Mr. Cooper (COOP) 8-K Washington Mutual Announces Fourth Quarter 2003 and Year-End Earnings

Exhibit 99.2

WM - 1

Washington Mutual, Inc.

Consolidated Statements of Income

(dollars in millions, except per share data)

(unaudited)

	Quarter Ended									Year Ended
	Dec. 31, 2003			Sept. 30, 2003			Dec. 31, 2002			Dec. 31, 2003			Dec. 31, 2002
Interest Income
Loans held for sale	$	439		$	684		$	591		$	2,483		$	1,917
Loans held in portfolio	1,969			1,848			2,076			7,686			8,675
Available-for-sale securities	353			401			546			1,738			2,951
Other interest and dividend income	38			65			68			256			312
Total interest income	2,799			2,998			3,281			12,163			13,855
Interest Expense
Deposits	491			538			672			2,165			2,661
Borrowings	565			551			728			2,369			3,065
Total interest expense	1,056			1,089			1,400			4,534			5,726
Net interest income	1,743			1,909			1,881			7,629			8,129
Provision (reversal of reserve) for loan and lease losses	(202		)	76			67			42			404
Net interest income after provision for loan and lease losses	1,945			1,833			1,814			7,587			7,725
Noninterest Income
Home loan mortgage banking income (expense):
Loan servicing fees	524			542			628			2,273			2,237
Amortization of mortgage servicing rights	(604		)	(665		)	(920		)	(3,269		)	(2,616		)
Mortgage servicing rights recovery (impairment)	615			368			(308		)	712			(3,219		)
Revaluation gain (loss) from derivatives	(306		)	(172		)	(19		)	338			2,517
Net settlement income from certain interest-rate swaps	190			130			158			543			382
Gain (loss) from mortgage loans	63			(204		)	439			1,250			1,375
Other home loan mortgage banking income (expense), net	110			146			(29		)	127			31
Total home loan mortgage banking income (expense)	592			145			(51		)	1,974			707
Depositor and other retail banking fees	472			471			449			1,818			1,634
Securities fees and commissions	103			103			90			395			362
Insurance income	49			45			39			188			155
Portfolio loan related income	96			116			123			439			349
Gain (loss) from other available-for-sale securities	(13		)	557			574			676			768
Gain (loss) on extinguishment of securities sold under agreements to repurchase	—			7			(11		)	(129		)	282
Other income	166			120			38			489			212
Total noninterest income	1,465			1,564			1,251			5,850			4,469
Noninterest Expense
Compensation and benefits	877			837			734			3,304			2,813
Occupancy and equipment	569			352			290			1,592			1,136
Telecommunications and outsourced information services	125			150			111			554			507
Depositor and other retail banking losses	49			50			51			201			204
Amortization of other intangible assets	15			15			16			61			67
Advertising and promotion	88			51			55			278			234
Professional fees	78			69			45			267			201
Other expense	300			286			301			1,151			1,026
Total noninterest expense	2,101			1,810			1,603			7,408			6,188
Income from continuing operations before income taxes	1,309			1,587			1,462			6,029			6,006
Income taxes	488			588			551			2,236			2,217
Income from continuing operations, net of taxes	821			999			911			3,793			3,789
Discontinued Operations
Income from discontinued operations	34			38			47			137			113
Income taxes	13			14			17			50			41
Income from discontinued operations, net of taxes	21			24			30			87			72
Net Income	$	842		$	1,023		$	941		$	3,880		$	3,861
Net Income Attributable to Common Stock	$	842		$	1,023		$	941		$	3,880		$	3,856
Basic earnings per common share:
Income from continuing operations	$	0.93		$	1.11		$	0.99		$	4.20		$	4.01
Income from discontinued operations, net	0.02			0.03			0.03			0.09			0.08
Net income	0.95			1.14			1.02			4.29			4.09
Diluted earnings per common share:
Income from continuing operations	$	0.91		$	1.09		$	0.97		$	4.12		$	3.94
Income from discontinued operations, net	0.02			0.02			0.03			0.09			0.08
Net income	0.93			1.11			1.00			4.21			4.02
Dividends declared per common share	0.41			0.40			0.28			1.40			1.06
Basic weighted average number of common shares outstanding (in thousands)	883,539			899,579			926,210			903,666			943,905
Diluted weighted average number of common shares outstanding (in thousands)	904,840			918,372			939,991			921,757			960,152

WM - 2

Washington Mutual, Inc.

Consolidated Statements of Financial Condition

(dollars in millions, except per share data)

(unaudited)

	Dec. 31, 2003			Sept. 30, 2003			Dec.  31, 2002
Assets
Cash and cash equivalents	$	7,018		$	5,744		$	7,084
Federal funds sold and securities purchased under resale agreements Available-for-sale securities, total amortized cost of $36,858, $36,792 and $42,528:	19			12			2,015
Mortgage-backed securities	10,695			14,352			28,375
Investment securities	26,012			22,705			15,530
Loans held for sale	20,343			35,493			38,782
Loans held in portfolio	175,644			160,556			143,869
Allowance for loan and lease losses	(1,250		)	(1,549		)	(1,503		)
Total loans held in portfolio, net of allowance for loan and lease losses	174,394			159,007			142,366
Investment in Federal Home Loan Banks	3,462			3,429			3,703
Mortgage servicing rights	6,354			5,870			5,341
Goodwill	6,196			6,196			6,213
Assets of discontinued operations	4,184			4,138			3,864
Other assets	16,501			29,685			14,952
Total assets	$	275,178		$	286,631		$	268,225
Liabilities
Deposits:
Noninterest-bearing deposits	$	29,968		$	39,197		$	37,515
Interest-bearing deposits	123,213			124,944			118,001
Total deposits	153,181			164,141			155,516
Federal funds purchased and commercial paper	2,011			3,113			507
Securities sold under agreements to repurchase	28,333			20,468			16,717
Advances from Federal Home Loan Banks	48,330			43,743			51,265
Other borrowings	15,483			12,584			14,712
Liabilities of discontinued operations	3,578			3,554			3,330
Other liabilities	4,520			18,587			6,117
Total liabilities	255,436			266,190			248,164
Stockholders’ equity	19,742			20,441			20,061
Total liabilities and stockholders’ equity	$	275,178		$	286,631		$	268,225
Common shares outstanding at end of period (in thousands) (1)	880,986			913,854			944,047
Book value per common share(2)	$	22.56		$	22.77		$	21.66
Tangible book value per common share(2)	15.58			15.94			14.98
Full-time equivalent employees at end of period(3)	60,021			59,975			52,459

