Citigroup 2006 Financial Services Conference. January 31, Steve Rotella President and Chief Operating Officer

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1 Citigroup 2006 Financial Services Conference January 31, 2006 Steve Rotella President and Chief Operating Officer

2 To be the nation s leading retailer of financial services for consumers and small businesses 2

3 Leading Player in All Business Lines National Rankings Total company assets 6 th Retail Banking Total deposits and retail banking stores Debit cards outstanding 1 Home equity loans 2 Home lending originations and servicing 3 6 th 3 rd 4 th 3 rd Commercial Group Multi-family lending 1 st Credit card issuer 4 6 th 1 Nilson Report, 5/05, as of Internal company research, 6/05 3 Inside Mortgage Finance, YTD Q405 (originations), as of 9/30/05 (servicing) 4 Nilson Bank Credit Card Report, 8/05, mid-year 2005 ranking. 3

4 Broad Distribution Network Retail Mortgage Lending Wholesale, Correspondent and/or Consumer Direct Mortgage Lending Retail Banking and Home Loans in 30 of top 50 MSAs Multi-Family Markets 2,140 Retail Banking Stores 352 Retail Mortgage Offices 39 Multi-family Lending Offices 96 Wholesale & Long Beach Mortgage Offices 3,747 ATMs 24/7 Internet Access As of 12/31/05 4

5 Asset Mix Evolves $187 billion As of 12/31/99 $343 billion As of 12/31/05 Prime Home Loans and MBS 76% 2% 7% 10% 5% Subprime Other Assets Multi-Family and CRE Home Equity Credit Cards Prime Home Loans and MBS 6% 3% 40% Subprime 16% 15% Other Assets 10% 10% Loans Held for Sale Multi-Family and CRE Home Equity 5

6 Five-Year Targets & 2005 Performance ROACE 1 High teens 14.63% Earnings per share growth 1 Double digit 14% Efficiency ratio 1 < 50% 58.17% Nonperforming assets / total assets <1% 0.57% 2 Tangible equity / total tangible assets >5.50% 5.73% 2 1 Average over the cycle 2 Period end 6

7 Improved Results in 2005 from 2004 Earnings Driver Average assets Net interest income Noninterest income Noninterest expense Net Income EPS Dollars $43 billion $770 million $1.0 billion $335 million $554 million $0.47 Percent 15% 11% 22% 4% 19% 14% 7

8 Retail Banking Highlights Net Income ($ millions) $2,400 $2,000 $1,600 $1,200 $800 $400 $2,188 $1,097 $1,091 Up 13% $2,465 $951 $1, ,000 net new checking accounts (178,000 small business) 633,000 net new households Average retail deposits up 5% 39% Noninterest income up 11% Home equity balances up 16% $ Retail Banking Network SFR Portfolio 8

9 Free Checking Drives Household Growth Households per Retail Store 5,000 4,000 5,000 4, % 3,000 Flat 3,000 2,000 2,000 1,000 1, US Average Over 70% of customers choose WaMu due to Free Checking 2 81% of net new checking accounts are Free Checking 3 1 Industry average estimates calculated from Census Bureau, FDIC and First Manhattan Consulting Data. 2 Based upon 2004 internal survey 3 Full year

10 Card Services Highlights Managed Receivables ($ billions) $21 $20 Up 8% $20.0 Managed receivables up 8% * Managed net credit losses $19 $18 $17 $16 $ * 12/31/04 12/31/ % for 4Q % for 4Q 04 Managed 30+ day delinquencies 4Q 05 4Q 04 *Q4 04 reflects the results of Providian Inc. on an independent basis for comparative purposes. At Q4 Q4 managed receivables included approximately $400 million of receivables transferred to available for sale on January 1st

11 Card Services Integration is Going Well Excellent results from initial cross-sell activities - Over 200,000 cards issued - Response rates significantly higher than forecast On track to achieve key integration milestones Senior management team intact New cross-sell phase coming soon - Store Sales begin mid-february; rollout complete in 2Q - Activities underway in other business lines 11

12 Commercial Group Highlights Net Income ($ millions) $800 $600 $400 $200 $0 $663 Up 13% $ Multi-family loans outstanding up 15% Loan volume Multi-family up 20% Long Beach up 82% Cost to originate Multi-family down 13% Long Beach down 12% 12

13 Home Loan Highlights Net Income ($ millions) $900 $800 Up 15% $742 Experienced leadership team $700 $600 $648 23% increase in number of loan consultants $500 $400 Loans serviced per FTE up 30% $300 $200 $100 $

14 Each Business Focused on Growth Business Retail Banking Card Services Growth Focus Household growth Store expansion Cross-sell cards and other products Realize WaMu growth opportunity Commercial Expand multi-family distribution Home Loans High-margin products Expand and leverage distribution 14

15 With Cross-Business Sales Gaining Momentum Retail Bank 8.5 million households Key Opportunities Home Loans 4.6 million loans serviced Home Loans Retail Banking Home Equity Home Loans Credit Cards WaMu Commercial Group 69,000 comm. loans serviced Service to Sales Card Services 9.8 million accounts 15

16 Cross-Business Efficiency Initiatives Migrate to Lower Cost Locations Increase Offshore Support Drive Productivity Through OpEx Improve Technology Tools and Infrastructure 16

17 Efficiency Initiatives Gaining Momentum: Initial wave of transfers to San Antonio - 1,000 jobs to be relocated from California Accelerating Offshore Activities - increase up to 6,000 FTE through 2007 Restructure of Commercial Group - Home Loans / Long Beach integration underway OpEx focus on additional savings 17

18 Key Takeaways Model is sound and execution is on target All of our businesses have solid growth plans We will drive higher levels of productivity Experienced and proven Management Team 18

19 Forward-Looking Statement Our Form 10-K K for 2004 and other documents that we filed with the Securities and Exchange Commission have forward-looking statements. In addition, our senior management may make forward-looking statements orally to analysts, investors, the media and others. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as expects, anticipates, intends, plans, believes, seeks, estimates, or words of similar meaning, or future or conditional verbs such h as will, would, should, could or may. Forward-looking statements provide our expectations or predictions of future conditions, events or results. They are not guarantees of future performance. By their nature, forward-looking statements are subject to risks and uncertainties. These statements speak only as of the date they are made. We do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward- looking statements were made. There are a number of factors, many y of which are beyond our control that could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. Some of these factors are: volatile interest rates impact the mortgage banking business and could adversely affect earnings; rising unemployment or a decrease in housing prices could adversely affect credit performance; the potential for negative amortization in the option adjustable-rate mortgage product could have an adverse effect on the company's credit performance; the company faces competition from banking and nonbanking companies; changes in the regulation of financial services companies and housing government-sponsored enterprises, and in particular, declines in the liquidity ity of the mortgage loan secondary market, could adversely affect business; general business and economic conditions, including movements in interest rates, the slope of the yield curve and the potential overextension of housing prices in certain geographic markets, may significantly affect the company s s business activities and earnings; negative public opinion could damage the e company s s reputation and adversely affect earnings; and, matters related to Washington Mutual Card Services, including, among others, risk related to integration of systems and the realization of expected growth opportunities. 19

20 Citigroup 2006 Financial Services Conference January 31, 2006 Steve Rotella President and Chief Operating Officer