dating back to 1889, Washington Mutual is a national financial services company that provides a diversified line of products and services to consumers and small- to mid-sized businesses. At September 30, 2002, Washington Mutual and its subsidiaries had assets of $261.10 billion. Washington Mutual currently operates more than 2,500 consumer banking, mortgage lending, commercial banking, consumer finance and financial services offices throughout the nation. Washington Mutual's press releases are available at www.wamu.com.

A live webcast of the company's quarterly earnings conference call will be held on Wednesday, October 16 at 10:30 a.m. Eastern Time at www.wamu.com or via phone at 1-888-730-9135. International callers may dial 1-712-257-3320. A recording of the conference call will be available after 1 p.m. Eastern Time on Wednesday, October 16, 2002 through 11:59 p.m. Eastern Time on Friday, October 25, 2002 at 1-800-677-4011. Callers from outside the United States may dial 1-402-998-1119.

Forward-Looking Statements

This press release 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 press release that are not historical facts. When used in this press release, 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, "Business Factors That May Affect Future Results" in Washington Mutual's 2001 Annual Report on Form 10-K which include: (1) changes in general business and economic conditions may significantly affect our earnings; (2) the risk of our inability to effectively manage the volatility of our mortgage banking business could adversely affect our earnings; (3) the risk of our inability to effectively integrate the operations and personnel of companies we have acquired could adversely affect our earnings and financial condition; (4) the concentration of our operations in California could adversely affect our operating results if the California economy or real estate market declines; (5) competition from other financial services companies in our markets could adversely affect our ability to achieve our financial goals; and (6) changes in the regulation of financial services companies could adversely affect our business.

WM-1

                        Washington Mutual, Inc.
                   Consolidated Statements of Income
             (dollars in millions, except per share data)
                              (unaudited)

                              Quarter Ended        Nine Months Ended
----------------------------------------------------------------------
                      Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
                          2002     2002      2001      2002      2001
----------------------------------------------------------------------
Interest Income
   Loans                $2,675   $2,696    $2,808    $8,225    $8,543
   Available-for-sale
    ("AFS") securities     652      812       825     2,411     2,797
   Other interest and
    dividend income         86       77        57       245       200
----------------------------------------------------------------------
    Total interest
     income              3,413    3,585     3,690    10,881    11,540

Interest Expense
 Deposits                  676      664       735     1,988     2,445
 Borrowings                818      821     1,139     2,478     4,246
----------------------------------------------------------------------
  Total interest
   expense               1,494    1,485     1,874     4,466     6,691
----------------------------------------------------------------------
   Net interest income   1,919    2,100     1,816     6,415     4,849
Provision for loan and
 lease losses              135      160       200       470       375
----------------------------------------------------------------------
     Net interest
      income after
      provision for
      loan and lease
      losses             1,784    1,940     1,616     5,945     4,474

Noninterest Income
 Depositor and other
  retail banking fees      426      398       333     1,185       937
 Securities fees and
  commissions               92       98        78       272       226
 Insurance income           46       39        22       132        65
 Single-family
  residential ("SFR")
  mortgage banking
  (expense) income      (1,591)    (733)     (131)   (1,931)      407
 Portfolio loan
  related income            85       75        49       226       134
 Gain from other AFS
  securities               356      137       253       195       209
 Revaluation gain
  (loss) from
  derivatives            1,582      857        (2)    2,423        (4)
 Gain on
  extinguishment of
  securities sold
  under agreements to
  repurchase                98      121       125       293       125
 Net settlement income
  from certain
  interest-rate swaps      116      101         -       224         -
 Other income              170      115       136       377       319
----------------------------------------------------------------------
   Total noninterest
    income               1,380    1,208       863     3,396     2,418

Noninterest Expense
 Compensation and
  benefits                 719      732       507     2,141     1,389
 Occupancy and
  equipment                289      283       202       859       576
 Telecommunications
  and outsourced
  information services     136      134       111       409       322
 Depositor and other
  retail banking
  losses                    55       48        37       153        99
 Amortization of
  goodwill                   -        -        39         -       102
 Amortization of other
  intangible assets         25       26         9        77        25
 Professional fees          55       52        51       161       139
 Advertising and
  promotion                 75       69        52       188       135
 Other expense             271      252       146       762       499
----------------------------------------------------------------------
   Total noninterest
    expense              1,625    1,596     1,154     4,750     3,286
----------------------------------------------------------------------
     Income before
      income taxes       1,539    1,552     1,325     4,591     3,606
Income taxes               563      568       493     1,680     1,334
----------------------------------------------------------------------
Net Income                $976     $984      $832    $2,911    $2,272
======================================================================
Net Income
 Attributable to
 Common Stock             $975     $982      $830    $2,906    $2,267
======================================================================
Net income per common
 share:
 Basic                   $1.03    $1.03     $0.97     $3.06     $2.67
 Diluted                  1.01     1.01      0.94      3.01      2.63

Dividends declared per
 common share            $0.27    $0.26     $0.23     $0.78     $0.66

Basic weighted average
 number of common
 shares outstanding
 (in thousands)        947,293  954,662   859,497   949,868   848,301
Diluted weighted
 average number of
 common shares
 outstanding (in
 thousands)            963,422  974,153   879,374   966,938   863,206


WM-2

                        Washington Mutual, Inc.
            Consolidated Statements of Financial Condition
             (dollars in millions, except per share data)
                              (unaudited)


                                         Sept. 30,  Dec. 31, Sept. 30,
                                            2002      2001      2001
----------------------------------------------------------------------
Assets
   Cash and cash equivalents               $5,122    $3,563    $3,723
   Federal funds sold and securities
    purchased under resale agreements       2,413     2,481         -
   AFS securities:
      Mortgage-backed securities ("MBS")   26,494    28,568    37,217
      Investment securities                20,098    29,781    10,662
   Loans held for sale                     26,440    23,842    18,035
   Loans:
      Loans held in portfolio             150,930   132,991   132,900
      Allowance for loan and lease
       losses                              (1,705)   (1,404)   (1,295)
----------------------------------------------------------------------
         Total loans held in portfolio,
          net of allowance for loan and
          lease losses                    149,225   131,587   131,605
   Investment in Federal Home Loan Banks
    ("FHLBs")                               3,792     3,873     3,822
   Mortgage servicing rights ("MSR")        4,548     6,241     6,721
   Goodwill                                 6,059     1,981     2,213
   Other assets                            16,910    10,589     9,640
----------------------------------------------------------------------
         Total assets                    $261,101  $242,506  $223,638
======================================================================

Liabilities
   Deposits:
      Checking accounts                   $77,113   $37,736   $25,575
      Savings accounts and money market
       deposit accounts ("MMDAs")          29,799    32,484    34,599
      Time deposit accounts                33,696    36,962    39,559
----------------------------------------------------------------------
         Total deposits                   140,608   107,182    99,733

   Federal funds purchased and
    commercial paper                        1,845     4,690     4,472
   Securities sold under agreements to
    repurchase ("repurchase agreements")   22,381    39,447    18,675
   Advances from FHLBs                     55,752    61,182    65,623
   Other borrowings                        13,415    12,576    15,580
   Other liabilities                        6,939     3,264     4,924
----------------------------------------------------------------------
         Total liabilities                240,940   228,341   209,007

Redeemable preferred stock                      -       102       102
Stockholders' equity                       20,161    14,063    14,529
----------------------------------------------------------------------
         Total liabilities, redeemable
          preferred stock, and
          stockholders' equity           $261,101  $242,506  $223,638
======================================================================

Common shares outstanding at end of
 period (in thousands) (1)                953,752   873,089   879,831

Book value per common share                $21.55    $16.45    $16.86

Tangible book value per common share        14.96     14.18     14.57


Full-time equivalent employees at end of
 period                                    50,329    39,465    37,830

--------------

(1) Includes 18 million shares held in escrow that were not included
    in the book value per share calculations.