(1)Includes 6,000,000 shares at December 31, 2003, 16,200,000 shares at September 30, 2003 and 18,000,000 shares at December 31, 2002, held in escrow.

(2)Excludes 6,000,000 shares at December 31, 2003, 16,200,000 shares at September 30, 2003 and 18,000,000 shares at December 31, 2002, held in escrow.

(3)Includes 2,380, 2,353 and 2,356 full-time equivalent employees reported as part of discontinued operations at December 31, 2003, September 30, 2003 and December 31, 2002.

WM - 3

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Year Ended
	Dec. 31, 2003			Dec. 31, 2002
Stockholders’ Equity Rollforward
Balance, beginning of period	$	20,061		$	14,025
Net income	3,880			3,861
Other comprehensive (loss) income, net of tax	(699		)	418
Cash dividends declared on common stock	(1,274		)	(1,021		)
Cash dividends declared on redeemable preferred stock	—			(5		)
Cash dividends returned(1)	53			—
Common stock repurchased and retired	(2,699		)	(1,303		)
Common stock issued for acquisitions	—			3,672
Fair value of Dime stock options	—			90
Common stock issued to redeem preferred stock	—			102
Common stock issued	420			222
Balance, end of period	$	19,742		$	20,061

(1)Represents accumulated dividends on shares returned from escrow.

WM - 4

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions, except per share data)

(unaudited)

	Quarter Ended
	Dec. 31, 2003			Sept. 30, 2003			June 30, 2003			Mar. 31, 2003			Dec. 31, 2002
PROFITABILITY
Net interest income	$	1,743		$	1,909		$	1,986		$	1,993		$	1,881
Net interest margin	2.90		%	3.07		%	3.22		%	3.28		%	3.16		%
Noninterest income	$	1,465		$	1,564		$	1,526		$	1,295		$	1,251
Noninterest expense	2,101			1,810			1,850			1,647			1,603
Basic earnings per common share:
Income from continuing operations	$	0.93		$	1.11		$	1.09		$	1.06		$	0.99
Income from discontinued operations, net	0.02			0.03			0.03			0.02			0.03
Net income	0.95			1.14			1.12			1.08			1.02
Diluted earnings per common share:
Income from continuing operations	$	0.91		$	1.09		$	1.07		$	1.05		$	0.97
Income from discontinued operations, net	0.02			0.02			0.02			0.02			0.03
Net income	0.93			1.11			1.09			1.07			1.00
Dividends declared per common share	$	0.41		$	0.40		$	0.30		$	0.29		$	0.28
Return on average assets(1)	1.21		%	1.41		%	1.43		%	1.42		%	1.38		%
Return on average common equity(1)	16.80			19.82			19.26			19.41			17.87
Efficiency ratio(2)(3)	65.51			52.13			52.66			50.09			51.18
ASSET QUALITY
Nonaccrual loans(4)	$	1,626		$	1,813		$	1,893		$	2,062		$	2,155
Foreclosed assets	311			293			307			325			328
Total nonperforming assets	1,937			2,106			2,200			2,387			2,483
Nonperforming assets/total assets	0.70		%	0.73		%	0.78		%	0.86		%	0.93		%
Restructured loans	$	111		$	118		$	89		$	99		$	98
Total nonperforming assets and restructured loans	2,048			2,224			2,289			2,486			2,581
Allowance for loan and lease losses	1,250			1,549			1,530			1,530			1,503
Allowance as a percentage of total loans held in portfolio	0.71		%	0.96		%	1.02		%	1.04		%	1.04		%
Provision (reversal of reserve) for loan and lease losses	$	(202	)	$	76		$	81		$	88		$	67
Net charge-offs	97			74			81			58			65
CAPITAL ADEQUACY
Stockholders’ equity/total assets	7.17		%	7.13		%	7.41		%	7.44		%	7.48		%
Tangible common equity(5)/total tangible assets(5)	5.26			5.26			5.26			5.26			5.26
Estimated total risk-based capital/risk-weighted assets(6)	11.12			11.54			11.68			11.68			11.53
SUPPLEMENTAL DATA
Average balance sheet:
Total loans held for sale	$	29,362		$	51,272		$	51,519		$	47,301		$	42,329
Total loans held in portfolio	167,033			152,696			147,708			144,690			145,479
Total interest-earning assets	241,718			249,892			246,851			242,791			238,970
Total assets	277,469			290,215			284,037			280,774			273,669
Total interest-bearing deposits	125,318			124,488			120,144			119,056			116,136
Total noninterest-bearing deposits	33,368			49,457			43,536			38,851			32,375
Total stockholders’ equity	20,056			20,657			21,112			20,557			21,061
Period-end balance sheet:
Loans held for sale	20,343			35,493			44,870			49,219			38,782
Loans held in portfolio, net of allowance for loan and lease losses	174,394			159,007			148,520			145,442			142,366
Interest-earning assets(2)	236,175			236,547			245,628			244,012			232,274
Total assets	275,178			286,631			283,120			277,041			268,225
Interest-bearing deposits	123,213			124,944			119,952			119,394			118,001
Noninterest-bearing deposits	29,968			39,197			46,505			40,478			37,515
Total stockholders’ equity	19,742			20,441			20,978			20,608			20,061

(1)Includes income from continuing and discontinued operations.

