Edgar Filing: WASHINGTON MUTUAL INC

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: January 21, 2003

Washington Mutual, Inc.
(Exact name of registrant as specified in its charter)

Washington	1-14667	91-1653725
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
1201 Third Avenue, Seattle, Washington		98101
(Address of principal executive offices)		(Zip Code)
(206) 461-2000 (Registrant's telephone number, including area code)

ITEM 9. Regulation FD Disclosure.

On January 21, 2003, Washington Mutual, Inc. issued a press release reporting its results of operations for the fourth quarter and the year ended December 31, 2002.

January 21, 2003
FOR IMMEDIATE RELEASE

Washington Mutual's Record Quarterly EPS Driven by
Record Loan Volume, Strong Account and Deposit Growth
Board of Directors Increases Cash Dividend

SEATTLE—Highlighting record levels of loan volume and organic deposit growth, Washington Mutual, Inc. (NYSE: WM) today announced further progress toward its goal of becoming the nation's leading growth retailer of financial services with strong fourth quarter earnings of $969 million, and record quarterly earnings per diluted share of $1.03 for the quarter ended December 31, 2002, up 6 percent on a per share basis from $842 million, or 97 cents per diluted share for the same period a year ago.

Earnings for 2002 were a record $3.90 billion, or $4.05 per diluted share versus $3.11 billion, or $3.59 per diluted share in 2001.

Comparatives for 2001 do not include results from the Dime Bancorp, Inc. (Dime) and HomeSide Lending, Inc. acquisitions in 2002, and new accounting rules which eliminated the amortization of goodwill in 2002. The adoption of the recently issued SFAS No. 147 increased full-year 2002 net income by $22 million or 2 cents per diluted share.

Highlights of the fourth quarter and the year included:

•: Continued growth in checking accounts, which are one of the company's core relationship-building products: The number of checking accounts increased by 166,987 during the quarter and by 1.4 million for the year, including 358,846 accounts acquired in the first quarter from the Dime acquisition. At year end, the average consumer banking household at Washington Mutual maintained more than five products and services with the company;
•: Record depositor and other retail banking fees of $449 million for the fourth quarter and $1.63 billion for the year were up 27 percent from both prior comparative periods;
•: The opening of 68 new financial center stores during the quarter, including 20 in the company's newest retail banking market, Denver, Colorado: The company opened or acquired a total of 266 stores in 2002—143 new stores and 123 as part of the Dime acquisition. As part of its strategy to overlay its retail banking operations in select metropolitan markets, Washington Mutual plans to open approximately 250 new financial center stores in 2003;
•: Record loan volume of $107 billion in the fourth quarter and $306 billion for the year, up 80 percent and 75 percent from the prior comparative periods: This strong performance was led by robust volume in home lending. Unprecedented low interest rates continued to drive record refinancing as home loan volume in the fourth quarter totaled $98 billion and for the year $275 billion;
•: Credit quality continues to be in line with management expectations given the current economic conditions;
•: The repurchase of 10.8 million shares of the company's common stock in the quarter at an average price of $33.28: The company purchased a total of 38 million shares during the year at an average price of $34.29, reflecting its strategy to effectively manage its capital.

"Our fourth quarter and overall 2002 performance illustrates the continued strength of our business strategy and our focus on serving mass-market consumers by delivering the combination of great value and efficient, friendly service on a national scale," said Kerry Killinger, the company's chairman, president and CEO. "Our team met the challenges of 2002—most notably, the slower

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national economy and the highest refinancing volume in U.S. history—and delivered yet another record financial performance, while successfully completing multiple integrations of our recent acquisitions. With these integrations now behind us, we see even greater opportunities to grow organically by attracting new households and deepening customer relationships, while driving greater productivity throughout our company. Our strong performance in 2002 places us in a great position to meet these objectives and deliver on our long-term financial targets."

BOARD OF DIRECTORS INCREASES DIVIDEND

Based on the company's continued strong operating fundamentals and financial performance, Washington Mutual's Board of Directors declared a cash dividend of 29 cents per share on the company's common stock, up from 28 cents per share in the previous quarter. Dividends on the common stock are payable on February 14, 2003 to shareholders of record as of January 31, 2003.

FOURTH-QUARTER AND YEAR-END RESULTS

Net Interest Income

For 2002, net interest income was $8.34 billion, an increase of $1.47 billion, or 21 percent, from 2001. Most of this increase was attributable to expansion of the net interest margin, which increased 16 basis points during the year, and an increase of $32.28 billion in average earning assets during 2002, mainly from the Dime acquisition. After peaking in the first quarter of 2002, the net interest margin has declined, largely due to the downward repricing of yields on loans and debt securities.

Net interest income in the fourth quarter, which was aided by a transitory increase in loans held for sale, was essentially flat from the previous quarter of $1.93 billion.

Noninterest Income

Continued strong consumer preference for Washington Mutual's products, services and overall business philosophy led to the net increase of more than 1.4 million checking accounts, year over year. This increase contributed to the record level of depositor and other retail banking fees of $449 million for the quarter, up 27 percent from $353 million from the same period one year ago. For the year, depositor and other retail banking fees totaled $1.63 billion, up from $1.29 billion for 2001.

Playing a role in the impressive increase in checking accounts was the company's entry into the New York/New Jersey retail banking market, a result of its acquisition and integration of Dime. Since the conversion and the launch of our marketing campaign, the company increased the number of checking accounts in the acquired branches at an annualized rate of 33 percent.

"Our Dime acquisition and conversion has been one of the most successful in our company's history," said Deanna Oppenheimer, Group President, Banking and Financial Services. "And, that success extends beyond financial performance. I am even more proud of the tremendous talent that came to us from Dime and the team that has helped us achieve these results."

During the fourth quarter, the company completed the HomeSide acquisition, resulting in the addition of almost $1 billion in mortgage servicing rights (MSR). The continuation of a very low interest rate environment reduced the value of the MSR; however, as in prior periods, the company's risk management activities effectively mitigated the impact of the change in valuation. Gain on certain available-for-sale securities, certain revaluation gain from derivatives and net settlement income on derivatives combined to offset impairment as well as increased amortization of MSR in the fourth quarter.

In addition, management continued its efforts to diligently manage its mortgage servicing asset by selling $175 million in excess servicing in the fourth quarter in a privately placed transaction for no material gain or loss. For the year, Washington Mutual sold nearly $1 billion in excess servicing.

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Lending

Reflecting Washington Mutual's strength in serving both the home purchase and refinancing markets as well as a significant increase in home equity and multi-family lending volume the company recorded record loan volume of $107.10 billion for the fourth quarter, versus $59.37 billion for the fourth quarter of 2001. For the year, total loan volume was a record $306.05 billion, compared with $175.08 billion in 2001. Of the total loan volume in the fourth quarter, home loan volume totaled $98.17 billion, versus $54.65 billion in the same period a year ago. Home loan volume totaled $274.74 billion in 2002, as compared with $155.10 billion in 2001.

Low mortgage interest rates continued to fuel high volumes of refinancing activity. During 2002, refinancing activity represented 68 percent of home loan volume (excluding specialty mortgage finance), versus 66 percent for 2001. Of home loan volume (excluding specialty mortgage finance), 68 percent was for fixed-rate loans in 2002, versus 74 percent the previous year.

The company saw a tremendous increase in the volume of home equity and multi-family loans in the fourth quarter. For the quarter, these two loan products produced loan volume of $6.80 billion, up 116 percent over $3.15 billion in the fourth quarter of 2001. For the year, that volume was $22.14 billion, up 98 percent from $11.17 billion for 2001.

"We're seeing monthly origination volumes that rival annual production numbers from just a few short years ago," said Craig S. Davis, Group President, Home Loans and Insurance Services. "This can only be accomplished with the incredible team we have assembled and the success of the multiple integrations that are now behind us."

Efficiency Ratio

For the year, noninterest expense totaled $6.38 billion, as compared with $4.62 billion for 2001, reflecting increased loan volume and acquisitions.

