Washington Mutual Announces First Quarter 2005 Earnings; Net Income fr

Washington Mutual Announces First Quarter 2005 Earnings; Net Income from Continuing Operations Increases 38 Percent; Board of Directors Increases Cash Dividend

    Business Editors

    SEATTLE--(BUSINESS WIRE)--April 19, 2005--Washington Mutual, Inc. (NYSE:WM) today announced first quarter 2005 net income of $902 million, or $1.01 per diluted share, all from continuing operations, up 38 percent on a per share basis when compared with net income from continuing operations of $648 million, or $0.73 per diluted share from continuing operations for the same period a year ago.
    Total net income during the first quarter of 2004 was $1.05 billion, or $1.18 per diluted share, and included $399 million, or $0.45 per diluted share from discontinued operations from the sale of its former subsidiary, Washington Mutual Finance Corporation.
    Washington Mutual's Board of Directors declared a cash dividend of 47 cents per share on the company's common stock, up from 46 cents per share in the previous quarter. Dividends on the common stock are payable on May 13, 2005 to shareholders of record as of April 29, 2005.
    "Our first quarter results validate that our business model is working -- assets, deposits and checking accounts are growing; credit quality remains strong; mortgage banking income increased and our expenses continue to decline," said Kerry Killinger, chairman and chief executive officer. "We currently see good momentum in all of our business lines."
    Killinger added: "We are all committed to achieving our long-term targets, producing top-tier performance in our industry and delivering superior long-term shareholder returns."

    Key results:

--	Total assets of $319.70 billion at the end of the first quarter of 2005 increased $11.78 billion or 4 percent from the fourth quarter of 2004 and $38.93 billion or 14 percent from the first quarter of 2004, reflecting growth in all major categories of loans held in portfolio;
--	The net interest margin declined to 2.73 percent in the first quarter from 2.79 percent in the fourth quarter of 2004 and 2.89 percent in the first quarter of 2004;
--	The loan loss provision was $16 million in the first quarter of 2005, down from $37 million in the fourth quarter of 2004 and $56 million in the first quarter of 2004 due to a continuing favorable credit environment;
--	Depositor and other retail banking fees of $490 million in the first quarter of 2005 were down $25 million, or 5 percent from the fourth quarter of 2004 but were up $27 million, or 6 percent from the first quarter of 2004;
--	Total retail deposits grew $1.92 billion from the fourth quarter of 2004 and $6.29 billion, or 5 percent from the first quarter of 2004. Contributing to these increases were the addition of more than 434,000 net new retail deposit accounts in the first quarter of 2005, including nearly 43,000 net new small business checking accounts;
--	The company continued to effectively manage costs as noninterest expense of $1.84 billion in the quarter was down $100 million from $1.94 billion in the fourth quarter of 2004 and $1.88 billion in the first quarter of 2004.

    FIRST QUARTER FINANCIAL SUMMARY

    Net Interest Income

    Net interest income was $1.89 billion in the first quarter, up slightly from $1.85 billion in the fourth quarter of 2004 and up 9 percent from $1.73 billion in the first quarter of 2004. The increase from the fourth quarter of 2004 reflects a 4 percent increase in average total interest-earning assets, while the increase from the first quarter of 2004 reflects a 15 percent increase in average total interest-earning assets.
    The net interest margin in the first quarter was 2.73 percent, down 6 basis points from 2.79 percent in the fourth quarter of 2004 and 16 basis points from 2.89 percent in the first quarter of 2004. The decrease in net interest margin from the first quarter of 2004 was due to the Federal Reserve's rate tightening during the year, which was partially offset by disciplined deposit pricing and the termination of higher cost debt. In the first quarter the company repositioned a portion of the available-for-sale securities portfolio, which resulted in a loss of approximately $75 million in the quarter. This will help offset future compression in net interest margin.

    Noninterest Income

    Noninterest income increased to $1.41 billion in the first quarter of 2005 from $1.22 billion in the fourth quarter of 2004 and $1.24 billion in the first quarter of 2004. The increases were driven primarily by higher home loan mortgage banking income. The improvement from the prior quarter was driven by improved mortgage servicing rights ("MSR") performance. The increase from the same quarter of the prior year was the result of higher gain from mortgage loans, net of risk management activities, although the gain in the first quarter of 2004 was reduced by approximately $107 million as a result of the one-time effect of the company's change in accounting for gain from mortgage loans.

    Noninterest Expense

    Noninterest expense of $1.84 billion was down from $1.94 billion in the fourth quarter and $1.88 billion in the first quarter of 2004. Expenses were down from both prior periods due to continued progress in productivity improvements and focus on expense management, as well as lower restructuring charges. The company's efficiency ratio improved to 55.77 percent, compared with 63.18 percent for the fourth quarter of 2004 and 63.34 percent in the first quarter of 2004.

    Lending

    Total loan volume was $59.52 billion in the first quarter of 2005, compared with $63.22 billion in the fourth quarter of 2004 and $62.17 billion in the first quarter of 2004. The decline from both periods was due primarily to a decline in refinancing activity resulting from higher interest rates.
    While first quarter fixed-rate home loan volume declined 26 percent compared with the first quarter of 2004, adjustable-rate home loan volume was up 13 percent, while home equity loan and line of credit and multi-family volumes rose 6 percent and 39 percent, respectively. The home loan volume included an 8 percent increase in specialty mortgage finance loan volume.
    During the first quarter of 2005, adjustable-rate loans represented 63 percent of the company's total home loan volume, compared with 68 percent in the fourth quarter of 2004 and 53 percent in the first quarter of 2004.

    Credit Quality

    At March 31, 2005, nonperforming assets as a percentage of total assets were 0.57 percent, down from 0.58 percent at December 31, 2004, and 0.66 percent at March 31, 2004. Net charge offs for the quarter were $37 million versus $38 million in the fourth quarter of 2004 and $46 million in the first quarter of 2004 and were well below expectations due largely to improvement in the economy and the continued strong housing market. Despite portfolio growth, the strong credit performance of the portfolio resulted in a provision of $16 million for the quarter. The allowance for loan and lease losses totaled $1.28 billion at March 31, 2005, down 2 percent from December 31, 2004.

    Balance Sheet and Capital Management

    Total assets increased $11.78 billion from the end of the fourth quarter of 2004 to $319.70 billion at the end of the first quarter of 2005, reflecting continued growth in loans held in portfolio. Loans held in portfolio grew to $214.11 billion, an increase of $7.04 billion from the fourth quarter of 2004 and an increase of $27.73 billion from the same period a year ago.
    Total deposits increased 6 percent from the previous quarter to $183.63 billion as of March 31, 2005, primarily due to growth of wholesale and time deposits.
    During the quarter, the company also deployed capital by repurchasing 2,540,000 shares of its common stock at an average price of $39.31.
    The company's ratio of tangible common equity to tangible assets was 5.03 percent at the end of the quarter. In addition, the capital ratios of the company's banking subsidiaries continued to exceed the federal regulatory requirements for classification as "well-capitalized" institutions, the highest regulatory standard.

    FIRST QUARTER OPERATING SEGMENT RESULTS

    Retail Banking and Financial Services Group Financial Performance

    Net income for the company's Retail Banking and Financial Services segment was $538 million in the first quarter of 2005, as compared with $565 million in the fourth quarter of 2004 and up 26 percent from $427 million in the first quarter of 2004. The increase in net income from the same quarter last year was driven by a 13 percent increase in net interest income. This reflects the growth in the average balances of home equity loans and lines of credit and the mortgage loan portfolio and margin expansion on deposits. In addition, noninterest income grew by 12 percent reflecting a 6 percent increase in depositor and other retail banking fees.
    Total retail deposits of $134.59 billion increased $1.92 billion from the fourth quarter of 2004 and were up $6.29 billion or 5 percent from the first quarter of 2004. The company opened 29 retail banking stores in the first quarter and is on target to open 250 new retail banking stores in 2005. Average loans in the segment's portfolio grew 19 percent from the first quarter of 2004 to $177.64 billion, primarily due to a 53 percent increase in average home equity loans and lines of credit to $44.68 billion. The cross-sell ratio for the average mature retail banking household increased to 5.94 products and services, up from 5.65 at March 31, 2004. Over the past year, WM Advisors' assets under management grew by $3.02 billion, or 16 percent, to $22.45 billion at March 31, 2005.

