-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ItZq+TcFddnkumHV8Ias4CQXWPcDHWHxG+/Xy7L3aDiHBHR2EdqSgCyiHZcLeRE1 ivkGblDW3IaQnEWxRLONFQ== 0000891020-97-000575.txt : 19970416 0000891020-97-000575.hdr.sgml : 19970416 ACCESSION NUMBER: 0000891020-97-000575 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970415 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970415 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WASHINGTON MUTUAL INC CENTRAL INDEX KEY: 0000933136 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED [6036] IRS NUMBER: 911653725 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-25188 FILM NUMBER: 97581544 BUSINESS ADDRESS: STREET 1: 1201 THIRD AVENUE CITY: SEATTLE STATE: WA ZIP: 98101 BUSINESS PHONE: 2064612000 MAIL ADDRESS: STREET 1: 1201 THIRD AVE STREET 2: 1201 THIRD AVE CITY: SEATTLE STATE: WA ZIP: 98101 8-K 1 FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: April 15, 1997 Washington Mutual, Inc. ------------------------------------------------------ (Exact Name of Registrant as specified in its charter) Washington ------------------------------------------------------ 0-25188 91-1653725 - -------------------------------------------------------------------------------- Commission File Number IRS Identification No. 1201 Third Avenue, Seattle, Washington 98101 - -------------------------------------------------------------------------------- Address of Principal Executive Office Postal Code 206-461-2000 ------------------------------------------------------ Registrant's telephone number including area code 2 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS 99.1 Earnings Release SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. WASHINGTON MUTUAL, INC. Date: April 15,1997 By: /s/ Marc R. Kittner ---------------------------- Marc R. Kittner Senior Vice President and Corporate Counsel 3 [(c) 1997 Business Wire | www.businesswire.com] - -------------------------------------------------------------------------------- BW0020 APR 15, 1997 4:32 PACIFIC 7:32 EASTERN (BW)(WASHINGTON-MUTUAL)(WAMU) Washington Mutual announces record first quarter results; board of directors increases cash dividend Business Editors SEATTLE--(BUSINESS WIRE)--April 15, 1997-- Strong Operating Fundamentals Result In 28 Percent Increase in Earnings and 19.42 Percent Return on Common Equity Washington Mutual, Inc. (Nasdaq: WAMU) announced today record first-quarter earnings of $114.1 million, an increase of 28 percent from earnings of $88.8 million a year earlier. Fully diluted earnings per share were 93 cents, an increase from 74 cents per share in the first quarter of 1996. Reflecting Washington Mutual's continued strong profitability and capital position, the company's board of directors declared a cash dividend on the common stock of 26 cents per share, an increase from the previous quarterly cash dividend of 25 cents per share. The board also declared dividends of 57 cents per share on the Series C preferred stock (Nasdaq: WAMUO) and 47.5 cents per share on the Series E preferred stock (Nasdaq: WAMUM). Dividends on the common and preferred stock are payable May 15, 1997, to shareholders of record on April 30, 1997. "Washington Mutual's record first-quarter financial results reflect continued strong operating performance driven by profitable growth in all areas of our consumer banking business, along with improved operating efficiency," said Kerry Killinger, the company's chairman, president and chief executive officer. "In addition, Washington Mutual continues to maintain strong capital and asset quality positions and low exposure to interest rate risk. "Highlights of the quarter included an annualized 19.42 percent return on common equity and an operating efficiency ratio of 49.1 percent. In addition, we produced 16 percent growth in loan originations over first quarter 1996, including a 45 percent increase in loan originations other than single-family residential mortgages. Solid origination volumes resulted in a 26 percent increase in average loan balances outstanding over the first quarter of 1996. "Meanwhile, we continued to expand our customer base by opening a record number of checking accounts. This