(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, but includes MSR.

(6)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, 2003								Sept. 30, 2003								Dec. 31, 2002
	Balance			Rate		Interest Income/ Expense			Balance			Rate		Interest Income/ Expense			Balance			Rate		Interest Income/ Expense
Average Balances and Weighted Average Interest Rates
Assets
Interest-earning assets:
Federal funds sold and securities purchased under resale agreements	$	414		2.26	%	$		2	$	1,350		2.16	%	$		7	$	2,536		1.43	%	$		9
Available-for-sale securities(1):
Mortgage-backed securities	12,584			4.14		130			21,174			4.51		239			26,010			5.01		325
Investment securities	27,386			3.24		223			17,652			3.66		162			18,214			4.83		221
Loans held for sale(2)	29,362			5.98		439			51,272			5.34		684			42,329			5.58		591
Loans held in portfolio(2):
Loans secured by real estate:
Home loans	94,713			4.41		1,045			84,456			4.56		963			85,325			5.55		1,184
Purchased specialty mortgage finance	11,799			5.05		149			10,777			5.30		143			9,405			5.54		130
Total home loans	106,512			4.48		1,194			95,233			4.64		1,106			94,730			5.55		1,314
Home construction loans:
Builder (3)	1,073			4.67		13			1,105			4.47		13			1,109			5.68		16
Custom (4)	1,087			6.53		18			977			6.90		17			914			8.34		19
Home equity loans and lines of credit	25,850			4.71		306			22,209			4.81		266			15,380			5.69		219
Multi-family	20,177			5.07		256			19,920			5.16		258			18,815			5.82		274
Other real estate	6,941			6.39		111			6,989			6.31		111			8,230			6.67		138
Total loans secured by real estate	161,640			4.69		1,898			146,433			4.83		1,771			139,178			5.69		1,980
Consumer	1,066			9.02		24			1,178			8.55		25			1,713			9.18		40
Commercial business	4,327			4.22		47			5,085			4.02		52			4,588			4.84		56
Total loans held in portfolio	167,033			4.71		1,969			152,696			4.83		1,848			145,479			5.70		2,076
Other	4,939			2.87		36			5,748			3.99		58			4,402			5.29		59
Total interest-earning assets	241,718			4.62		2,799			249,892			4.79		2,998			238,970			5.48		3,281
Noninterest-earning assets:
Mortgage servicing rights	6,408								6,250								5,855
Goodwill	6,196								6,196								6,171
Other(5)	23,147								27,877								22,673
Total assets	$	277,469							$	290,215							$	273,669
Liabilities
Interest-bearing liabilities:
Deposits:
Interest-bearing checking	$	67,896		1.44		247			$	64,057		1.68		272			$	53,588		2.35		317
Savings accounts and money market deposit accounts	27,667			0.81		56			28,674			0.88		63			28,738			1.30		94
Time deposit accounts	29,755			2.50		188			31,757			2.53		203			33,810			3.06		261
Total interest-bearing deposits	125,318			1.55		491			124,488			1.72		538			116,136			2.30		672
Federal funds purchased and commercial paper	3,872			1.08		11			4,057			1.12		12			2,189			1.61		9
Securities sold under agreements to repurchase	27,394			2.17		152			21,399			2.19		120			23,659			2.77		165
Advances from Federal Home Loan Banks	44,837			2.47		283			45,334			2.59		300			56,030			2.94		415
Other	13,675			3.51		119			12,203			3.94		119			14,240			3.86		139
Total interest-bearing liabilities	215,096			1.94		1,056			207,481			2.07		1,089			212,254			2.62		1,400
Noninterest-bearing sources:
Noninterest-bearing deposits	33,368								49,457								32,375
Other liabilities(6)	8,949								12,620								7,979
Stockholders’ equity	20,056								20,657								21,061
Total liabilities and stockholders’ equity	$		277,469						$		290,215						$		273,669
Net interest spread and net interest income				2.68		$	1,743					2.72		$	1,909					2.86		$	1,881
Impact of noninterest-bearing sources				0.22								0.35		��						0.30
Net interest margin				2.90								3.07								3.16

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

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

(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.

(5)Includes assets of discontinued operations.

(6)Includes liabilities of discontinued operations.