    Mortgage Banking Group Financial Performance

    Net income for the Mortgage Banking segment was $243 million in the first quarter of 2005 compared with $142 million in the fourth quarter of 2004 and $228 million in the first quarter of 2004. The increase in net income from the prior quarter was driven by favorable MSR performance, higher gain from mortgage loans, net of risk management activities, and lower noninterest expense. The increase in net income over the first quarter of 2004 resulted from higher gain from mortgage loans, net of risk management activities, and lower noninterest expense.
    Noninterest expense of $566 million in the first quarter of 2005 declined $63 million from $629 million in the fourth quarter of 2004 and was down $111 million, or 16 percent from $677 million in the first quarter of 2004 due to continued productivity and efficiency improvements.
    The Mortgage Banking segment loan volume in the first quarter of 2005, which excludes specialty mortgage finance, was $38.50 billion, down slightly from $41.78 billion in the fourth quarter of 2004 and $43.72 billion in the first quarter of 2004. The decline reflects a slowdown in the mortgage market due to lower refinancing activity resulting from rising interest rates over the past year.

    Commercial Group Financial Performance

    Net income for the Commercial Group was $200 million in the first quarter of 2005, up $76 million from $124 million in the fourth quarter of 2004 and up $33 million from $167 million in the first quarter of 2004. The increase in net income from the fourth quarter of 2004 was primarily due to higher noninterest income resulting from a $59 million pretax gain on sale of a real estate investment property and higher gain from mortgage loans. The increase in net income over first quarter 2004 was largely due to the real estate investment property gain.
    Average loans in the Commercial Group were $41.78 billion in the first quarter of 2005, up from $40.92 billion in the fourth quarter of 2004 and up $4.80 billion, or 13 percent from the first quarter of 2004. Total average commercial deposits of $7.31 billion in the first quarter of 2005 were down from $7.79 billion in the fourth quarter of 2004 but up 21 percent from $6.05 billion in the first quarter of 2004, driven by growth in average Mortgage Banker Finance deposits.

    About Washington Mutual

    With a history dating back to 1889, Washington Mutual is a retailer of financial services that provides a diversified line of products and services to consumers and commercial clients. At March 31, 2005, Washington Mutual and its subsidiaries had assets of $319.70 billion. Washington Mutual currently operates more than 2,400 retail banking, mortgage lending, commercial banking and financial services offices throughout the nation. Washington Mutual's press releases are available at www.wamunewsroom.com.

    Webcast information: A conference call to discuss the company's financial results will be held on Wednesday, April 20, 2005, at 10:30 a.m. EDT and will be hosted by Kerry Killinger, chairman and chief executive officer, Steve Rotella, president and chief operating officer, and Tom Casey, executive vice president and chief financial officer. The conference call is available by telephone or on the Internet. The dial-in number for the live conference call is 888-730-9138. Participants calling from outside the United States may dial 630-395-0018. The passcode "WaMu" is required to access the call. Via the Internet, the conference call is available on the Investor Relations portion of the company's web site at www.wamu.com/ir. A transcript of the prepared remarks will be on the company's web site for 30 days following the call. A recording of the conference call will be available after 1 p.m. EDT on Wednesday, April 20, 2005, through 11:59 p.m. EDT on Friday, April 29, 2005. The recorded message will be available at 866-416-8329. Callers from outside the United States may dial 203-369-0727.

    Forward Looking Statement

    Our Form 10-K for 2004 and other documents that we filed with the Securities and Exchange Commission have forward-looking statements. In addition, our senior management may make forward-looking statements orally to analysts, investors, the media and others. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could" or "may." Forward-looking statements provide our expectations or predictions of future conditions, events or results. They are not guarantees of future performance. By their nature, forward-looking statements are subject to risks and uncertainties. These statements speak only as of the date they are made. We do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward looking statements were made. There are a number of factors, many of which are beyond our control that could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. Some of these factors are described in detail in our Form 10-K for 2004 and include:

    -- Volatile interest rates impact our mortgage banking business
    and could adversely affect our earnings;

    -- Rising unemployment or a decrease in housing prices could
    adversely affect our credit performance;

    -- A continuing emphasis on subprime lending could negatively
    impact our business;

    -- The potential for negative amortization in the Option ARM
    product could have an adverse effect on the Company's credit;

    -- We face competition from banking and nonbanking companies;

    -- Changes in the regulation of financial services companies and
    housing government-sponsored enterprises could adversely
    affect our business;

    -- General business and economic conditions, including movements
    in interest rates, may significantly affect our earnings; and

    -- Negative public opinion could damage our reputation and
    adversely affect our earnings.

WM-1 Washington Mutual, Inc. Consolidated Statements of Income (dollars in millions, except per share data) (unaudited)

Quarter Ended ---------------------------------------------------------------------- Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2005 2004 2004 2004 2004 ---------------------------------------------------------------------- Interest Income Loans held for sale $470 $393 $341 $406 $332 Loans held in portfolio 2,544 2,421 2,226 2,111 2,067 Available-for-sale securities 224 157 163 180 265 Trading securities 79 66 40 21 24 Other interest and dividend income 43 29 41 34 33 ---------------------------------------------------------------------- Total interest income 3,360 3,066 2,811 2,752 2,721 Interest Expense Deposits 696 604 539 458 443 Borrowings 774 612 532 500 546 ---------------------------------------------------------------------- Total interest expense 1,470 1,216 1,071 958 989 ---------------------------------------------------------------------- Net interest income 1,890 1,850 1,740 1,794 1,732 Provision for loan and lease losses 16 37 56 60 56 ---------------------------------------------------------------------- Net interest income after provision for loan and lease losses 1,874 1,813 1,684 1,734 1,676 Noninterest Income Home loan mortgage banking income, net 776 352 504 - 531 Depositor and other retail banking fees 490 515 514 507 463 Securities fees and commissions 110 110 104 105 107 Insurance income 46 47 61 57 61 Portfolio loan related income 85 101 109 103 87 Trading securities income (expense) (89) 26 51 5 8 Gain (loss) from other available-for-sale securities (122) (23) 11 41 21 Loss on extinguishment of borrowings - - (147) (1) (89) Other income 112 89 57 77 48 ---------------------------------------------------------------------- Total noninterest income 1,408 1,217 1,264 894 1,237 Noninterest Expense Compensation and benefits 876 839 841 849 899 Occupancy and equipment 402 462 404 393 400 Telecommunications and outsourced information services 104 115 118 123 123 Depositor and other retail banking losses 55 61 54 40 40 Advertising and promotion 55 57 76 84 58 Professional fees 34 54 34 32 39 Other expense 313 350 342 327 321 ---------------------------------------------------------------------- Total noninterest expense 1,839 1,938 1,869 1,848 1,880 ---------------------------------------------------------------------- Income from continuing operations before income taxes 1,443 1,092 1,079 780 1,033 Income taxes 541 424 405 291 385 ---------------------------------------------------------------------- Income from continuing operations, net of taxes 902 668 674 489 648 ---------------------------------------------------------------------- Discontinued Operations Loss from discontinued operations before income taxes - - - - (32) Gain on disposition of discontinued operations - - - - 676 Income taxes - - - - 245 ---------------------------------------------------------------------- Income from discontinued operations, net of taxes - - - - 399 ---------------------------------------------------------------------- Net Income $902 $668 $674 $489 $1,047 ======================================================================