activity resulted in an increase of more than 65,000 accounts to our retail checking account base during the quarter. We also continued the integration of American Savings Bank, which has produced results exceeding our initial expectations. Finally, we took steps to significantly expand our business by announcing a merger agreement with Great Western 4 Financial Corporation, which will create one of the nation's premier consumer banking organizations and place our company in an even stronger competitive position. "Together with solid operating fundamentals, these achievements have set the stage for what we believe will be an outstanding year for Washington Mutual." FIRST-QUARTER FINANCIAL RESULTS Net Interest And Other Income Growth in the loan portfolio, accompanied by an improved net interest spread, produced net interest income of $317.0 million for the first quarter of 1997, up 10 percent from $287.0 million a year earlier. The spread during the quarter was 2.77 percent, up from 2.75 percent last year. Killinger noted that the company's strategy to manage interest rate risk, as well as its adjustable-rate and consumer loan origination capabilities and strong capital position, should limit the effect of recent increases in interest rates on net interest income. He added that the percentage of fixed-rate assets in the company's loan and mortgage-backed securities portfolio has been dramatically reduced in recent years, providing added protection against potential future increases in interest rates. Total other income, driven primarily by higher depositor and loan servicing fees, was $75.4 million, up 32 percent from $57.0 million in last year's first quarter. Depositor fees increased 27 percent to $28.6 million during the quarter, versus $22.5 million a year earlier. Killinger pointed out that over the past year, the company has made progress in re-mixing its deposit base by replacing time deposits with core transaction accounts, which produce higher fee income and help reduce the company's cost of deposits and borrowings. At March 31, 1997, transaction account balances, including checking, savings and money market deposits, represented 42 percent of total deposits, compared with 40 percent a year earlier. The increase in loan servicing fees was primarily the result of a larger number of loans serviced for others as well as the reclassification of $3.3 million of income that would have been accounted for as net interest income by American Savings Bank, but that Washington Mutual classifies as loan servicing income. Loan Originations/Balance Sheet Growth The company's growing franchise, aggressive marketing strategy and state-of-the-art technology, combined with positive regional economies in the West, helped to produce record total loan originations of $3.5 billion for the quarter, up 16 percent from $3.0 billion a year ago. In addition to increased originations in the Northwest, the company's American Savings Bank subsidiary posted significantly stronger loan originations in the first quarter of 1997 -- $1.5 billion for the period just ended, compared with $1.3 billion from last year, a 16 percent increase. "When we announced the American 5 acquisition, we stated our belief that loan originations would be greater at American once the transaction was completed and that the combined company's strong capital position would facilitate greater retention of those loans," Killinger said. "The results of the first quarter reflect the successful execution of that strategy." On Jan. 15, Washington Mutual acquired Salt Lake City-based United Western Financial Group, Inc. Had United Western been part of the company in 1996, Washington Mutual would have been the No. 1 residential mortgage lender in the state of Utah. The company already holds the top position in residential mortgage originations in both Washington and Oregon, and the No. 2 position in California. Further reflecting the company's successful consumer banking strategy, loan originations other than single-family residential loans increased to 31 percent of total originations, up from 24 percent in last year's first quarter. The company originated substantially greater volume in