The company's efficiency ratio was 49.45 percent during the fourth quarter of 2002, compared with 48.48 percent for the third quarter of 2002. For the year, the efficiency ratio was 48.09 percent, versus 43.90 percent one year ago. Noninterest expense for the fourth quarter of 2002 totaled $1.66 billion, compared with $1.62 billion in the third quarter of 2002.

Credit Quality

Despite a challenging economy, and modest increases in nonperforming assets (NPAs) and charge offs, credit performance remained in line with the company's expectations.

Specifically, at December 31, 2002, NPAs as a percentage of total assets were 0.97 percent versus 0.95 percent at the end of the third quarter, and 0.93 percent at year-end 2001. Total NPAs were up $96 million to $2.59 billion at December 31, 2002, as compared with $2.50 billion at September 30, 2002.

The provision for loan and lease losses was $125 million, versus $200 million for the same period in the previous year, and $595 million for the year as compared with $575 million for 2001. The allowance for loan and lease losses was $1.65 billion at December 31, 2002. Net loan charge offs for the fourth quarter were $108 million, compared with $88 million for the third quarter.

"The increase in fourth-quarter NPAs was consistent with our expectations and our consumer loan portfolio, originated through our financial center stores, continues to perform in a stable and consistent manner and our multi-family non-accrual totals were at their lowest point of 2002 in the fourth quarter," said Jim Vanasek, the company's chief credit officer. "Overall, we remain comfortable with the credit quality of our portfolio."

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Balance Sheet and Capital Management

Washington Mutual's total assets were $268.30 billion at December 31, 2002, up from $242.51 billion at year-end 2001.

On the asset side, the balance sheet grew in the fourth quarter by $5.7 billion as a result of increased home loans held for sale.

The company continues to reduce its reliance on wholesale borrowings, continuing a trend that began in 2001 to increase significantly the portion of loan funding provided by deposits. At December 31, 2002, transaction account balances, including checking, savings and money market deposits, represented 78 percent of total deposits, up from 66 percent at the end of 2001. Total deposits were $155.52 billion at the end of the fourth quarter, up 45 percent from $107.18 billion at the end of the fourth quarter of 2001, reflecting the company's strong organic growth and the Dime acquisition.

Washington Mutual continues to manage its capital position by repurchasing its common stock. During the fourth quarter, the company repurchased 10.8 million shares of its common stock at an average price of $33.28. For the year, it repurchased 38 million shares at an average price of $34.29. Killinger added that company's stock should continue to be an attractive choice for capital deployment in 2003.

Stockholders' equity stood at $20.13 billion, or 7.5 percent of total assets at December 31, 2002. In addition, 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.

Outlook

"Washington Mutual has an exceptional franchise on which to continue building a market leadership position in consumer financial services," Killinger said. "2002 was a terrific year for Washington Mutual and gives us momentum entering 2003 as we are well positioned to deliver solid top-line growth and bottom line results during the year."

"Our major business initiatives for 2003 will be centered on driving organic expansion through the combination of new household acquisition and targeted cross-sell of products and services to mass market consumers. In addition, with the recent completion of our acquisition integrations, we are able to bring an increased focus on efficiency and operational excellence throughout our organization."

Company Updates

•: Following the trailblazing efforts of the company's Home Loans and Insurance Services Group, Washington Mutual plans to open up to 70 new financial center stores in the greater Chicago area by the end of 2003.
•: The company also opened its first 20 financial center stores in the Denver area in December.
•: Tom Casey joined Washington Mutual from General Electric to become the company's new chief financial officer; former CFO, Vice Chair Bill Longbrake, assumed full-time his role in Enterprise Risk Management, as announced earlier in 2002.
•: The company completed its acquisition of HomeSide Lending, Inc. in October, acquiring HomeSide's 1.4 million customer relationships nationwide.
•: More than 28,000 New York and New Jersey-area teachers and their guests were treated to Broadway shows as part of Washington Mutual's "Spotlight on Teachers" program in November.
•: Washington Mutual and the New-York Historical Society teamed up to hold a student photojournalism project called "Home of the Free," which helped students learn about photography, about themselves and their communities.
•: Washington Mutual's new Leadership Center at Cedarbrook, located just outside Seattle, opened in December.

About WaMu

With a history dating back to 1889, Washington Mutual is a growth retailer of consumer financial services that provides a diversified line of products and services to consumers and small- to mid-sized businesses. At December 31, 2002, Washington Mutual and its subsidiaries had assets of $268.30 billion. The company currently operates more than 2,500 consumer banking, mortgage lending, commercial banking, consumer finance and financial services offices throughout the nation. Washington Mutual's press releases are available at www.wamu.com.

Webcast information: Investors may listen to Washington Mutual's fourth quarter earnings conference call on January 22, 2003, at 10:30 a.m. EST at www.wamu.com or by dialing 1.888.391.7808, passcode "WaMu" is required to access the call. International callers may dial 1.712.271.0791. A recording of the conference call will be available at 1 p.m. EST on Wednesday, January 22 through 11:59 p.m. EST on Friday, January 31. The recorded message will be available at 1.888.562.7231. Callers from outside the United States may dial 1.402.220.6031.

Forward-Looking Statements

This press release contains forward-looking statements, which are not historical facts and pertain to future operating results. These forward-looking statements are within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to statements about our plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts. When used in this press release, the words "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" or words of similar meaning, or future or conditional verbs, such as "will," "would," "should," "could," or "may" are generally intended to identify forward-looking statements. These forward-looking statements are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ materially from the results discussed in these forward-looking statements for the reasons, among others, discussed under the heading, "Business Factors That May Affect Future Results" in Washington Mutual's 2001 Annual Report on Form 10-K which include: (1) changes in general business and economic conditions may significantly affect our earnings; (2) the risk of our inability to effectively manage the volatility of our mortgage banking business could adversely affect our earnings; (3) the risk of our inability to effectively integrate the operations and personnel of companies we have acquired could adversely affect our earnings and financial condition; (4) the concentration of our operations in California could adversely affect our operating results if the California economy or real estate market declines; (5) competition from other financial services companies in our markets could adversely affect our ability to achieve our financial goals; and (6) changes in the regulation of financial services companies could adversely affect our business.

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Media Contact:		Alan Gulick (206) 377-3637 alan.gulick@wamu.net
Investor Contacts:		JoAnn DeGrande (206) 461-3186 joann.degrande@wamu.net
		Ruthanne King (206) 461-6421 ruthanne.king@wamu.net

WM-1

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

				Quarter Ended									Year Ended
				Dec. 31, 2002			Sept. 30, 2002			Dec. 31, 2001			Dec. 31, 2002			Dec. 31, 2001
Interest Income
	Loans held for sale			$	583		$	399		$	398		$	1,727		$	1,188
	Loans held in portfolio				2,168			2,276			2,292			9,249			10,045
	Available-for-sale ("AFS") securities				547			652			776			2,959			3,573
	Other interest and dividend income				68			86			59			312			259

		Total interest income			3,366			3,413			3,525			14,247			15,065
Interest Expense
	Deposits				672			679			649			2,668			3,094
	Borrowings				768			815			849			3,238			5,095

		Total interest expense			1,440			1,494			1,498			5,906			8,189

			Net interest income		1,926			1,919			2,027			8,341			6,876
Provision for loan and lease losses					125			135			200			595			575

			Net interest income after provision for loan and lease losses		1,801			1,784			1,827			7,746			6,301
Noninterest Income
	Depositor and other retail banking fees				449			426			353			1,634			1,290
	Securities fees and commissions				90			92			77			362			303
	Insurance income				45			46			35			177			100
	Home loan mortgage banking expense, net				(178	)		(1,575	)		(690	)		(2,094	)		(285	)
	Portfolio loan related income				123			85			60			349			193
	Gain from other AFS securities				574			356			392			768			600
	Revaluation gain (loss) from derivatives				(28	)		1,582			—			2,396			(5	)
	Gain (loss) on extinguishment of securities sold under agreements to repurchase ("repurchase agreements")				(11	)		98			496			282			621
	Net settlement income from certain interest-rate swaps				158			116			—			382			—
	Other income				172			154			107			534			431