WM - 6

	Year Ended
	Dec. 31, 2003							Dec. 31, 2002
	Balance			Rate		Interest Income/ Expense		Balance		Rate		Interest Income/ Expense
Average Balances and Weighted Average Interest Rates
Assets
Interest-earning assets:
Federal funds sold and securities purchased under resale agreements	$		2,570	1.45	%	$	37	$	2,352	1.70	%	$	40
Available-for-sale securities(1):
Mortgage-backed securities	20,977			4.91		1,030		24,654		5.46		1,345
Investment securities	18,742			3.77		708		32,387		4.96		1,606
Loans held for sale(2)	44,832			5.54		2,483		30,954		6.19		1,917
Loans held in portfolio(2):
Loans secured by real estate:
Home loans	86,443			4.77		4,124		86,039		5.90		5,077
Purchased specialty mortgage finance	10,794			5.43		586		9,028		6.27		566
Total home loans	97,237			4.84		4,710		95,067		5.94		5,643
Home construction loans:
Builder(3)	1,084			4.79		52		1,316		5.93		78
Custom(4)	978			7.13		70		906		8.19		74
Home equity loans and lines of credit	21,163			4.98		1,053		13,382		5.91		790
Multi-family	19,409			5.30		1,029		17,973		6.01		1,081
Other real estate	7,243			6.35		460		8,368		6.83		572
Total loans secured by real estate	147,114			5.01		7,374		137,012		6.01		8,238
Consumer	1,208			8.87		107		2,340		9.41		220
Commercial business	4,771			4.31		205		4,223		5.14		217
Total loans held in portfolio	153,093			5.02		7,686		143,575		6.04		8,675
Other	5,109			4.27		219		4,513		6.04		272
Total interest-earning assets	245,323			4.96		12,163		238,435		5.81		13,855
Noninterest-earning assets:
Mortgage servicing rights	5,721							6,650
Goodwill	6,198							5,996
Other(5)	25,746							20,339
Total assets	$	282,988						$	271,420
Liabilities
Interest-bearing liabilities:
Deposits:
Interest-bearing checking	$	62,723		1.69		1,057		$	40,338	2.55		1,028
Savings accounts and money market deposit accounts	28,196			0.93		263		31,529		1.48		466
Time deposit accounts	31,416			2.69		845		37,253		3.13		1,167
Total interest-bearing deposits	122,335			1.77		2,165		109,120		2.44		2,661
Federal funds purchased and commercial paper	3,158			1.18		37		2,976		1.90		57
Securities sold under agreements to repurchase	22,318			2.44		545		34,830		2.31		804
Advances from Federal Home Loan Banks	49,441			2.62		1,296		59,369		2.82		1,676
Other	13,315			3.68		491		12,172		4.34		528
Total interest-bearing liabilities	210,567			2.15		4,534		218,467		2.62		5,726
Noninterest-bearing sources:
Noninterest-bearing deposits	41,250							25,396
Other liabilities(6)	10,724							7,624
Stockholders’ equity	20,447							19,933
Total liabilities and stockholders’ equity	$	282,988						$	271,420
Net interest spread and net interest income				2.81		$	7,629			3.19		$	8,129
Impact of noninterest-bearing sources				0.30						0.22
Net interest margin				3.11						3.41

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

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

(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.

(5)Includes assets of discontinued operations.

(6)Includes liabilities of discontinued operations.

WM - 7

	Quarter Ended						Year Ended
	Dec. 31, 2003		Sept. 30, 2003		Dec. 31, 2002		Dec. 31, 2003		Dec. 31, 2002
Loan Volume
Home loans:
Adjustable rate	$	23,397	$	28,225	$	25,998	$	99,899	$	84,627
Fixed rate	28,105		83,360		69,123		263,604		180,745
Specialty mortgage finance (1)	6,031		5,460		4,689		20,678		14,077
Total home loan volume	57,533		117,045		99,810		384,181		279,449
Home construction loans:
Builder (2)	636		787		389		2,506		1,842
Custom (3)	377		363		194		1,176		761
Home equity loans and lines of credit	7,922		9,369		4,721		29,639		15,254
Multi-family	1,647		2,598		1,864		8,065		5,839
Other real estate	655		439		513		1,969		1,818
Total loans secured by real estate	68,770		130,601		107,491		427,536		304,963
Consumer	72		146		114		339		760
Commercial business	1,061		1,191		883		4,370		3,696
Total loan volume	$	69,903	$	131,938	$	108,488	$	432,245	$	309,419
Loan Volume by Channel
Originated	$	47,964	$	82,514	$	64,702	$	265,217	$	199,127
Purchased/Correspondent	21,939		49,424		43,786		167,028		110,292
Total loan volume by channel	$	69,903	$	131,938	$	108,488	$	432,245	$	309,419
Refinancing Activity (4)
Home loan refinancing	$	31,919	$	83,564	$	71,203	$	269,442	$	183,788
Home construction loans	6		16		11		47		50
Home equity loans and lines of credit and consumer	848		2,030		904		4,775		2,814
Multi-family and other real estate	690		1,164		903		3,453		2,155
Total refinancing	$	33,463	$	86,774	$	73,021	$	277,717	$	188,807
Home Loan Volume by Index:
Short-term adjustable-rate loans(5):
Treasury indices	$	13,021	$	7,076	$	3,972	$	30,147	$	19,474
COFI	151		124		316		722		3,231
Other	628		336		244		1,404		789
Total short-term adjustable-rate loans	13,800		7,536		4,532		32,273		23,494
Medium-term adjustable-rate loans(6)	13,667		24,138		24,896		81,404		72,597
Fixed-rate loans	30,066		85,371		70,382		270,504		183,358
Total home loan volume	$	57,533	$	117,045	$	99,810	$	384,181	$	279,449

Note: Pursuant to regulatory guidance issued in December 2003, buyouts of delinquent mortgages contained within Government National Mortgage Association (GNMA) loan servicing pools must be classified as loans on the balance sheet. Accordingly, total home loan volume includes GNMA pool buy-out volume of $1.30 billion, $1.67 billion and $1.64 billion for the quarters ended December 31, 2003, September 30, 2003 and December 31, 2002 and $6.94 billion and $4.71 billion for the years ended December 31, 2003 and December 31, 2002.