shorter-term, higher-yielding consumer loans during the quarter -- $369.8 million, up 35 percent from $273.6 million a year ago. Residential construction lending for the period was $325.1 million, up 30 percent from $249.7 million in first quarter 1996. Operating Efficiency Higher revenues, combined with prudent expense management, enabled the company to operate more efficiently during the quarter. Washington Mutual's operating efficiency ratio (other expense as a percentage of net interest income and other income) improved to 49.1 percent versus 52.6 percent a year ago. Total other expense for the quarter was $192.6 million, or 1.71 percent of average assets, compared with $181.1 million, or 1.74 percent of average assets, in last year's first quarter. Credit Quality and Capital "Consistent with our goal of maintaining excellent credit quality, we continue to exercise solid underwriting standards with the long-term target of keeping the ratio of nonperforming assets to total assets below 1 percent," Killinger said. Total nonperforming assets were $334.6 million at March 31, 1997, compared with $329.5 million at Dec. 31, 1996. Nonperforming assets as a percentage of total assets were 0.73 percent, compared with 0.74 percent at Dec. 31, 1996. The quarterly provision for loan losses was $15.5 million. At March 31, 1997, loan loss reserves totaled $367.2 million. Reserves as a percentage of nonperforming assets were 109.8 percent, and as a percentage of nonperforming assets, less REO, were 152.9 percent. Consolidated assets at March 31, 1997, were $46.1 billion, up from $44.6 billion at Dec. 31, 1996, while total deposits were $24.3 billion, up from $24.1 billion at the end of fourth quarter 1996. Stockholders' equity at March 31, 1997, was $2.4 billion, or 5.27 percent of assets, and capital ratios of the company's banking subsidiaries continued to exceed the FDIC's requirements for classification as "well-capitalized," the highest regulatory standard. 6 Commercial Banking/Nonbanking Activities With Western Bank serving as the platform for the company's commercial banking activities in the Northwest, the commercial banking division's loan portfolio grew in the first quarter from $896.8 million to $1.0 billion or a 14 percent increase over Dec. 31, 1996. Annuities underwritten by WM Life Insurance Co., the company's insurance underwriting subsidiary, were $877.8 million; while assets of the Composite Group of mutual funds, managed by Composite Research & Management Co., the company's investment management firm, increased slightly to $1.5 billion at March 31, 1997. FRANCHISE GROWTH The company's focus on gaining new households through aggressive marketing of checking accounts produced excellent results in each of its markets during the quarter. Total households served grew by more than 76,000 to 1.5 million through February and included 24,000 non-acquisition-related households. Excluding acquisitions, the company added more than 65,000 checking accounts to its base during the first quarter. This figure included more than 31,000 net new accounts generated at American, which in all of 1996 added only 5,700 net checking accounts to its base. "We are extremely pleased with the positive results that our consumer banking strategy is achieving in California. Checking account openings have exceeded our original projections and we believe that the opportunities for gaining further market share in the state, as well as our other markets, are very promising," Killinger said. Great Western Definitive Merger Agreement Signed On March 6, Washington Mutual and Great Western Financial Corporation (NYSE: GWF) signed a definitive merger agreement that will create the nation's largest savings institution and one of the premier consumer banking franchises in the country. The agreement calls for 0.9 shares of Washington Mutual common stock to be exchanged for each share of Great Western common stock. The agreement has been unanimously approved by the boards of directors of both companies. The merger, which requires regulatory approval and the approval of both companies' shareholders, is scheduled to close in the third quarter of this year. The company has filed with