Basic Earnings Per Common Share: Income from continuing operations $1.04 $0.77 $0.78 $0.57 $0.75 Income from discontinued operations, net - - - - 0.46 -------- -------- --------- -------- -------- Net income 1.04 0.77 0.78 0.57 1.21

Diluted Earnings Per Common Share: Income from continuing operations $1.01 $0.76 $0.76 $0.55 $0.73 Income from discontinued operations, net - - - - 0.45 -------- -------- --------- -------- -------- Net income 1.01 0.76 0.76 0.55 1.18

Dividends declared per common share 0.46 0.45 0.44 0.43 0.42 Basic weighted average number of common shares outstanding (in thousands) 864,933 863,055 862,004 860,496 863,299 Diluted weighted average number of common shares outstanding (in thousands) 888,789 883,991 882,323 883,414 886,467

WM-2 Washington Mutual, Inc. Consolidated Statements of Financial Condition (dollars in millions, except per share data) (unaudited)

Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2005 2004 2004 2004 2004 ---------------------------------------------------------------------- Assets Cash and cash equivalents $4,811 $4,455 $4,689 $5,133 $6,045 Federal funds sold and securities purchased under agreements to resell 1,152 82 30 70 1,783 Trading securities 6,066 5,588 3,113 1,336 968 Available-for-sale securities, total amortized cost of $20,569, $19,047, $16,312, $19,392 and $22,843: Mortgage-backed securities 15,947 14,923 10,168 10,042 10,766 Investment securities 4,756 4,296 6,319 9,337 12,565 Loans held for sale 41,197 42,743 29,184 27,795 34,207 Loans held in portfolio 214,114 207,071 206,158 194,543 186,380 Allowance for loan and lease losses (1,280) (1,301) (1,322) (1,293) (1,260) ---------------------------------------------------------------------- Total loans held in portfolio, net of allowance for loan and lease losses 212,834 205,770 204,836 193,250 185,120 Investment in Federal Home Loan Banks 3,973 4,059 3,883 3,965 3,916 Mortgage servicing rights 6,802 5,906 6,112 7,501 5,239 Goodwill 6,196 6,196 6,196 6,196 6,196 Other assets 15,962 13,900 14,298 13,919 13,963 ---------------------------------------------------------------------- Total assets $319,696 $307,918 $288,828 $278,544 $280,768 ====================================================================== Liabilities Deposits: Noninterest- bearing deposits $34,941 $32,780 $32,250 $33,343 $35,714 Interest-bearing deposits 148,690 140,878 136,445 129,123 125,267 ---------------------------------------------------------------------- Total deposits 183,631 173,658 168,695 162,466 160,981 Federal funds purchased and commercial paper 2,053 4,045 7,025 2,293 4,501 Securities sold under agreements to repurchase 16,716 15,944 15,611 15,764 18,306 Advances from Federal Home Loan Banks 66,730 70,074 59,758 61,379 58,494 Other borrowings 21,938 18,498 12,747 12,113 13,692 Other liabilities 6,861 4,473 4,172 4,160 4,411 ---------------------------------------------------------------------- Total liabilities 297,929 286,692 268,008 258,175 260,385 Stockholders' equity 21,767 21,226 20,820 20,369 20,383 ---------------------------------------------------------------------- Total liabilities and stockholders' equity $319,696 $307,918 $288,828 $278,544 $280,768 ====================================================================== Common shares outstanding at end of period (in thousands)(1) 877,287 874,262 873,085 872,246 868,953 Book value per common share(2) $24.98 $24.45 $24.01 $23.51 $23.62 Tangible book value per common share(2) 18.01 17.45 16.99 16.47 16.53 Employees at end of period 52,488 52,579 55,488 57,274 59,173

(1) Includes 6,000,000 shares held in escrow in all periods reported.

(2) Excludes 6,000,000 shares held in escrow in all periods reported.

WM-3 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)

Quarter Ended ---------------------------------------------------------------------- Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2005 2004 2004 2004 2004 ---------------------------------------------------------------------- Stockholders' Equity Rollforward Balance, beginning of period $21,226 $20,820 $20,369 $20,383 $19,742 Net income 902 668 674 489 1,047 Other comprehensive income (loss), net of tax (8) 49 98 (210) 512 Cash dividends declared on common stock (402) (390) (381) (372) (367) Common stock repurchased and retired (100) - - - (712) Common stock issued 149 79 60 79 161 ---------------------------------------------------------------------- Balance, end of period $21,767 $21,226 $20,820 $20,369 $20,383 ======================================================================

WM-4 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)

Quarter Ended ---------------------------------------------------------------------- Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2005 2004 2004 2004 2004 ---------------------------------------------------------------------- RETAIL BANKING AND FINANCIAL SERVICES GROUP Condensed income statement: Net interest income $1,343 $1,323 $1,255 $1,224 $1,187 Provision for loan and lease losses 37 34 42 43 58 Noninterest income 695 717 715 703 623 Inter-segment revenue 12 8 3 7 6 Noninterest expense 1,148 1,132 1,116 1,115 1,071 ---------------------------------------------------------------------- Income before income taxes 865 882 815 776 687 Income taxes 327 317 309 294 260 ---------------------------------------------------------------------- Net income $538 $565 $506 $482 $427 ====================================================================== Performance and other data: Efficiency ratio(1) 49.78% 48.95% 49.97% 50.97% 51.86% Average loans $177,635 $177,204 $167,569 $158,966 $149,377 Average assets 190,479 189,872 180,003 171,343 161,359 Average deposits 132,982 132,771 131,850 128,680 128,000 Loan volume 12,493 13,337 14,178 14,988 12,778 Employees at end of period 31,152 30,107 30,069 29,640 29,077

MORTGAGE BANKING GROUP Condensed income statement: Net interest income $286 $293 $287 $369 $288 Noninterest income 682 566 769 208 761 Inter-segment expense 12 8 3 7 6 Noninterest expense 566 629 615 666 677 ---------------------------------------------------------------------- Income (loss) before income taxes 390 222 438 (96) 366 Income taxes (benefit) 147 80 165 (37) 138 ---------------------------------------------------------------------- Net income (loss) $243 $142 $273 $(59) $228 ====================================================================== Performance and other data: Efficiency ratio(1) 53.83% 67.78% 53.40% 107.91% 59.98% Average loans $27,765 $24,880 $22,611 $26,999 $19,871 Average assets 49,019 44,195 40,037 44,568 38,914 Average deposits 13,107 15,121 15,385 19,837 14,877 Loan volume 38,498 41,782 40,491 56,219 43,720 Employees at end of period 12,626 14,197 16,826 18,916 21,203

COMMERCIAL GROUP Condensed income statement: Net interest income $323 $322 $325 $342 $343 Provision for loan and lease losses 2 11 8 10 16 Noninterest income 158 61 65 102 86 Noninterest expense 175 192 164 149 156 ---------------------------------------------------------------------- Income before income taxes 304 180 218 285 257 Income taxes 104 56 75 101 90 ---------------------------------------------------------------------- Net income $200 $124 $143 $184 $167 ====================================================================== Performance and other data: Efficiency ratio(1) 30.36% 42.23% 34.52% 26.89% 29.57% Average loans $41,783 $40,917 $38,799 $38,496 $36,984 Average assets 46,647 45,678 43,730 43,749 42,805 Average deposits 7,308 7,791 7,811 6,898 6,049 Loan volume 8,524 8,102 7,156 8,314 5,667 Employees at end of period 3,530 3,100 3,248 3,207 3,130

(This table is continued on "WM-5".)

(1) The efficiency ratio is defined as noninterest expense, excluding a cost of capital charge on goodwill, divided by total revenue (net interest income and noninterest income).