		Total noninterest income			1,394			1,380			830			4,790			3,248
Noninterest Expense
	Compensation and benefits				757			719			535			2,899			1,924
	Occupancy and equipment				294			289			228			1,153			804
	Telecommunications and outsourced information services				115			136			119			524			441
	Depositor and other retail banking losses				51			55			45			204			144
	Amortization of goodwill				—			—			37			—			139
	Amortization of other intangible assets				16			17			8			67			33
	Professional fees				47			55			63			208			201
	Advertising and promotion				58			75			50			246			185
	Other expense				320			270			246			1,081			746

		Total noninterest expense			1,658			1,616			1,331			6,382			4,617

			Income before income taxes		1,537			1,548			1,326			6,154			4,932
Income taxes					568			567			484			2,258			1,818

Net Income				$	969		$	981		$	842		$	3,896		$	3,114

Net Income Attributable to Common Stock				$	969		$	980		$	840		$	3,891		$	3,107

Net income per common share:
	Basic			$	1.05		$	1.04		$	0.98		$	4.12		$	3.65
	Diluted				1.03			1.02			0.97			4.05			3.59
Dividends declared per common share				$	0.28		$	0.27		$	0.24		$	1.06		$	0.90
Basic weighted average number of common shares outstanding (in thousands)					926,210			947,293			856,014			943,905			850,245
Diluted weighted average number of common shares outstanding (in thousands)					939,991			963,422			868,951			960,152			864,658

WM-2

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

				Dec. 31, 2002			Sept. 30, 2002			Dec. 31, 2001
Assets
	Cash and cash equivalents			$	7,208		$	5,122		$	3,563
	Federal funds sold and securities purchased under resale agreements				2,015			2,413			2,481
	AFS securities:
		Mortgage-backed securities ("MBS")			28,375			26,494			28,568
		Investment securities			15,597			20,098			29,781
	Loans held for sale				33,996			29,508			26,582
	Loans:
		Loans held in portfolio			147,528			147,862			130,251
		Allowance for loan and lease losses			(1,653	)		(1,705	)		(1,404	)

			Total loans held in portfolio, net of allowance for loan and lease losses		145,875			146,157			128,847
	Investment in Federal Home Loan Banks ("FHLBs")				3,703			3,792			3,873
	Mortgage servicing rights ("MSR")				5,341			4,548			6,241
	Goodwill				6,270			6,253			2,175
	Other assets				19,918			18,246			10,395

			Total assets	$	268,298		$	262,631		$	242,506

Liabilities
	Deposits:
		Checking accounts		$	91,862		$	77,113		$	37,736
		Savings accounts and money market deposit accounts ("MMDAs")			29,886			29,799			32,484
		Time deposit accounts			33,768			33,696			36,962

			Total deposits		155,516			140,608			107,182
	Federal funds purchased and commercial paper				1,247			1,845			4,690
	Securities sold under agreements to repurchase ("repurchase agreements")				16,717			22,381			39,447
	Advances from FHLBs				51,265			55,752			61,182
	Other borrowings				15,264			13,415			12,576
	Other liabilities				8,155			8,452			3,264

			Total liabilities		248,164			242,453			228,341
Redeemable preferred stock					—			—			102
Stockholders' equity					20,134			20,178			14,063

			Total liabilities, redeemable preferred stock, and stockholders' equity	$	268,298		$	262,631		$	242,506

Common shares outstanding at end of period (in thousands)(1)					926,054			935,752			855,089
Book value per common share				$	21.74		$	21.56		$	16.45
Tangible book value per common share					15.06			14.95			14.18
Full-time equivalent employees at end of period					52,459			50,329			39,465

(1): Excludes 18 million shares held in escrow pending resolution of the company's asserted right to the return and cancellation of such shares.

WM-3

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

	Year Ended
	Dec. 31, 2002			Dec. 31, 2001
Stockholders' Equity Rollforward
Balance, beginning of period	$	14,063		$	10,166
Net income		3,896			3,114
Other comprehensive income (loss), net of tax		418			(189	)
Cash dividends declared on common stock		(1,021	)		(774	)
Cash dividends declared on redeemable preferred stock		(5	)		(7	)
Common stock repurchased and retired		(1,303	)		(231	)
Common stock warrants issued, net of issuance costs		—			398
Common stock issued for acquisitions		3,672			1,389
Fair value of Dime stock options		90			—
Common stock issued to redeem preferred stock		102			—
Common stock issued		222			197

Balance, end of period	$	20,134		$	14,063

	Quarter Ended									Year Ended
	Dec. 31, 2002			Sept. 30, 2002			Dec. 31, 2001			Dec. 31, 2002			Dec. 31, 2001
Pro Forma(1)
Income before income taxes	$	1,537		$	1,548		$	1,326		$	6,154		$	4,932
Add back: amortization of goodwill(2)		—			—			37			—			139

Income before income taxes, excluding amortization of goodwill		1,537			1,548			1,363			6,154			5,071
Income taxes		(568	)		(567	)		(488	)		(2,258	)		(1,834	)

Net income, excluding amortization of goodwill		969			981			875			3,896			3,237
Redeemable preferred stock dividends		—			(1	)		(2	)		(5	)		(7	)

Net income attributable to common stock, excluding amortization of goodwill	$	969		$	980		$	873		$	3,891		$	3,230

Net income per diluted common share, excluding amortization of goodwill	$	1.03		$	1.02		$	1.00		$	4.05		$	3.73

(1): Represents pro forma impact to net income for the quarter ended December 31, 2002, September 30, 2002 and December 31, 2001 and the year ended December 31, 2002 and 2001, assuming that the adoption of Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets, which eliminates the amortization of goodwill from net income, was applied to all periods presented. SFAS No. 142 became effective on January 1, 2002.
(2): With the adoption of SFAS No. 147, Acquisitions of Certain Financial Institutions, amortization of goodwill includes the amortization of certain unidentifiable intangible assets that were recognized from financial institution acquisitions.

	Quarter Ended									Nine Months Ended
	Sept. 30, 2002			June 30, 2002			Mar. 31, 2002			Sept. 30, 2002
Impact of SFAS No. 147 Adoption(1)
Income before income taxes as reported prior to the adoption of SFAS No. 147	$	1,539		$	1,552		$	1,499		$	4,591
Add back: amortization of certain unidentifiable intangible assets		9			9			9			26

Income before income taxes		1,548			1,561			1,508			4,617
Income taxes		(567	)		(571	)		(552	)		(1,690	)

Net income		981			990			956			2,927
Redeemable preferred stock dividends		(1	)		(2	)		(2	)		(5	)

Net income attributable to common stock	$	980		$	988		$	954		$	2,922

Net income per diluted common share	$	1.02		$	1.01		$	0.99		$	3.02

(1): The 2002 annual impact of the adoption of SFAS No. 147 was to increase net income by $22 million or 2 cents per diluted share.