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

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

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

WM - 8

	Change from Sept. 30, 2003 to Dec. 31, 2003			Dec. 31, 2003			Sept. 30, 2003			Dec. 31, 2002
Loans by Property Type and Mortgage-Backed Securities (“MBS”)
Loans held in portfolio:
Loans secured by real estate:
Home loans	$	9,800		$	100,043		$	90,243		$	82,842
Purchased specialty mortgage finance	1,607			12,973			11,366			10,128
Total home loans	11,407			113,016			101,609			92,970
Home construction loans:
Builder(1)	(9		)	1,052			1,061			1,017
Custom(2)	136			1,168			1,032			932
Home equity loans and lines of credit	3,587			27,647			24,060			16,168
Multi-family	133			20,324			20,191			18,000
Other real estate	(283		)	6,649			6,932			7,986
Total loans secured by real estate	14,971			169,856			154,885			137,073
Consumer	(93		)	1,028			1,121			1,663
Commercial business	210			4,760			4,550			5,133
Total loans held in portfolio	15,088			175,644			160,556			143,869
Less: allowance for loan and lease losses	299			(1,250		)	(1,549		)	(1,503		)
Loans securitized and retained as MBS	(3,393		)	9,229			12,622			25,054
Total net loans held in portfolio and loans securitized and retained as MBS	11,994			183,623			171,629			167,420
Loans held for sale(3)	(15,150		)	20,343			35,493			38,782
Total net loans and loans securitized and retained as MBS	(3,156		)	203,966			207,122			206,202
Purchased MBS	(264		)	1,466			1,730			3,321
Total net loans and MBS	$	(3,420	)	$	205,432		$	208,852		$	209,523

(1)Represents loans to builders for the purpose of financing the acquisition, development and construction of single-family residences for sale.

(2)Represents construction loans made directly to the intended occupant of a single-family residence.

(3)Fair value of loans held for sale was $20.34 billion, $35.53 billion and $38.84 billion as of December 31, 2003, September 30, 2003 and December 31, 2002.

WM - 9

	Change from Sept. 30, 2003 to Dec. 31, 2003			Dec. 31, 2003		Weighted Average Coupon Rate		Sept. 30, 2003		Weighted Average Coupon Rate		Dec. 31, 2002		Weighted Average Coupon Rate
Loans Secured by Real Estate and MBS
Selected loans held in portfolio(1):
Short-term adjustable-rate loans(2):
COFI	$	(942	)	$	10,766	4.93	%	$	11,708	5.05	%	$	15,315	5.59	%
Treasury indices	11,547			51,494		3.66		39,947		3.99		31,015		4.78
Other	2,624			26,867		4.81		24,243		4.96		17,843		5.80
Total short-term adjustable-rate loans	13,229			89,127		4.16		75,898		4.46		64,173		5.26
Medium-term adjustable-rate loans(3)	3,593			53,576		5.56		49,983		5.65		43,715		6.55
Fixed-rate loans	(1,695		)	18,284		6.91		19,979		7.16		19,250		7.75
Total loans held in portfolio secured by real estate(4)	15,127			160,987		4.94		145,860		5.24		127,138		6.08
Loans held for sale(5)	(15,177		)	20,211		6.51		35,388		5.90		38,686		6.26
Total loans secured by real estate	(50		)	181,198		5.12		181,248		5.37		165,824		6.12
MBS(6):
Short-term adjustable-rate MBS(2):
COFI	(1,562		)	5,270		3.87		6,832		3.95		11,459		4.46
Treasury indices	(1,664		)	3,401		2.94		5,065		3.14		8,984		3.78
Other	(403		)	9		3.15		412		4.62		3,562		6.04
Total short-term adjustable-rate MBS	(3,629		)	8,680		3.50		12,309		3.64		24,005		4.44
Fixed-rate MBS	46			1,496		6.35		1,450		6.98		3,707		6.87
Total MBS(7)	(3,583		)	10,176		3.92		13,759		3.99		27,712		4.77
Total loans secured by real estate and MBS	$	(3,633	)	$	191,374	5.05		$	195,007	5.27		$	193,536	5.93

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

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

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

(4)At December 31, 2003, September 30, 2003 and December 31, 2002 adjustable-rate loans with lifetime caps totaled $138.58 billion, $123.96 billion and $105.60 billion with a lifetime weighted average cap rate of 12.21%, 12.16% and 12.67%.

(5)Excludes student loans.

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

(7)At December 31, 2003, September 30, 2003 and December 31, 2002 adjustable-rate MBS with lifetime caps totaled $8.12 billion, $11.82 billion and $23.84 billion with a lifetime weighted average cap rate of 11.32%, 11.27% and 11.34%.

	Sept. 30, 2003 to Dec. 31, 2003			Dec. 31, 2002 to Dec. 31, 2003
Rollforward of Loans Held for Sale
Balance, beginning of period	$	35,493		$	38,782
Loans originated and purchased	36,552			317,417
Loans sold and other	(51,702		)	(335,856		)
Balance, end of period	$	20,343		$	20,343
Rollforward of Loans Held in Portfolio
Balance, beginning of period	$	160,556		$	143,869
Loans originated and purchased	33,351			114,828
Loan payments and other	(18,263		)	(83,053		)
Balance, end of period	$	175,644		$	175,644

WM - 10

	Sept. 30, 2003 to Dec. 31, 2003			Dec. 31, 2002 to Dec. 31, 2003
Rollforward of Mortgage Servicing Rights (“MSR”)(1)
Balance, beginning of period	$	5,870		$	5,341
Home loans:
Additions	701			4,203
Amortization	(604		)	(3,269		)
Recovery	615			712
Sales of MSR	(231		)	(638		)
Net change in commercial real estate MSR	3			5
Balance, end of period(2)	$	6,354		$	6,354
Rollforward of Valuation Allowance for MSR Impairment
Balance, beginning of period	$	3,075		$	4,521
Recovery	(615		)	(712		)
Other than temporary impairment	—			(1,115		)
Sales of MSR	(25		)	(259		)
Balance, end of period	$	2,435		$	2,435
Rollforward of Loans Serviced for Others
Balance, beginning of period	$	577,822		$	604,504
Home loans:
Additions	51,480			342,871
Sales of servicing	(195		)	(3,155		)
Loan payments and other	(47,062		)	(362,319		)
Net change in commercial real estate loans serviced for others	624			768
Balance, end of period	$	582,669		$	582,669