WM-5 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)

Quarter Ended ---------------------------------------------------------------------- (This table is Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, continued from "WM-4".) 2005 2004 2004 2004 2004 ---------------------------------------------------------------------- CORPORATE SUPPORT/TREASURY AND OTHER Condensed income statement: Net interest expense $(175) $(201) $(237) $(247) $(189) Noninterest income (expense) (65) 12 (123) 24 (69) Noninterest expense 158 197 186 128 186 ---------------------------------------------------------------------- Income (loss) from continuing operations (398) (386) (546) (351) (444) Income taxes (benefit) (149) (150) (205) (131) (165) ---------------------------------------------------------------------- Income (loss) from continuing operations (249) (236) (341) (220) (279) Income from discontinued operations, net of taxes - - - - 399 ---------------------------------------------------------------------- Net income (loss) $(249) $(236) $(341) $(220) $120 ====================================================================== Performance and other data: Average assets $23,809 $19,279 $21,721 $26,025 $29,996 Average deposits 21,788 18,190 13,820 9,391 5,028 Employees at end of period 5,180 5,175 5,345 5,511 5,763

RECONCILING ADJUSTMENTS Condensed income statement: Net interest income(2) $113 $113 $110 $106 $103 Provision (reversal of reserve) for loan and lease losses(3) (23) (8) 6 7 (18) Noninterest income (expense)(4) (62) (139) (162) (143) (164) Noninterest (income) expense(5) (208) (212) (212) (210) (210) ---------------------------------------------------------------------- Income before income taxes 282 194 154 166 167 Income taxes(6) 112 121 61 64 62 ---------------------------------------------------------------------- Net income $170 $73 $93 $102 $105 ====================================================================== Performance and other data: Average loans(7) $(1,556) $(1,622) $(1,600) $(1,553) $(1,505) Average assets(7)(8) (1,782) (1,866) (1,822) (1,745) (1,668)

TOTAL CONSOLIDATED Condensed income statement: Net interest income $1,890 $1,850 $1,740 $1,794 $1,732 Provision for loan and lease losses 16 37 56 60 56 Noninterest income 1,408 1,217 1,264 894 1,237 Noninterest expense 1,839 1,938 1,869 1,848 1,880 ---------------------------------------------------------------------- Income from continuing operations before income taxes 1,443 1,092 1,079 780 1,033 Income taxes 541 424 405 291 385 ---------------------------------------------------------------------- Income from continuing operations 902 668 674 489 648 Income from discontinued operations, net of taxes - - - - 399 ---------------------------------------------------------------------- Net income $902 $668 $674 $489 $1,047 ====================================================================== Performance and other data: Efficiency ratio(9) 55.77% 63.18% 62.19% 68.77% 63.34% Average loans $245,627 $241,379 $227,379 $222,908 $204,727 Average assets 308,172 297,158 283,669 283,940 271,406 Average deposits 175,185 173,873 168,866 164,806 153,954 Loan volume 59,515 63,221 61,825 79,521 62,165 Employees at end of period 52,488 52,579 55,488 57,274 59,173

(2) Represents the difference between home loan premium amortization recorded by the Retail Banking and Financial Services segment and the amount recognized in the Company's Consolidated Statements of Income. For management reporting purposes, loans that are held in portfolio by the Retail Banking and Financial Services segment are treated as if they are purchased from the Mortgage Banking segment. Since the cost basis of these loans includes an assumed profit factor paid to the Mortgage Banking segment, the amortization of loan premiums recorded by the Retail Banking and Financial Services segment includes this assumed profit factor and must therefore be eliminated as a reconciling adjustment.

(3) Represents the difference between the long-term, normalized net charge-off ratio used to assess expected loan and lease losses for the operating segments and the "losses inherent in the loan portfolio" methodology used by the Company.

(4) Represents the difference between gain from mortgage loans recorded by the Mortgage Banking segment and the gain from mortgage loans recognized in the Company's Consolidated Statements of Income. As the Mortgage Banking segment holds no loans in portfolio, all loans originated or purchased by this segment are considered to be salable for management reporting purposes.

(5) Represents the corporate offset for the cost of capital related to goodwill that has been allocated to the segments.

(6) Represents the tax effect of reconciling adjustments.

(7) Includes the inter-segment offset for inter-segment loan premiums that the Retail Banking and Financial Services segment recognized from the transfer of portfolio loans from the Mortgage Banking segment.

(8) Includes the impact to the allowance for the loan and lease losses per the following table that results from the difference between the long-term, normalized net charge-off ratio used to assess expected loan and lease losses for the operating segments and the "losses inherent in the loan portfolio" methodology used by the Company.

----------------------------------------------------- Quarter Ended ----------------------------------------------------- Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2005 2004 2004 2004 2004 ----------------------------------------------------- $(226) $(244) $(222) $(192) $(163) -----------------------------------------------------

(9) The efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income).

WM-6 Washington Mutual, Inc. Selected Financial Information (dollars in millions, except per share data) (unaudited)

Quarter Ended ---------------------------------------------------------------------- Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2005 2004 2004 2004 2004 ---------------------------------------------------------------------- PROFITABILITY Net interest income $1,890 $1,850 $1,740 $1,794 $1,732 Net interest margin 2.73% 2.79% 2.77% 2.86% 2.89% Noninterest income $1,408 $1,217 $1,264 $894 $1,237 Noninterest expense 1,839 1,938 1,869 1,848 1,880 Basic earnings per common share: Income from continuing operations $1.04 $0.77 $0.78 $0.57 $0.75 Income from discontinued operations, net - - - - 0.46 Net income 1.04 0.77 0.78 0.57 1.21 Diluted earnings per common share: Income from continuing operations $1.01 $0.76 $0.76 $0.55 $0.73 Income from discontinued operations, net - - - - 0.45 Net income 1.01 0.76 0.76 0.55 1.18 Dividends declared per common share $0.46 $0.45 $0.44 $0.43 $0.42 Return on average assets(1) 1.17% 0.90% 0.95% 0.69% 1.54% Return on average common equity(1) 16.63 12.71 13.03 9.63 20.85 Efficiency ratio(2) 55.77 63.18 62.19 68.77 63.34

ASSET QUALITY Nonaccrual loans(3)(4) $1,569 $1,534 $1,471 $1,396 $1,542 Foreclosed assets(4) 264 261 281 286 307 Total nonperforming assets(3)(4) 1,833 1,795 1,752 1,682 1,849 Nonperforming assets/total assets(3)(4) 0.57% 0.58% 0.61% 0.60% 0.66% Restructured loans(4) $27 $34 $38 $79 $107 Total nonperforming assets and restructured loans(3)(4) 1,860 1,829 1,790 1,761 1,956 Allowance for loan and lease losses(4) 1,280 1,301 1,322 1,293 1,260 Allowance as a percentage of total loans held in portfolio(4) 0.60% 0.63% 0.64% 0.66% 0.68% Provision for loan and lease losses $16 $37 $56 $60 $56 Net charge-offs 37 38 27 24 46

CAPITAL ADEQUACY(4) Stockholders' equity/total assets 6.81% 6.89% 7.21% 7.31% 7.26% Tangible common equity(5)/total tangible assets(5) 5.03 5.05 5.26 5.32 5.21 Estimated total risk- based capital/risk- weighted assets(6) 11.18 11.34 10.64 10.39 10.53

SUPPLEMENTAL DATA Average balance sheet: Total loans held for sale $38,307 $33,083 $28,220 $33,096 $24,464 Total loans held in portfolio 207,320 208,296 199,159 189,812 180,263 Total interest-earning assets 277,080 266,375 252,235 251,264 239,979 Total assets 308,172 297,158 283,669 283,940 271,406 Total interest-bearing deposits 142,639 139,938 135,600 127,670 123,336 Total noninterest- bearing deposits 32,546 33,935 33,266 37,136 30,618 Total stockholders' equity 21,680 21,025 20,703 20,288 20,088 Period-end balance sheet: Loans held for sale 41,197 42,743 29,184 27,795 34,207 Loans held in portfolio, net of allowance for loan and lease losses 212,834 205,770 204,836 193,250 185,120 Interest-earning assets 287,205 278,762 258,855 247,088 250,585 Total assets 319,696 307,918 288,828 278,544 280,768 Interest-bearing deposits 148,690 140,878 136,445 129,123 125,267 Noninterest-bearing deposits 34,941 32,780 32,250 33,343 35,714 Total stockholders' equity 21,767 21,226 20,820 20,369 20,383

(1) Includes income from continuing and discontinued operations for the period ending March 31, 2004.