WM-4

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

			Quarter Ended
			Dec. 31, 2002			Sept. 30, 2002			June 30, 2002			Mar. 31, 2002			Dec. 31, 2001
PROFITABILITY
	Net interest income		$	1,926		$	1,919		$	2,100		$	2,396		$	2,027
	Net interest margin			3.25	%		3.36	%		3.54	%		3.74	%		3.80	%
	Noninterest income		$	1,394		$	1,380		$	1,208		$	807		$	830
	Noninterest expense			1,658			1,616			1,586			1,521			1,331
	Net income			969			981			990			956			842
	Net income per common share:
		Basic	$	1.05		$	1.04		$	1.04		$	1.01		$	0.98
		Diluted		1.03			1.02			1.01			0.99			0.97
	Dividends declared per common share		$	0.28		$	0.27		$	0.26		$	0.25		$	0.24
	Return on average assets			1.42	%		1.50	%		1.48	%		1.34	%		1.43	%
	Return on average common equity			18.34			18.79			20.37			20.64			23.36
	Efficiency ratio(1)			49.45			48.48			47.45			46.96			44.99
ASSET QUALITY
	Nonaccrual loans(2)		$	2,257		$	2,188		$	2,232		$	2,391		$	2,030
	Foreclosed assets			336			309			274			267			228
	Total nonperforming assets			2,593			2,497			2,506			2,658			2,258
	Nonperforming assets/total assets			0.97	%		0.95	%		0.96	%		0.97	%		0.93	%
	Restructured loans		$	98		$	112		$	119		$	130		$	118
		Total nonperforming assets and restructured loans		2,691			2,609			2,625			2,788			2,376
	Allowance for loan and lease losses			1,653			1,705			1,665			1,621			1,404
		Allowance as a percentage of total loans held in portfolio		1.12	%		1.15	%		1.14	%		1.12	%		1.08	%
	Provision for loan and lease losses		$	125		$	135		$	160		$	175		$	200
	Net charge offs			108			88			116			99			97
CAPITAL ADEQUACY
	Stockholders' equity/total assets			7.50	%		7.68	%		7.50	%		6.59	%		5.80	%
	Stockholders' equity(3)/total assets(3)			7.48			7.51			7.52			6.80			5.89
	Tangible common equity(3)(4)/total assets(3)(4)			5.29			5.27			5.28			4.69			5.14
	Estimated total risk-based capital/risk-weighted assets(5)			11.69			11.16			12.32			11.69			12.87
SUPPLEMENTAL DATA
	Average balance sheet:
		Loans held for sale	$	37,322		$	25,740		$	22,211		$	27,241		$	25,263
		Loans held in portfolio		149,173			146,160			146,667			147,531			129,661
		Interest-earning assets		237,842			229,364			236,504			255,177			214,063
		Total assets		273,729			261,170			266,849			284,349			236,335
		Interest-bearing deposits		116,177			111,408			108,231			101,217			83,934
		Noninterest-bearing deposits		32,375			24,065			22,417			22,635			19,699
		Stockholders' equity		21,121			20,872			19,401			18,487			14,389
	Period-end balance sheet:
		Loans held for sale		33,996			29,508			21,940			24,751			26,582
		Loans held in portfolio, net of allowance for loan and lease losses		145,875			146,157			144,208			143,309			128,847
		Interest-earning assets		231,214			230,167			230,852			241,296			221,536
		Assets		268,298			262,631			261,298			275,231			242,506
		Interest-bearing deposits		118,001			112,969			108,441			107,174			83,923
		Noninterest-bearing deposits		37,515			27,639			20,628			21,836			23,259
		Stockholders' equity		20,134			20,178			19,598			18,133			14,063

(1): Excludes amortization of goodwill and amortization of other intangible assets.
(2): Excludes nonaccrual loans held for sale.
(3): Excludes unrealized net gain/loss on available-for-sale securities and derivatives.
(4): Excludes goodwill and intangible assets but includes MSR.
(5): Estimate of what the total risk-based capital ratio would be if Washington Mutual, Inc. was a bank holding company that complies with Federal Reserve Board capital requirements.

WM-5

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

						Quarter Ended
						Dec. 31, 2002				Sept. 30, 2002				Dec. 31, 2001
						Balance		Rate		Balance		Rate		Balance		Rate
Average Balances and Weighted Average Interest Rates
Assets
Interest-earning assets:
	Federal funds sold and securities purchased under resale agreements					$	2,536	1.43	%	$	3,707	1.74	%	$	516	2.15	%
	AFS securities(1):
		MBS					26,010	5.01			24,882	5.53			31,188	6.29
		Investment securities					18,286	4.84			24,472	5.02			23,184	4.91
	Loans held for sale(2)						37,322	5.70			25,740	6.03			25,263	6.51
	Loans held in portfolio(2):
		Home loans					85,317	5.55			84,276	5.85			79,110	6.60
		Specialty mortgage finance(3)					9,405	5.54			9,141	6.28			8,015	7.39

			Total home loans				94,722	5.55			93,417	5.89			87,125	6.67
		Home construction loans:
			Builder(4)				1,109	5.68			1,214	5.53			1,776	6.23
			Custom(5)				914	8.34			891	8.15			916	8.75
		Home equity loans and lines of credit:
			Banking subsidiaries				15,380	5.69			14,170	5.97			7,700	6.86
			Washington Mutual Finance				2,010	11.88			2,225	11.96			2,100	12.57
		Multi-family					18,815	5.82			18,094	5.92			15,916	7.01
		Other real estate					8,230	6.67			8,412	6.76			6,154	7.14

				Total loans secured by real estate			141,180	5.77			138,423	6.07			121,687	6.86
		Consumer:
			Banking subsidiaries				1,691	9.30			2,119	9.53			2,063	9.53
			Washington Mutual Finance				1,710	19.25			1,708	19.13			1,744	18.37
		Commercial business					4,592	4.83			3,910	5.34			4,167	5.57

			Total loans held in portfolio				149,173	5.94			146,160	6.25			129,661	7.02
	Other						4,515	5.16			4,403	6.23			4,251	5.31

					Total interest-earning assets		237,842	5.65			229,364	5.94			214,063	6.58
Noninterest-earning assets:
	MSR						5,855				5,933				6,517
	Goodwill						6,229				6,231				2,125
	Other						23,803				19,642				13,630

			Total assets			$	273,729			$	261,170			$	236,335

Liabilities
Interest-bearing liabilities:
	Deposits:
		Interest-bearing checking				$	53,588	2.35		$	46,508	2.59		$	10,897	1.98
		Savings accounts and MMDAs					28,745	1.30			29,963	1.45			34,174	2.11
		Time deposit accounts					33,844	3.06			34,937	3.01			38,863	4.22

			Total interest-bearing deposits				116,177	2.30			111,408	2.42			83,934	3.07
	Federal funds purchased and commercial paper						2,848	1.71			1,983	2.06			5,163	2.39
	Repurchase agreements						23,659	2.77			26,814	3.06			29,677	2.31
	Advances from FHLBs						56,047	2.94			56,926	3.01			64,338	3.17
	Other						14,376	4.83			13,549	4.87			14,357	3.61

			Total interest-bearing liabilities				213,107	2.68			210,680	2.81			197,469	3.01
Noninterest-bearing sources:
	Noninterest-bearing deposits						32,375				24,065				19,699
	Other liabilities						7,126				5,553				4,778
	Stockholders' equity						21,121				20,872				14,389

				Total liabilities and stockholders' equity		$	273,729			$	261,170			$	236,335

	Net interest spread							2.97				3.13				3.57
	Impact of noninterest-bearing sources							0.28				0.23				0.23
	Net interest margin							3.25				3.36				3.80

(1): Yield is based on average amortized cost balances.
(2): Nonaccrual loans were included in the average loan amounts outstanding.
(3): Represents purchased subprime loan portfolios.
(4): Represents loans to builders for the purpose of financing the acquisition, development and construction of single-family residences for sale.
(5): Represents construction loans made directly to the intended occupant of a single-family residence.

WM-6

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

						Year Ended
						Dec. 31, 2002				Dec. 31, 2001
						Balance		Rate		Balance		Rate
Average Balances and Weighted Average Interest Rates
Assets
Interest-earning assets:
	Federal funds sold and securities purchased under resale agreements					$	2,352	1.68	%	$	335	4.40	%
	AFS securities(1):
		MBS					24,656	5.46			41,430	6.94
		Investment securities					32,508	4.96			13,187	5.29
	Loans held for sale(2)						28,128	6.13			17,719	6.79
	Loans held in portfolio(2):
		Home loans					86,042	5.90			81,686	7.23
		Specialty mortgage finance(3)					9,028	6.27			6,936	7.63

			Total home loans				95,070	5.94			88,622	7.26
		Home construction loans:
			Builder(4)				1,316	5.87			1,826	7.67
			Custom(5)				906	8.19			905	8.96
		Home equity loans and lines of credit:
			Banking subsidiaries				13,382	5.91			7,248	7.72
			Washington Mutual Finance				2,100	12.06			2,056	12.74
		Multi-family					17,973	6.01			16,480	7.72
		Other real estate					8,368	6.81			5,913	7.96

