WM-1

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,
  
   
2007
  
2006
 
2006
 
2006
 
2006
 
PROFITABILITY
                      
Net income
  
$
784
  
$
1,058
  
$
748
  
$
767
  
$
985
  
Net interest income
    
2,081
   
1,998
   
1,947
   
2,060
   
2,117
 
Noninterest income
    
1,541
   
1,592
   
1,570
   
1,578
   
1,638
 
Noninterest expense
    
2,105
   
2,257
   
2,184
   
2,229
   
2,138
 
                                 
Diluted earnings per common share:
                                
Income from continuing operations
  
$
0.86
  
$
0.66
  
$
0.76
  
$
0.78
  
$
0.97
  
Income from discontinued operations
    
-
   
0.44
   
0.01
   
0.01
   
0.01
 
Net income
    
0.86
   
1.10
   
0.77
   
0.79
   
0.98
 
                                 
Diluted weighted average number of common shares outstanding
                                
(in thousands)
    
899,706
   
955,817
   
967,376
   
975,504
   
1,003,460
 
Net interest margin
    
2.79
%
  
2.58
%
  
2.53
%
  
2.65
%
  
2.75
%
Dividends declared per common share
    
0.54
   
0.53
   
0.52
   
0.51
   
0.50
 
Book value per common share (period end)(1)
    
27.30
   
28.21
   
27.65
   
27.31
   
27.10
 
Return on average assets
    
0.95
%
  
1.20
%
  
0.86
%
  
0.88
%
  
1.15
%
Return on average common equity
    
12.99
   
16.03
   
11.47
   
11.82
   
14.69
 
Efficiency ratio(2)(3)
    
58.13
   
62.87
   
62.09
   
61.27
   
56.95
 
                                 
ASSET QUALITY
                                
Nonperforming assets(4) to total assets
    
1.02
%
  
0.80
%
  
0.69
%
  
0.62
%
  
0.59
%
Allowance as a percentage of total loans held in portfolio
    
0.71
   
0.72
   
0.64
   
0.68
   
0.68
 
                                 
CREDIT PERFORMANCE
                                
Provision for loan and lease losses
  
$
234
  
$
344
  
$
166
  
$
224
  
$
82
  
Net charge-offs
    
183
   
136
   
154
   
116
   
105
 
                                 
CAPITAL ADEQUACY
                                
Capital Ratios for WMI:
                                
Tangible equity to total tangible assets(5)
    
5.78
%
  
6.04
%
  
5.86
%
  
5.84
%
  
5.75
%
Total risk-based capital to total risk-weighted assets(6)
    
11.14
   
11.77
   
11.10
   
11.26
   
10.77
 
Tier 1 capital to average total assets(6)
    
5.87
   
6.35
   
6.28
   
6.24
   
6.13
 
Capital Ratios for WMB (well-capitalized minimum)(7):
                               
Tier 1 capital to adjusted total assets (5.00%)
    
6.71
   
6.79
   
6.47
   
6.33
   
6.76
 
Adjusted tier 1 capital to total risk-weighted assets (6.00%)
    
7.84
   
8.28
   
8.12
   
8.13
   
8.92
 
Total risk-based capital to total risk-weighted assets (10.00%)
    
11.89
   
12.16
   
11.30
   
11.39
   
11.82
 
                                 
SUPPLEMENTAL DATA
                               
Average balance sheet:
                                
Total loans held in porfolio
 
$
222,617
  
$
239,265
  
$
242,165
  
$
242,334
  
$
232,505
  
Total interest-earning assets(2)
    
295,700
   
314,784
   
312,827
   
313,239
   
307,777
 
Total assets
    
331,905
   
353,056
   
349,542
   
348,664
   
343,660
 
Total deposits
    
210,764
   
214,801
   
208,912
   
200,252
   
191,034
 
Total stockholders' equity
    
24,407
   
26,700
   
26,147
   
25,958
   
26,825
 
Period-end balance sheet:
                                
Total lons held in portfolio, net of allowance for loan and lease losses
    
215,481
   
223,330
   
240,215
   
241,840
   
238,362
 
Total assets
    
319,985
   
346,288
   
348,877
   
350,884
   
348,401
 
Total deposits
    
210,209
   
213,956
   
210,882
   
204,558
   
200,002
 
Total stockholders' equity
    
24,578
   
26,969
   
26,458
   
26,131
   
25,819
 
Common shares outstanding at the end of period (in thousands)(8)
    
888,111
   
944,479
   
945,098
   
962,880
   
958,819
 
Employees at end of period
    
49,693
   
49,824
   
51,056
   
56,247
   
60,381
 
 
_______________________
  
(1)
 Excludes six million shares held in escrow.
(2)
 Based on continuing operations.
(3)
 The efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income).
(4)
 Excludes nonaccrual loans held for sale.
(5)
 Excludes unrealized net gain/loss on available-for-sale securities and derivatives, goodwill and intangible assets (except MSR) and the impact from the adoption and application of FASB Statement No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, as of December 31, 2006. Minority interests of $2.45 billion for March 31, 2007 and December 31, 2006, $1.96 billion for September 30, 2006 and June 30, 2006 and $1.97 billion for March 31, 2006 are included in the numerator.
(6)
 The capital ratios are estimated as if Washington Mutual, Inc. were a bank holding company subject to Federal Reserve Board capital requirements.
(7)
 Capital ratios for Washington Mutual Bank ("WMB") at March 31, 2007 are preliminary.
(8)
 Includes six million shares held in escrow.
 
 
WM-2
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,
  
   
2007
 
2006
 
2006
 
2006
 
2006
 
Interest Income
                      
Loans held for sale
  
$
562
  
$
515
  
$
435
  
$
395
  
$
462
  
Loans held in portfolio
    
3,900
   
4,053
   
4,012
   
3,887
   
3,580
 
Available-for-sale securities
    
332
   
392
   
379
   
368
   
322
 
Trading assets
   
113
   
102
   
140
   
165
   
198
 
Other interest and dividend income
    
101
   
148
   
139
   
120
   
95
 
Total interest income
    
5,008
   
5,210
   
5,105
   
4,935
   
4,657
 
Interest Expense
                                
Deposits
    
1,772
   
1,843
   
1,739
   
1,461
   
1,221
 
Borrowings
    
1,155
   
1,369
   
1,419
   
1,414
   
1,319
 
Total interest expense
    
2,927
   
3,212
   
3,158
   
2,875
   
2,540
 
Net interest income
    
2,081
   
1,998
   
1,947
   
2,060
   
2,117
 
Provision for loan and lease losses
    
234
   
344
   
166
   
224
   
82
 
Net interest income after provision for loan and lease losses
    
1,847
   
1,654
   
1,781
   
1,836
   
2,035
 
Noninterest Income
                                
Revenue from sales and servicing of home mortgage loans
    
125
   
164
   
118
   
222
   
263
 
Revenue from sales and servicing of consumer loans
   
443
   
372
   
355
   
424
   
376
 
Depositor and other retail banking fees
    
665
   
692
   
655
   
641
   
578
 
Credit card fees
    
172
   
182
   
165
   
152
   
138
 
Securities fees and commissions
    
60
   
54
   
52
   
56
   
52
 
Insurance income
    
29
   
30
   
31
   
33
   
33
 
Trading assets income (loss)
    
(108
)
  
(81
)
  
68
   
(129
)
  
(13
)
Gain (loss) from sales of other available-for-sale securities
    
35
   
(1
)
  
(1
)
  
-
   
(7
)
Other income
    
120
   
180
   
127
   
179
   
218
 
Total noninterest income
    
1,541
   
1,592
   
1,570
   
1,578
   
1,638
 
Noninterest Expense
                                
Compensation and benefits
    
1,002
   
945
   
939
   
1,021
   
1,032
 
Occupancy and equipment
    
376
   
476
   
408
   
435
   
391
 
Telecommunications and outsourced information services
    
129
   
133
   
142
   
145
   
134
 
Depositor and other retail banking losses
    
61
   
64
   
57
   
51
   
56
 
Advertising and promotion
    
98
   
107
   
124
   
117
   
95
 
Professional fees
    
38
   
89
   
57
   
45
   
36
 
Other expense
    
401
   
443
   
457
   
415
   
394
 
Total noninterest expense
    
2,105
   
2,257
   
2,184
   
2,229
   
2,138
 
Minority interest expense
    
43
   
34
   
34
   
37
   
-
 
Income from continuing operations before income taxes
   
1,240
   
955
   
1,133
   
1,148
   
1,535
 
Income taxes
    
456
   
315
   
394
   
389
   
559
 
Income from continuing operations
    
784
   
640
   
739
   
759
   
976
 
Discontinued Operations(1)
                                