(2) The efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income).

(3) Excludes nonaccrual loans held for sale.

(4) As of quarter end.

(5) Excludes unrealized net gain/loss on available-for-sale securities and derivatives, goodwill and intangible assets, but includes MSR.

(6) Estimate of what the total risk-based capital ratio would be if Washington Mutual, Inc. were a bank holding company that is subject to Federal Reserve Board capital requirements.

WM-7 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)

Quarter Ended ---------------------------------------------------------------------- Mar. 31, 2005 Dec. 31, 2004 ------------------------- ------------------------- Interest Interest Income/ Income/ Balance Rate Expense Balance Rate Expense ---------------------------------------------------------------------- Average Balances and Weighted Average Interest Rates Assets Interest-earning assets: Federal funds sold and securities purchased under agreements to resell $1,354 2.55% $9 $560 1.92% $3 Trading securities 5,713 5.55 79 4,540 5.80 66 Available-for- sale securities(1): Mortgage-backed securities 15,487 4.45 173 11,398 3.85 110 Investment securities 4,627 4.44 51 4,387 4.27 47 Loans held for sale(2) 38,307 4.91 470 33,083 4.74 393 Loans held in portfolio(2): Loans secured by real estate: Home 110,131 4.59 1,263 113,352 4.30 1,218 Specialty mortgage finance(3) 18,554 5.05 234 17,389 4.87 212 ---------------------------- -------- --------- -------- Total home loans 128,685 4.65 1,497 130,741 4.37 1,430 Home equity loans and lines of credit 44,679 5.37 593 42,034 4.93 520 Home construction (4) 2,242 5.77 32 2,434 5.87 36 Multi-family 22,667 5.00 283 21,922 4.92 270 Other real estate 5,425 6.02 82 6,133 6.03 93 ---------------------------- -------- --------- -------- Total loans secured by real estate 203,698 4.90 2,487 203,264 4.62 2,349 Consumer 770 10.50 20 813 10.20 21 Commercial business 2,852 5.19 37 4,219 4.78 51 ---------------------------- -------- --------- -------- Total loans held in portfolio 207,320 4.92 2,544 208,296 4.64 2,421 Other 4,272 3.21 34 4,111 2.60 26 ---------------------------- -------- --------- -------- Total interest- earning assets 277,080 4.86 3,360 266,375 4.59 3,066 Noninterest- earning assets: Mortgage servicing rights 6,090 5,928 Goodwill 6,196 6,196 Other assets 18,806 18,659 ---------------------------- --------- Total assets $308,172 $297,158 ============================ ========= Liabilities Interest-bearing liabilities: Deposits: Interest-bearing checking deposits $49,917 1.63 201 $52,171 1.32 173 Savings and money market deposits 41,997 1.42 147 44,017 1.36 151 Time deposits 50,725 2.77 348 43,750 2.53 280 ---------------------------- -------- --------- -------- Total interest- bearing deposits 142,639 1.97 696 139,938 1.71 604 Federal funds purchased and commercial paper 3,486 2.49 22 4,828 1.98 24 Securities sold under agreements to repurchase 16,621 2.65 110 13,528 2.09 72 Advances from Federal Home Loan Banks 66,591 2.82 469 63,053 2.34 376 Other 18,400 3.78 173 15,164 3.70 140 ---------------------------- -------- --------- -------- Total interest- bearing liabilities 247,737 2.39 1,470 236,511 2.03 1,216 Noninterest- bearing sources: Noninterest- bearing deposits 32,546 33,935 Other liabilities 6,209 5,687 Stockholders' equity 21,680 21,025 ---------------------------- --------- Total liabilities and stockholders' equity $308,172 $297,158 ============================ ========= Net interest spread and net interest income 2.47 $1,890 2.56 $1,850 ======== ======== Impact of noninterest- bearing sources 0.26 0.23 Net interest margin 2.73 2.79

Quarter Ended -------------------------------------------- Mar. 31, 2004 ------------------------- Interest Income/ Balance Rate Expense -------------------------------------------- Average Balances and Weighted Average Interest Rates Assets Interest-earning assets: Federal funds sold and securities purchased under agreements to resell $1,026 1.34% $3 Trading securities 1,228 7.91 24 Available-for- sale securities(1): Mortgage-backed securities 9,999 4.35 109 Investment securities 19,073 3.29 156 Loans held for sale(2) 24,464 5.43 332 Loans held in portfolio(2): Loans secured by real estate: Home 102,691 4.24 1,089 Specialty mortgage finance(3) 14,016 5.21 182 ------------------ --------- -------- Total home loans 116,707 4.36 1,271 Home equity loans and lines of credit 29,262 4.72 344 Home construction (4) 2,317 5.33 31 Multi-family 20,376 5.06 258 Other real estate 6,589 5.77 95 ---------------------------- -------- Total loans secured by real estate 175,251 4.57 1,999 Consumer 997 10.15 25 Commercial business 4,015 4.19 43 ------------------ --------- -------- Total loans held in portfolio 180,263 4.59 2,067 Other 3,926 3.00 30 ------------------ --------- -------- Total interest- earning assets 239,979 4.54 2,721 Noninterest- earning assets: Mortgage servicing rights 5,872 Goodwill 6,196 Other assets 19,359 ------------------ --------- Total assets $271,406 ================== ========= Liabilities Interest-bearing liabilities: Deposits: Interest-bearing checking deposits $67,431 1.28 214 Savings and money market deposits 26,915 0.75 50 Time deposits 28,990 2.48 179 ------------------ --------- -------- Total interest- bearing deposits 123,336 1.45 443 Federal funds purchased and commercial paper 3,493 1.08 10 Securities sold under agreements to repurchase 21,954 1.93 107 Advances from Federal Home Loan Banks 52,921 2.28 305 Other 14,032 3.56 124 ------------------ --------- -------- Total interest- bearing liabilities 215,736 1.83 989 Noninterest- bearing sources: Noninterest- bearing deposits 30,618 Other liabilities 4,964 Stockholders' equity 20,088 ------------------ --------- Total liabilities and stockholders' equity $271,406 ================== ========= Net interest spread and net interest income 2.71 $1,732 ======== Impact of noninterest- bearing sources 0.18 Net interest margin 2.89

(1) The average balance and yield are based on average amortized cost balances.

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

(3) Represents purchased subprime loan portfolios and certain mortgages originated by Long Beach Mortgage Company.

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

WM-8 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)

Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2005 2004 2004 2004 2004 ---------------------------------------------------------------------- Deposits Retail deposits: Checking deposits: Noninterest bearing $18,599 $17,463 $16,178 $15,666 $15,107 Interest bearing 48,988 51,099 52,378 59,395 66,618 ---------------------------------------------------------------------- Total checking deposits 67,587 68,562 68,556 75,061 81,725 Savings and money market deposits 35,184 36,836 38,620 30,413 22,452 Time deposits(1) 31,819 27,268 24,825 23,990 24,128 ---------------------------------------------------------------------- Total retail deposits 134,590 132,666 132,001 129,464 128,305 Commercial business deposits 8,447 7,611 7,369 7,176 6,426 Wholesale deposits 24,969 18,448 14,052 8,874 6,219 Custodial and escrow deposits(2) 15,625 14,933 15,273 16,952 20,031 ---------------------------------------------------------------------- Total deposits $183,631 $173,658 $168,695 $162,466 $160,981 ======================================================================

(1) Weighted average remaining maturity of time deposits was 14 months at March 31, 2005 and 16 months at December 31, 2004, September 30, 2004, June 30, 2004 and March 31, 2004.