the appropriate regulators all applications required for the merger. Special meetings for the shareholders of both companies to approve the transaction are anticipated to be held in June. OUTLOOK "The operating results for the first quarter provided solid 7 momentum for our organization as we begin the second quarter," Killinger said. "Our capital position is strong, and our growth strategy provides the foundation for increasing our market share both internally and through acquisitions. We will continue to focus on the core strategies of our business plan and strive to achieve -- and surpass -- the aggressive set of long-term financial targets we've established for ourselves," he added. With a history dating back to 1889, Washington Mutual is a regional financial services company that provides a diversified line of products and services to consumers and small- to mid-sized businesses. Its subsidiaries provide consumer and commercial banking services, securities brokerage, mutual fund management, property/casualty and life insurance sales, and underwriting for insurance annuities. At March 31, 1997, Washington Mutual and its subsidiaries had consolidated assets of $46.1 billion. The company operates more than 500 offices in nine western states. EDITOR'S NOTE: Washington Mutual's press releases are available at no charge through the company's News On Demand Plus System. For a menu of Washington Mutual press releases or to retrieve a specific release, call 1-800-329-6236. On the Internet, press releases may be accessed at http://www.businesswire.com/cnn/wamu.htm This press release contains forward-looking statements regarding the benefits of the merger of Washington Mutual and Great Western, including cost savings to be realized, earnings accretion, transaction charges and additional loan-loss reserves and revenue enhancement opportunities following the merger. Actual results may vary materially from the forward-looking statements as described in Washington Mutual's Current Report on Form 8-K dated March 6, 1997, and its Form S-4 Registration Statement dated March 13, 1997, to which reference is made. These factors include without limitation possible delays in integration of Great Western operations into Washington Mutual's, increases in interest rates which could reduce net interest margin, competitive factors which could adversely affect consumer banking strategy and general economic conditions which negatively impact the volume of loan origination and amount of loan losses. Washington Mutual ("Washington Mutual") and other certain persons named below may be deemed to be participants in the solicitation of proxies in connection with the merger of Great Western Financial Corporation ("Great Western") and a wholly-owned subsidiary of Washington Mutual pursuant to which each outstanding share of Great Western common stock would be converted into 0.9 shares of Washington Mutual common stock ("the Merger"). The participants may include the directors of Washington Mutual (Douglas P. Beighle, David Bonderman, Herbert M. Bridge, J. Taylor Crandall, Roger H. Eigsti, John W. Ellis, Daniel J. Evans, Anne V. Farrell, William P. Gerberding, Kerry K. Killinger, Samuel B. McKinney, Michael K. Murphy, Louis H. Pepper, William G. Reed, Jr. and James E. Stever); the following executive officers of Washington Mutual: Craig S. Davis, Steven P. Freimuth, Lee D. Lannoye, William A. Longbrake, Deanna W. Oppenheimer, Craig E. Tall and S. Liane Wilson; and the following other members of management of Washington Mutual: Karen Christensen, JoAnn DeGrande, William Ehrlich, James B. Fitzgerald, Marc Kittner, and Douglas G. Wisdorf (collectively, the "Washington Mutual Participants"). As of the date of this communication, David Bonderman, J. Taylor Crandall and Kerry K. Killinger beneficially 8 owned 1,894,141 shares, 6,549,755 shares and 1,044,224 shares of Washington Mutual common stock, respectively. The remaining Washington Mutual Participants do not beneficially own, individually or in the aggregate, in excess of 1% of Washington Mutual's equity securities. Other participants in the solicitation include Great Western and may include the directors of Great Western (James F. Montgomery, John F. Maher, Dr. David Alexander, H. Frederick Christie, Stephen E. Frank, John V. Giovenco, Firmin A. Gryp, Enrique Hernandez, Jr., Charles D. Miller, Dr. Alberta E. Siegel and Willis B. Wood, Jr.); the following executive officers of Great Western: J. Lance Erikson, Carl F. Geuther, Michael M. Pappas, A. William Schenck III, Ray W. Sims and Jaynie M. Studenmund; and the following other members of management of Great Western: Stephen F. Adams, Bruce F. Antenberg, Barry R. Barkley, Ian D. Campbell, Charles Coleman, Allen D. Meadows and John A. Trotter (collectively, the "Great Western Participants"). As of the date of this communication, James F. Montgomery and John F. Maher beneficially owned 680,488 shares and 611,762 share of Great Western common stock, respectively (including shares subject to stock options exercisable within 60 days). The remaining Great Western Participants do not beneficially own, individually or in the aggregate, in excess of 1% of Great Western's equity securities. Washington Mutual has retained Lehman Brothers Inc. ("Lehman Brothers") to act as its financial advisor in connection with the Merger for which it received and may receive substantial fees as well as reimbursement of reasonable out-of-pocket expenses. In addition, Washington Mutual has agreed to idemnify Lehman Brothers and certain persons related to it against certain liabilities, including certain liabilities under the federal securities laws, arising out of its engagement. Lehman Brothers is an investment banking firm that provides a full range of financial services for institutional and individual clients. Lehman Brothers does not admit that it or any of its directors, officers or employees is a "participant" as defined in Schedule 14A promulgated under the Securities Exchange Act of 1934, as amended, in the proxy solicitation, or that Schedule 14A requires the disclosure of certain information concerning Lehman Brothers. In connection with Lehman Brothers' role as financial advisor to Washington Mutual, Lehman Brothers and the following investment banking employees of Lehman Brothers may communicate in person, by telephone or otherwise with a limited number of institutions, brokers or other persons who are stockholders of Washington Mutual and Great Western: Steven B. Wolitzer, Philip R. Erlanger, Sanjiv Sobti, David J. Kim, Craig P. Sweeney and Daniel A. Trznadel. In the normal course of its business Lehman Brothers regularly buys and sells securities issued by Washington Mutual and its affiliates ("Washington Mutual Securities") and Great Western and its affiliates ("Great Western Securities") for its own account and for the account of its customers, which transactions may result from time to time in Lehman Brothers and its associates having a net "long" or net "short" position in Washington Mutual Securities, Great Western Securities, or option contracts or other derivatives in or relating to Washington Mutual Securities or Great Western Securities. As of April 7, 1997, Lehman Brothers had positions in Washington Mutual Securities and Great Western Securities as principal as follows: (i) net "short" 224 of Washington Mutual's common shares; (ii) net "long" 27,434 shares of Washington Mutual's 9.12% preferred stock; (iii) net "long" 124,964 shares of Washington Mutual's 7.60% preferred stock; (iv) net "short" 3,509 of Great Western's common shares; and (v) net "long" 160,000 shares of Great Western's 8.30% preferred stock. 9 Great Western has retained Goldman, Sachs & Co. ("Goldman Sachs") and Merrill Lynch & Co. ("Merrill Lynch") to act as its financial advisors in connection with the Merger, as well as the merger proposal by H.F. Ahmanson & Company, for which they received and may receive substantial fees, as well as reimbursement of reasonable out-of-pocket expenses. In addition, Great Western has agreed to indemnify Goldman Sachs and Merrill Lynch and certain persons related to them against certain liabilities under the federal securities laws, arising out of their engagement. Each of Goldman Sachs and Merrill Lynch is an investment banking firm that provides a full range of financial services for institutional and