Income from discontinued operations before income taxes
    
-
   
2
   
14
   
12
   
15
 
Gain on disposition of discontinued operations
    
-
   
667
   
-
   
-
   
-
 
Income taxes
    
-
   
251
   
5
   
4
   
6
 
Income from discontinued operations
    
-
   
418
   
9
   
8
   
9
 
Net Income
  
$
784
  
$
1,058
  
$
748
  
$
767
  
$
985
  
Net Income Available to Common Stockholders
  
$
777
  
$
1,050
  
$
748
  
$
767
  
$
985
  
                                 
Basic Earnings Per Common Share:
                                
Income from continuing operations
  
$
0.89
  
$
0.68
  
$
0.78
  
$
0.80
  
$
1.00
  
Income from discontinued operations
    
-
   
0.45
   
0.01
   
0.01
   
0.01
 
Net Income
    
0.89
   
1.13
   
0.79
   
0.81
   
1.01
 
                                 
Diluted Earnings Per Common Share:
                                
Income from continuing operations
  
$
0.86
  
$
0.66
  
$
0.76
  
$
0.78
  
$
0.97
  
Income from discontinued operations
    
-
   
0.44
   
0.01
   
0.01
   
0.01
 
Net Income
    
0.86
   
1.10
   
0.77
   
0.79
   
0.98
 
                                 
Dividends declared per common share
    
0.54
   
0.53
   
0.52
   
0.51
   
0.50
 
Basic weighted average number of common shares outstanding (in thousands)
    
874,816
   
931,484
   
941,898
   
947,023
   
973,614
 
Diluted weighted average number of common shares outstanding (in thousands)
    
899,706
   
955,817
   
967,376
   
975,504
   
1,003,460
 
_______________________
(1)
Represents WM Advisors, Inc., the Company's retail mutual fund management business, which was sold in the fourth quarter of 2006.
 
WM-3
 
Washington Mutual, Inc.
  
Consolidated Statements of Financial Condition
  
(dollars in millions)
  
(unaudited)
  
 
   
Mar. 31,
  
Dec. 31,
  
Sept. 30,
  
June 30,
  
Mar. 31,
  
   
2007
 
2006
 
2006
 
2006
 
2006
 
Assets
                      
Cash and cash equivalents
  
$
4,047
  
$
6,948
  
$
6,649
  
$
6,675
  
$
5,868
  
Federal funds sold and securities purchased under agreements to resell
    
8,279
   
3,743
   
5,102
   
4,112
   
3,995
 
Trading assets
    
5,290
   
4,434
   
5,391
   
7,445
   
9,958
 
Available-for-sale securities, total amortized cost of $22,921, $25,073,
$29,136, $28,504, and $27,424:
                                
Mortgage-backed securities
    
15,939
   
18,063
   
22,353
   
21,438
   
21,388
 
Investment securities
    
6,900
   
6,915
   
6,664
   
6,358
   
5,586
 
Total available-for-sale securities
    
22,839
   
24,978
   
29,017
   
27,796
   
26,974
 
Loans held for sale
    
26,874
   
44,970
   
23,720
   
23,342
   
25,020
 
Loans held in portfolio
    
217,021
   
224,960
   
241,765
   
243,503
   
240,004
 
Allowance for loan and lease losses
    
(1,540
)
  
(1,630
)
  
(1,550
)
  
(1,663
)
  
(1,642
)
Total loans held in portfolio, net of allowance for loan and lease losses
    
215,481
   
223,330
   
240,215
   
241,840
   
238,362
 
Investment in Federal Home Loan Banks
    
2,230
   
2,705
   
3,013
   
3,500
   
4,200
 
Mortgage servicing rights
    
6,507
   
6,193
   
6,288
   
9,162
   
8,736
 
Goodwill
    
9,052
   
9,050
   
8,368
   
8,339
   
8,298
 
Other assets
    
19,386
   
19,937
   
21,114
   
18,673
   
16,990
 
Total assets
  
$
319,985
  
$
346,288
  
$
348,877
  
$
350,884
  
$
348,401
  
Liabilities
                                
Deposits:
                                
Noninterest-bearing deposits
  
$
34,367
  
$
33,386
  
$
34,667
  
$
35,457
  
$
36,531
  
Interest-bearing deposits
    
175,842
   
180,570
   
176,215
   
169,101
   
163,471
 
Total deposits
   
210,209
   
213,956
   
210,882
   
204,558
   
200,002
 
Federal funds purchased and commercial paper
    
563
   
4,778
   
5,282
   
6,138
   
6,841
 
Securities sold under agreements to repurchase
    
8,323
   
11,953
   
13,665
   
19,866
   
15,471
 
Advances from Federal Home Loan Banks
    
24,735
   
44,297
   
47,247
   
55,311
   
65,283
 
Other borrowings
    
39,430
   
32,852
   
33,883
   
27,995
   
24,872
 
Other liabilities
    
9,694
   
9,035
   
9,501
   
8,926
   
8,140
 
Minority interests
    
2,453
   
2,448
   
1,959
   
1,959
   
1,973
 
Total liabilities
    
295,407
   
319,319
   
322,419
   
324,753
   
322,582
 
Stockholders' equity
                                
Preferred stock
    
492
   
492
   
492
   
-
   
-
 
Capital surplus - common stock
    
3,121
   
5,825
   
5,761
   
6,596
   
6,414
 
Accumulated other comprehensive loss
    
(268
)
  
(287
)
  
(180
)
  
(599
)
  
(448
)
Retained earnings
    
21,233
   
20,939
   
20,385
   
20,134
   
19,853
 
Total stockholders' equity
    
24,578
   
26,969
   
26,458
   
26,131
   
25,819
 
Total liabilities and stockholders' equity
  
$
319,985
  
$
346,288
  
$
348,877
  
$
350,884
  
$
348,401
  
 
 
WM-4
 
Washington Mutual, Inc.
  
Selected Financial Information
  
(dollars in millions)
  
(unaudited)
  
 
   
 Quarter Ended
  
   
Mar. 31,
  
Dec. 31,
  
Sept. 30,
  
June 30,
  
Mar. 31,
  
   
2007
 
2006
 
2006
 
2006
 
2006
 
Stockholders' Equity Rollforward
                      
Balance, beginning of period
  
$
26,969
  
$
26,458
  
$
26,131
  
$
25,819
  
$
27,279
  
Net income
    
784
   
1,058
   
748
   
767
   
985
 
Cumulative effect from the adoption of new accounting pronouncements
    
(6)
(1)
  
(157)
(2)
  
-
   
-
   
35
(3)
Other comprehensive income (loss), net of income taxes
    
19
   
50
   
419
   
(151
)
  
(219
)
Cash dividends declared on common stock
    
(476
)
  
(496
)
  
(497
)
  
(486
)
  
(499
)
Cash dividends declared on preferred stock
    
(7
)
  
(8
)
  
-
   
-
   
-
 
Common stock repurchased and retired(4)
    
(2,797
)
  
-
   
(930
)
  
-
   
(2,108
)
Common stock issued
    
92
   
64
   
95
   
182
   
346
 
Preferred stock issued
    
-
   
-
   
492
   
-
   
-
 
Balance, end of period
  
$
24,578
  
$
26,969
  
$
26,458
  
$
26,131
  
$
25,819
  
 
(1)
As of January 1, 2007, the Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes.
(2)
On December 31, 2006, the Company adopted Statement of Financial Accounting Standards ("Statement") No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans. Statement No. 158 requires an entity to recognize the overfunded or underfunded status of its defined benefit postretirement plans as an asset or liability in its statement of financial condition and to recognize changes, through comprehensive income, in that funded status in the year in which the changes occur. The cumulative effects, net of income taxes, resulted in a $274 million decrease to December 31, 2006 other assets and a $117 million decrease to December 31, 2006 other liabilities.
(3)
As of January 1, 2006, the Company adopted Statement No. 156, Accounting for Servicing of Financial Assets. Statement No. 156 permits an entity to choose either to continue the practice of amortizing servicing assets and assess such assets for impairment, or to report servicing assets at fair value. The Company has elected to report its mortgage servicing assets at fair value. Statement No. 156 also permits the one-time transfer of available-for-sale securities being utilized as MSR risk management instruments to trading securities. The cumulative effects, net of income taxes, resulted in a $29 million increase to January 1, 2006 retained earnings from the MSR fair value election and a $6 million increase to January 1, 2006 accumulated other comprehensive income from the transfer of AFS securities, designated as MSR risk management instruments, to the trading portfolio.
(4)
The Company repurchased 61.4 million, 1.7 million, 18.8 million, zero and 47.0 million shares of its common stock in the three months ended March 31, 2007, December 31, 2006, September 30, 2006, June 30, 2006 and March 31, 2006. At March 31, 2007, the total remaining common stock repurchase authority was 68.2 million shares.
 