(2) Substantially all custodial and escrow deposits reside in noninterest-bearing checking accounts.

Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2005 2004 2004 2004 2004 ---------------------------------------------------------------------- Retail Deposit Accounts(1) Transaction accounts(2) 14,434,101 14,091,734 13,905,707 13,579,961 13,193,298 Time deposits 1,300,580 1,208,870 1,171,127 1,165,002 1,185,728 ---------------------------------------------------------------------- Total accounts, end of period 15,734,681 15,300,604 15,076,834 14,744,963 14,379,026 ======================================================================

Net transaction account changes 342,367 186,027 325,746 386,663 398,396 Net total account changes 434,077 223,770 331,871 365,937 368,788

(1) The information provided in this table represents the number of accounts.

(2) Transaction accounts include retail checking, small business checking, retail savings and small business savings.

Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2005 2004 2004 2004 2004 ------------------------------------------------------------------- Retail Banking Stores Stores, beginning of period 1,939 1,872 1,816 1,755 1,776 Net stores opened during the quarter 29 67 56 61 (21)(1) ------------------------------------------------------------------- Stores, end of period 1,968 1,939 1,872 1,816 1,755 ===================================================================

(1) The Company consolidated 79 grocery store locations into larger, existing, retail banking stores.

Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2005 2004 2004 2004 2004 ---------------------------------------------------------------------- Assets Under Management $22,454 $22,196 $20,617 $20,106 $19,438 ======================================================================

WM-9 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)

Quarter Ended ---------------------------------------------------------------------- Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2005 2004 2004 2004 2004 ---------------------------------------------------------------------- Loan Volume Home loans: Adjustable rate $22,947 $26,141 $25,589 $29,753 $21,822 Fixed rate 17,147 15,448 14,635 26,076 21,564 Specialty mortgage finance(1) 7,656 9,362 7,536 7,323 7,113 ---------------------------------------------------------------------- Total home loan volume 47,750 50,951 47,760 63,152 50,499 Home equity loans and lines of credit 8,887 9,307 10,527 11,572 8,416 Home construction loans(2) 245 293 640 839 609 Multi-family 2,121 2,240 2,050 2,346 1,525 Other real estate 345 257 352 760 370 ---------------------------------------------------------------------- Total loans secured by real estate 59,348 63,048 61,329 78,669 61,419 Consumer 43 77 138 63 58 Commercial business 124 96 358 789 688 ---------------------------------------------------------------------- Total loan volume $59,515 $63,221 $61,825 $79,521 $62,165 ====================================================================== Loan Volume by Channel Retail $25,569 $28,766 $30,285 $37,720 $28,126 Wholesale 16,716 18,441 16,079 19,534 15,419 Purchased/correspondent 17,230 16,014 15,461 22,267 18,620 ---------------------------------------------------------------------- Total loan volume by channel $59,515 $63,221 $61,825 $79,521 $62,165 ====================================================================== Refinancing Activity(3) Home loan refinancing $28,641 $30,752 $23,834 $40,201 $33,233 Home equity loans and lines of credit and consumer 392 336 360 1,147 1,107 Home construction loans 10 13 9 13 12 Multi-family and other real estate 660 565 621 883 575 ---------------------------------------------------------------------- Total refinancing $29,703 $31,666 $24,824 $42,244 $34,927 ====================================================================== Home Loan Volume by Index Short-term adjustable- rate loans(4): Treasury indices $15,997 $18,967 $18,883 $16,467 $13,440 COFI 195 846 145 167 110 Other 426 57 45 812 218 ---------------------------------------------------------------------- Total short-term adjustable-rate loans 16,618 19,870 19,073 17,446 13,768 Medium-term adjustable- rate loans(5) 13,409 14,890 12,866 17,536 12,814 Fixed-rate loans 17,723 16,191 15,821 28,170 23,917 ---------------------------------------------------------------------- Total home loan volume $47,750 $50,951 $47,760 $63,152 $50,499 ======================================================================

Note: Pursuant to regulatory guidance, buyouts of delinquent mortgages contained within Government National Mortgage Association (GNMA) loan servicing pools must be classified as loans on the balance sheet. Accordingly, total home loan volume includes GNMA pool buy-out volume of $563 million, $785 million, $898 million, $689 million and $1.05 billion for the quarters ended March 31, 2005, December 31, 2004, September 30, 2004, June 30, 2004 and March 31, 2004.

(1) Represents purchased subprime loan portfolios and mortgages originated by Long Beach Mortgage Company.

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

(3) Includes loan refinancing entered into by both new and pre- existing loan customers.

(4) Short-term is defined as adjustable-rate loans that reprice within one year or less.

(5) Medium-term is defined as adjustable-rate loans that reprice after one year.

WM-10 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)

Change from Dec. 31, 2004 Mar. 31, Dec. 31, to Mar. 31, 2005 2005 2004 ---------------------------------------------------------------------- Loans by Property Type Loans held in portfolio: Loans secured by real estate: Home $2,453 $112,444 $109,991 Specialty mortgage finance(1) 2,396 21,539 19,143 ---------------------------------------------------------------------- Total home loans 4,849 133,983 129,134 Home equity loans and lines of credit 2,199 45,849 43,650 Home construction(2) (174) 2,170 2,344 Multi-family 965 23,247 22,282 Other real estate (353) 5,311 5,664 ---------------------------------------------------------------------- Total loans secured by real estate 7,486 210,560 203,074 Consumer (45) 747 792 Commercial business (398) 2,807 3,205 ---------------------------------------------------------------------- Total loans held in portfolio 7,043 214,114 207,071 Less: allowance for loan and lease losses 21 (1,280) (1,301) ---------------------------------------------------------------------- Total net loans held in portfolio 7,064 212,834 205,770 Loans held for sale(3) (1,546) 41,197 42,743 ---------------------------------------------------------------------- Total net loans $5,518 $254,031 $248,513 ======================================================================

Sept. 30, June 30, Mar. 31, 2004 2004 2004 ---------------------------------------------------------------------- Loans by Property Type Loans held in portfolio: Loans secured by real estate: Home $112,230 $106,312 $104,946 Specialty mortgage finance(1) 17,305 16,217 15,437 ---------------------------------------------------------------------- Total home loans 129,535 122,529 120,383 Home equity loans and lines of credit 40,505 36,077 31,264 Home construction(2) 2,732 2,605 2,370 Multi-family 21,640 21,156 20,579 Other real estate 6,268 6,513 6,508 ---------------------------------------------------------------------- Total loans secured by real estate 200,680 188,880 181,104 Consumer 831 892 954 Commercial business 4,647 4,771 4,322 ---------------------------------------------------------------------- Total loans held in portfolio 206,158 194,543 186,380 Less: allowance for loan and lease losses (1,322) (1,293) (1,260) ---------------------------------------------------------------------- Total net loans held in portfolio 204,836 193,250 185,120 Loans held for sale(3) 29,184 27,795 34,207 ---------------------------------------------------------------------- Total net loans $234,020 $221,045 $219,327 ======================================================================

(1) Represents purchased subprime loan portfolios and certain mortgages originated by Long Beach Mortgage Company.

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

(3) Fair value of loans held for sale was $41.38 billion, $43.02 billion, $29.32 billion, $27.92 billion and $34.36 billion as of March 31, 2005, December 31, 2004, September 30, 2004, June 30, 2004 and March 31, 2004.