	Dec. 31, 2003 Balance
Total Servicing Portfolio
Loans serviced for others	$	582,669
Servicing on retained MBS without MSR	3,455
Servicing on owned loans	182,604
Subservicing portfolio	1,852
Total servicing portfolio	$	770,580

	Dec. 31, 2003
	Unpaid Principal Balance		Weighted Average Servicing Fee
			(in basis points)
Loans Serviced for Others by Loan Type
Government	$	66,773	50
Agency	387,233		29
Private	115,302		36
Specialty home loans	13,361		50
Total loans serviced for others(3)	$	582,669	34

(1)Net of valuation allowance.

(2)At December 31, 2003, aggregate mortgage servicing rights fair value was $6.39 billion.

(3)Weighted average coupon rate was 6.07% at December 31, 2003.

WM - 11

	Quarter Ended
	Dec. 31, 2003			Sept. 30, 2003			June 30, 2003			Mar. 31, 2003			Dec. 31, 2002
Home Loan Mortgage Banking Income (Expense)
Loan servicing fees	$	524		$	542		$	593		$	613		$	628
Loan subservicing fees	1			1			7			5			14
Amortization of mortgage servicing rights	(604		)	(665		)	(1,032		)	(969		)	(920		)
Mortgage servicing rights recovery (impairment)	615			368			(309		)	37			(308		)
Other, net	(76		)	(221		)	(168		)	(137		)	(134		)
Net home loan servicing income (expense)	460			25			(909		)	(451		)	(720		)
Revaluation gain (loss) from derivatives:
Mortgage servicing rights risk management	(314		)	(317		)	745			412			109
Loans held for sale risk management(1)	8			145			(147		)	(195		)	(128		)
Total revaluation gain (loss) from derivatives	(306		)	(172		)	598			217			(19		)
Net settlement income from certain interest-rate swaps	190			130			84			140			158
Gain (loss) from mortgage loans(1)	63			(204		)	747			643			439
Loan related income	124			108			91			75			76
Gain from sale of originated mortgage-backed securities	61			258			—			1			15
Total home loan mortgage banking income (expense)	592			145			611			625			(51		)
Impact of other mortgage servicing rights risk management instruments(2):
Gain (loss) from certain available-for-sale securities	(11		)	176			140			—			407
Total home loan mortgage banking income (expense), net of other mortgage servicing rights risk management instruments	$	581		$	321		$	751		$	625		$	356

	Year Ended
	Dec. 31, 2003			Dec. 31, 2002
Home Loan Mortgage Banking Income
Loan servicing fees	$	2,273		$	2,237
Loan subservicing fees	14			100
Amortization of mortgage servicing rights	(3,269		)	(2,616		)
Mortgage servicing rights recovery (impairment)	712			(3,219		)
Other, net	(606		)	(371		)
Net home loan servicing income (expense)	(876		)	(3,869		)
Revaluation gain (loss) from derivatives:
Mortgage servicing rights risk management	526			2,645
Loans held for sale risk management(1)	(188		)	(128		)
Total revaluation gain (loss) from derivatives	338			2,517
Net settlement income from certain interest-rate swaps	543			382
Gain from mortgage loans(1)	1,250			1,375
Loan related income	399			268
Gain from sale of originated mortgage-backed securities	320			34
Total home loan mortgage banking income	1,974			707
Impact of other mortgage servicing rights risk management instruments(2):
Gain from certain available-for-sale securities	305			795
Gain on extinguishment of securities sold under agreements to repurchase	—			257
Total home loan mortgage banking income, net of other mortgage servicing rights risk management instruments	$	2,279		$	1,759

(1)The Company’s policy of recording the fair value of rate lock commitments on its Consolidated Statements of Financial Condition has the effect of recognizinggain (loss) from mortgage loans before the loans are sold.  Rate lock commitment volume, adjusted for actual and anticipated fallout factors, totaled $29.13 billion for the quarter ended December 31, 2003.  Gain (loss) from mortgage loans net of revaluation gain (loss) from derivatives used for loans held for sale risk management was a gain of $71 million for the quarter ended December 31, 2003, compared with a net loss of $59 million for the quarter ended September 30, 2003 and a net gain of $600 million for the quarter ended June 30, 2003.

(2)Includes only instruments designated for mortgage servicing rights risk management and does not include the effects of instruments held for asset/liability risk management.

WM - 12

	Dec. 31, 2003		Sept. 30, 2003		Dec. 31, 2002
Deposits
Deposits:
Checking accounts:
Noninterest bearing	$	27,906	$	35,649	$	35,730
Interest bearing	68,318		66,353		56,132
Total checking accounts	96,224		102,002		91,862
Savings and money market deposit accounts	29,000		31,348		29,886
Time deposit accounts(1)	27,957		30,791		33,768
Total deposits(2)	$	153,181	$	164,141	$	155,516

(1)Weighted average remaining maturity of time deposits was 14 months at December 31, 2003, 15 months at September 30, 2003 and 15 months at December 31, 2002.

(2)Includes custodial and escrow deposits of $14.99 billion at December 31, 2003, $24.92 billion at September 30, 2003 and $25.90 billion at December 31, 2002.