WM-5
 
Washington Mutual, Inc.
  
Selected Financial Information
  
(dollars in millions)
  
(unaudited)
  
 
   
Quarter Ended
  
   
Mar. 31,
  
Dec. 31,
  
Sept. 30,
  
June 30,
  
Mar. 31,
  
   
2007
 
2006
 
2006
 
2006
 
2006
 
RETAIL BANKING GROUP
                      
Condensed income statement:
                      
Net interest income
  
$
1,275
  
$
1,239
  
$
1,260
  
$
1,323
  
$
1,347
  
Provision for loan and lease losses
    
62
   
47
   
53
   
13
   
54
 
Noninterest income
    
751
   
774
   
738
   
732
   
670
 
Inter-segment revenue
    
22
   
17
   
17
   
16
   
13
 
Noninterest expense
    
1,075
   
1,102
   
1,079
   
1,109
   
1,088
 
Income from continuing operations before income taxes
    
911
   
881
   
883
   
949
   
888
 
Income taxes
    
342
   
336
   
337
   
363
   
340
 
Income from continuing operations
    
569
   
545
   
546
   
586
   
548
 
Income from discontinued operations
    
-
   
12
   
9
   
8
   
9
 
Net income
  
$
569
  
$
557
  
$
555
  
$
594
  
$
557
  
Performance and other data:
                                
Efficiency ratio
    
52.50
%
  
54.29
%
  
53.55
%
  
53.53
%
  
53.61
%
Average loans
  
$
155,206
  
$
172,029
  
$
180,829
  
$
182,891
  
$
173,852
  
Average assets
    
165,047
   
182,256
   
191,288
   
193,246
   
184,147
 
Average deposits:
                                
Checking deposits:
                                
Noninterest bearing
    
22,331
   
21,873
   
21,440
   
21,418
   
20,344
 
Interest bearing
    
31,739
   
33,010
   
34,792
   
37,518
   
40,343
 
Total checking deposits
    
54,070
   
54,883
   
56,232
   
58,936
   
60,687
 
Savings and money market deposits
    
43,103
   
41,442
   
38,317
   
38,143
   
37,433
 
Time deposits
    
46,857
   
47,188
   
45,405
   
41,724
   
40,940
 
Average deposits
    
144,030
   
143,513
   
139,954
   
138,803
   
139,060
 
Loan volume
    
8,492
   
7,966
   
9,006
   
10,488
   
7,255
 
Employees at end of period
    
27,873
   
27,664
   
28,034
   
31,426
   
32,863
 
CARD SERVICES GROUP
                               
Managed basis(1)
                                
Condensed income statement:
                                
Net interest income
  
$
653
  
$
664
  
$
633
  
$
615
  
$
619
  
Provision for loan and lease losses
    
388
   
555
   
345
   
417
   
330
 
Noninterest income 
    
474
   
451
   
343
   
389
   
344
 
Inter-segment expense
    
4
   
2
   
2
   
1
   
-
 
Noninterest expense
    
325
   
316
   
294
   
293
   
298
 
Income before income taxes
    
410
   
242
   
335
   
293
   
335
 
Income taxes
    
154
   
93
   
128
   
112
   
128
 
Net income
  
$
256
  
$
149
  
$
207
  
$
181
  
$
207
  
Performance and other data:
                                
Efficiency ratio
    
28.96
%
  
28.41
%
  
30.16
%
  
29.19
%
  
30.95
%
Average loans
  
$
23,604
  
$
22,875
  
$
21,706
  
$
20,474
  
$
20,086
  
Average assets
    
26,039
   
25,472
   
24,236
   
23,044
   
22,764
 
Employees at end of period
    
2,646
   
2,676
   
2,731
   
2,597
   
2,871
 
Securitization adjustments
                                
Condensed income statement:
                                
Net interest income
  
$
(414
)
$
(437
)
$
(411
)
$
(405
)
$
(432
)
Provision for loan and lease losses
    
(282
)
  
(280
)
  
(220
)
  
(217
)
  
(225
)
Noninterest income
    
132
   
157
   
191
   
188
   
207
 
Performance and other data:
                                
Average loans
    
(12,507
)
  
(12,811
)
  
(12,169
)
  
(11,565
)
  
(12,107
)
Average assets
    
(10,961
)
  
(11,035
)
  
(10,330
)
  
(9,753
)
  
(10,219
)
Adjusted basis
                                
Condensed income statement:
                                
Net interest income
  
$
239
  
$
227
  
$
222
  
$
210
  
$
187
  
Provision for loan and lease losses
    
106
   
275
   
125
   
200
   
105
 
Noninterest income
    
606
   
608
   
534
   
577
   
551
 
Inter-segment expenses
    
4
   
2
   
2
   
1
   
-
 
Noninterest expense
    
325
   
316
   
294
   
293
   
298
 
Income before income taxes
    
410
   
242
   
335
   
293
   
335
 
Income taxes
    
154
   
93
   
128
   
112
   
128
 
Net income
  
$
256
  
$
149
  
$
207
  
$
181
  
$
207
  
Performance and other data:
                                
Average loans
  
$
11,097
  
$
10,064
  
$
9,537
  
$
8,909
  
$
7,979
  
Average assets
    
15,078
   
14,437
   
13,906
   
13,291
   
12,545
 
                                 
(This table is continued on "WM-6.")
                                
                                 
 
(1)
The managed basis presentation treats securitized and sold credit card receivables as if they were still on the balance sheet. The Company uses this basis in assessing the overall performance of this operating segment. The managed basis presentation of the Card Services Group is derived by adjusting the GAAP financial information to add back securitized loan balances and the related interest, fee income and provision for credit losses. Such adjustments are eliminated as securitization adjustments when reporting GAAP results.
 
 
WM-6
 
Washington Mutual, Inc.
  
Selected Financial Information
  
(dollars in millions)
  
(unaudited)
  
 
   
Quarter Ended
  
(This table is continued from "WM-5.")
  
Mar. 31,
  
Dec. 31,
  
Sept. 30,
  
June 30,
  
Mar. 31,
  
   
2007
 
2006
 
2006
 
2006
 
2006
 
COMMERCIAL GROUP
                      
Condensed income statement:
                      
Net interest income
  
$
200
  
$
189
  
$
159
  
$
166
  
$
163
  
Provision (reversal of reserve) for loan and lease losses
    
(10
)
  
(69
)
  
(2
)
  
(10
)
  
-
 
Noninterest income
    
14
   
40
   
25
   
17
   
12
 
Noninterest expense
    
74
   
72
   
60
   
57
   
67
 
Income before income taxes
    
150
   
226
   
126
   
136
   
108
 
Income taxes
    
56
   
86
   
48
   
52
   
41
 
Net income
  
$
94
  
$
140
  
$
78
  
$
84
  
$
67
  
Performance and other data:
                                
Efficiency ratio
    
34.52
%
  
31.49
%
  
32.21
%
  
31.28
%
  
38.47
%
Average loans
  
$
38,641
  
$
37,552
  
$
32,414
  
$
31,505
  
$
31,011
  
Average assets
    
41,001
   
40,216
   
34,560
   
33,709
   
33,334
 
Average deposits
    
3,762
   
3,609
   
2,323
   
2,242
   
2,259
 
Loan volume
    
3,671
   
4,019
   
3,104
   
2,961
   
2,769
 
Employees at end of period
    
1,351
   
1,409
   
1,242
   
1,252
   
1,326
 
HOME LOANS GROUP
                                
Condensed income statement:
                                
Net interest income
  
$
245
  
$
273
  
$
276
  
$
290
  
$
338
  
Provision for loan and lease losses
    
49
   
47
   
84
   
38
   
21
 
Noninterest income
    
162
   
126
   
314
   
461
   
401
 
Inter-segment expense
    
18
   
15
   
15
   
15
   
13
 
Noninterest expense
    
521
   
534
   
528
   
617
   
621
 
Income (loss) before income taxes
    
(181
)
  
(197
)
  
(37
)
  
81
   
84
 
Income taxes (benefit)
    
(68
)
  
(75
)
  
(14
)
  
31
   
32
 
Net income (loss)
  
$
(113
)
$
(122
)
$
(23
)
$
50
  
$
52
  
Performance and other data:
                                
Efficiency ratio
    
133.90
%
  
138.93
%
  
92.00
%
  
83.80
%
  
85.62
%
Average loans
  
$
53,254
  
$
51,048
  
$
45,407
  
$
43,988
  
$
49,913
  
Average assets
    
71,381
   
71,512
   
70,565
   
70,958
   
78,163
 
Average deposits
    
16,767
   
19,788
   
20,659
   
20,124
   
16,532
 
Loan volume
    
29,645
   
34,897
   
37,200
   
41,364
   
44,998
 
Employees at end of period
    
13,025
   
13,025
   
13,936
   
15,560
   
17,653
 
CORPORATE SUPPORT/TREASURY AND OTHER
                                
Condensed income statement:
                                