			Total loans secured by real estate				139,115	6.10			123,050	7.50
		Consumer:
			Banking subsidiaries				2,349	9.37			1,804	10.96
			Washington Mutual Finance				1,714	18.87			1,731	18.63
		Commercial business					4,227	5.08			4,010	7.02

				Total loans held in portfolio			147,405	6.27			130,595	7.68
	Other						4,597	5.92			4,103	5.95

					Total interest-earning assets		239,646	5.94			207,369	7.26
Noninterest-earning assets:
	MSR						6,650				5,276
	Goodwill						6,054				1,901
	Other						19,117				11,027

			Total assets			$	271,467			$	225,573

Liabilities
Interest-bearing liabilities:
	Deposits:
		Interest-bearing checking				$	40,338	2.55		$	7,540	1.58
		Savings accounts and MMDAs					31,545	1.48			35,873	3.17
		Time deposit accounts					37,422	3.14			36,496	5.04

			Total interest-bearing deposits				109,305	2.44			79,909	3.87
	Federal funds purchased and commercial paper						3,478	1.92			4,806	4.11
	Repurchase agreements						34,830	2.31			29,582	4.05
	Advances from FHLBs						59,449	2.83			63,859	4.58
	Other						14,014	4.90			13,289	5.84

			Total interest-bearing liabilities				221,076	2.67			191,445	4.28
Noninterest-bearing sources:
	Noninterest-bearing deposits						25,396				16,613
	Other liabilities						5,015				4,308
	Stockholders' equity						19,980				13,207

			Total liabilities and stockholders' equity			$	271,467			$	225,573

Net interest spread								3.27				2.98
Impact of noninterest-bearing sources								0.21				0.34
Net interest margin								3.48				3.32

(1): Yield is based on average amortized cost balances.
(2): Nonaccrual loans were included in the average loan amounts outstanding.
(3): Represents purchased subprime loan portfolios.
(4): Represents loans to builders for the purpose of financing the acquisition, development and construction of single-family residences for sale.
(5): Represents construction loans made directly to the intended occupant of a single-family residence.

WM-7

Washington Mutual, Inc.
Selected Financial Information
(unaudited)

			Quarter Ended			Year Ended
			Dec. 31, 2002	Sept. 30, 2002	Dec. 31, 2001	Dec. 31, 2002	Dec. 31, 2001
Basic and Diluted Weighted Average Number of Common Shares Outstanding (in thousands)
Basic weighted average number of common shares outstanding			926,210	947,293	856,014	943,905	850,245
	Potential dilutive effect of common shares from:
		Stock options	7,530	8,460	6,726	8,626	8,469
		Premium Income Equity Securities ^SM(1)	—	775	1,268	951	1,346
		Trust Preferred Income Equity Redeemable Securities^SM	6,251	6,894	4,943	6,670	4,598

			13,781	16,129	12,937	16,247	14,413

Diluted weighted average number of common shares outstanding			939,991	963,422	868,951	960,152	864,658

(1): Redeemed on August 16, 2002.

WM-8

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

				Quarter Ended						Year Ended
				Dec. 31, 2002		Sept. 30, 2002		Dec. 31, 2001		Dec. 31, 2002		Dec. 31, 2001
Loan Volume
	Home loans:
		Adjustable rate ("ARMs")		$	25,998	$	25,928	$	12,891	$	84,627	$	37,224
		Fixed rate			67,487		38,323		39,280		176,040		107,538
		Specialty mortgage finance(1)			4,689		3,187		2,476		14,077		10,333

			Total home loan volume		98,174		67,438		54,647		274,744		155,095
	Home construction loans:
		Builder(2)			389		567		144		1,842		1,957
		Custom(3)			194		214		160		761		917
	Home equity loans and lines of credit:
		Banking subsidiaries			4,721		3,374		2,209		15,254		7,537
		Washington Mutual Finance			216		244		223		1,051		937
	Multi-family				1,864		1,870		715		5,839		2,697
	Other real estate				513		636		225		1,818		1,422

			Total loans secured by real estate		106,071		74,343		58,323		301,309		170,562
	Consumer:
		Banking subsidiaries			114		178		105		760		540
		Washington Mutual Finance			481		435		472		1,791		1,760
	Commercial business				438		527		468		2,193		2,219

			Total loan volume	$	107,104	$	75,483	$	59,368	$	306,053	$	175,081

Loan Volume by Channel
	Originated			$	64,881	$	52,020	$	35,390	$	200,107	$	112,173
	Purchased/Correspondent				42,223		23,463		23,978		105,946		62,908

			Total loan volume by channel	$	107,104	$	75,483	$	59,368	$	306,053	$	175,081

Refinancing Activity(4)
	Home loans:
		ARMs		$	18,957	$	18,617	$	9,816	$	60,170	$	25,099
		Fixed rate			50,634		25,432		27,169		118,224		70,023
		Specialty mortgage finance			1,612		1,285		902		5,394		2,433

			Total home loan refinances		71,203		45,334		37,887		183,788		97,555
	Home construction loans				11		12		7		50		31
	Home equity loans and lines of credit and consumer				904		584		147		2,814		364
	Multi-family and other real estate				903		391		345		2,155		1,257

			Total refinances	$	73,021	$	46,321	$	38,386	$	188,807	$	99,207

Home Loans Volume by Index:
	Short-term ARMs:
		Treasury indices		$	3,972	$	4,020	$	5,633	$	19,474	$	21,157
		COFI			316		743		449		3,231		1,976
		Other			2,163		1,980		58		7,461		142

			Total short-term ARMs		6,451		6,743		6,140		30,166		23,275
	Medium-term ARMs				22,977		21,905		8,875		65,925		21,788
	Fixed-rate mortgages				68,746		38,790		39,632		178,653		110,032

			Total home loans volume	$	98,174	$	67,438	$	54,647	$	274,744	$	155,095

(1): Represents purchased subprime loan portfolios and mortgages originated by Long Beach Mortgage.
(2): Represents loans to builders for the purpose of financing the acquisition, development and construction of single-family residences for sale.
(3): Represents construction loans made directly to the intended occupant of a single-family residence.
(4): Includes loan refinancings entered into by both new and pre-existing loan customers.

WM-9

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

				Change from Sept. 30, 2002 to Dec. 31, 2002			Dec. 31, 2002			Sept. 30, 2002			Dec. 31, 2001
Loans by Property Type and MBS
	Loans held in portfolio:
		Home loans:
			ARMs and fixed rate	$	(1,863	)	$	82,842		$	84,705		$	79,281
			Specialty mortgage finance(1)		533			10,128			9,595			8,552

			Total home loans		(1,330	)		92,970			94,300			87,833
		Home construction loans:
			Builder(2)		(142	)		1,017			1,159			1,623
			Custom(3)		17			932			915			979
		Home equity loans and lines of credit:
			Banking subsidiaries		1,513			16,168			14,655			7,970
			Washington Mutual Finance		(331	)		1,930			2,261			2,100
		Multi-family			(408	)		18,000			18,408			15,608
		Other real estate			(402	)		7,986			8,388			6,089

			Total loans secured by real estate		(1,083	)		139,003			140,086			122,202
		Consumer:
			Banking subsidiaries		(115	)		1,663			1,778			2,009
			Washington Mutual Finance		23			1,729			1,706			1,755
		Commercial business			841			5,133			4,292			4,285

			Total loans held in portfolio		(334	)		147,528			147,862			130,251
	Less: allowance for loan and lease losses				52			(1,653	)		(1,705	)		(1,404	)
	Loans securitized and retained as MBS				3,136			25,054			21,918			22,212

			Total net loans held in portfolio and loans securitized and retained as MBS		2,854			170,929			168,075			151,059
	Loans held for sale				4,488			33,996			29,508			26,582

			Total net loans and loans securitized and retained as MBS		7,342			204,925			197,583			177,641
	Purchased MBS				(1,255	)		3,321			4,576			6,356