WM-3

                        Washington Mutual, Inc.
                    Selected Financial Information
             (dollars in millions, except per share data)
                              (unaudited)

                                               Nine Months Ended
----------------------------------------------------------------------
                                           Sept. 30,     Sept. 30,
                                              2002          2001
----------------------------------------------------------------------
Stockholders' Equity Rollforward
Balance, beginning of period                $14,063       $10,166
Net income                                    2,911         2,272
Other comprehensive income, net of tax          844           694
Cash dividends declared on common stock        (757)         (564)
Cash dividends declared on
 redeemable preferred stock                      (5)           (5)
Common stock repurchased and retired           (942)            -
Common stock warrants issued, net of
 issuance costs                                   -           398
Common stock issued for acquisitions          3,672         1,389
Fair value of Dime stock options                 90             -
Common stock issued to redeem
 preferred stock                                102             -
Common stock issued                             183           179
----------------------------------------------------------------------
Balance, end of period                      $20,161       $14,529
======================================================================




                                Quarter Ended       Nine Months Ended
----------------------------------------------------------------------
                            Sept.   June     Sept.     Sept.   Sept.
                             30,     30,      30,       30,     30,
                            2002    2002     2001      2002    2001
----------------------------------------------------------------------
Pro Forma (1)
Income before income
 taxes                    $1,539   $1,552   $1,325    $4,591   $3,606
Add back: goodwill
 previously amortized          -        -       39         -      102
----------------------------------------------------------------------
Income before income
 taxes, excluding
 amortization of goodwill  1,539    1,552    1,364     4,591    3,708
Income taxes                (563)    (568)    (495)   (1,680)  (1,346)
----------------------------------------------------------------------
Net income, excluding
 amortization of goodwill    976      984      869     2,911    2,362
Redeemable preferred
 stock dividends              (1)      (2)      (2)       (5)      (5)
----------------------------------------------------------------------
Net income attributable
 to common stock, excluding
 amortization of goodwill   $975     $982     $867    $2,906   $2,357
======================================================================
Net income per diluted common
 share, excluding
 amortization of goodwill  $1.01    $1.01    $0.99     $3.01    $2.73

-----------------------

(1) Represents pro forma impact to net income for the quarter-to-date
    September 30, 2002, June 30, 2002 and September 30, 2001 and to
    year-to-date September 30, 2002 and 2001, assuming that the
    adoption of Statement of Financial Accounting Standards ("SFAS")
    No. 142, Goodwill and Other Intangible Assets, which eliminates
    the amortization of goodwill from net income, was applied to all
    periods presented. SFAS No. 142 became effective on January 1,
    2002.


WM-4

                       Washington Mutual, Inc.
                    Selected Financial Information
           (dollars in millions, except per share amounts)
                             (unaudited)

                                         Quarter Ended
----------------------------------------------------------------------
                        Sept. 30, June 30, Mar. 31, Dec. 30, Sept. 30,
                            2002     2002     2002     2001     2001
----------------------------------------------------------------------
PROFITABILITY
Net interest income        $1,919   $2,100   $2,396   $2,027   $1,816
Net interest margin          3.36%    3.54%    3.74%    3.80%    3.53%
Noninterest income         $1,380   $1,208     $807     $830     $863
Noninterest expense         1,625    1,596    1,529    1,331    1,154
Net income                    976      984      950      842      832
Net income per common
share:
 Basic                      $1.03    $1.03    $1.00    $0.98    $0.97
 Diluted                     1.01     1.01     0.98     0.97     0.94
Basic weighted average
 number of common shares
outstanding (in
 thousands)               947,293  954,662  947,653  856,014  859,497
Diluted weighted average
 number of common shares
outstanding (in
 thousands)               963,422  974,153  963,242  868,951  879,374
Return on average assets     1.49%    1.48%    1.34%    1.43%    1.46%
Return on average common
 equity                     18.70    20.27    20.53    23.36    23.64
Efficiency ratio,
 excluding amortization
 of other intangible
 assets                     48.48    47.45    46.96  44.99(4) 41.29(4)
Efficiency ratio,
 including amortization
 of other intangible
 assets                     49.25    48.22    47.75  46.58(5) 43.09(5)

ASSET QUALITY
Period end:
Nonaccrual loans(6)        $2,188   $2,232   $2,391   $2,030   $1,726
Foreclosed assets             309      274      267      228      221
Total nonperforming
 assets                     2,497    2,506    2,658    2,258    1,947
Restructured loans            112      119      130      118      128
 Total nonperforming
  assets and restructured
  loans                     2,609    2,625    2,788    2,376    2,075
Allowance for loan and
 lease losses               1,705    1,665    1,621    1,404    1,295
 Allowance as a
  percentage of total
  loans held in portfolio    1.13%    1.14%    1.11%    1.06%    0.97%
Quarter-to-date:
Provision for loan and
 lease losses                $135     $160     $175     $200     $200
Net charge offs                88      116       99       97       75

CAPITAL ADEQUACY
Stockholders'
 equity/total assets         7.72%    7.50%    6.59%    5.80%    6.50%
Stockholders'
 equity(1)/total
 assets(1)                   7.55     7.51     6.80     5.89     6.24
Tangible common
 equity(1)(2)/total
 assets(1)(2)                5.30     5.28     4.69     5.14     5.41
Estimated total risk-
 based capital/risk-
 weighted assets(3)         11.92    12.32    11.69    12.87    12.35

SUPPLEMENTAL DATA
Average balance sheet:
Average loans            $171,900 $168,879 $174,770 $154,924 $151,930
Average interest-earning
 assets                   229,364  236,504  255,175  214,063  206,799
Average total assets      261,148  266,836  284,345  236,335  228,457
Average interest-bearing
 deposits                 111,408  108,231  102,085   83,934   80,485
Average noninterest-
 bearing deposits          24,065   22,417   21,767   19,699   18,691
Average stockholders'
 equity                    20,858   19,392   18,484   14,389   14,054
Period-end balance sheet:
Total loans held in
 portfolio, net of
 allowance for loan
 and lease losses         149,225  145,001  144,743  131,587  131,605
Total loans held for sale  26,440   21,147   23,317   23,842   18,035
Total interest-earning
 assets                   230,167  230,852  241,296  221,536  202,636
Total assets              261,101  261,281  275,223  242,506  223,638
Total interest-bearing
 deposits                 112,969  108,441  107,174   84,741   81,062
Total noninterest-bearing
 deposits                  27,639   20,628   21,836   22,441   18,671
Total stockholders'
 equity                    20,161   19,586   18,128   14,063   14,529
Dividends declared per
 common share               $0.27    $0.26    $0.25    $0.24    $0.23

(1) Excludes unrealized net gain/loss on available-for-sale securities
    and derivatives.