Net interest expense
  
$
(15
)
$
(64
)
$
(107
)
$
(60
)
$
(44
)
Provision (reversal of reserve) for loan and lease losses
    
27
   
44
   
(94
)
  
(17
)
  
(98
)
Noninterest income (expense)
    
81
   
142
   
75
   
(88
)
  
150
 
Noninterest expense
    
110
   
233
   
223
   
153
   
64
 
Minority interest expense
    
43
   
34
   
34
   
37
   
-
 
Income (loss) from continuing operations before income taxes
    
(114
)
  
(233
)
  
(195
)
  
(321
)
  
140
 
Income taxes (benefit)
    
(71
)
  
(103
)
  
(90
)
  
(129
)
  
33
 
Income (loss) from continuing operations
    
(43
)
  
(130
)
  
(105
)
  
(192
)
  
107
 
Income from discontinued operations
    
-
   
406
   
-
   
-
   
-
 
Net income (loss)
  
$
(43
)
$
276
  
$
(105
)
$
(192
)
$
107
  
Performance and other data:
                                
Average loans
  
$
1,345
  
$
1,294
  
$
1,245
  
$
1,178
  
$
1,142
  
Average assets
    
40,877
   
46,208
   
40,823
   
39,061
   
37,042
 
Average deposits
    
46,205
   
47,891
   
45,976
   
39,083
   
33,183
 
Loan volume
    
107
   
144
   
58
   
82
   
24
 
Employees at end of period
    
4,798
   
5,050
   
5,113
   
5,412
   
5,668
 
 
(This table is continued on "WM-7.")
 
 
WM-7
 
Washington Mutual, Inc.
  
Selected Financial Information
  
(dollars in millions)
  
(unaudited)
  
 
   
Quarter Ended
  
(This table is continued from "WM-6.")
  
Mar. 31,
  
Dec. 31,
  
Sept. 30,
  
June 30,
  
Mar. 31,
  
   
2007
 
2006
 
2006
 
2006
 
2006
 
RECONCILING ADJUSTMENTS
                      
Condensed income statement:
                      
Net interest income(1)
  
$
137
  
$
134
  
$
137
  
$
131
  
$
126
  
Noninterest income (expense)(2)
    
(73
)
  
(98
)
  
(116
)
  
(121
)
  
(146
)
Income (loss) before income taxes
    
64
   
36
   
21
   
10
   
(20
)
Income taxes (benefit)(3)
    
43
   
(22
)
  
(15
)
  
(40
)
  
(15
)
Net income (loss)
  
$
21
  
$
58
  
$
36
  
$
50
  
$
(5
)
Performance and other data:
                                
Average loans(4)
  
$
(1,479
)
$
(1,573
)
$
(1,600
)
$
(1,601
)
$
(1,571
)
Average assets(4)
    
(1,479
)
  
(1,573
)
  
(1,600
)
  
(1,601
)
  
(1,571
)
                                 
TOTAL CONSOLIDATED
                                
Condensed income statement:
                                
Net interest income
  
$
2,081
  
$
1,998
  
$
1,947
  
$
2,060
  
$
2,117
  
Provision for loan and lease losses
    
234
   
344
   
166
   
224
   
82
 
Noninterest income
    
1,541
   
1,592
   
1,570
   
1,578
   
1,638
 
Noninterest expense
    
2,105
   
2,257
   
2,184
   
2,229
   
2,138
 
Minority interest expense
    
43
   
34
   
34
   
37
   
-
 
Income from continuing operations before income taxes
    
1,240
   
955
   
1,133
   
1,148
   
1,535
 
Income taxes
    
456
   
315
   
394
   
389
   
559
 
Income from continuing operations
    
784
   
640
   
739
   
759
   
976
 
Income from discontinued operations
    
-
   
418
   
9
   
8
   
9
 
Net income
  
$
784
  
$
1,058
  
$
748
  
$
767
  
$
985
  
Performance and other data:
                                
Efficiency ratio
    
58.13
%
  
62.87
%
  
62.09
%
  
61.27
%
  
56.95
%
Average loans
    
258,064
   
270,414
   
267,832
   
266,870
   
262,326
 
Average assets
    
331,905
   
353,056
   
349,542
   
348,664
   
343,660
 
Average deposits
    
210,764
   
214,801
   
208,912
   
200,252
   
191,034
 
Loan volume
    
41,915
   
47,026
   
49,368
   
54,895
   
55,046
 
Employees at end of period
    
49,693
   
49,824
   
51,056
   
56,247
   
60,381
 
 
__________________________
  
 
(1)
Represents the difference between mortgage loan premium amortization recorded by the Retail Banking Group and the amount recognized in the Company's Consolidated Statements of Income. For management reporting purposes, certain mortgage loans that are held in portfolio by the Retail Banking Group are treated as if they are purchased from the Home Loans Group. Since the cost basis of these loans includes an assumed profit factor paid to the Home Loans Group, the amortization of loan premiums recorded by the Retail Banking Group reflects this assumed profit factor and must therefore be eliminated as a reconciling adjustment.
(2)
Represents the difference between gain from mortgage loans recorded by the Home Loans Group and gain from mortgage loans recognized in the Company's Consolidated Statements of Income. A substantial amount of loans originated or purchased by this segment are considered to be salable for management reporting purposes.
(3)
Represents the tax effect of reconciling adjustments.
(4)
Represents the inter-segment offset for inter-segment loan premiums that the Retail Banking Group recognized upon transfer of portfolio loans from the Home Loans Group.
 
WM-8
 
Washington Mutual, Inc.
  
Selected Financial Information
  
(dollars in millions)
  
(unaudited)
  
 
   
Quarter Ended
  
   
Mar. 31, 2007
  
Dec. 31, 2006
  
Mar. 31, 2006
  
           
Interest
          
Interest
          
Interest
  
           
Income/
          
Income/
          
Income/
  
   
Balance
  
Rate
  
Expense
  
Balance
  
Rate
  
Expense
  
Balance
  
Rate
  
Expense
  
Average Balances and Weighted Average Interest Rates
                                      
Assets
                                      
Interest-earning assets(1):
                                      
Federal funds sold and securities purchased under
                                      
agreements to resell
  
$
3,930
    
5.39
%
$
52
  
$
5,597
    
5.33
%
$
76
  
$
3,754
    
4.62
%
$
43
  
Trading assets
    
5,594
   
8.10
   
113
   
4,855
   
8.39
   
102
   
11,692
   
6.80
   
198
 
Available-for-sale securities(2):
                                                        
Mortgage-backed securities
    
17,887
   
5.47
   
245
   
21,661
   
5.58
   
302
   
20,144
   
5.29
   
266
 
Investment securities
    
6,753
   
5.17
   
87
   
6,952
   
5.15
   
90
   
4,845
   
4.62
   
56
 
Loans held for sale
    
35,447
   
6.37
   
562
   
31,149
   
6.59
   
515
   
29,821
   
6.20
   
462
 
Loans held in portfolio:
                                                        
Loans secured by real estate:
                                                        
Home loans(3)(4)
    
97,365
   
6.45
   
1,570
   
114,645
   
6.04
   
1,729
   
117,720
   
5.58
   
1,643
 
Home equity loans and lines of credit(4)
  
53,014
   
7.56
   
989
   
52,850
   
7.54
   
1,004
   
51,320
   
6.96
   
883
 
Subprime mortgage channel(5)
    
20,612
   
6.67
   
344
   
20,982
   
6.81
   
357
   
19,967
   
5.95
   
296
 
Home construction(6)
    
2,061
   
6.55
   
34
   
2,060
   
6.62
   
34
   
2,059
   
6.34
   
33
 
Multi-family
    
29,826
   
6.57
   
490
   
30,348
   
6.52
   
494
   
25,758
   
5.92
   
382
 
Other real estate
    
6,763
   
7.03
   
117
   
6,732
   
6.88
   
118
   
5,157
   
6.84
   
88
 
Total loans secured by real estate
    
209,641
   
6.79
   
3,544
   
227,617
   
6.55
   
3,736
   
221,981
   
6.01
   
3,325
 
Consumer:
                                                        
Credit card
    
10,904
   
11.57
   
311
   
9,597
   
11.28
   
273
   
7,808
   
10.74
   
206
 
Other
    
267
   
12.96
   
9
   
280
   
12.54
   
9
   
622
   
11.03
   
17
 
Commercial
    
1,805
   
7.95
   
36
   
1,771
   
7.72
   
35
   
2,094
   
6.19
   
32
 
Total loans held in portfolio
    
222,617
   
7.04
   
3,900
   
239,265
   
6.76
   
4,053
   
232,505
   
6.18
   
3,580
 
Other
    
3,472
   
5.77
   
49
   
5,305
   
5.35
   
72
   
5,016
   
4.17
   
52
 
Total interest-earning assets
    
295,700
   
6.81
   
5,008
   
314,784
   
6.60
   
5,210
   
307,777
   
6.07
   
4,657
 
Noninterest-earning assets:
                                                        