	Dec. 31, 2003	Sept. 30, 2003	June 30, 2003	Mar. 31, 2003	Dec. 31, 2002
Retail Checking Accounts(1)
Accounts, beginning of period	7,882,946	7,637,914	7,461,320	7,258,555	7,091,568
Net accounts opened during the quarter	183,386	245,032	176,594	202,765	166,987
Accounts, end of period	8,066,332	7,882,946	7,637,914	7,461,320	7,258,555

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

	Dec. 31, 2003	Sept. 30, 2003	June 30, 2003	Mar. 31, 2003	Dec. 31, 2002
Retail Banking Stores
Stores, beginning of period	1,677	1,602	1,556	1,526	1,462
Net stores opened during the quarter	99	75	46	30	64
Stores, end of period	1,776	1,677	1,602	1,556	1,526

WM - 13

	Quarter Ended
	Dec. 31, 2003			Sept. 30, 2003			June 30, 2003			Mar. 31, 2003			Dec. 31, 2002
Allowance for Loan and Lease Losses
Balance, beginning of quarter	$	1,549		$	1,530		$	1,530		$	1,503		$	1,566
Allowance transferred to loans held for sale	—			—			—			(3		)	(13		)
Allowance for certain loan commitments	—			17			—			—			(52		)
Provision (reversal of reserve) for loan and lease losses	(202		)	76			81			88			67
	1,347			1,623			1,611			1,588			1,568
Loans charged off:
Loans secured by real estate:
Home loans	(18		)	(22		)	(9		)	(15		)	(23		)
Purchased specialty mortgage finance	(11		)	(9		)	(9		)	(10		)	(7		)
Total home loan charge-offs	(29		)	(31		)	(18		)	(25		)	(30		)
Home construction loans - builder	(1		)	(1		)	—			—			—
Home equity loans and lines of credit	(2		)	(4		)	(4		)	(4		)	(9		)
Multi-family	(1		)	(4		)	—			—			—
Other real estate	(52		)	(16		)	(21		)	(10		)	(7		)
Total loans secured by real estate	(85		)	(56		)	(43		)	(39		)	(46		)
Consumer	(14		)	(20		)	(18		)	(17		)	(16		)
Commercial business	(15		)	(19		)	(31		)	(14		)	(18		)
Total loans charged off	(114		)	(95		)	(92		)	(70		)	(80		)
Recoveries of loans previously charged off:
Loans secured by real estate:
Home loans	1			7			2			—			—
Purchased specialty mortgage finance	1			1			1			1			—
Total home loan recoveries	2			8			3			1			—
Other real estate	5			6			2			4			5
Total loans secured by real estate	7			14			5			5			5
Consumer	5			5			3			3			5
Commercial business	5			2			3			4			5
Total recoveries of loans previously charged off	17			21			11			12			15
Net charge-offs	(97		)	(74		)	(81		)	(58		)	(65		)
Balance, end of quarter	$	1,250		$	1,549		$	1,530		$	1,530		$	1,503
Net charge-offs (annualized) as a percentage of average loans held in portfolio	0.23		%	0.19		%	0.22		%	0.16		%	0.18		%
Allowance as a percentage of total loans held in portfolio	0.71			0.96			1.02			1.04			1.04

WM - 14

	Dec. 31, 2003			Sept. 30, 2003			June 30, 2003			Mar. 31, 2003			Dec. 31, 2002
Nonperforming Assets and Restructured Loans
Nonaccrual loans(1):
Nonaccrual loans secured by real estate:
Home loans	$	736		$	760		$	804		$	954		$	1,068
Purchased specialty mortgage finance	597			553			483			479			438
Total home loan nonaccrual loans	1,333			1,313			1,287			1,433			1,506
Home construction loans:
Builder(2)	25			31			31			38			42
Custom(3)	10			9			9			9			7
Home equity loans and lines of credit	47			46			49			44			36
Multi-family	19			39			54			49			50
Other real estate	153			309			369			402			413
Total nonaccrual loans secured by real estate	1,587			1,747			1,799			1,975			2,054
Consumer	8			10			15			14			22
Commercial business	31			56			79			73			79
Total nonaccrual loans held in portfolio	1,626			1,813			1,893			2,062			2,155
Foreclosed assets	311			293			307			325			328
Total nonperforming assets	$	1,937		$	2,106		$	2,200		$	2,387		$	2,483
As a percentage of total assets	0.70		%	0.73		%	0.78		%	0.86		%	0.93		%
Restructured loans	$	111		$	118		$	89		$	99		$	98
Total nonperforming assets and restructured loans	$	2,048		$	2,224		$	2,289		$	2,486		$	2,581

(1)Excludes nonaccrual loans held for sale of $66 million at December 31, 2003.  Prior periods also reflect the exclusion of nonaccrual loans held for sale of $67 million, $73 million, $72 million and $119 million at September 30, 2003, June 30, 2003, March 31, 2003 and December 31, 2002.  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 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 - 15

Washington Mutual, Inc.

Pro Forma Combining Statements of Income

(dollars in millions, except per share data)

(unaudited)

Note:  The following schedule combines income from continuing operations with the discontinued operations of Washington Mutual Finance in order to present the pro forma effects of total net income on an individual line level basis.