(2) Excludes goodwill and intangible assets but includes MSR.

(3) Estimate of what the total risk-based capital ratio would be if
    Washington Mutual, Inc. was a bank holding company that complies
    with Federal Reserve Board capital requirements.

(4) Excludes amortization of goodwill.

(5) Includes amortization of goodwill.

(6) Excludes nonaccrual loans held for sale.

WM-5


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


                                         Quarter Ended
----------------------------------------------------------------------
                         Sept. 30, 2002  June 30, 2002 Sept. 30, 2001
                          Balance  Rate  Balance  Rate  Balance  Rate
----------------------------------------------------------------------
Average Balances and
 Weighted Average
 Interest Rates
Assets
Interest-earning assets:
   Federal funds sold and
    securities purchased
  under resale agreements  $3,707  1.74%  $1,995  1.89%    $134  3.67%
AFS securities(1):
  MBS                      24,882  5.53   22,471  5.96   37,863  6.83
  Investment securities    24,472  5.02   38,436  4.97   12,739  5.61
Loans(2):
  SFR                     109,265  5.66  108,312  5.87  100,548  6.82
  Specialty mortgage
   finance(3)              11,078  9.29   10,423  9.75    9,770 10.21
---------------------------------       --------       --------
     Total SFR            120,343  5.99  118,735  6.21  110,318  7.12
  SFR construction(4)       2,105  6.57    2,272  7.05    2,821  8.00
      Second mortgage and other
       consumer:
     Banking subsidiaries  16,762  6.50   16,057  6.66    9,946  8.05
     Washington Mutual
      Finance               2,695 16.29    2,566 16.50    2,561 15.39
  Commercial business       5,007  5.69    4,963  5.54    5,302  6.91
  Commercial real estate:
     Multi-family          18,106  5.93   17,432  5.98   16,329  7.46
     Other commercial
      real estate           6,882  6.55    6,854  6.46    4,653  7.65
---------------------------------       --------       --------
        Total loans       171,900  6.21  168,879  6.38  151,930  7.38
  Other                     4,403  6.23    4,723  5.67    4,133  5.21
---------------------------------       --------       --------
        Total interest-
        earning assets    229,364  5.94  236,504  6.06  206,799  7.13
Noninterest-earning
 assets:
 MSR                        5,933          7,828          7,069
 Goodwill                   6,038          5,952          2,083
 Other                     19,813         16,552         12,506
---------------------------------       --------       --------
     Total assets        $261,148       $266,836       $228,457
=================================       ========       ========
Liabilities
Interest-bearing
 liabilities:
Deposits:
  Interest-bearing
   checking               $46,508  2.59  $36,991  2.65   $6,632  0.86
  Savings accounts and
   MMDAs                   29,963  1.45   32,249  1.51   36,532  2.88
  Time deposit accounts    34,937  2.98   38,991  3.06   37,321  4.84
---------------------------------       --------       --------
     Total interest-
      bearing deposits    111,408  2.41  108,231  2.46   80,485  3.62
Federal funds purchased
 and commercial paper       1,983  1.43    3,562  1.75    4,309  3.71
Repurchase agreements      26,814  3.06   35,812  2.44   27,353  3.29
Advances from FHLBs        56,926  3.00   59,651  2.75   62,614  4.17
Other                      13,549  5.06   13,976  5.14   15,459  5.51
---------------------------------       --------       --------
     Total interest-
      bearing liabilities 210,680  2.81  221,232  2.69  190,220  3.91
Noninterest-bearing
 sources:
Noninterest-bearing
 deposits                  24,065         22,417         18,691
Other liabilities           5,545          3,795          5,492
Stockholders' equity       20,858         19,392         14,054
---------------------------------       --------       --------
     Total liabilities
     and stockholders'
     equity              $261,148       $266,836       $228,457
=================================       ========       ========

Net interest spread                3.13           3.37           3.22
Impact of noninterest-
 bearing sources                   0.23           0.17           0.31
Net interest margin                3.36           3.54           3.53

------------------
(1) Yield is based on average amortized cost balances.

(2) Nonaccrual loans were included in the average loan amounts
    outstanding.

(3) Includes purchased subprime loan portfolios as well as first
    mortgages originated by Washington Mutual Finance and Long Beach
    Mortgage.

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


WM-6

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


                                               Nine Months Ended
----------------------------------------------------------------------
                                        Sept. 30, 2002  Sept. 30, 2001
                                         Balance  Rate   Balance  Rate
----------------------------------------------------------------------
Average Balances and Weighted Average
 Interest Rates
Assets
Interest-earning assets:
   Federal funds sold and securities
    purchased under resale agreements     $2,289  1.77%    $273  5.83%
   AFS securities(1):
      MBS                                 24,199  5.62   44,882  7.08
      Investment securities               37,301  4.98    9,818  5.61
   Loans(2):
      SFR                                110,564  5.88   96,775  7.24
      Specialty mortgage finance(3)       10,867  9.36    8,727 10.34
------------------------------------------------        -------
         Total SFR                       121,431  6.19  105,502  7.50
      SFR construction(4)                  2,290  6.74    2,744  8.39
      Second mortgage and other
       consumer:
         Banking subsidiaries             15,773  6.66    9,395  8.61
         Washington Mutual Finance         2,584 16.44    2,573 15.22
      Commercial business                  5,204  5.58    4,670  7.67
      Commercial real estate:
         Multi-family                     17,699  6.08   16,675  7.95
         Other commercial real estate      6,859  6.61    4,528  8.08
------------------------------------------------        -------
            Total loans                  171,840  6.38  146,087  7.80
      Other                                4,624  6.17    4,053  6.17
------------------------------------------------        -------
                Total interest-earning
                 assets                  240,253  6.04  205,113  7.50
Noninterest-earning assets:
   MSR                                     6,918          4,858
   Goodwill                                5,757          1,825
   Other                                  17,763         10,150
------------------------------------------------       --------
         Total assets                   $270,691       $221,946
================================================       ========

Liabilities
Interest-bearing liabilities:
   Deposits:
      Interest-bearing checking          $35,873  2.65   $6,408  1.35
      Savings accounts and MMDAs          33,357  1.49   36,772  3.47
      Time deposit accounts               38,628  3.13   35,698  5.34
------------------------------------------------       --------
         Total interest-bearing deposits 107,858  2.46   78,878  4.14
   Federal funds purchased and
    commercial paper                       3,690  1.73    4,685  4.76
   Repurchase agreements                  38,595  2.21   29,550  4.63
   Advances from FHLBs                    60,595  2.78   63,698  5.06
   Other                                  13,892  5.10   12,929  6.68
------------------------------------------------       --------
         Total interest-bearing
          liabilities                    224,630  2.66  189,740  4.72
Noninterest-bearing sources:
   Noninterest-bearing deposits           22,175         15,248
   Other liabilities                       4,299          4,150
   Stockholders' Equity                   19,587         12,808
------------------------------------------------       --------
         Total liabilities and
          stockholders' equity          $270,691       $221,946
================================================       ========

  Net interest spread                             3.38           2.78
  Impact of noninterest-bearing sources           0.17           0.36
  Net interest margin                             3.55           3.14

-------------------

(1) Yield is based on average amortized cost balances.