			Total net loans and MBS	$	6,087		$	208,246		$	202,159		$	183,997

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

WM-10

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

			Sept. 30, 2002 to Dec. 31, 2002			Dec. 31, 2001 to Dec. 31, 2002
Rollforward of Loans Held for Sale
	Balance, beginning of period		$	29,508		$	26,582
		Loans added through acquisitions		13			6,730
		Loans originated and purchased/correspondent		85,444			226,434
		Loans transferred from loans held in portfolio		180			6,177
		Loans transferred to loans held in portfolio		(349	)		(725	)
		Loans securitized and retained		(3,535	)		(8,805	)
		Loans sold		(76,171	)		(219,985	)
		Loan payments and other		(1,094	)		(2,412	)

	Change in loans			4,488			7,414

	Balance, end of period		$	33,996		$	33,996

Rollforward of Loans Held in Portfolio
	Balance, beginning of period		$	147,862		$	130,251
		Loans added through acquisitions		33			16,258
		Loans originated and purchased/correspondent		21,660			79,619
		Loans transferred from loans held for sale		349			725
		Loans transferred to loans held for sale		(180	)		(6,177	)
		Loans securitized and retained		(3,421	)		(3,469	)
		Loan payments and other		(18,775	)		(69,679	)

	Change in loans			(334	)		17,277

	Balance, end of period		$	147,528		$	147,528

WM-11

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

				Sept. 30, 2002 to Dec. 31, 2002			Dec. 31, 2001 to Dec. 31, 2002
Rollforward of Mortgage Servicing Rights ("MSR")(1)
	Balance, beginning of period			$	4,548		$	6,241
		Home loans:
			Additions through acquisitions		962			1,888
			Other additions		1,221			4,031
			Amortization		(920	)		(2,616	)
			Impairment		(308	)		(3,219	)
			Sale of excess servicing		(175	)		(997	)
		Net change in commercial real estate MSR			13			13

	Balance, end of period(2)			$	5,341		$	5,341

Rollforward of Valuation Allowance for MSR Impairment
	Balance, beginning of period			$	4,320		$	1,714
		Impairment			308			3,219
		Sale of excess servicing			(107	)		(412	)

	Balance, end of period			$	4,521		$	4,521

Rollforward of Loans Serviced for Others
	Balance, beginning of period			$	478,275		$	382,500
		Home loans:
			Additions through acquisitions		129,642			178,884
			Other additions		87,788			249,855
			Loan payments and other		(92,761	)		(208,337	)
	Net change in commercial real estate loans serviced for others				1,560			1,602

	Balance, end of period			$	604,504		$	604,504

			Dec. 31, 2002 Balance
Total Servicing Portfolio
		Loans serviced for others	$	604,504
		Servicing on retained MBS without MSR		5,850
		Servicing on owned loans		167,696
		Subservicing portfolio		302

	Total servicing portfolio		$	778,352

			Dec. 31, 2002
			Unpaid Principal Balance		Weighted Average Servicing Fee
					(in basis points, annualized)
Loans Serviced for Others by Loan Type
		Government	$	89,762	54
		Agency		391,833	35
		Private		110,808	46
		Specialty home loans		12,101	50

	Total loans serviced for others(3)		$	604,504	40

(1): Net of valuation allowance.
(2): At December 31, 2002, aggregate MSR fair value was $5.38 billion.
(3): Weighted average coupon (annualized) was 6.83% at December 31, 2002.

WM-12

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

				Change from Sept. 30, 2002 to Dec. 31, 2002			Dec. 31, 2002			% of total		Sept. 30, 2002			% of total		Dec. 31, 2001			% of total
Loans Secured by Real Estate and MBS
	Short-term ARMs:
		COFI		$	(1,707	)	$	28,252		14	%	$	29,959		15	%	$	34,760		19	%
		Treasury indices			1,996			42,045		21			40,049		20			36,680		21
		Other			1,593			27,420	(1)	13			25,827	(1)	13			19,004	(1)	11

			Total short-term ARMs		1,882			97,717		48			95,835		48			90,444		51
	Medium-term ARMs				169			54,164		27			53,995		28			43,849		25
	Fixed-rate loans				4,704			45,691		23			40,987		21			36,410		20
	Fixed-rate MBS				(1,492	)		3,707		2			5,199		3			6,579		4

			Total loans secured by real estate and MBS	$	5,263		$	201,279		100	%	$	196,016		100	%	$	177,282		100	%

(1): The balance included the following amount of securities retained which bear COFI to LIBOR basis risk (dollars in billions):

Dec. 31, 2002:	$	2.8
Sept. 30, 2002:		2.8
Dec. 31, 2001:		2.9

			Quarter Ended									Year Ended
			Dec. 31, 2002			Sept. 30, 2002			Dec. 31, 2001			Dec. 31, 2002			Dec. 31, 2001
Home Loan Mortgage Banking (Expense) Income
	Loan servicing fees		$	628		$	508		$	448		$	2,237		$	1,375
	Loan subservicing fees			14			34			9			100			24
	Amortization of MSR			(920	)		(713	)		(381	)		(2,616	)		(1,006	)
	MSR impairment			(308	)		(1,849	)		(1,057	)		(3,219	)		(1,749	)
	Other, net			(134	)		(97	)		(61	)		(371	)		(165	)

		Net home loans servicing expense		(720	)		(2,117	)		(1,042	)		(3,869	)		(1,521	)
	Loan related income			135			125			49			461			156
	Gain from mortgage loans			392			418			287			1,280			963
	Gain (loss) from sale of originated MBS			15			(1	)		16			34			117

		Total home loan mortgage banking expense	$	(178	)	$	(1,575	)	$	(690	)	$	(2,094	)	$	(285	)

Impact of MSR risk management instruments(1):
	Gain from certain AFS securities			407			388
	Revaluation gain from derivatives			109			1,694
	Gain on extinguishment of repurchase agreements			—			136
	Net settlement income from certain interest rate swaps			158			116

	Total impact of MSR risk management instruments			674			2,334

		Total home loan mortgage banking income net of MSR risk management instruments	$	496		$	759

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

WM-13

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

					Dec. 31, 2002			Sept. 30, 2002			Dec. 31, 2001
					Balance		Term(1)	Balance		Term(1)	Balance		Term(1)
							(in months)			(in months)			(in months)
Deposits and Borrowings
	Deposits:
		Noninterest-bearing deposits			$	37,515	N/A	$	27,639	N/A	$	23,259	N/A
		Interest-bearing checking accounts, savings accounts and MMDAs				84,233	N/A		79,273	N/A		46,961	N/A
		Interest-bearing time deposit accounts				33,768	15		33,696	16		36,962	10

			Total deposits(2)			155,516			140,608			107,182
	Borrowings:
		Adjustable				50,121	1		53,392	1		48,014	2
		Fixed				34,372	44		40,001	37		69,881	22

			Total borrowings			84,493			93,393			117,895

				Total deposits and borrowings	$	240,009		$	234,001		$	225,077

(1): Terms used are remaining term for deposits and fixed-rate borrowings and term to reprice for adjustable-rate borrowings.
(2): Includes custodial and escrow deposits of $25.90 billion at December 31, 2002, $16.02 billion at September 30, 2002 and $10.11 billion at December 31, 2001.