individual clients. Neither Goldman Sachs nor Merrill Lynch admits that it or any of its directors, officers or employees is a "participant" as defined in Schedule 14A promulgated under the Securities Exchange Act of 1934, as amended, in the proxy solicitation, or that Schedule 14A requires the disclosure of certain information concerning Goldman Sachs and Merrill Lynch. In connection with Goldman Sachs' role as financial advisor to Great Western, Goldman Sachs and the following investment banking employees of Goldman Sachs may communicate in person, by telephone or otherwise with a limited number of institutions, brokers or other persons who are stock holders of Great Western: Joe Wender, John Mahoney, Andy Gordon, Todd Owens and Andrea Vitorelli. In connection with Merrill Lynch's role as financial advisor to Great Western, Merrill Lynch and the following investment banking employees of Merrill Lynch may communicate in person, by telephone or otherwise with a limited number of institutions, brokers or other persons who are stockholders of Great Western: Herb Lurie, Louis S. Wolfe, Paul Wetzel, Frank V. McMahon, John Esposito, Alex Sun, Christopher Del-Moral Niles and Kavita Gupta. In the normal course of their respective businesses Goldman Sachs and Merrill Lynch regularly buy and sell Great Western Securities and Washington Mutual Securities for its own account and for the accounts of its customers, which transactions may result from time to time in Goldman Sachs and its associates and Merrill Lynch and its associates having a net "long" or net "short" position in Great Western Securities, Washington Mutual Securities, or option contracts or other derivatives in or relating to Great Western Securities or Washington Mutual Securities. As of April 7, 1997, Goldman Sachs had positions in Great Western Securities and Washington Mutual Securities as principal as follows: (i) net "long" 8,973 of Great Western's common shares; (ii) net "long" $1 million of Great Western's deposit notes; and (iii) net "long" 1,098 of Washington Mutual's common shares. As of April 7, 1997, Merrill Lynch had positions in Great Western Securities and Washington Mutual Securities as principal as follows: (i) net "long" 7,125 of Great Western's common shares and (ii) net "long" 1,526 of Washington Mutual's common shares. 10 Washington Mutual, Inc. Consolidated Statements of Income (dollars in thousands, except for per share amounts) (unaudited)
Quarter ended March 31, 1997 1996 Interest Income Loans $ 619,496 $ 496,729 Available-for-sale securities 154,244 211,123 Held-to-maturity securities 52,599 55,929 Cash equivalents 394 841 Total interest income 826,733 764,622 Interest Expense Deposits 257,712 274,050 Borrowings 252,068 203,570 Total interest expense 509,780 477,620 Net interest income 316,953 287,002 Provision for loan losses 15,526 20,889 Net interest income after provision for loan losses 301,427 266,113 Other Income Depositor fees 28,640 22,498 Securities, annuity & other service fees 12,812 13,083 Loan servicing fees 14,280 8,477 Other operating income 13,689 7,766 Gain on sale of loans 5,725 4,380 Gain (loss) on sale of other assets 243 806 Total other income 75,389 57,010 Other Expense Salaries and employee benefits 86,819 81,835 Occupancy and equipment 32,864 27,675 Outside telecommunications and data processing services 24,949 12,186 Regulatory assessments 4,066 11,572 Other operating expense 39,261 37,624 Amortization of goodwill and other intangible assets 6,789 6,968 Real estate owned (REO) operations, inclusive of write-downs (2,116) 3,234 Total other expense 192,632 181,094 Income before income taxes 184,184 142,029 Income taxes 70,112 49,695 Income before minority interest 114,072 92,334 Minority interest in earnings of consolidated subsidiaries -- (3,527) Net Income $ 114,072 $ 88,807 Net Income Attributable to Common Stock $ 111,567 $ 84,202 Net income per common share: Primary $ 0.93 $ 0.75 Fully Diluted 0.93 0.74 Financial Ratios Return on average assets 1.01% 0.85% Return on average equity 18.88 13.97 Return on average common equity 19.42 14.24
11 Washington Mutual, Inc. Selected Financial Information (dollars in thousands, except for per share amounts) (unaudited)