(2) Nonaccrual loans were included in the average loan amounts
    outstanding.

(3) Includes purchased subprime loan portfolios as well as first
    mortgages originated by Washington Mutual Finance and Long Beach
    Mortgage.

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

WM-7

                        Washington Mutual, Inc.
                    Selected Financial Information
                              (unaudited)

                                   Quarter Ended     Nine Months Ended
----------------------------------------------------------------------
                               Sept.    June   Sept.    Sept.  Sept.
                                30,      30,    30,      30,    30,
                               2002     2002   2001     2002   2001
----------------------------------------------------------------------
Basic and Diluted Weighted
 Average Number of Common
 Shares Outstanding
 (in thousands)

Basic weighted average
 number of common
 shares outstanding          947,293  954,662 859,497 949,868 848,301
  Dilutive effect of
   potential common
   shares from:
    Stock options              8,460    9,911   9,336   8,991   9,050
    Premium Income Equity
     Securities(SM) (1)          775    1,671   1,782   1,269   1,372
    Trust Preferred Income
     Equity Redeemable
     Securities(SM)            6,894    7,909   8,759   6,810   4,483
----------------------------------------------------------------------
                              16,129   19,491  19,877  17,070  14,905
----------------------------------------------------------------------
Diluted weighted average
 number of common shares
 outstanding                 963,422  974,153 879,374 966,938 863,206
======================================================================

(1) Redeemed on August 16, 2002.

WM-8

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


                                 Quarter Ended      Nine Months Ended
----------------------------------------------------------------------
                              Sept.   June    Sept.   Sept.    Sept.
                               30,     30,     30,     30,      30,
                              2002    2002    2001    2002     2001
----------------------------------------------------------------------
Loan Volume
 SFR:
  Adjustable rate ("ARMs")  $25,928 $16,093  $9,120  $58,629  $24,333
  Fixed rate                 38,323  30,999  30,781  108,553   68,258
  Specialty mortgage
   finance (1)                3,370   3,358   3,186   10,048    8,406
----------------------------------------------------------------------
    Total SFR loan volume    67,621  50,450  43,087  177,230  100,997
   SFR construction:
      Builder (2)               629     589     144    1,635    2,058
      Custom (3)                152     136     142      384      512
   Second mortgage and other
    consumer:
      Banking subsidiaries    3,554   3,912   2,280   11,186    5,780
      Washington Mutual
       Finance                  496     536     499    1,484    1,453
   Commercial business          533     598     573    1,774    2,148
   Commercial real estate:
      Multi-family            1,870   1,242     580    3,976    1,982
      Other commercial real
       estate                   628     316     145    1,280      783
----------------------------------------------------------------------
         Total loan volume  $75,483 $57,779 $47,450 $198,949 $115,713
======================================================================

Loan Volume by Channel
 Originated                 $52,020 $39,667 $27,022 $135,225  $76,783
 Purchased/Correspondent     23,463  18,112  20,428   63,724   38,930
----------------------------------------------------------------------
         Total loan volume
          by channel        $75,483 $57,779 $47,450 $198,949 $115,713
======================================================================

Refinancing Activity (4)
   SFR:
      ARMs                  $19,681 $10,575  $6,937  $44,413  $16,677
      Fixed rate             25,653  16,584  18,805   68,170   42,990
   SFR construction              12      15       7       40       23
   Second mortgage and other
    consumer                    584     687      84    1,912      225
   Commercial real estate       391     537     326    1,250      903
----------------------------------------------------------------------
         Total refinances   $46,321 $28,398 $26,159 $115,785  $60,818
======================================================================

SFR Loan Volume by Index:
   Short-term ARMs:
      Treasury indices       $4,020  $5,002  $5,903  $15,502  $15,524
      COFI                      743   1,444     532    2,915    1,527
      Other                   1,980   1,824      71    5,298       85
----------------------------------------------------------------------
       Total short-term ARMs  6,743   8,270   6,506   23,715   17,136
   Medium-term ARMs          21,905  10,615   5,290   42,948   12,913
   Fixed-rate mortgages      38,973  31,565  31,291  110,567   70,948
----------------------------------------------------------------------
      Total SFR loan volume $67,621 $50,450 $43,087 $177,230 $100,997
======================================================================

(1) Includes purchased subprime loan portfolios as well as first
    mortgages originated by Washington Mutual Finance and Long Beach
    Mortgage.

(2) Represents loans to builders for the purpose of financing the
    acquisition, development and construction of single-family
    residences for sale.

(3) Represents construction loans made directly to the intended
    occupant of a single-family residence.

(4) Includes loan refinancings entered into by both new and
    pre-existing loan customers.

WM-9

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

                                Change from   Sept.    June     Sept.
                              June 30, 2002    30,      30,      30,
                          to Sept. 30, 2002   2002     2002     2001
----------------------------------------------------------------------
Loans by Property Type and MBS
 Loans held in portfolio:
   SFR                              $2,603  $87,773  $85,170  $82,174
   Specialty mortgage finance(1)       282   10,866   10,584    9,196
----------------------------------------------------------------------
      Total SFR loans                2,885   98,639   95,754   91,370
   SFR construction:
      Builder(2)                       (57)   1,704    1,761    2,307
      Custom(3)                         (2)     370      372      438
   Second mortgage and other
    consumer:
      Banking subsidiaries             193   16,848   16,655   10,202
      Washington Mutual Finance         18    2,695    2,677    2,550
   Commercial business                 340    5,385    5,045    5,285
   Commercial real estate:
      Multi-family                     841   18,408   17,567   16,163
      Other commercial real estate      46    6,881    6,835    4,585
----------------------------------------------------------------------
   Total loans held in portfolio     4,264  150,930  146,666  132,900
Less: allowance for loan
  and lease losses                     (40)  (1,705)  (1,665)  (1,295)
Loans securitized and retained as
 MBS                                 2,574   21,918   19,344   25,009
----------------------------------------------------------------------
   Total net loans held in
    portfolio and loans securitized
    and retained as MBS              6,798  171,143  164,345  156,614
Loans held for sale                  5,293   26,440   21,147   18,035
----------------------------------------------------------------------
   Total net loans and loans
    securitized and retained as MBS 12,091  197,583  185,492  174,649
Purchased MBS                         (778)   4,576    5,354   12,208
----------------------------------------------------------------------
   Total net loans and MBS         $11,313 $202,159 $190,846 $186,857
======================================================================

(1) Includes purchased subprime loan portfolios as well as first
    mortgages originated by Washington Mutual Finance.

(2) Represents loans to builders for the purpose of financing the
    acquisition, development and construction of single-family
    residences for sale.