Mortgage servicing rights
    
6,304
               
6,230
               
8,260
             
Goodwill
    
9,054
               
9,011
               
8,298
             
Other assets(7)
    
20,847
               
23,031
               
19,325
             
Total assets
 
$
331,905
              
$
353,056
              
$
343,660
              
Liabilities
                                                        
Interest-bearing liabilities:
                                                        
Deposits:
                                                        
Interest-bearing checking deposits
  
$
31,821
    
2.63
   
206
 
$
33,098
    
2.78
   
232
 
$
40,436
    
2.29
   
228
 
Savings and money market deposits
    
54,862
   
3.27
   
443
   
53,314
   
3.34
   
449
   
44,816
   
2.38
   
263
 
Time deposits
    
91,631
   
4.97
   
1,123
   
93,415
   
4.90
   
1,162
   
73,182
   
4.02
   
730
 
Total interest-bearing deposits
    
178,314
   
4.03
   
1,772
   
179,827
   
4.05
   
1,843
   
158,434
   
3.11
   
1,221
 
Federal funds purchased and commercial paper
   
3,846
   
5.48
   
52
   
6,781
   
5.40
   
93
   
7,463
   
4.46
   
83
 
Securities sold under agreements to repurchase
    
12,098
   
5.48
   
164
   
12,177
   
5.43
   
169
   
15,280
   
4.46
   
170
 
Advances from Federal Home Loan Banks
    
36,051
   
5.38
   
478
   
46,005
   
5.31
   
625
   
66,995
   
4.46
   
746
 
Other
    
32,808
   
5.67
   
461
   
34,420
   
5.54
   
482
   
26,636
   
4.81
   
320
 
Total interest-bearing liabilities
    
263,117
   
4.51
   
2,927
   
279,210
   
4.53
   
3,212
   
274,808
   
3.72
   
2,540
 
Noninterest-bearing sources:
                                                        
Noninterest-bearing deposits
    
32,450
               
34,974
               
32,600
             
Other liabilities(8)
    
9,482
               
10,111
               
8,875
             
Minority interests
    
2,449
               
2,061
               
552
             
Stockholders' equity
    
24,407
               
26,700
               
26,825
             
Total liabilities and stockholders' equity
  
$
331,905
              
$
353,056
              
$
343,660
              
Net interest spread and net interest income
         
2.30
 
$
2,081
          
2.07
 
$
1,998
          
2.35
 
$
2,117
  
Impact of noninterest-bearing sources
          
0.49
               
0.51
               
0.40
       
Net interest margin
          
2.79
               
2.58
               
2.75
       
 
_______________________________
  

(1)
Nonaccrual assets and related income, if any, are included in their respective categories.
(2)
The average balance and yield are based on average amortized cost balances.
(3)
Capitalized interest recognized in earnings that resulted from negative amortization within the Option ARM portfolio totaled $361 million, $333 million and $194 million for the three months ended March 31, 2007, December 31, 2006 and March 31, 2006.
(4)
Excludes home loans and home equity loans and lines of credit in the subprime mortgage channel.
(5)
Represents mortgage loans purchased from recognized subprime lenders and mortgage loans originated under the Long Beach Mortgage name and held in its investment portfolio.
(6)
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.
(7)
Includes assets of discontinued operations for the three months ended December 31, 2006 and March 31, 2006.
(8)
Includes liabilities of discontinued operations for the three months ended December 31, 2006 and March 31, 2006.
 
 
WM-9

Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
 
   
Change from
                      
   
Dec. 31, 2006
  
Mar. 31,
  
Dec. 31,
  
Sept. 30,
  
June 30,
  
Mar. 31,
  
   
to Mar. 31, 2007
  
2007
 
2006
 
2006
 
2006
 
2006
 
Deposits
                         
Retail deposits:
                          
Checking deposits:
                          
Noninterest bearing
  
$
1,562
  
$
24,400
  
$
22,838
  
$
22,466
  
$
22,450
  
$
22,378
  
Interest bearing
    
(1,200
)
  
31,523
   
32,723
   
33,761
   
35,958
   
39,289
 
Total checking deposits
    
362
   
55,923
   
55,561
   
56,227
   
58,408
   
61,667
 
Savings and money market deposits
    
2,115
   
44,058
   
41,943
   
39,481
   
37,664
   
38,197
 
Time deposits(1)
    
441
   
47,262
   
46,821
   
47,361
   
43,685
   
41,534
 
Total retail deposits
    
2,918
   
147,243
   
144,325
   
143,069
   
139,757
   
141,398
 
Commercial business and other deposits
    
2,566
   
17,741
   
15,175
   
15,831
   
15,625
   
14,559
 
Brokered deposits:
                                      
Consumer
    
(3,304
)
  
18,995
   
22,299
   
22,430
   
14,316
   
8,111
 
Institutional
    
(5,083
)
  
17,256
   
22,339
   
18,236
   
22,708
   
23,166
 
Custodial and escrow deposits(2)
    
(844
)
  
8,974
   
9,818
   
11,316
   
12,152
   
12,768
 
Total deposits
  
$
(3,747
)
$
210,209
  
$
213,956
  
$
210,882
  
$
204,558
  
$
200,002
  
 
(1)
Weighted average remaining maturity of time deposits was 9 months at March 31, 2007 and December 31, 2006 and 10 months at September 30, 2006, June 30, 2006 and March 31, 2006.
(2)
Substantially all custodial and escrow deposits are reported as noninterest-bearing checking deposits.
 
   
Mar. 31,
  
Dec. 31,
  
Sept. 30,
  
June 30,
  
Mar. 31,
  
   
2007
 
2006
 
2006
 
2006
 
2006
 
Retail Deposit Accounts (number of accounts)
                      
Noninterest bearing checking
    
9,983,313
   
9,611,706
   
9,403,072
   
9,063,458
   
8,630,646
 
Interest bearing checking
    
1,459,534
   
1,503,365
   
1,532,215
   
1,564,396
   
1,593,018
 
Savings and money market
    
6,708,784
   
6,525,772
   
6,379,068
   
6,161,187
   
5,929,653
 
Total transaction accounts, end of period(1)
    
18,151,631
   
17,640,843
   
17,314,355
   
16,789,041
   
16,153,317
 
                                 
Net change in noninterest bearing checking accounts
    
371,607
   
208,634
   
339,614
   
432,812
   
331,615
 
Net change in checking accounts
    
327,776
   
179,784
   
307,433
   
404,190
   
340,157
 
 
(1)
Transaction accounts include retail checking, small business checking, retail savings and small business savings.
 
   
Mar. 31,
  
Dec. 31,
  
Sept. 30,
  
June 30,
  
Mar. 31,
  
   
2007
 
2006
 
2006
 
2006
 
2006
 
Retail Banking Stores
                      
Stores, beginning of period
    
2,225
   
2,225
   
2,201
   
2,168
   
2,140
 
Stores opened during the quarter
    
6
   
81
(1)
  
25
   
35
   
29
 
Stores closed during the quarter
    
(3
)
  
(81
)
  
(1
)
  
(2
)
  
(1
)
Stores, end of period
    
2,228
   
2,225
   
2,225
   
2,201
   
2,168
 
 
(1)
Includes 26 retail banking stores acquired through the merger with Commercial Capital Bancorp.
 
