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Washington Mutual to Sell $140 Billion in Mortgage Servicing and Milwaukee Servicing Operations to Wells Fargo

SEATTLE & DES MOINES, Iowa--(BUSINESS WIRE)--July 19, 2006--Washington Mutual, Inc. (NYSE:WM) and Wells Fargo & Company (NYSE:WFC) have entered into a definitive agreement to sell Washington Mutual's entire portfolio of government mortgage servicing and a portion of its conforming, fixed-rate servicing portfolio -- totaling approximately $140 billion and representing approximately 1.3 million servicing customers -- to Wells Fargo. As part of the transaction, Washington Mutual will transfer to Wells Fargo its Milwaukee servicing operations. The effective date of the sale is expected to be July 31, 2006. Terms of the transaction were not disclosed.

To help ensure a smooth transition for customers, the two companies agreed to transfer to Wells Fargo the majority of Washington Mutual's loan servicing and support staff at its Milwaukee operations with the transfer of servicing. The loan servicing and support employees who will join Wells Fargo are expected to transfer to Wells Fargo from the fourth quarter of 2006 through the first quarter of 2007.

"The sale is consistent with Washington Mutual's strategy to deploy capital for maximum return and to focus our Home Loans business on higher margin products, while improving operating efficiency and reducing Mortgage Servicing Rights as a percentage of capital. The sale will also appropriately balance our servicing portfolio with our origination franchise," said Steve Rotella, Washington Mutual's president and chief operating officer.

"We're also very pleased that including the Milwaukee support operations in this transaction will provide continued employment for the majority of our employees who have contributed to our servicing success," said David Schneider, president of Washington Mutual's Home Loans Group. "Rather than shifting our product mix over time, selling this portion of our loan servicing portfolio, which is predominately mortgage-only customers, allows us to execute on our Home Loans product strategy faster while ensuring a seamless transition. Our total servicing portfolio will include approximately 4 million customers with outstanding principal balance of $692 billion at the completion of this sale."

"We welcome these 1.3 million mortgage servicing customers to Wells Fargo and the valued team members who will join us to serve them," said Mark Oman, senior EVP of Wells Fargo & Company and head of the Home and Consumer Finance Group. "This acquisition will further leverage the operating scale of our servicing business. Consistent with our vision to satisfy all our customers' financial needs, we look forward to building relationships with these customers so we can be there when they need their next financial product. We have a proven track record of earning more business from new customers. After this purchase, our total servicing portfolio will grow to 7.5 million customers with outstanding principal balances of approximately $1.25 trillion, served by team members from seven locations across the country."

"We expect this transaction to exceed our required internal rate of return even before factoring in any cross-sell to these new customers," said Howard Atkins, Wells Fargo & Company's chief financial officer. "With this additional servicing we'll continue to have a good balance between originations and servicing in our mortgage business and a healthy diversity of revenue sources, including our mortgage business, for our company as a whole."

Wells Fargo grew its mortgage servicing portfolio at a compound annual growth rate of 25 percent since 1995. By comparison, this acquisition will increase Wells Fargo's mortgage servicing portfolio by 13 percent.

Lehman Brothers and Kirkpatrick & Lockhart Nicholson Graham LLP were advisors to Washington Mutual on the transaction.

About Washington Mutual

Washington Mutual, through its subsidiaries, is one of the nation's leading consumer and small business banks. At June 30, 2006, Washington Mutual and its subsidiaries had assets of $350.70 billion. The company has a history dating back to 1889 and its subsidiary banks currently operate more than 2,600 consumer and small business banking stores throughout the nation. Washington Mutual's press releases are available at

About Wells Fargo

Wells Fargo & Company is a diversified financial services company with $500 billion in assets, providing banking, insurance, investments, mortgage and consumer finance to more than 23 million customers from more than 6,200 stores and the Internet ( across North America and elsewhere internationally. Wells Fargo Bank, N.A. is the only bank in the United States to receive the highest possible credit rating, "Aaa," from Moody's Investors Service.

Cautionary Note About Forward-Looking Statements

In accordance with the Private Securities Litigation Reform Act of 1995, we caution you that this news release contains forward-looking statements about Washington Mutual and Wells Fargo, including (1) the expected effective date of the transaction, (2) the expected percentage of Washington Mutual loan and servicing employees who will join Wells Fargo as part of the transaction and when they are expected to join, (3) Wells Fargo's expectation that the transaction will meet its required internal rate of return, and (4) Wells Fargo's expectations as to the balance of its mortgage originations and servicing and the diversity of its revenue sources after the transaction. Do not unduly rely on forward-looking statements. They give Washington Mutual's or Wells Fargo's expectations, as the case may be, about its future and are not guarantees. The forward-looking statements speak only as of the date of this press release, and neither Washington Mutual nor Wells Fargo undertakes to update them to reflect changes that occur after that date. For factors that may cause actual results to differ from Washington Mutual's or Wells Fargo's expectations, refer to the company's Annual Report on Form 10-K for the year ended December 31, 2005 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2006.

Washington Mutual
Olivia Riley, 206-500-2834
Wells Fargo & Company
Bob Strickland, 415-396-0523
Washington Mutual
Alan Magleby, 212-326-6019

SOURCE: Washington Mutual, Inc.