(3) Represents 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)


                                                  June 30,   Dec. 31,
                                                    2002       2001
                                                     to         to
                                                  Sept. 30,  Sept. 30,
                                                    2002       2002
----------------------------------------------------------------------
Rollforward of Loans Held for Sale
 Balance, beginning of period                      $21,147    $23,842
  Loans added through acquisitions                       -      6,717
  Loans originated and purchased/correspondent      54,857    140,990
  Loans transferred from loans held in portfolio       252        990
  Loans transferred to loans held in portfolio        (376)      (376)
  Loans securitized and retained                    (2,731)    (5,270)
  Loans sold                                       (46,620)  (138,807)
  Loan payments and other                              (89)    (1,646)
----------------------------------------------------------------------
 Change in loans                                     5,293      2,598
----------------------------------------------------------------------
 Balance, end of period                            $26,440    $26,440
======================================================================


Rollforward of Loans Held in Portfolio
 Balance, beginning of period                     $146,666   $132,991
  Loans added through acquisitions                       -     16,225
  Loans originated and purchased/correspondent      20,626     57,959
  Loans transferred from loans held for sale           376        376
  Loans transferred to loans held for sale            (252)      (990)
  Loans securitized and retained                       (48)       (48)
  Loans sold                                          (761)    (5,007)
  Loan payments and other                          (15,677)   (50,576)
----------------------------------------------------------------------
 Change in loans                                     4,264     17,939
----------------------------------------------------------------------
 Balance, end of period                           $150,930   $150,930
======================================================================


WM-11

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

                                               June 30,       Dec. 31,
                                                  2002           2001
                                                to Sept.  to Sept. 30,
                                               30, 2002          2002
----------------------------------------------------------------------
Rollforward of Mortgage Servicing Rights
 ("MSR")(1)
   Balance, beginning of period                   $6,489       $6,241
      SFR:
         Additions through acquisitions                -          926
         Other additions                             732        2,810
         Amortization                               (713)      (1,696)
         Impairment                               (1,849)      (2,911)
         Sale of excess servicing                   (111)        (822)
----------------------------------------------------------------------
   Balance, end of period(2)                      $4,548       $4,548
======================================================================
Rollforward of Valuation Allowance for MSR
 Impairment
   Balance, beginning of period                   $2,568       $1,714
      Impairment                                   1,849        2,911
      Sale of excess servicing                       (97)        (305)
----------------------------------------------------------------------
   Balance, end of period                         $4,320       $4,320
======================================================================
Rollforward of Loans Serviced for Others
   Balance, beginning of period                 $477,309     $378,383
      SFR:
         Additions through acquisitions                -       49,242
         Other additions                          52,910      162,067
         Loan payments and other                 (51,957)    (111,459)
      Net change in commercial real estate
       loans serviced for others                      13           42
----------------------------------------------------------------------
   Balance, end of period                       $478,275     $478,275
======================================================================

                                                             Sept. 30,
                                                                2002
                                                              Balance
----------------------------------------------------------------------
Total Servicing Portfolio
      Loans serviced for others                              $478,275
      Servicing on retained MBS without MSR                     6,718
      Servicing on owned loans                                164,696
      Subservicing portfolio                                  144,494
----------------------------------------------------------------------
   Total servicing portfolio                                 $794,183
======================================================================

                                                     Sept. 30, 2002
                                               -----------------------
                                                             Weighted
                                                 Unpaid       Average
                                                Principal    Servicing
                                                 Balance        Fee
----------------------------------------------------------------------
Loans Serviced for Others by Loan Type                      (in basis
                                                              points,
                                                           annualized)

      Government                                 $67,969           54
      Agency                                     308,467           35
      Private                                     90,791           48
      Specialty home loans                        11,048           50
----------------------------------------------------------------------
   Total loans serviced for others(3)           $478,275           40
======================================================================

(1) Net of valuation allowance.

(2) At September 30, 2002, aggregate MSR fair value was $4.57 billion.

(3) Weighted average coupon (annualized) was 6.98% at September 30,
    2002.

WM-12

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

                Change from
                  June      Sept.    % of   June    % of  Sept.   % of
                  30,       30,      total  30,     total  30,   total
                  2002      2002            2002          2001
                  to Sept.
                  30, 2002
----------------------------------------------------------------------
Real Estate
 Loans and MBS (1)
  Short-term ARMs:
   COFI         $(1,212)  $ 29,672   18% $ 30,884   20% $ 36,436   23%
   Treasury
    indices       1,922     39,891   24    37,969   24    37,547   23
   Other          1,384     12,667(2) 8    11,283(2) 7    10,928(2) 7
----------------------------------------------------------------------
    Total short-
     term ARMs    2,094     82,230   50    80,136   51    84,911   53
   Medium-term
    ARMs          5,535     49,016   29    43,481   28    34,706   22
   Fixed-rate
    loans         2,009     29,597   18    27,588   18    29,440   18
   Fixed-rate MBS   687      5,198    3     4,511    3    10,766    7
----------------------------------------------------------------------
    Total real
     estate loans
      and MBS   $10,325   $166,041  100% $155,716  100% $159,823  100%
======================================================================

(1) Does not include specialty mortgage finance loans.

(2) The balance included the following amount of securities retained
    which bear COFI to LIBOR basis risk (dollars in billions):
        Sept. 30, 2002: $2.8
         June 30, 2002:  2.8
        Sept. 30, 2001:  2.8

                                 Quarter Ended       Nine Months Ended
---------------------------------------------------- -----------------
                            Sept.      June    Sept.   Sept.    Sept.
                             30,        30,     30,     30,      30,
                            2002       2002    2001    2002     2001
---------------------------------------------------- -----------------
SFR Mortgage Banking
 (Expense) Income
   Loan servicing fees    $    508   $  560   $ 425   $ 1,609   $ 928
   Loan subservicing fees       34       38      11        87      15
   Amortization of MSR        (713)    (504)   (293)   (1,696)   (624)
   MSR impairment           (1,849)  (1,107)   (554)   (2,911)   (692)
   Other, net                  (97)     (78)    (44)     (238)   (104)
---------------------------------------------------- -----------------
    Net SFR loan servicing
     expense                (2,117)  (1,091)   (455)   (3,149)   (477)
   Loan related income         125      120      44       326     107
   Gain from mortgage loans    402      220     275       873     677
   (Loss) gain from sale of
     originated MBS             (1)      18       5        19     100
---------------------------------------------------- -----------------
     Total SFR mortgage
      banking (expense)
       income             $ (1,591)  $ (733)  $(131)  $(1,931)  $ 407
==================================================== =================


WM-13

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

                       Sept. 30, 2002  Dec. 31, 2001  Sept. 30,  2001
----------------------------------------------------------------------
                       Balance Term(1) Balance Term(1) Balance Term(1)
----------------------------------------------------------------------
Deposits and Borrowings         (in             (in             (in
                               months)         months)         months)
   Deposits:
     Noninterest-
      bearing deposits  $27,639  N/A   $22,441   N/A   $18,671   N/A
      Interest-bearing
       checking
       accounts,
        savings
         accounts and
         MMDAs           79,273   N/A   47,779   N/A    41,503   N/A
      Interest-bearing
       time deposit
       accounts          33,696    16   36,962    10    39,559     7
----------------------------------------------------------------------
         Total
          deposits(2)   140,608        107,182          99,733
   Borrowings:
      Adjustable         53,392     1   48,014     2    49,185     2
      Short-term fixed   15,900     2   49,569     1    39,459     1
      Long-term fixed    24,101    61   20,312    72    15,706    90
----------------------------------------------------------------------
         Total
          borrowings     93,393        117,895         104,350
----------------------------------------------------------------------
           Total
            deposits
            and
            borrowings $234,001       $225,077        $204,083
======================================================================

(1) Terms used are remaining term for deposits and fixed-rate
    borrowings and term to reprice for adjustable-rate borrowings.

