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Washington Mutual Seeks Release of Funds from Escrow Account

SEATTLE--(BUSINESS WIRE)--Dec. 23, 2002--Washington Mutual, Inc. (NYSE:WM) announced today that it is notifying The Bank of New York as escrow agent requesting the release of 18 million shares of Washington Mutual common stock and approximately $85 million in cash from an escrow agreement established as part of the company's acquisition of American Savings Bank (ASB) in 1996.

The escrow account was scheduled to terminate on Dec. 20, 2002.

When Washington Mutual acquired American Savings Bank from Keystone Holdings Partners, L.P. and the Federal Deposit Insurance Corporation (FDIC) as manager of the FSLIC Resolution Fund, it placed 8 million shares of Washington Mutual common stock in an escrow account. Prior to the Dec. 20 termination date, Keystone and the FDIC had contingent rights to receive all or part of the escrowed shares (which have increased since 1996 due to stock splits), plus accumulated dividends and interest.

The ultimate number of shares and cash to be released from escrow would be based on the amount of net cash proceeds Washington Mutual would receive from a settlement -- or final, non-appealable money judgment -- resulting from Keystone's 1992 lawsuit against the federal government for breach of contract. The Keystone lawsuit was one among many such "goodwill" lawsuits filed by thrift institutions against the federal government in that period. In order for the maximum number of shares in the escrow to be released, Washington Mutual would have to receive net cash proceeds, before taxes, from any settlement or judgment of approximately $516 million.

The shares in the escrow account are currently not included in either primary or fully diluted shares for purposes of computing Washington Mutual's earnings per share.

Washington Mutual has been advised that the FDIC has requested that the escrow agent not release the shares and cash therein because, in the FDIC's opinion, conditions for an extension of the escrow account for up to four years were satisfied by a summary judgment establishing the liability of the federal government for breach of contract. The plaintiffs received that judgment earlier this year.

In order to facilitate discussions among the parties, David Bonderman and J. Taylor Crandall, two Washington Mutual outside directors who are affiliated with Keystone Holdings Partners, L.P. and who have a financial interest in this matter, have resigned as directors of Washington Mutual effective immediately. The company thanked them for their dedicated years of service to Washington Mutual and the board. Washington Mutual does not anticipate filling their seats.

Discussions are now taking place between the parties to determine whether they can resolve their differences.

With a history dating back to 1889, Washington Mutual (NYSE:WM) is a national financial services company that provides a diversified line of products and services to consumers and small- to mid-sized businesses. At Sept. 30, 2002, Washington Mutual and its subsidiaries had consolidated assets of $262.61 billion. Washington Mutual currently operates more than 2,500 consumer banking, mortgage lending, commercial banking, consumer finance and financial services offices throughout the nation.


CONTACT: Washington Mutual (Media)
Alan Gulick, 206/377-3637
Washington Mutual (Investor Relations)
JoAnn DeGrande, 206/461-3186
Ruthanne King, 206/461-6421