 
WM-10
 
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
 
   
Quarter Ended
  
   
Mar. 31,
  
Dec. 31,
  
Sept. 30,
  
June 30,
  
Mar. 31,
  
   
2007
 
2006
 
2006
 
2006
 
2006
 
Loan Volume
                      
Home loans:
                      
Short-term adjustable-rate loans(1):
                      
Option ARMs
  
$
7,552
  
$
9,487
  
$
11,601
  
$
12,728
  
$
8,777
  
Other ARMs
    
36
   
13
   
42
   
387
   
2,943
 
Total short-term adjustable-rate loans
    
7,588
   
9,500
   
11,643
   
13,115
   
11,720
 
Medium-term adjustable-rate loans(2)
    
13,131
   
17,323
   
16,707
   
16,041
   
14,865
 
Fixed-rate loans
    
8,521
   
7,351
   
8,818
   
13,695
   
17,605
 
Total home loan volume
    
29,240
   
34,174
   
37,168
   
42,851
   
44,190
 
Home equity loans and lines of credit
    
8,319
   
8,098
   
8,498
   
8,251
   
7,306
 
Home construction(3)
    
298
   
298
   
269
   
421
   
493
 
Multi-family
    
2,663
   
2,977
   
2,186
   
2,230
   
2,034
 
Other real estate
    
1,080
   
1,182
   
983
   
787
   
716
 
Total loans secured by real estate(4)
    
41,600
   
46,729
   
49,104
   
54,540
   
54,739
 
Consumer(5)
    
26
   
23
   
26
   
36
   
49
 
Commercial
    
289
   
274
   
238
   
319
   
258
 
Total loan volume
  
$
41,915
  
$
47,026
  
$
49,368
  
$
54,895
  
$
55,046
  
Loan Volume by Channel
                                
Retail
 
$
22,670
  
$
24,426
  
$
22,239
  
$
23,709
  
$
22,580
  
Wholesale
    
13,028
   
16,002
   
14,964
   
14,798
   
16,722
 
Purchased
    
6,217
   
6,398
   
11,560
   
12,033
   
7,318
 
Correspondent
    
-
   
200
   
605
   
4,355
   
8,426
 
Total loan volume by channel
  
$
41,915
  
$
47,026
  
$
49,368
  
$
54,895
  
$
55,046
  
Refinancing Activity(6)
                                
Home loan refinancing
  
$
21,874
  
$
25,060
  
$
23,993
  
$
26,667
  
$
26,871
  
Home equity loans and lines of credit and consumer
    
537
   
599
   
689
   
161
   
215
 
Home construction loans
    
276
   
283
   
254
   
379
   
393
 
Multi-family and other real estate
    
257
   
1,254
   
763
   
799
   
774
 
Total refinancing
  
$
22,944
  
$
27,196
  
$
25,699
  
$
28,006
  
$
28,253
  
 
(1)
Short-term is defined as adjustable-rate loans that reprice within one year.
(2)
Medium-term is defined as adjustable-rate loans that reprice after one year.
(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.
(4)
Includes mortgage loans purchased from recognized subprime lenders and mortgage loans originated under the Long Beach Mortgage name of $3.48 billion, $6.07 billion, $9.40 billion, $8.20 billion and $7.09 billion for the three months ended March 31, 2007, December 31, 2006, September 30, 2006, June 30, 2006 and March 31, 2006.
(5)
Excludes credit card loan volume.
(6)
Includes loan refinancing entered into by both new and pre-existing loan customers.
 
 
WM-11
 
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
 
   
Change from
                      
   
Dec. 31, 2006
  
Mar. 31,
  
Dec. 31,
  
Sept. 30,
  
June 30,
  
Mar. 31,
  
   
to Mar. 31, 2007
  
2007
 
2006
 
2006
 
2006
 
2006
 
Loans Held in Portfolio
                         
Loans secured by real estate:
                          
Home:
                          
Short-term adjustable-rate loans(1):
                        
Option ARMs(2)
  
$
(5,427
)
$
58,130
  
$
63,557
  
$
67,142
  
$
69,224
  
$
71,153
  
Other ARMs 
    
(1,590
)
  
13,501
   
15,091
   
16,375
   
15,021
   
14,797
 
Total short-term adjustable-rate loans
    
(7,017
)
  
71,631
   
78,648
   
83,517
   
84,245
   
85,950
 
Medium-term adjustable-rate loans(3)
150
   
29,924
   
29,774
   
47,740
   
52,032
   
49,391
 
Fixed-rate loans
    
(276
)
  
9,506
   
9,782
   
9,928
   
9,424
   
8,660
 
Total home loans
    
(7,143
)
  
111,061
   
118,204
   
141,185
   
145,701
   
144,001
 
Home equity loans and lines of credit
  
1,199
   
56,123
   
54,924
   
54,364
   
52,981
   
51,872
 
Home construction(4)
    
(11
)
  
2,071
   
2,082
   
2,077
   
2,082
   
2,095
 
Multi-family
    
(646
)
  
29,515
   
30,161
   
27,407
   
26,749
   
26,151
 
Other real estate
    
(17
)
  
6,728
   
6,745
   
5,869
   
5,537
   
5,353
 
Total loans secured by real estate(5)
  
(6,618
)
  
205,498
   
212,116
   
230,902
   
233,050
   
229,472
 
Consumer:
                                      
Credit card
    
(1,371
)
  
9,490
   
10,861
   
8,807
   
8,451
   
7,906
 
Other
    
(15
)
  
261
   
276
   
281
   
287
   
602
 
Commercial
    
65
   
1,772
   
1,707
   
1,775
   
1,715
   
2,024
 
Total loans held in portfolio(6)
    
(7,939
)
  
217,021
   
224,960
   
241,765
   
243,503
   
240,004
 
Less: allowance for loan and lease losses
  
90
   
(1,540
)
  
(1,630
)
  
(1,550
)
  
(1,663
)
  
(1,642
)
Total net loans held in portfolio
  
$
(7,849
)
$
215,481
  
$
223,330
  
$
240,215
  
$
241,840
  
$
238,362
  
 
(1)
Short-term is defined as adjustable-rate loans that reprice within one year.
(2)
The total amount by which the unpaid principal balance of Option ARM loans exceeded their original principal amount was $1.12 billion, $888 million, $681 million, $474 million and $298 million at March 31, 2007, December 31, 2006, September 30, 2006, June 30, 2006 and March 31, 2006.
(3)
Medium-term is defined as adjustable-rate loans that reprice after one year.
(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.
(5)
Includes subprime mortgage channel loans, comprising mortgage loans purchased from recognized subprime lenders and mortgage loans originated under the Long Beach Mortgage name and held in its investment portfolio as follows:
 
Subprime Mortgage Channel 
  
Mar. 31,
  
Dec. 31,
  
Sept. 30,
  
June 30,
  
Mar. 31,
 
   
2007
  
2006
  
2006
  
2006
  
2006
  
Home loans
  
$
17,610
  
$
18,725
  
$
20,083
  
$
20,498
  
$
20,238
  
Home equity loans and lines of credit
   
2,749
   
2,042
   
1,522
   
424
   
12
 
Total
 
$
20,359
  
$
20,767
  
$
21,605
  
$
20,922
  
$
20,250
  
 
(6)
Includes net unamortized deferred loan origination costs of $1.43 billion, $1.48 billion, $1.61 billion, $1.62 billion and $1.61 billion at March 31, 2007, December 31, 2006, September 30, 2006, June 30, 2006 and March 31, 2006.
 
 
WM-12

Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
 
           
Weighted
      
Weighted
      
Weighted
  
   
Change from
      
Average
      
Average
      
Average
  
   
Dec. 31, 2006
  
Mar. 31,
  
Coupon
  
Dec. 31,
  
Coupon
  
Mar. 31,
  
Coupon
  
   
to Mar. 31, 2007
  
2007
 
Rate
  
2006
 
Rate
  
2006
 
Rate
  
Selected Loans Secured by Real Estate and MBS
                              
Home loans held in portfolio:
                              
Short-term adjustable-rate loans(1):
                              
Option ARMs
  
$
(5,427
)
$
58,130
    
7.74%
 
$
63,557
    
7.44%
 
$
70,169
    
6.34%
 
Other ARMs
    
(1,590
)
  
13,501
   
7.25
   
15,091
   
7.17
   
15,781
   
6.64
  
Total short-term adjustable-rate loans
   
(7,017
)
  
71,631
   
7.65
   
78,648
   
7.39
   
85,950
   
6.39
  
Medium-term adjustable-rate loans(2) 
    
150
   
29,924
   
5.86
   
29,774
   
5.77
   
49,391
   
5.61
  
Fixed-rate loans
   
(276
)
  
9,506
   
6.68
   
9,782
   
6.65
   
8,660
   
6.54
  
Total home loans held in portfolio
    
(7,143
)
  
111,061
   
7.08
   
118,204
   
6.92
   
144,001
   
6.13
  
Home equity loans and lines of credit:
                                            
Short-term (Prime-based or treasury-based)(1)
    
(359
)
  
33,854
   
8.45
   
34,213
   
8.40
   
37,181
   
7.79
  
Fixed-rate loans
   
1,558
   
22,269
   
7.62
   
20,711
   
7.45
   
14,691
   
6.69
  
Total home equity loans and lines of credit
    
1,199
   
56,123
   
8.12
   
54,924
   
8.04
   
51,872
   
7.48
  
Multi-family loans held in portfolio:
                                            
Short-term adjustable-rate loans(1):
                                            
Option ARMs
    
(791
)
  
8,373
   
7.29
   
9,164
   
7.18
   
9,506
   
6.13
  
Other ARMs
    
306
   
7,779
   
7.01
   
7,473
   
7.12
   
6,280
   
6.27
  
Total short-term adjustable-rate loans
   
(485
)
  
16,152
   
7.15
   
16,637
   
7.15
   
15,786
   
6.19
  
Medium-term adjustable-rate loans(2) 
    