(2) Includes custodial and escrow deposits of $16.02 billion at
    September 30, 2002, $10.11 billion at December 31, 2001 and $8.68
    billion at September 30, 2001.


                                       Sept. 30,  June 30,   Sept. 30,
                                         2002       2002       2001
----------------------------------------------------------------------
Retail Checking
 Accounts (1)
    WMB and WMBfsb                    1,277,805  1,249,270  1,158,646
    WMB, FA                           5,813,763  5,568,273  4,501,229
----------------------------------------------------------------------
         Total retail
          checking
          accounts                    7,091,568  6,817,543  5,659,875
======================================================================

Retail Checking Account
 Activity (1)
   Net accounts opened
    during the quarter:
      WMB and WMBfsb                     28,535     30,830     19,891
      WMB, FA                           245,490    250,078    177,438
----------------------------------------------------------------------
   Net new retail
    checking accounts                   274,025    280,908    197,329
======================================================================

(1) Retail checking accounts exclude commercial business accounts. The
    information provided refers to the number of accounts, not dollar
    volume.

WM-14


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

                                            Quarter Ended
----------------------------------------------------------------------
                                 Sept.   June    Mar.    Dec.   Sept.
                                  30,     30,     31,     31,     30,
                                 2002    2002    2002    2001    2001
----------------------------------------------------------------------
Allowance for Loan and Lease
 Losses
   Balance, beginning of
    quarter                    $1,665  $1,621  $1,404  $1,295  $1,170
   Allowance acquired through
    business
    combinations/other             (7)      -     141       6       -
   Provision for loan and
    lease losses                  135     160     175     200     200
----------------------------------------------------------------------
                                1,793   1,781   1,720   1,501   1,370

   Loans charged off:
      SFR                          (9)    (11)    (11)     (3)     (6)
      Specialty mortgage
       finance                     (9)     (8)     (9)    (10)     (4)
----------------------------------------------------------------------
            Total SFR charge
             offs                 (18)    (19)    (20)    (13)    (10)
      Second mortgage and
       other consumer:
         Banking
          subsidiaries            (22)    (22)    (21)    (16)    (12)
         Washington Mutual
          Finance                 (44)    (46)    (43)    (41)    (36)
      Commercial business         (22)    (46)    (26)    (38)    (19)
      Commercial real
       estate:
         Multi-family              (1)      -       -       -       -
         Other commercial
          real estate              (2)     (5)     (2)      -      (5)
----------------------------------------------------------------------
            Total loans
             charged off         (109)   (138)   (112)   (108)    (82)
   Recoveries of loans
    previously charged off:
      SFR                           2       -       -       -       -
      Second mortgage and
       other consumer:
         Banking
          subsidiaries              3       3       3       1       1
         Washington Mutual
          Finance                   5       5       5       4       5
      Commercial business          10      14       5       5       1
      Commercial real
       estate:
          Multi-family              1       -       -       -       -
          Other commercial
           real estate              -       -       -       1       -
----------------------------------------------------------------------
             Total
              recoveries of
              loans
              previously
              charged off          21      22      13      11       7
----------------------------------------------------------------------
          Net charge offs         (88)   (116)    (99)    (97)    (75)
----------------------------------------------------------------------
   Balance, end of quarter     $1,705  $1,665  $1,621  $1,404  $1,295
======================================================================

   Net charge offs
    (annualized) as a
     percentage of average
      loans held in
      portfolio                  0.24%   0.31%   0.26%   0.29%   0.22%
   Allowance as a percentage
    of total loans held in
    portfolio                    1.13%   1.14%   1.11%   1.06%   0.97%


WM-15


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



                                   Sept.  June    Mar.    Dec.   Sept.
                                    30,    30,     31,     31,    30,
                                   2002   2002    2002    2001   2001
----------------------------------------------------------------------
Nonperforming Assets ("NPAs") and
 Restructured Loans
  Nonaccrual loans(1):
    SFR                          $1,068  $1,092  $1,177   $974   $771
    Specialty mortgage
     finance(2)                     426     420     418    358    301
----------------------------------------------------------------------
      Total SFR nonaccrual loans  1,494   1,512   1,595  1,332  1,072
    SFR construction:
        Builder(3)                   48      44      57     26     18
        Custom(4)                     6       8      15     10      9
    Second mortgage and other
     consumer:
        Banking subsidiaries         61      66      72     64     52
        Washington Mutual
         Finance                     92      88      91     84     78
    Commercial business             186     177     186    159    126
    Commercial real estate:
        Multi-family                 58      65      51     56     51
        Other commercial real
         estate                     243     272     324    299    320
----------------------------------------------------------------------
       Total nonaccrual loans     2,188   2,232   2,391  2,030  1,726
  Foreclosed assets:
    SFR                             129     114     126    107    110
    Specialty mortgage finance       88      72      70     69     55
----------------------------------------------------------------------
      Total SFR foreclosed
       assets                       217     186     196    176    165
    SFR construction:
        Builder                       8       7       8      4      4
        Custom                        -       -       -      1      -
    Second mortgage and other
     consumer:
        Banking subsidiaries          8      11      12     11     16
        Washington Mutual
         Finance                      9       8       9      9      8
    Commercial business              13      11      13     10     10
    Commercial real estate:
       Multi-family                   -       -       -      -      1
       Other commercial real
        estate                       54      51      29     17     17
----------------------------------------------------------------------
       Foreclosed assets            309     274     267    228    221
----------------------------------------------------------------------
       Total NPAs                $2,497  $2,506  $2,658 $2,258 $1,947
       As a percentage of total
        assets                     0.96%   0.96%   0.97%  0.93%  0.87%

   Restructured loans              $112    $119    $130   $118   $128
----------------------------------------------------------------------
        Total NPAs and
         restructured loans      $2,609  $2,625  $2,788 $2,376 $2,075
======================================================================

(1) Excludes nonaccrual loans held for sale of $105 million at
    September 30, 2002. Prior periods also reflect the exclusion of
    nonaccrual loans held for sale of $114 million, $122 million, $123
    million, and $85 million at June 30, 2002, March 31, 2002,
    December 31, 2001 and September 30, 2001. 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) Includes purchased subprime loan portfolios as well as first
    mortgages originated by Washington Mutual Finance.

(3) Represents loans to builders for the purpose of financing the
    acquisition, development and construction of single-family
    residences for sale.

(4) Represents construction loans made directly to the intended
    occupant of a single-family residence.