Quarter ended March 31, 1997 1996 Data Used To Compute Per Share Amounts Net income $ 114,072 $ 88,807 Preferred stock dividends: Noncumulative Perpetual, Series C (1,569) (1,569) Noncumulative Perpetual, Series E (936) (936) Noncumulative Convertible Perpetual, Series D -- (2,100) Net income available to primary common stock $ 111,567 $ 84,202 Net income $ 114,072 $ 88,807 Preferred stock dividends: Noncumulative Perpetual, Series C (1,569) (1,569) Noncumulative Perpetual, Series E (936) (936) Net income available to fully diluted common stock $ 111,567 $ 86,302 Average common shares used to calculate earnings per share: Primary 120,277,744 111,797,730 Fully diluted 120,292,563 117,216,977 Net Interest Spread Yield on loans and note receivable 7.98% 8.04% Yield on investments 6.88 7.19 Combined yield on earning assets 7.68 7.72 Cost of deposits 4.38 4.53 Cost of borrowings 5.62 5.69 Combined cost of funds 4.91 4.97 Net interest spread 2.77% 2.75% Net interest margin 2.88% 2.90% Average Balances Loans $ 31,086,400 $ 24,718,530 Investments 12,035,248 14,910,308 Total earning assets 43,121,648 39,628,838 Deposits 24,071,680 24,186,572 Borrowings 18,027,984 14,308,546 Total interest bearing liabilities 42,099,664 38,495,118 Total assets 45,025,200 41,573,446 Stockholders' equity 2,416,232 2,542,743
12 Washington Mutual, Inc. Consolidated Statements of Financial Position (dollars in thousands, except for per share amounts) (unaudited)
Mar. 31, Dec. 31, 1997 1996 Assets Cash and cash equivalents $ 532,671 $ 831,063 Trading account securities 2,804 1,647 Available-for-sale securities 8,942,084 9,111,274 Held-to-maturity securities 2,807,352 2,860,347 Loans, net of allowance for loan losses 32,018,457 30,103,386 Loans held for sale 212,506 227,390 Real estate owned 94,498 103,111 Bank premises and equipment 495,186 482,391 Goodwill and other intangible assets 130,698 133,509 Other assets 814,769 697,807 Total assets $ 46,051,025 $ 44,551,925 Liabilities Deposits: Checking accounts $ 3,164,963 $ 2,979,962 Savings and money market accounts 7,121,545 6,842,061 Time certificates 14,012,013 14,258,118 Total deposits 24,298,521 24,080,141 Annuities 877,841 878,057 Federal funds purchased 1,230,000 1,052,000 Securities sold under agreements to repurchase 7,561,220 7,835,453 Advances from the Federal Home Loan Bank 8,643,363 7,241,492 Other borrowings 501,846 676,986 Other liabilities 510,391 389,908 Total liabilities 43,623,182 42,154,037 Stockholders' Equity Preferred stock, no par value: 10,000,000 shares authorized - 4,722,500 and 4,722,500 shares issued and outstanding -- -- Common stock, no par value: 350,000,000 shares authorized - 126,247,850 and 126,142,285 shares outstanding -- -- Capital surplus 957,233 952,747 Valuation reserve for available-for-sale securities (12,935) 41,666 Retained earnings 1,483,545 1,403,475 Total stockholders' equity 2,427,843 2,397,888 Total liabilities and stockholders' equity $ 46,051,025 $ 44,551,925 Book value per common share $ 19.53 $ 19.30 Tangible book value per common share 18.43 18.17
13 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Mar. 31, Dec. 31, Sep. 30, Jun. 30, 1997 1996 1996 1996 Interest Sensitivity One-year interest sensitivity using principal balances as a % of total assets (0.8)% (3.6)% (1.0)% n.a. Capital Adequacy Washington Mutual, Inc.: Stockholders' equity/total assets 5.27% 5.38% 5.54% 5.21% Tangible stockholders' equity/total tangible assets 5.00 5.10 5.24 4.88 Retail Checking Account Activity (No.) New accounts opened during the quarter: WMB and WMBfsb 62,395 58,011 61,811 52,955 ASB 41,474 17,895 14,931 12,408 103,869 75,906 76,742 65,363 Net new accounts opened during the quarter WMB and WMBfsb 34,358 31,520 35,506 29,221 ASB 31,315 6,063 2,193 (89) 65,673 37,583 37,699 29,132 New accounts acquired during the quarter 8,751 2,353 -- -- Retail Checking Accounts (No.) WMB and WMBfsb 651,474 608,365 574,492 538,986 ASB 268,932 237,617 231,554 229,361 Total retail checking accounts 920,406 845,982 806,046 768,347 Households Served (No.)/a WMB and WMBfsb 898,918 830,425 795,898 768,943 ASB 600,799 592,916 591,935 579,572 Total households served 1,499,717 1,423,341 1,387,833 1,348,515