(212
)
  
11,545
   
5.78
   
11,757
   
5.68
   
8,791
   
5.35
  
Fixed-rate loans
   
51
   
1,818
   
6.39
   
1,767
   
6.44
   
1,574
   
6.51
  
Total multi-family loans held in portfolio
    
(646
)
  
29,515
   
6.57
   
30,161
   
6.54
   
26,151
   
5.93
  
Total selected loans held in portfolio secured by real estate(3)
    
(6,590
)
  
196,699
   
7.30
   
203,289
   
7.17
   
222,024
   
6.42
  
Loans held for sale(4)
    
(18,330
)
  
26,394
   
6.44
   
44,724
   
6.32
   
24,843
   
6.53
  
MBS(5):
                                            
Short-term adjustable-rate MBS(1)
    
(93
)
  
5,963
   
5.71
   
6,056
   
5.68
   
8,763
   
5.13
  
Medium-term adjustable-rate MBS(2)
    
(6
)
  
2,453
   
5.09
   
2,459
   
5.08
   
4,020
   
4.93
  
Fixed-rate MBS
    
(2,025
)
  
7,523
   
5.25
   
9,548
   
5.27
   
8,605
   
5.21
  
Total MBS(6)
    
(2,124
)
  
15,939
   
5.40
   
18,063
   
5.38
   
21,388
   
5.13
  
Total selected loans secured by real estate and MBS
  
$
(27,044
)
$
239,032
    
7.08
 
$
266,076
    
6.90
 
$
268,255
    
6.33
  
 
(1)
Short-term is defined as adjustable-rate loans and MBS that reprice within one year.
(2)
Medium-term is defined as adjustable-rate loans and MBS that reprice after one year.
(3)
At March 31, 2007, December 31, 2006, and March 31, 2006, adjustable-rate loans with lifetime caps were $162.24 billion, $169.60 billion, and $193.55 billion with a lifetime weighted average cap rate of 12.31%, 12.29% and 12.16%.
(4)
Excludes credit card and student loans.
(5)
Includes only those securities designated as available-for-sale. Excludes principal-only strips and interest-only strips.
(6)
At March 31, 2007, December 31, 2006, and March 31, 2006, the par value of adjustable-rate MBS with lifetime caps were $8.16 billion, $8.17 billion and $12.92 billion with a lifetime weighted average cap rate of 10.55%, 10.54% and 10.36%.
 
   
Dec. 31, 2006
  
   
to Mar. 31, 2007
  
Rollforward of Loans Held for Sale
      
Balance, beginning of period
  
$
44,970
  
Mortgage loans originated, purchased and transferred from held in portfolio
    
30,057
 
Mortgage loans transferred to held in portfolio
    
(1,753
)
Mortgage loans sold and other(1)
    
(46,635
)
Net change in consumer loans held for sale
    
235
 
Balance, end of period
  
$
26,874
  
         
Rollforward of Home Loans Held in Portfolio
        
Balance, beginning of period
  
$
118,204
  
Loans originated, purchased and transferred from held for sale
    
17,007
 
Loan payments, transferred to held for sale and other
    
(24,150
)
Balance, end of period
  
$
111,061
  
 
(1)
The unpaid principal balance ("UPB") of home loans sold was $45.25 billion for the three months ended March 31, 2007.
 
 
WM-13
 
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
 
   
Quarter Ended
  
Detail of Revenue from Sales and Servicing of Home Mortgage Loans
  
Mar. 31,
  
Dec. 31,
  
Sept. 30,
  
June 30,
  
Mar. 31,
  
   
2007
 
2006
 
2006
 
2006
 
2006
 
Gain from home mortgage loans and originated mortgage-backed securities,
net of hedging and risk management instruments(1):
                      
Gain from home mortgage loans and originated mortgage-backed securities
  
$
149
  
$
64
  
$
206
  
$
190
  
$
166
  
Revaluation gain (loss) from derivatives economically hedging loans held for sale
    
(54
)
  
91
   
(87
)
  
61
   
43
 
Gain from home mortgage loans and originated mortgage-backed securities,
                               
net of hedging and risk management instruments
    
95
   
155
   
119
   
251
   
209
 
Home mortgage loan servicing revenue (expense):
                                
Home mortgage loan servicing revenue(2)
    
514
   
497
   
525
   
586
   
572
 
Change in MSR fair value due to payments on loans and other
    
(356
)
  
(375
)
  
(410
)
  
(460
)
  
(409
)
Net mortgage loan servicing revenue
    
158
   
122
   
115
   
126
   
163
 
Change in MSR fair value due to valuation inputs or assumptions
    
(96
)
  
(80
)
  
(469
)
  
435
   
413
 
Revaluation gain (loss) from derivatives economically hedging MSR
    
(32
)
  
(33
)
  
353
   
(433
)
  
(522
)
Adjustment to MSR fair value for MSR sale
    
-
   
-
   
-
   
(157
)
  
-
 
Home mortgage loan servicing revenue (expense), net of MSR valuation
                                
changes and derivative risk management instruments
    
30
   
9
   
(1
)
  
(29
)
  
54
 
Total revenue from sales and servicing of home mortgage loans
  
$
125
  
$
164
  
$
118
  
$
222
  
$
263
  
 
(1) 
Originated mortgage-backed securities represent available-for-sale securities retained on the balance sheet subsequent to the securitization of mortgage loans that were originated by the Company.
(2) 
Includes contractualy specified servicing fees, late charges and loan pool expenses (the shortfall of the scheduled interest required to be remitted to investors and that which is collected from borrowers upon payoff).
 
   
Quarter Ended
  
   
Mar. 31,
  
Dec. 31,
  
Sept. 30,
  
June 30,
  
Mar. 31,
  
   
2007
 
2006
 
2006
 
2006
 
2006
 
MSR Valuation and Risk Management(1):
                      
Change in MSR fair value due to valuation inputs or assumptions
  
$
(96
)
$
(80
)
$
(469
)
$
435
  
$
413
  
Gain (loss) on MSR risk management instruments:
                                
Revaluation gain (loss) from derivatives
    
(32
)
  
(33
)
  
353
   
(433
)
  
(522
)
Revaluation gain (loss) from certain trading securities
    
4
   
(5
)
  
39
   
(47
)
  
(42
)
Loss from certain available-for-sale securities
    
-
   
-
   
(1
)
  
-
   
-
 
Total gain (loss) on MSR risk management instruments
    
(28
)
  
(38
)
  
391
   
(480
)
  
(564
)
Total changes in MSR valuation and risk management
 
$
(124
)
$
(118
)
$
(78
)
$
(45
)
$
(151
)
 
(1)
Excludes $157 million downward adjustment to MSR fair value recognized in the three months ended June 30, 2006.
 
 
WM-14

Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
 
   
Quarter Ended 
  
   
Mar. 31,
  
Dec. 31,
  
Sept. 30,
  
June 30,
  
Mar. 31,
  
   
2007
 
2006
 
2006
 
2006
 
2006
 
Rollforward of Mortgage Servicing Rights(1)
                      
Balance, beginning of period
  
$
6,193
  
$
6,288
  
$
9,162
  
$
8,736
  
$
8,041
  
Home loans:
                                
Additions
    
760
   
357
   
533
   
607
   
633
 
Change in MSR fair value due to payments on loans and other
  
(356
)
  
(375
)
  
(410
)
  
(460
)
  
(409
)
Change in MSR fair value due to valuation inputs or
                               
assumptions
    
(96
)
  
(80
)
  
(469
)
  
435
   
413
 
Adjustment to MSR fair value for MSR sale
    
-
   
-
   
-
   
(157
)
  
-
 
Fair value basis adjustment(2)
    
-
   
-
   
-
   
-
   
57
 
Sale of MSR
    
-
   
1
   
(2,527
)
  
-
   
-
 
Net change in commercial real estate MSR
    
6
   
2
   
(1
)
  
1
   
1
 
Balance, end of period
  
$
6,507
  
$
6,193
  
$
6,288
  
$
9,162
  
$
8,736
  
Rollforward of Mortgage Loans Serviced for Others
                                
Balance, beginning of period
  
$
444,696
  
$
439,208
  
$
570,352
  
$
569,501
  
$
563,208
  
Home loans:
                                
Additions
    
44,526
   
25,833
   
29,899
   
30,949
   
35,026
 
Sale of servicing
    
24
   
-
   
(141,842
)
  
(9
)
  
-
 
Loan payments and other
    
(22,469
)
  
(20,744
)
  
(19,288
)
  
(30,368
)
  
(29,063
)
Net change in commercial real estate loans
    
1,005
   
399
   
87
   
279
   
330
 
Balance, end of period
  
$
467,782
  
$
444,696
  
$
439,208
  
$
570,352
  
$
569,501
  
 
   