WM-16


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

The Company uses interest rate risk management contracts as tools to
manage interest rate risk. The following tables summarize the key
contractual terms associated with these contracts. Interest rate risk
management contracts that are embedded with certain adjustable and
fixed-rate borrowings, while not accounted for as derivatives under
SFAS No. 133, have been included in the tables since they also
function as interest rate risk management tools. The following
estimated net fair value amounts have been determined by the Company
using available market information and appropriate valuation
methodologies. Substantially all of the interest rate contracts are
indexed to three-month LIBOR.


                                               Sept. 30, 2002
----------------------------------------------------------------------
                                               Maturity Range
----------------------------------------------------------------------
                                      Counter-
                                       Party   Total
                            Net Fair  Credit  Notional
                             Value     Risk    Amount    2002    2003
----------------------------------------------------------------------
Interest Rate Risk
 Management Contracts:
  Asset/Liability Management
    Pay-fixed swaps         $(1,108)      $-
       Contractual maturity                   $29,363    $413  $8,166
       Weighted average pay
        rate                                     3.94%   3.11%   2.95%
       Weighted average
        receive rate                             1.81%   1.84%   1.81%
    Receive-fixed swaps         553      553
       Contractual maturity                    $4,322    $100    $600
       Weighted average pay
        rate                                     1.70%   3.31%   1.50%
       Weighted average
        receive rate                             6.39%   8.25%   5.10%
    Interest rate
     caps/collars/corridors       -        -
       Contractual maturity                      $536     $10    $271
       Weighted average
        strike rate                              7.63%   8.63%   7.62%
    Payor swaptions               5        5
       Contractual maturity
        (option)                               $5,000       -  $5,000
       Weighted average
        strike rate                              6.12%      -    6.12%
       Contractual maturity
        (swap)                                      -       -       -
       Weighted average
        strike rate                                 -       -       -
    Embedded pay-fixed swaps   (199)       -
       Contractual maturity                    $2,750       -       -
       Weighted average pay
        rate                                     4.73%      -       -
       Weighted average
        receive rate                             1.81%      -       -
    Embedded caps                 1        1
       Contractual maturity                      $655       -    $155
       Weighted average
        strike rate                              7.63%      -    7.25%
    Embedded payor
     swaptions(1)                21       21
       Contractual maturity
        (option)                               $6,400       -  $5,900
       Weighted average
        strike rate                              6.14%      -    6.13%
       Contractual maturity
        (swap)                                      -       -       -
       Weighted average
        strike rate                                 -       -       -
----------------------------------------------------------------------
           Total
            asset/liability
            management        $(727)    $580  $49,026
======================================================================

  MSR Risk Management
    Receive-fixed swaps      $1,665   $1,665
       Contractual maturity                   $12,075       -       -
       Weighted average pay
        rate                                     1.84%      -       -
       Weighted average
        receive rate                             5.93%      -       -
   Floors                       248      248
       Contractual maturity                    $3,900       -       -
       Weighted average
        strike rate                              6.09%      -       -
        Receiver swaptions      692      692
       Contractual maturity
        (option)                               $5,400    $250    $300
       Weighted average
        strike rate                              6.51%   5.69%   5.42%
       Contractual maturity
        (swap)                                      -       -       -
       Weighted average
        strike rate                                 -       -       -
----------------------------------------------------------------------
           Total interest
            rate contracts    2,605    2,605  $21,375(2)
     FNMA 15y 5% TBA              9        9
       Contractual maturity                      $350    $350       -
       Weighted average
        price                                   99.01   99.01
     FNMA 30y 5.5% TBA           30       30
        Contractual maturity                   $1,375  $1,375       -
       Weighted average
        price                                   98.98   98.98
     FNMA 30y 6% TBA              7        7
       Contractual maturity                      $300    $300       -
       Weighted average
        price                                  100.44  100.44
----------------------------------------------------------------------
           Total forward
            purchase
            commitments          46       46   $2,025
----------------------------------------------------------------------
           Total MSR risk
            management       $2,651   $2,651  $23,400
======================================================================
           Total interest
            rate risk
            management
            contracts        $1,924   $3,231  $72,426
======================================================================



                                               Sept. 30, 2002
----------------------------------------------------------------------
                                               Maturity Range
----------------------------------------------------------------------
                                                                After
                                        2004    2005    2006    2006
----------------------------------------------------------------------
Interest Rate Risk
 Management Contracts:
  Asset/Liability Management
    Pay-fixed swaps
       Contractual maturity           $8,834  $3,130  $4,709   $4,111
       Weighted average pay rate        4.03%   4.13%   4.39%    5.08%
       Weighted average receive rate    1.80%   1.80%   1.84%    1.82%
    Receive-fixed swaps
       Contractual maturity               $-    $530  $1,000   $2,092
       Weighted average pay rate           -    1.11%   1.75%    1.81%
       Weighted average receive rate       -    5.37%   6.81%    6.74%
    Interest rate
     caps/collars/corridors
       Contractual maturity             $191     $64       -        -
       Weighted average strike rate     8.14%   5.94%      -        -
    Payor swaptions
       Contractual maturity (option)       -       -       -        -
       Weighted average strike rate        -       -       -        -
       Contractual maturity (swap)         -       -  $1,000   $4,000
       Weighted average strike rate        -       -    6.05%    6.14%
    Embedded pay-fixed swaps
       Contractual maturity                -       -       -   $2,750
       Weighted average pay rate           -       -       -     4.73%
       Weighted average receive rate       -       -       -     1.81%
    Embedded caps
       Contractual maturity             $500       -       -        -
       Weighted average strike rate     7.75%      -       -        -
    Embedded payor swaptions(1)
       Contractual maturity (option)    $500       -       -        -
       Weighted average strike rate     6.21%      -       -        -
       Contractual maturity (swap)         -       -  $3,750   $2,650
       Weighted average strike rate        -       -    5.99%    6.34%
----------------------------------------------------------------------
           Total asset/liability
            management
======================================================================

  MSR Risk Management
    Receive-fixed swaps
       Contractual maturity                -       -       -  $12,075
       Weighted average pay rate           -       -       -     1.84%
       Weighted average receive rate       -       -       -     5.93%
   Floors
       Contractual maturity                -       -       -   $3,900
       Weighted average strike rate        -       -       -     6.09%
        Receiver swaptions
       Contractual maturity (option)    $300  $4,550       -        -
       Weighted average strike rate     5.99%   6.66%
       Contractual maturity (swap)         -       -       -   $5,400
       Weighted average strike rate        -       -       -     6.51%
----------------------------------------------------------------------
           Total interest rate
            contracts
     FNMA 15y 5% TBA
       Contractual maturity                -       -       -        -
       Weighted average price
     FNMA 30y 5.5% TBA
        Contractual maturity               -       -       -        -
       Weighted average price
     FNMA 30y 6% TBA
       Contractual maturity                -       -       -        -
       Weighted average price
----------------------------------------------------------------------
           Total forward purchase
            commitments
----------------------------------------------------------------------
           Total MSR risk management
======================================================================
           Total interest rate
            risk management contracts
======================================================================

(1) Embedded interest rate swaptions are exercisable upon maturity.