WM-11 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)

Weighted Change from Average Dec. 31, 2004 Mar. 31, Coupon to Mar. 31, 2005 2005 Rate ---------------------------------------------------------------------- Loans Secured by Real Estate and MBS Selected loans held in portfolio secured by real estate(1): Short-term adjustable-rate loans(2): COFI $(375) $7,261 5.05% Treasury indices 3,706 76,846 4.58 Other 2,281 43,967 5.86 ---------------------------------------------------------------------- Total short-term adjustable- rate loans 5,612 128,074 5.05 Medium-term adjustable-rate loans(3) 1,579 54,157 5.50 Fixed-rate loans 822 20,848 6.52 ---------------------------------------------------------------------- Total loans held in portfolio secured by real estate(4) 8,013 203,079 5.32 Loans held for sale(5) (1,596) 41,003 5.11 ---------------------------------------------------------------------- Total loans secured by real estate 6,417 244,082 5.28 MBS(6): Short-term adjustable-rate MBS(2): COFI (552) 3,121 3.93 Treasury indices 2,117 7,700 3.85 Other 69 737 5.06 ---------------------------------------------------------------------- Total short-term adjustable- rate MBS 1,634 11,558 3.95 Medium-term adjustable-rate MBS(3) 289 991 4.45 Fixed-rate MBS (743) 3,185 5.22 ---------------------------------------------------------------------- Total MBS(7) 1,180 15,734 4.24 ---------------------------------------------------------------------- Total loans secured by real estate and MBS $7,597 $259,816 5.22 ======================================================================

Weighted Weighted Average Average Dec. 31, Coupon Mar. 31, Coupon 2004 Rate 2004 Rate ---------------------------------------------------------------------- Loans Secured by Real Estate and MBS Selected loans held in portfolio secured by real estate(1): Short-term adjustable-rate loans(2): COFI $7,636 4.91% $9,878 4.86% Treasury indices 73,140 4.25 58,981 3.76 Other 41,686 5.42 30,759 4.78 ---------------------------------------------------------------------- Total short-term adjustable- rate loans 122,462 4.69 99,618 4.19 Medium-term adjustable-rate loans(3) 52,578 5.40 53,209 5.51 Fixed-rate loans 20,026 6.56 19,399 6.80 ---------------------------------------------------------------------- Total loans held in portfolio secured by real estate(4) 195,066 5.07 172,226 4.89 Loans held for sale(5) 42,599 4.70 34,023 5.42 ---------------------------------------------------------------------- Total loans secured by real estate 237,665 5.01 206,249 4.98 MBS(6): Short-term adjustable-rate MBS(2): COFI 3,673 3.72 4,964 3.82 Treasury indices 5,583 3.15 4,225 2.50 Other 668 5.04 9 3.08 ---------------------------------------------------------------------- Total short-term adjustable- rate MBS 9,924 3.49 9,198 3.21 Medium-term adjustable-rate MBS(3) 702 4.25 - - Fixed-rate MBS 3,928 5.32 1,272 6.38 ---------------------------------------------------------------------- Total MBS(7) 14,554 4.02 10,470 3.60 ---------------------------------------------------------------------- Total loans secured by real estate and MBS $252,219 4.95 $216,719 4.92 ======================================================================

(1) Includes total home loans, home equity loans and lines of credit and multi-family loans.

(2) Short-term is defined as adjustable-rate loans and MBS that reprice within one year or less.

(3) Medium-term is defined as adjustable-rate loans and MBS that reprice after one year.

(4) At March 31, 2005, December 31, 2004, and March 31, 2004, the adjustable-rate loans with lifetime caps were $179.59 billion, $171.44 billion and $149.33 billion with a lifetime weighted average cap rate of 12.31%, 12.31% and 12.20%.

(5) Excludes student loans.

(6) Excludes principal-only strips and interest-only strips.

(7) At March 31, 2005, December 31, 2004 and March 31, 2004, the adjustable-rate MBS with lifetime caps were $12.47 billion, $10.58 billion and $7.48 billion with a lifetime weighted average cap rate of 10.18%, 10.23% and 11.33%.

Dec. 31, 2004 to Mar. 31, 2005 ---------------------------------------------------------------------- Rollforward of Loans Held for Sale Balance, beginning of period $42,743 Loans originated, purchased and transferred from held in portfolio 37,861 Loans transferred to held in portfolio (4,631) Loans sold and other (34,776) ---------------------------------------------------------------------- Balance, end of period $41,197 ======================================================================

Rollforward of Loans Held in Portfolio Balance, beginning of period $207,071 Loans originated, purchased and transferred from held for sale 26,285 Loan payments, transferred to held for sale and other (19,242) ---------------------------------------------------------------------- Balance, end of period $214,114 ======================================================================

WM-12 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)

Quarter Ended ---------------------------------------------------------------------- Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2005 2004 2004 2004 2004 ---------------------------------------------------------------------- Home Loan Mortgage Banking Income (Expense) Loan servicing fees $489 $481 $482 $485 $502 Amortization of MSR (570) (636) (589) (546) (750) Net MSR valuation adjustments(1) 539 257 165 (51) (606) Other, net(2) (51) (62) (62) (89) (66) ---------------------------------------------------------------------- Net home loan servicing income (expense) 407 40 (4) (201) (920) Revaluation gain (loss) from derivatives: MSR risk management(3) (23) 14 130 (322) 1,108 Loans held for sale risk management(4) 86 28 (23) 142 (66) ---------------------------------------------------------------------- Total revaluation gain (loss) from derivatives 63 42 107 (180) 1,042 Net settlement income from certain interest- rate swaps 51 53 126 192 167 Gain from mortgage loans(4) 178 155 210 113 171 Loan related income 74 60 65 76 71 Gain from sale of originated mortgage- backed securities 3 2 - - - ---------------------------------------------------------------------- Total home loan mortgage banking income 776 352 504 - 531 ---------------------------------------------------------------------- Impact of other MSR risk management instruments(5): Gain (loss) from certain available- for-sale securities (44) (4) - - 5 Revaluation gain (loss) from certain trading securities (109) 36 45 - - ---------------------------------------------------------------------- Total home loan mortgage banking income, net of other MSR risk management instruments $623 $384 $549 $- $536

(1) Represents fair value hedge ineffectiveness as well as any impairment/reversal recognized on MSR accounted for under the lower of cost or market value methodology. The Company prospectively applied fair value hedge accounting treatment, as prescribed by Statement of Financial Accounting Standards No. 133, to most of its MSR on April 1, 2004.

(2) Includes loan pool expense, which represent the shortfall of what is remitted to investors compared to what is collected from the borrowers.

(3) Represents the change in fair value from certain derivatives that economically hedge the MSR.

(4) Gain from mortgage loans net of loans held for sale hedging and risk management instruments was a net gain of $257 million, $180 million, $187 million, $252 million and $112 million for the quarters ended March 31, 2005, December 31, 2004, September 30, 2004, June 30, 2004, and March 31, 2004.

(5) Includes only instruments designated for MSR risk management and does not include the effects of instruments held for asset/liability risk management.

WM-13 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)

Quarter Ended ---------------------------------------------------------------------- Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2005 2004 2004 2004 2004 ---------------------------------------------------------------------- Mortgage Servicing Rights ("MSR") Performance Statement No. 133 MSR accounting valuation adjustments $545 $(123) $(885) $1,707 $- Statement No. 133 fair value hedging adjustments (433) 201 1,316 (1,985) - ---------------------------------------------------------------------- Statement No. 133 ineffectiveness 112 78 431 (278) - Change in value of MSR accounted for under lower of cost or market value methodology 427 179 (266) 227 (606) ---------------------------------------------------------------------- Net MSR valuation adjustments(1) 539 257 165 (51) (606) Amortization of MSR (570) (636) (589) (546) (750) MSR risk management: Revaluation gain (loss) from derivatives (23) 14 130 (322) 1,108 Net settlement income from certain interest-rate swaps 58 56 126 195 160 Gain (loss) from certain available- for-sale securities (44) (4) - - 5 Revaluation gain (loss) from certain trading securities (109) 36 45 - - ---------------------------------------------------------------------- Net MSR valuation less hedging expense $(149) $(277) $(123) $(724) $(83) ======================================================================

(1) Represents fair value hedge ineffectiveness as well as any impairment/reversal recognized on MSR accounted for under the lower of cost or market value methodology. The Company began applying fair value hedge accounting treatment, as prescribed by Statement No. 133, to most of its MSR on a prospective basis as of April 1, 2004.