			Dec. 31, 2002	Sept. 30, 2002	Dec. 31, 2001
Retail Checking Accounts(1)
	WMB and WMBfsb		1,289,705	1,277,805	1,182,385
	WMB, FA		5,968,850	5,813,763	4,667,806

		Total retail checking accounts	7,258,555	7,091,568	5,850,191

Retail Checking Account Activity(1)
	Net accounts opened during the quarter:
		WMB and WMBfsb	11,900	28,535	23,739
		WMB, FA	155,087	245,490	166,577

	Net new retail checking accounts		166,987	274,025	190,316

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

WM-14

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

					Quarter Ended
					Dec. 31, 2002			Sept. 30, 2002			June 30, 2002			Mar. 31, 2002			Dec. 31, 2001
Allowance for Loan and Lease Losses
	Balance, beginning of quarter				$	1,705		$	1,665		$	1,621		$	1,404		$	1,295
	Allowance acquired through business combinations					—			—			—			148			9
	Allowance for transfer to loans held for sale					(17	)		(7	)		—			(7	)		(3	)
	Allowance for certain loan commitments					(52	)		—			—			—			—
	Provision for loan and lease losses					125			135			160			175			200

						1,761			1,793			1,781			1,720			1,501
	Loans charged off:
		Home loans				(23	)		(9	)		(11	)		(11	)		(3	)
		Specialty mortgage finance				(7	)		(9	)		(8	)		(9	)		(10	)

				Total home loans charge offs		(30	)		(18	)		(19	)		(20	)		(13	)
		Home equity loans and lines of credit:
			Banking subsidiaries			(9	)		(3	)		(1	)		(1	)		(1	)
			Washington Mutual Finance			(4	)		(2	)		(3	)		(2	)		(2	)
		Multi-family				—			(1	)		—			—			—
		Other real estate				(5	)		(11	)		(32	)		(10	)		(4	)

				Total loans secured by real estate		(48	)		(35	)		(55	)		(33	)		(20	)
		Consumer:
			Banking subsidiaries			(16	)		(15	)		(20	)		(20	)		(15	)
			Washington Mutual Finance			(43	)		(42	)		(44	)		(40	)		(39	)
		Commercial business				(20	)		(17	)		(19	)		(19	)		(34	)

				Total loans charged off		(127	)		(109	)		(138	)		(112	)		(108	)
	Recoveries of loans previously charged off:
		Home loans				—			2			—			—			—
		Home equity loans and lines of credit:
			Banking subsidiaries			—			—			—			—			—
			Washington Mutual Finance			—			—			—			—			—
		Multi-family				—			1			—			—			—
		Other real estate				5			6			1			1			2

				Total loans secured by real estate		5			9			1			1			2
		Consumer:
			Banking subsidiaries			5			3			3			2			1
			Washington Mutual Finance			4			5			5			5			4
		Commercial business				5			4			13			5			4

				Total recoveries of loans previously charged off		19			21			22			13			11

			Net charge offs			(108	)		(88	)		(116	)		(99	)		(97	)

	Balance, end of quarter				$	1,653		$	1,705		$	1,665		$	1,621		$	1,404

	Net charge offs (annualized) as a percentage of average loans held in portfolio					0.29	%		0.24	%		0.32	%		0.27	%		0.30	%
	Allowance as a percentage of total loans held in portfolio					1.12	%		1.15	%		1.14	%		1.12	%		1.08	%

WM-15

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

				Dec. 31, 2002			Sept. 30, 2002			June 30, 2002			Mar. 31, 2002			Dec. 31, 2001
Nonperforming Assets ("NPAs") and Restructured Loans
	Nonaccrual loans(1):
		Home loans		$	1,017		$	1,068		$	1,092		$	1,177		$	974
		Specialty mortgage finance(2)			488			407			403			401			328

			Total home loan nonaccrual loans		1,505			1,475			1,495			1,578			1,302
		Home construction loans:
			Builder(3)		42			48			44			57			26
			Custom(4)		7			6			8			15			11
		Home equity loans and lines of credit:
			Banking subsidiaries		36			35			35			35			34
			Washington Mutual Finance		37			35			31			29			40
		Multi-family			50			58			64			51			56
		Other real estate			409			356			371			413			375

			Total nonaccrual loans secured by real estate		2,086			2,013			2,048			2,178			1,844
		Consumer:
			Banking subsidiaries		23			13			13			18			12
			Washington Mutual Finance		69			76			75			79			74
		Commercial business			79			86			96			116			100

			Total nonaccrual loans		2,257			2,188			2,232			2,391			2,030
	Foreclosed assets:
		Home loans			156			119			106			118			103
		Specialty mortgage finance			78			88			72			70			69

			Total home loan foreclosed assets		234			207			178			188			172
		Home construction loans:
			Builder		7			8			7			8			4
			Custom		—			—			—			—			—
		Home equity loans and lines of credit:
			Banking subsidiaries		7			5			4			3			1
			Washington Mutual Finance		8			9			8			9			9
		Multi-family			—			—			—			—			—
		Other real estate			75			72			67			47			31

			Total foreclosed loans secured by real estate		331			301			264			255			217
		Consumer:
			Banking subsidiaries		5			8			10			12			11
			Washington Mutual Finance		—			—			—			—			—
		Commercial business			—			—			—			—			—

			Foreclosed assets		336			309			274			267			228

			Total NPAs	$	2,593		$	2,497		$	2,506		$	2,658		$	2,258
			As a percentage of total assets		0.97	%		0.95	%		0.96	%		0.97	%		0.93	%
	Restructured loans			$	98		$	112		$	119		$	130		$	118

			Total NPAs and restructured loans	$	2,691		$	2,609		$	2,625		$	2,788		$	2,376

(1): Excludes nonaccrual loans held for sale of $119 million at December 31, 2002. Prior periods also reflect the exclusion of nonaccrual loans held for sale of $105 million, $114 million, $122 million and $123 million at September 30, 2002, June 30, 2002, March 31, 2002 and December 31, 2001. Loans held for sale are accounted for at lower of aggregate cost or market value, with valuation changes included as adjustments to gain from mortgage loans.
(2): Represents purchased subprime loan portfolios.
(3): Represents loans to builders for the purpose of financing the acquisition, development and construction of single-family residences for sale.
(4): Represents construction loans made directly to the intended occupant of a single-family residence.

WM-16

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

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

													Dec. 31, 2002 Maturity Range
					Net Fair Value			Counter-Party Credit Risk		Total Notional Amount			2003			2004			2005			2006			2007			After 2007
Interest Rate Risk Management Contracts:
	Asset/Liability Management(1)
		Pay-fixed swaps:			$	(1,143	)	$	—
			Contractual maturity							$	29,742		$	8,416		$	8,834		$	3,210		$	4,709		$	3,700		$	873
			Weighted average pay rate								3.92	%		2.92	%		4.03	%		4.09	%		4.39	%		5.02	%		4.68	%
			Weighted average receive rate								1.56	%		1.56	%		1.53	%		1.57	%		1.58	%		1.66	%		1.37	%
		Receive-fixed swaps:				591			591
			Contractual maturity							$	5,905		$	825		$	200		$	530		$	1,000			—		$	3,350
			Weighted average pay rate								1.39	%		1.21	%		1.65	%		0.90	%		1.40	%		—			1.49	%
			Weighted average receive rate								5.81	%		5.40	%		6.75	%		5.37	%		6.81	%		—			5.62	%
		Interest rate caps/corridors:				—			—
			Contractual maturity							$	526		$	271		$	191		$	64			—			—			—
			Weighted average strike rate								7.61	%		7.62	%		8.14	%		5.94	%		—			—			—
		Payor swaptions:				—			—
			Contractual maturity (option)							$	5,000		$	5,000			—			—			—			—			—
			Weighted average strike rate								6.12	%		6.12	%		—			—			—			—			—
			Contractual maturity (swap)								—			—			—			—		$	1,000		$	750		$	3,250
			Weighted average strike rate								—			—			—			—			6.05	%		6.26	%		6.11	%
		Embedded pay-fixed swaps:				(207	)		—
			Contractual maturity							$	2,750			—			—			—			—		$	2,750			—
			Weighted average pay rate								4.73	%		—			—			—			—			4.73	%		—
			Weighted average receive rate								1.74	%		—			—			—			—			1.74	%		—
		Embedded caps:				—			—
			Contractual maturity							$	641		$	141		$	500			—			—			—			—
			Weighted average strike rate								7.64	%		7.25	%		7.75	%		—			—			—			—
		Embedded payor swaptions(2):				4			4
			Contractual maturity (option)							$	6,400		$	5,900		$	500			—			—			—			—
			Weighted average strike rate								6.14	%		6.13	%		6.21	%		—			—			—			—
			Contractual maturity (swap)								—			—			—			—		$	3,750			—		$	2,650
			Weighted average strike rate								—			—			—			—			5.99	%		—			6.34	%

				Total interest rate contracts		(755	)		595	$	50,964
		Forward purchase commitments:				101			101
			Contractual maturity							$	10,193		$	10,193			—			—			—			—			—
			Weighted average price								102.38			102.38
		Forward sales commitments:				(662	)		—
			Contractual maturity							$	41,238		$	41,238			—			—			—			—			—
			Weighted average price								102.34			102.34
		Mortgage put options:				7			7
			Contractual maturity							$	7,150		$	7,150			—			—			—			—			—
			Weighted average strike price								99.28			99.28

				Total asset/liability management	$	(1,309	)	$	703	$	109,545

(Continued on next page)

(1): Interest rate contracts decreased net interest income by $132 million and $407 million for the three months and the year ended December 31, 2002.
(2): Embedded interest rate swaptions are exercisable upon maturity.