Mar. 31,
  
Dec. 31,
 
Sept. 30,
  
June 30,
  
Mar. 31,
  
   
2007
 
2006
 
2006
 
2006
 
2006
 
Total Servicing Portfolio
                      
Mortgage loans serviced for others
  
$
467,782
  
$
444,696
  
$
439,208
  
$
570,352
  
$
569,501
  
Consumer loans serviced for others
    
13,645
   
12,415
   
13,112
   
12,644
   
12,194
 
Servicing on retained MBS without MSR
    
1,082
   
1,140
   
1,199
   
1,262
   
1,334
 
Servicing on owned loans
    
226,217
   
251,766
   
245,925
   
247,489
   
245,469
 
Subservicing portfolio
    
465
   
84,797
   
137,089
   
552
   
588
 
Total servicing portfolio
  
$
709,191
  
$
794,814
  
$
836,533
  
$
832,299
  
$
829,086
  
 
   
March 31, 2007
  
   
Unpaid
  
Weighted
  
   
Principal
  
Average
  
   
Balance
  
Servicing Fee
  
       
(in basis points,
  
Mortgage Loans Serviced for Others by Loan Type
      
annualized)
  
Agency
  
$
247,330
    
31
 
Private
    
186,931
   
55
 
Subprime mortgage channel-home
    
33,521
   
51
 
Total mortgage loans serviced for others(3) 
  
$
467,782
    
42
 
 
(1)
MSR as a percentage of mortgage loans serviced for others was 1.39%, 1.39%, 1.43%, 1.61% and 1.53% at March 31, 2007, December 31, 2006, September 30, 2006, June 30, 2006 and March 31, 2006.
(2)
Pursuant to the adoption of Statement No. 156 on January 1, 2006, the Company applied the fair value method of accounting to its mortgage servicing assets. The valuation allowance of $914 million was written off against the recorded value of the MSR, and the $57 million difference between the net carrying value and fair value of the MSR was recorded as an increase to the basis of the Company's mortgage servicing rights.
(3)
Weighted average coupon rate was 6.30% at March 31, 2007.
 
 
WM-15

Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
 
   
Quarter Ended
  
   
Mar. 31,
  
Dec. 31,
  
Sept. 30,
  
June 30,
  
Mar. 31,
  
   
2007
 
2006
 
2006
 
2006
 
2006
 
Allowance for Loan and Lease Losses
                      
Balance, beginning of quarter
  
$
1,630
  
$
1,550
  
$
1,663
  
$
1,642
  
$
1,695
  
Allowance transferred to loans held for sale
    
(148
)
  
(158
)
  
(125
)
  
(87
)
  
(30
)
Allowance acquired through business combinations/other
    
7
   
30
   
-
   
-
   
-
 
Provision for loan and lease losses
    
234
   
344
   
166
   
224
   
82
 
     
1,723
   
1,766
   
1,704
   
1,779
   
1,747
 
Loans charged off:
                                
Loans secured by real estate:
                                
Home loans(1)
    
(35
)
  
(16
)
  
(12
)
  
(11
)
  
(12
)
Home equity loans and lines of credit(1)
    
(29
)
  
(13
)
  
(8
)
  
(6
)
  
(4
)
Subprime mortgage channel(2)
    
(40
)
  
(52
)
  
(47
)
  
(21
)
  
(20
)
Home construction(3)
    
-
   
(4
)
  
(3
)
  
-
   
-
 
Other real estate
    
-
   
(1
)
  
(2
)
  
-
   
(3
)
Total loans secured by real estate
    
(104
)
  
(86
)
  
(72
)
  
(38
)
  
(39
)
Consumer:
                                
Credit card
    
(96
)
  
(68
)
  
(98
)
  
(94
)
  
(63
)
Other
    
(3
)
  
(3
)
  
(3
)
  
(6
)
  
(7
)
Commercial
    
(9
)
  
(9
)
  
(6
)
  
(4
)
  
(8
)
Total loans charged off
    
(212
)
  
(166
)
  
(179
)
  
(142
)
  
(117
)
Recoveries of loans previously charged off:
                                
Loans secured by real estate:
                                
Home loans(1)
    
1
   
-
   
-
   
1
   
-
 
Home equity loans and lines of credit(1)
    
3
   
2
   
2
   
3
   
1
 
Subprime mortgage channel(2)
    
1
   
4
   
-
   
1
   
1
 
Multi-family
    
-
   
-
   
-
   
1
   
-
 
Other real estate
    
-
   
-
   
-
   
1
   
1
 
Total loans secured by real estate
    
5
   
6
   
2
   
7
   
3
 
Consumer:
                                
Credit card
    
16
   
18
   
16
   
15
   
4
 
Other
    
6
   
3
   
4
   
3
   
4
 
Commercial
    
2
   
3
   
3
   
1
   
1
 
Total recoveries of loans previously charged off
    
29
   
30
   
25
   
26
   
12
 
Net charge-offs
    
(183
)
  
(136
)
  
(154
)
  
(116
)
  
(105
)
Balance, end of quarter
  
$
1,540
  
$
1,630
  
$
1,550
  
$
1,663
  
$
1,642
  
                                 
Net charge-offs (annualized) as a percentage
                                
of average loans held in portfolio
    
0.33
%
  
0.23
%
  
0.26
%
  
0.19
%
  
0.18
%
Allowance as a percentage of total loans held in portfolio
    
0.71
   
0.72
   
0.64
   
0.68
   
0.68
 
                                 
 
(1)
Excludes home loans and home equity loans and lines of credit in the subprime mortgage channel.
(2)
Represents mortgage loans purchased from recognized subprime lenders and mortgage loans originated under the Long Beach Mortgage name and held in its investment portfolio.
(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.
 
 
WM-16
 
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)
 
   
Mar. 31,
  
Dec. 31,
  
Sept. 30,
  
June 30,
  
Mar. 31,
  
   
2007
 
2006
 
2006
 
2006
 
2006
 
Nonperforming Assets and Restructured Loans
                      
Nonaccrual loans(1)(2):
                      
Loans secured by real estate:
                      
Home loans(3) 
  
$
690
  
$
640
  
$
568
  
$
512
  
$
490
  
Home equity loans and lines of credit(3)
    
297
   
231
   
162
   
103
   
91
 
Subprime mortgage channel (4) 
    
1,503
   
1,283
   
1,121
   
1,092
   
1,013
 
Home construction(5)
    
41
   
27
   
35
   
31
   
15
 
Multi-family
    
60
   
46
   
31
   
19
   
21
 
Other real estate
    
52
   
51
   
53
   
56
   
69
 
Total nonaccrual loans secured by real estate
    
2,643
   
2,278
   
1,970
   
1,813
   
1,699
 
Consumer
    
1
   
1
   
1
   
1
   
6
 
Commercial
    
28
   
16
   
16
   
16
   
26
 
Total nonaccrual loans held in portfolio
    
2,672
   
2,295
   
1,987
   
1,830
   
1,731
 
Foreclosed assets(6)
    
587
   
480
   
405
   
330
   
309
 
Total nonperforming assets
  
$
3,259
  
$
2,775
  
$
2,392
  
$
2,160
  
$
2,040
  
As a percentage of total assets
    
1.02
%
  
0.80
%
  
0.69
%
  
0.62
%
  
0.59
%
Restructured loans
  
$
16
  
$
18
  
$
19
 
$
20
 
$
21
 
Total nonperforming assets and restructured loans
$
3,275
 
$
2,793
 
$
2,411
  
$
2,180
  
$
2,061
  
 
(1)
Nonaccrual loans held for sale, which are excluded from the nonaccrual balances presented above, were $195 million, $185 million, $129 million, $122 million, and $201 million at March 31, 2007, December 31, 2006, September 30, 2006, June 30, 2006, and March 31, 2006. Loans held for sale are accounted for at lower of aggregate cost or fair value, with valuation changes included as adjustments to noninterest income.
(2)
Credit card loans are exempt under regulatory rules from being classified as nonaccrual because they are charged off when they are determined to be uncollectible, or by the end of the month in which the account becomes 180 days past due.
(3)
Excludes home loans and home equity loans and lines of credit in the subprime mortgage channel.
(4)
Represents mortgage loans purchased from recognized subprime lenders and mortgage loans originated under the Long Beach Mortgage name and held in its investment portfolio.
(5)
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.
(6)
Forclosed real estate securing Government National Mortgage Association (“GNMA”) loans of $72 million, $99 million, $129 million, $142 million, and $167 million at March 31, 2007, December 31, 2006, September 30, 2006, June 30, 2006, and March 31, 2006 have been excluded. These assets are fully collectible as the corresponding GNMA loans are insured by the Federal Housing Administration (“FHA”) or guaranteed by the Department of Veterans Affairs (“VA”).