	Quarter Ended Dec. 31, 2003								Year Ended Dec. 31, 2003
	Income From Continuing Operations			Washington Mutual Finance		Pro Forma Combined			Income From Continuing Operations			Washington Mutual Finance		Pro Forma Combined
Interest Income
Loans held for sale	$	439		$	—	$	439		$	2,483		$	—	$	2,483
Loans held in portfolio	1,969			152		2,121			7,686			587		8,273
Available-for-sale securities	353			1		354			1,738			5		1,743
Other interest and dividend income	38			—		38			256			—		256
Total interest income	2,799			153		2,952			12,163			592		12,755
Interest Expense
Deposits	491			—		491			2,165			—		2,165
Borrowings	565			39		604			2,369			159		2,528
Total interest expense	1,056			39		1,095			4,534			159		4,693
Net interest income	1,743			114		1,857			7,629			433		8,062
Provision (reversal of reserve) for loan and lease losses	(202		)	41		(161		)	42			153		195
Net interest income after provision for loan and lease losses	1,945			73		2,018			7,587			280		7,867
Noninterest Income
Home loan mortgage banking income:
Loan servicing fees	524			—		524			2,273			—		2,273
Amortization of mortgage servicing rights	(604		)	—		(604		)	(3,269		)	—		(3,269		)
Mortgage servicing rights recovery	615			—		615			712			—		712
Revaluation gain (loss) from derivatives	(306		)	—		(306		)	338			—		338
Net settlement income from certain interest-rate swaps	190			—		190			543			—		543
Gain from mortgage loans	63			—		63			1,250			—		1,250
Other home loan mortgage banking income, net	110			—		110			127			—		127
Total home loan mortgage banking income	592			—		592			1,974			—		1,974
Depositor and other retail banking fees	472			—		472			1,818			—		1,818
Securities fees and commissions	103			—		103			395			—		395
Insurance income	49			5		54			188			21		209
Portfolio loan related income	96			—		96			439			—		439
Gain (loss) from other available-for-sale securities	(13		)	—		(13		)	676			—		676
Gain (loss) on extinguishment of securities sold under agreements to repurchase	—			—		—			(129		)	—		(129		)
Other income	166			1		167			489			3		492
Total noninterest income	1,465			6		1,471			5,850			24		5,874
Noninterest Expense
Compensation and benefits	877			25		902			3,304			95		3,399
Occupancy and equipment	569			4		573			1,592			14		1,606
Telecommunications and outsourced information services	125			3		128			554			14		568
Depositor and other retail banking losses	49			—		49			201			—		201
Amortization of other intangible assets	15			—		15			61			—		61
Advertising and promotion	88			3		91			278			14		292
Professional fees	78			3		81			267			11		278
Other expense	300			7		307			1,151			19		1,170
Total noninterest expense	2,101			45		2,146			7,408			167		7,575
Income before income taxes	1,309			34		1,343			6,029			137		6,166
Income taxes	488			13		501			2,236			50		2,286
Net Income	$	821		$	21	$	842		$	3,793		$	87	$	3,880
Net Income Attributable to Common Stock	$	821		$	21	$	842		$	3,793		$	87	$	3,880
Basic earnings per common share:	$	0.93		$	0.02	$	0.95		$	4.20		$	0.09	$	4.29
Diluted earnings per common share:	0.91			0.02		0.93			4.12			0.09		4.21

WM - 16

Washington Mutual, Inc.

Pro Forma Statement of Financial Condition

December 31, 2003

(dollars in millions)

(unaudited)

Note:  The following schedule presents the pro forma effects of disaggregating the discontinued operations of Washington Mutual Finance into its individual components on the Statement of Financial Condition.  

	As Reported			Washington Mutual Finance			Pro Forma
Assets
Cash and cash equivalents	$	7,018		$	64		$	7,082
Federal funds sold and securities purchased under resale agreements	19			—			19
Available-for-sale securities, total amortized cost of $36,858 as reported, $36,987 pro forma:
Mortgage-backed securities	10,695			—			10,695
Investment securities	26,012			130			26,142
Loans held for sale	20,343			—			20,343
Loans held in portfolio	175,644			3,997			179,641
Allowance for loan and lease losses	(1,250		)	(150		)	(1,400		)
Total loans held in portfolio, net of allowance for loan and lease losses	174,394			3,847			178,241
Investment in Federal Home Loan Banks	3,462			—			3,462
Mortgage servicing rights	6,354			—			6,354
Goodwill	6,196			57			6,253
Assets of discontinued operations	4,184			(4,184		)	—
Other assets	16,501			86			16,587
Total assets	$	275,178		$	—		$	275,178
Liabilities
Deposits:
Noninterest-bearing deposits	$	29,968		$	—		$	29,968
Interest-bearing deposits	123,213			—			123,213
Total deposits	153,181			—			153,181
Federal funds purchased and commercial paper	2,011			1,067			3,078
Securities sold under agreements to repurchase	28,333			—			28,333
Advances from Federal Home Loan Banks	48,330			—			48,330
Other borrowings	15,483			2,431			17,914
Liabilities of discontinued operations	3,578			(3,578		)	—
Other liabilities	4,520			80			4,600
Total liabilities	255,436			—			255,436
Stockholders’ equity	19,742			—			19,742
Total liabilities and stockholders’ equity	$	275,178		$	—		$	275,178

WM - 17

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Quarter Ended
	Dec. 31, 2003
Credit Overview - Key Statistics
Allowance for Loan and Lease Losses (“ALLL”):
September 30, 2003 as originally reported, including Washington Mutual Finance	$	1,699
Less:  ALLL associated with Washington Mutual Finance	(150		)
September 30, 2003 ALLL excluding Washington Mutual Finance	1,549
Less:  Excess franchise lending portfolio specific reserve (net of charge-offs)	(82		) (1)
Less:  December 31, 2003 ALLL reversal	(120		) (1)
Less:  December 31, 2003 net charge-offs	(97		)
Balance, end of quarter	$	1,250

(1)Included in the December 31, 2003 reversal of reserve for loan and lease losses

	Quarter Ended
Key Ratios:	Dec. 31, 2003			Sept. 30, 2003
Nonaccrual loans as a percentage of total loans held in portfolio	0.93		%	1.13		%
Nonperforming assets as a percentage of total loans held in portfolio	1.10			1.31
Nonperforming assets as a percentage of total assets	0.70			0.73
Allowance as a percentage of total loans held in portfolio	0.71			0.96
Foreclosed assets	$	311		$	293