WM-17

(Continued from previous page)

														Dec. 31, 2002 Maturity Range
						Net Fair Value			Counter-Party Credit Risk		Total Notional Amount			2003			2004			2005			2006			2007			After 2007
Interest Rate Risk Management Contracts:
	MSR Risk Management
		Pay-fixed swaps:				$	(50	)	$	—
			Contractual maturity								$	2,903			—			—			—			—		$	1,950		$	953
			Weighted average pay rate									3.77	%		—			—			—			—			3.41	%		4.52	%
			Weighted average receive rate									1.41	%		—			—			—			—			1.40	%		1.42	%
		Receive-fixed swaps:					2,176			2,176
			Contractual maturity								$	17,915			—		$	561		$	500		$	700		$	1,250		$	14,904
			Weighted average pay rate									1.57	%		—			1.80	%		1.41	%		1.42	%		1.50	%		1.58	%
			Weighted average receive rate									5.65	%		—			4.35	%		4.54	%		5.31	%		4.33	%		5.86	%
		Floors(3):					249			249
			Contractual maturity								$	3,900			—			—			—			—		$	3,900			—
			Weighted average strike rate									6.09	%		—			—			—			—			6.09	%		—
		Receiver swaptions:					415			415
			Contractual maturity (option)								$	4,000		$	300		$	800		$	2,900			—			—			—
			Weighted average strike rate									6.21	%		5.42	%		5.73	%		6.43	%		—			—			—
			Contractual maturity (swap)									—			—			—			—			—			—		$	4,000
			Weighted average strike rate									—			—			—			—			—			—			6.21	%

				Total interest rate contracts			2,790			2,840	$	28,718
		Forward purchase commitments:					236			236
			Contractual maturity								$	13,250		$	13,250			—			—			—			—			—
			Weighted average price									100.35			100.35

				Total MSR risk management		$	3,026		$	3,076	$	41,968

					Total interest rate risk management contracts	$	1,717		$	3,779	$	151,513

(3): At December 31, 2002, none of these floors were effective. These contracts will become effective during May and July 2003.

WM-18

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

													Sept. 30, 2002 Maturity Range
					Net Fair Value			Counter-Party Credit Risk		Total Notional Amount			Sept. 30, 2002 Maturity Range
					Net Fair Value			Counter-Party Credit Risk		Total Notional Amount			2002			2003			2004			2005			2006			After 2006
Interest Rate Risk Management Contracts:
	Asset/Liability Management(1)
		Pay-fixed swaps:			$	(1,108	)	$	—
			Contractual maturity							$	29,363		$	413		$	8,166		$	8,834		$	3,130		$	4,709		$	4,111
			Weighted average pay rate								3.94	%		3.11	%		2.95	%		4.03	%		4.13	%		4.39	%		5.08	%
			Weighted average receive rate								1.81	%		1.84	%		1.81	%		1.80	%		1.80	%		1.84	%		1.82	%
		Receive-fixed swaps:				553			553
			Contractual maturity							$	4,322		$	100		$	600			—		$	530		$	1,000		$	2,092
			Weighted average pay rate								1.70	%		3.31	%		1.50	%		—			1.11	%		1.75	%		1.81	%
			Weighted average receive rate								6.39	%		8.25	%		5.10	%		—			5.37	%		6.81	%		6.74	%
		Interest rate caps/collars/corridors:				—			—
			Contractual maturity							$	536		$	10		$	271		$	191		$	64			—			—
			Weighted average strike rate								7.63	%		8.63	%		7.62	%		8.14	%		5.94	%		—			—
		Payor swaptions:				5			5
			Contractual maturity (option)							$	5,000			—		$	5,000			—			—			—			—
			Weighted average strike rate								6.12	%		—			6.12	%		—			—			—			—
			Contractual maturity (swap)								—			—			—			—			—		$	1,000		$	4,000
			Weighted average strike rate								—			—			—			—			—			6.05	%		6.14	%
		Embedded pay-fixed swaps:				(199	)		—
			Contractual maturity							$	2,750			—			—			—			—			—		$	2,750
			Weighted average pay rate								4.73	%		—			—			—			—			—			4.73	%
			Weighted average receive rate								1.81	%		—			—			—			—			—			1.81	%
		Embedded caps:				1			1
			Contractual maturity							$	655			—		$	155		$	500			—			—			—
			Weighted average strike rate								7.63	%		—			7.25	%		7.75	%		—			—			—
		Embedded payor swaptions(2):				21			21
			Contractual maturity (option)							$	6,400			—		$	5,900		$	500			—			—			—
			Weighted average strike rate								6.14	%		—			6.13	%		6.21	%		—			—			—
			Contractual maturity (swap)								—			—			—			—			—		$	3,750		$	2,650
			Weighted average strike rate								—			—			—			—			—			5.99	%		6.34	%

				Total interest rate contracts		(727	)		580	$	49,026
		Forward purchase commitments:				23			23
			Contractual maturity							$	5,506		$	5,506			—			—			—			—			—
			Weighted average price								102.71			102.71
		Forward sales commitments:				(528	)		—
			Contractual maturity							$	43,521		$	43,516		$	5			—			—			—			—
			Weighted average price								101.87			101.87			103.79
		Mortgage put options:				17			17
			Contractual maturity							$	6,225		$	6,225			—			—			—			—			—
			Weighted average strike price								100.10			100.10

				Total asset/liability management	$	(1,215	)	$	620	$	104,278

(Continued on next page)

(1): Interest rate contracts decreased net interest income by $146 million and $275 million for the three months and nine months ended September 30, 2002.
(2): Embedded interest rate swaptions are exercisable upon maturity.

WM-19

(Continued from previous page)

													Sept. 30, 2002 Maturity Range
						Net Fair Value		Counter-Party Credit Risk		Total Notional Amount			Sept. 30, 2002 Maturity Range
						Net Fair Value		Counter-Party Credit Risk		Total Notional Amount			2002			2003			2004			2005			2006	After 2006
Interest Rate Risk Management Contracts:
	MSR Risk Management
		Receive-fixed swaps:				$	1,665	$	1,665
			Contractual maturity							$	12,075			—			—			—			—		—	$	12,075
			Weighted average pay rate								1.84	%		—			—			—			—		—		1.84	%
			Weighted average receive rate								5.93	%		—			—			—			—		—		5.93	%
		Floors(3):					248		248
			Contractual maturity							$	3,900			—			—			—			—		—	$	3,900
			Weighted average strike rate								6.09	%		—			—			—			—		—		6.09	%
		Receiver swaptions:					692		692
			Contractual maturity (option)							$	5,400		$	250		$	300		$	300		$	4,550		—		—
			Weighted average strike rate								6.51	%		5.69	%		5.42	%		5.99	%		6.66	%	—		—
			Contractual maturity (swap)								—			—			—			—			—		—	$	5,400
			Weighted average strike rate								—			—			—			—			—		—		6.51	%

				Total interest rate contracts			2,605		2,605	$	21,375
		Forward purchase commitments:					46		46
			Contractual maturity							$	2,025		$	2,025			—			—			—		—		—
			Weighted average price								99.20			99.20

				Total MSR risk management		$	2,651	$	2,651	$	23,400

					Total interest rate risk management contracts	$	1,436	$	3,271	$	127,678

(3): At September 30, 2002, none of these floors were effective. These contracts will become effective during May and July 2003.

SIGNATURE

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: January 21, 2003		By:	/s/ FAY L. CHAPMAN Fay L. Chapman Senior Executive Vice President