(2) Interest rate contracts decreased net interest income by $146
    million and $275 million for the three months and nine months
    ended September 30, 2002.

WM-17


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

The Company uses interest rate risk management contracts as tools to
manage interest rate risk. The following tables summarize the key
contractual terms associated with these contracts. Interest rate risk
management contracts that are embedded with certain adjustable-rate
borrowings, while not accounted for as derivatives under SFAS No. 133,
have been included in the tables since they also function as interest
rate risk management tools. The following estimated net fair value
amounts have been determined by the Company using available market
information and appropriate valuation methodologies.


                                              June 30, 2002
----------------------------------------------------------------------
                                              Maturity Range
----------------------------------------------------------------------
                                     Counter-
                                     Party    Total
                           Net Fair  Credit  Notional
                             Value    Risk    Amount    2002    2003
----------------------------------------------------------------------
Interest Rate Risk
 Management Contracts:
  Asset/Liability Management
    Pay-fixed swaps           $(356)    $10
       Contractual maturity                  $30,509    $713  $8,166
       Weighted average pay
        rate                                    4.00%   4.44%   2.95%
       Weighted average
       receive rate                             1.93%   1.94%   1.93%
    Receive-fixed swaps         332     335
       Contractual maturity                   $4,380       -    $600
       Weighted average pay
        rate                                    1.84%      -    1.52%
       Weighted average
       receive rate                             6.39%      -    5.10%
    Interest rate
     caps/collars/corridors       -       -
       Contractual maturity                     $755    $229    $271
       Weighted average
        strike rate                             7.52%   7.32%   7.62%
    Payor swaptions              30      30
       Contractual maturity
      (option)                                $5,000       -  $5,000
       Weighted average
        strike rate                             6.12%      -    6.12%
       Contractual maturity
        (swap)                                     -       -       -
       Weighted average
        strike rate                                -       -       -
    Embedded pay-fixed swaps    (71)      -
       Contractual maturity                   $2,750       -       -
       Weighted average pay
        rate                                    4.89%      -       -
       Weighted average
       receive rate                             1.93%      -       -
    Embedded caps                 1       1
       Contractual maturity                     $669       -    $169
       Weighted average
        strike rate                             7.62%      -    7.25%
    Embedded payor
     swaptions(1)                57      57
       Contractual maturity
      (option)                                $6,400       -  $5,900
       Weighted average
        strike rate                             6.14%      -    6.13%
       Contractual maturity
        (swap)                                     -       -       -
       Weighted average
        strike rate                                -       -       -
----------------------------------------------------------------------
           Total
            asset/liability
            management          $(7)   $433  $50,463
======================================================================

  MSR Risk Management
    Receive-fixed swaps        $533    $533
       Contractual maturity                  $11,575       -       -
       Weighted average pay
        rate                                    1.95%      -       -
       Weighted average
       receive rate                             5.93%      -       -
   Floors                       110     110
       Contractual maturity                   $3,750       -       -
       Weighted average
        strike rate                             6.15%      -       -
    Receiver swaptions          447     447
       Contractual maturity
      (option)                                $7,650  $2,000    $300
       Weighted average
        strike rate                             6.38%   5.83%   5.42%
       Contractual maturity
        (swap)                                     -       -       -
       Weighted average
        strike rate                                -       -       -
    Embedded floors (2)         221     221
       Contractual maturity                   $8,600       -       -
       Weighted average
        strike rate                             6.02%      -       -
----------------------------------------------------------------------
           Total MSR risk
            management       $1,311  $1,311  $31,575
======================================================================
Total interest rate risk
 management contracts        $1,304  $1,744  $82,038      (3)
======================================================================



                                              June 30, 2002
----------------------------------------------------------------------
                                              Maturity Range
----------------------------------------------------------------------
                                                                After
                                           2004   2005   2006   2006
----------------------------------------------------------------------
Interest Rate Risk Management Contracts:
Asset/Liability Management
Pay-fixed swaps
   Contractual maturity                  $8,834 $3,130 $4,708  $4,958
   Weighted average pay rate               4.03%  4.13%  4.39%   5.17%
       Weighted average
       receive rate                        1.90%  1.88%  1.92%   2.03%
Receive-fixed swaps
   Contractual maturity                      $-   $530 $1,000  $2,250
   Weighted average pay rate                  -   1.51%  1.90%   1.97%
       Weighted average
       receive rate                           -   5.37%  6.81%   6.80%
Interest rate
 caps/collars/corridors
   Contractual maturity                    $191    $64      -       -
   Weighted average strike
    rate                                   8.14%  5.94%     -       -
Payor swaptions
       Contractual maturity
      (option)                                -      -      -       -
   Weighted average strike
    rate                                      -      -      -       -
   Contractual maturity
    (swap)                                    -      - $1,000  $4,000
   Weighted average strike
    rate                                      -      -   6.05%   6.14%
Embedded pay-fixed swaps
   Contractual maturity                       -      -      -  $2,750
   Weighted average pay rate                  -      -      -    4.89%
       Weighted average
       receive rate                           -      -      -    1.93%
Embedded caps
   Contractual maturity                    $500      -      -       -
   Weighted average strike
    rate                                   7.75%     -      -       -
Embedded payor swaptions(1)
       Contractual maturity
      (option)                             $500      -      -       -
   Weighted average strike
    rate                                   6.21%     -      -       -
   Contractual maturity
    (swap)                                    -      - $3,750  $2,650
   Weighted average strike
    rate                                      -      -   5.99%   6.34%
----------------------------------------------------------------------
       Total asset/liability
        management
======================================================================

MSR Risk Management
Receive-fixed swaps
   Contractual maturity                       -      -      - $11,575
   Weighted average pay rate                  -      -      -    1.95%
       Weighted average
       receive rate                           -      -      -    5.93%
Floors
   Contractual maturity                       -      -      -  $3,750
   Weighted average strike
    rate                                      -      -      -    6.15%
Receiver swaptions
       Contractual maturity
      (option)                             $300 $5,050      -       -
   Weighted average strike
    rate                                   5.99%  6.67%     -       -
   Contractual maturity
    (swap)                                    -      -      -  $7,650
   Weighted average strike
    rate                                      -      -      -    6.38%
Embedded floors (2)
   Contractual maturity                       -      -      -  $8,600
   Weighted average strike
    rate                                      -      -      -    6.02%
----------------------------------------------------------------------
       Total MSR risk
        management
======================================================================
Total interest rate risk management contracts
======================================================================

(1) Embedded interest rate swaptions are exercisable upon maturity.

(2) At June 30, 2002, none of these contracts were effective. $5.78
    billion and $2.82 billion of these contracts will become effective
    in June 2003 and July 2003. Once effective, the floors reprice
    every three months.

(3) Interest rate contracts decreased net interest income by $92
    million and $129 million for the three months and six months ended
    June 30, 2002.

CONTACT: Washington Mutual
Alan Gulick, 206/377-3637 (Media)
alan.gulick@wamu.net
or
JoAnn DeGrande, 206/461-3186 (Investors)
joann.degrande@wamu.net
or
Ruthanne King, 206/461-6421 (Investors)
ruthanne.king@wamu.net