WM-14 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)

Quarter Ended ---------------------------------------------------------------------- Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2005 2004 2004 2004 2004 ---------------------------------------------------------------------- Rollforward of Mortgage Servicing Rights ("MSR")(1)(2) Balance, beginning of period $5,906 $6,112 $7,501 $5,239 $6,354 Home loans: Additions 490 372 348 874 241 Amortization (570) (636) (589) (546) (750) (Impairment) reversal 427 179 (266) 227 (606) Statement No. 133 MSR accounting valuation adjustments 545 (123) (885) 1,707 - Net change in commercial real estate MSR 4 2 3 - - ---------------------------------------------------------------------- Balance, end of period(3) $6,802 $5,906 $6,112 $7,501 $5,239 ====================================================================== Rollforward of Valuation Allowance for MSR Impairment Balance, beginning of period $1,981 $2,653 $2,417 $3,035 $2,435 Impairment (reversal) (427) (179) 266 (227) 606 Other-than- temporary impairment (34) (486) (22) (388) - Other (7) (7) (8) (3) (6) ---------------------------------------------------------------------- Balance, end of period $1,513 $1,981 $2,653 $2,417 $3,035 ====================================================================== Rollforward of Loans Serviced for Others Balance, beginning of period $540,392 $551,245 $558,388 $559,807 $582,669 Home loans: Additions 34,533 27,218 29,699 54,201 22,009 Loan payments and other (32,861) (38,529) (37,035) (56,388) (46,058) Net change in commercial real estate loans serviced for others 733 458 193 768 1,187 ---------------------------------------------------------------------- Balance, end of period $542,797 $540,392 $551,245 $558,388 $559,807 ======================================================================

Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2005 2004 2004 2004 2004 ---------------------------------------------------------------------- Total Servicing Portfolio Loans serviced for others $542,797 $540,392 $551,245 $558,388 $559,807 Servicing on retained MBS without MSR 1,702 1,808 2,713 2,938 3,208 Servicing on owned loans 233,738 229,879 217,592 205,714 204,449 Subservicing portfolio 421 461 502 563 1,528 ---------------------------------------------------------------------- Total servicing portfolio $778,658 $772,540 $772,052 $767,603 $768,992 ======================================================================

March 31, 2005 ---------------------------------------------------------------------- Unpaid Weighted Principal Average Balance Servicing Fee ---------------------------------------------------------------------- (in basis points, Loans Serviced for Others by Loan Type annualized) Government $52,046 47.56 Agency 340,472 30.19 Private 131,415 37.91 Specialty home loans 18,864 50.00 ---------------------------------------------------------------------- Total loans serviced for others(4) $542,797 34.41 ======================================================================

(1) Net of valuation allowance.

(2) MSR as a percentage of loans serviced for others was 1.25%, 1.09%, 1.11%, 1.34% and 0.94% at March 31, 2005, December 31, 2004, September 30, 2004, June 30, 2004 and March 31, 2004.

(3) At March 31, 2005, the aggregate MSR fair value was $6.81 billion.

(4) Weighted average coupon rate (annualized) was 5.83% at March 31, 2005.

WM-15 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)

Quarter Ended ---------------------------------------------------------------------- Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2005 2004 2004 2004 2004 ---------------------------------------------------------------------- Allowance for Loan and Lease Losses Balance, beginning of quarter $1,301 $1,322 $1,293 $1,260 $1,250 Other - (20) - (3) - Provision for loan and lease losses 16 37 56 60 56 ---------------------------------------------------------------------- 1,317 1,339 1,349 1,317 1,306 Loans charged off: Loans secured by real estate: Home (11) (9) (6) (8) (16) Specialty mortgage finance(1) (10) (10) (11) (9) (9) ---------------------------------------------------------------------- Total home loans charged off (21) (19) (17) (17) (25) Home equity loans and lines of credit (5) (3) (6) (5) (7) Home construction(2) - (1) - - (1) Multi-family - (2) - - - Other real estate (1) (1) (1) (1) (8) ---------------------------------------------------------------------- Total loans secured by real estate (27) (26) (24) (23) (41) Consumer (13) (17) (11) (11) (14) Commercial business (6) (8) (4) (4) (6) ---------------------------------------------------------------------- Total loans charged off (46) (51) (39) (38) (61) Recoveries of loans previously charged off: Loans secured by real estate: Specialty mortgage finance(1) 1 1 1 1 1 Home equity loans and lines of credit - 2 - 1 1 Multi-family - - 1 - 2 Other real estate 1 2 2 4 2 ---------------------------------------------------------------------- Total loans secured by real estate 2 5 4 6 6 Consumer 5 4 5 5 5 Commercial business 2 4 3 3 4 ---------------------------------------------------------------------- Total recoveries of loans previously charged off 9 13 12 14 15 ---------------------------------------------------------------------- Net charge-offs (37) (38) (27) (24) (46) ---------------------------------------------------------------------- Balance, end of quarter $1,280 $1,301 $1,322 $1,293 $1,260 ======================================================================

Net charge-offs (annualized) as a percentage of average loans held in portfolio 0.07% 0.07% 0.05% 0.05% 0.10% Allowance as a percentage of total loans held in portfolio 0.60 0.63 0.64 0.66 0.68

(1) Represents purchased subprime loan portfolios and certain mortgages originated by Long Beach Mortgage Company.

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

WM-16 Washington Mutual, Inc. Selected Financial Information (dollars in millions) (unaudited)

Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2005 2004 2004 2004 2004 ---------------------------------------------------------------------- Nonperforming Assets and Restructured Loans Nonaccrual loans(1): Loans secured by real estate: Home $495 $542 $538 $535 $622 Specialty mortgage finance(2) 734 674 608 585 615 ---------------------------------------------------------------------- Total home nonaccrual loans 1,229 1,216 1,146 1,120 1,237 Home equity loans and lines of credit 74 66 50 48 45 Home construction(3) 25 28 31 24 31 Multi-family 15 12 23 20 23 Other real estate 159 162 173 133 153 ---------------------------------------------------------------------- Total nonaccrual loans secured by real estate 1,502 1,484 1,423 1,345 1,489 Consumer 8 9 11 9 7 Commercial business 59 41 37 42 46 ---------------------------------------------------------------------- Total nonaccrual loans held in portfolio 1,569 1,534 1,471 1,396 1,542 Foreclosed assets 264 261 281 286 307 ---------------------------------------------------------------------- Total nonperforming assets $1,833 $1,795 $1,752 $1,682 $1,849 As a percentage of total assets 0.57% 0.58% 0.61% 0.60% 0.66% Restructured loans $27 $34 $38 $79 $107 ---------------------------------------------------------------------- Total nonperforming assets and restructured loans $1,860 $1,829 $1,790 $1,761 $1,956 ======================================================================

(1) Excludes nonaccrual loans held for sale of $112 million at March 31, 2005. Prior periods also reflect the exclusion of nonaccrual loans held for sale of $76 million, $84 million, $99 million and $135 million at December 31, 2004, September 30, 2004, June 30, 2004 and March 31, 2004. Loans held for sale are accounted for at lower of aggregate cost or market value, with valuation changes included as adjustments to gain from mortgage loans.

(2) Represents purchased subprime loan portfolios and certain mortgages originated by Long Beach Mortgage Company.

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

--30--APS/se*

CONTACT: Washington Mutual Alan Gulick, 206-377-3637 (Media) alan.gulick@wamu.net or Washington Mutual Alan Magleby, 206-490-5182 (Investor Relations) alan.magleby@wamu.net

KEYWORD: WASHINGTON INDUSTRY KEYWORD: BANKING EARNINGS CONFERENCE CALLS SOURCE: Washington Mutual

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