(a) March figures for households served are as of Feb. 28, 1997 14
Quarter ended March 31, 1997 1996 Nonbanking Subsidiary Pretax Operating Income Securities $ 4.3 $ 4.9 Insurance 4.3 4.5 Recognition of deferred gain on sale of travel agency subsidiary -- 4.1 Net income before taxes, amortization of goodwill and other intangible assets, and elimination of intercompany transactions $ 8.6 $ 13.5
15 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Quarter ended March 31, 1997 1996 % Change Loan Originations Single-family residential (SFR): Adjustable-rate $ 1,573.0 $ 1,314.8 20% Fixed-rate 832.2 947.0 (12) Total single-family residential 2,405.2 2,261.8 6 SFR - custom construction 168.3 125.1 35 SFR - builder construction 156.8 124.6 26 Multi-family residential 139.7 130.1 7 Nonresidential real estate 73.7 40.4 82 Consumer 369.8 273.6 35 Commercial business 148.4 36.9 302 Total loan originations $ 3,461.9 $ 2,992.5 16% As a % of total originations: Single-family residential 69% 76% All other 31 24
16
Change from Dec. 31, 1996 Mar. 31, Dec. 31, Sep. 30, Jun. 30, to Mar. 31, 1997 1997 1996 1996 1996 Loans By Property Type Single-family residential: Adjustable- rate $ 1,216.6 $18,173.4 $16,956.8 $15,792.1 $14,256.3 Fixed-rate 267.2 5,971.1 5,703.9 5,185.1 5,083.2 Total single- family residential 1,483.8 24,144.5 22,660.7 20,977.2 19,339.5 SFR - custom construction 28.5 453.9 425.4 380.2 362.2 SFR - builder construction 30.8 329.0 298.2 288.8 272.2 Multi-family residential 311.0 2,869.8 2,558.8 2,473.9 2,433.5 Nonresidential real estate (175.3) 1,076.9 1,252.2 1,258.8 1,346.1 Consumer 144.6 3,303.3 3,158.7 3,056.9 2,846.4 Commercial business 80.6 420.8 340.2 295.3 270.4 Loan loss reserves (3.8) (367.2) (363.4) (234.3) (234.3) Total loans outstanding $ 1,900.2 $32,231.0 $30,330.8 $28,496.8 $26,636.0 Change in Loans Outstanding Loans originated $ 3,461.9 $ 3,607.8 $ 3,446.1 $ 3,601.2 Loans purchased or acquired 312.2 139.8 110.4 40.5 Loans securitized (14.5) (56.8) -- (464.9) Loans sold (558.3) (387.7) (583.8) (693.4) Loan payments and other (1,301.1) (1,469.1) (1,111.9) (1,267.0) Change in loans outstanding $ 1,900.2 $ 1,834.0 $1,860.8 $ 1,216.4 As a % of total loans at beginning of quarter 6% 6% 7% 5% As a % of total assets at beginning of quarter 4 4 4 3
17 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)
Mar. 31, Dec. 31, Sep. 30, Jun. 30, 1997 1996 1996 1996 Reserve For Loan Losses Balance at beginning of quarter $ 363.4 $ 234.3 $ 234.3 $ 232.9 Provision for loan losses 15.5 143.4 17.1 20.1 Reserves charged off, net of recoveries (20.0) (15.4) (17.1) (18.7) Reserves added through business combinations 8.3 1.1 -- -- Balance at end of quarter $ 367.2 $ 363.4 $ 234.3 $ 234.3 Allocated reserves: Multi-family residential and nonresidential real estate $ 82.9 $ 77.0 $ 21.6 $ 18.0 Builder construction -- -- 0.2 0.2 Commercial business 1.9 1.3 1.7 -- Total allocated reserves 84.8 78.3 23.5 18.2 Unallocated reserves 282.4 285.1 210.8 216.1 Total reserve for loan losses $ 367.2 $ 363.4 $ 234.3 $ 234.3 Reserve for loan losses as a % of: Nonperforming assets 109.76% 110.29% 72.53% 72.48% Nonperforming assets, less real estate owned 152.90 160.52 108.33 110.43 Nonperforming Assets Nonaccrual assets $ 240.2 $ 226.4 $ 216.3 $ 212.1 REO: REO 100.8 110.2 113.4 117.9 Reserve for losses (6.4) (7.1) (6.6) (6.8) Net REO 94.4 103.1 106.8 111.1 Total nonperforming assets $ 334.6 $ 329.5 $ 323.1 $ 323.2 Nonperforming assets by property type: Single-family residential $ 254.9 $ 253.3 $ 241.1 $ 237.8 SFR - custom construction 5.2 2.5 2.8 1.3 SFR - builder construction 8.3 8.4 6.0 6.9 Multi-family residential 21.4 22.2 27.3 34.3 Nonresidential real estate 27.8 25.0 35.5 35.8 Consumer 21.8 24.1 16.0 13.2 Commercial business 1.6 1.1 1.0 0.7 Reserve for REO losses (6.4) (7.1) (6.6) (6.8) Total nonperforming assets $ 334.6 $ 329.5 $ 323.1 $ 323.2 As a % of total loans 1.04% 1.09% 1.13% 1.21% As a % of total assets 0.73 0.74 0.74 0.76 Troubled Debt Restructurings $ 94.7 $ 112.3 $ 95.1 $ 78.5 As a % of total loans 0.29% 0.37% 0.33% 0.29% As a % of total assets 0.21 0.25 0.22 0.18
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