Lehman Brothers Financial Services Conference. Kerry Killinger Chairman and Chief Executive Officer

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1 Lehman Brothers Financial Services Conference Kerry Killinger Chairman and Chief Executive Officer

2 Forward-Looking Statement This presentation contains forward-looking statements, which are not historical facts and pertain to future operating results. These forward-looking statements are within the meaning of the Private Securities Litigation Reform Act of These forward-looking statements include, but are not limited to, statements about our plans, objectives, expectations and intentions and other statements contained in this document that are not historical facts. When used in this presentation, the words expects, anticipates, intends, plans, believes, seeks, estimates, or words of similar meaning, or future or conditional verbs, such as will, would, should, could, or may are generally intended to identify forward-looking statements. These forwardlooking statements are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forwardlooking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ materially from the results discussed in these forward-looking statements for the reasons, among others, discussed under the heading Factors That May Affect Future Results in Washington Mutual s 2004 Annual Report on Form 10-K and under the heading, Cautionary Statements, in Washington Mutual s Quarterly Report on Form 10-Q for the period ended June 30, 2005 which include: 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 ARM product could have an adverse affect 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 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 business activities and earnings; and negative public opinion could damage the Company's reputation and adversely affect earnings. 2

3 National Market Position Total Assets $324 billion 6 th Total Deposits $184 billion 6 th Retail Banking Stores 1,997 6 th Home Loan Originations $118 billion 3 rd 1 Home Loan Servicing $739 billion 3 rd 2 1 Source: Inside Mortgage Finance, YTD 2Q05 2 Source: Inside Mortgage Finance, as of 6/30/05 3

4 Touch Points Retail Mortgage Lending Wholesale, Correspondent and/or Consumer Direct Mortgage Lending Retail Banking and Home Loans in 29 of top 50 MSAs Multi-Family Markets 1,997 Retail Banking Stores 346 Retail Mortgage Offices 39 Multi-family Lending Offices 95 Wholesale & Long Beach Mortgage Offices 3,430 ATMs 24/7 Internet Access As of 6/30/05 4

5 New Five Year Financial Targets Targets Results YTD 2Q05 ROACE 1 High teens 15.98% Earnings per share growth 1 Double digit 13.22% 2 Efficiency ratio 1 < 50% 56.49% NPAs/total assets 3 < 1% 0.53% Tangible common equity/total tangible assets 3 > 5% 5.13% 1 Average over the cycle for targets 2 Calculated using EPS from YTD 6/30/04 - YTD 6/30/05 3 Period end 5

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8 Strong Double-Digit Net Income Growth Retail Banking and Financial Services Net Income ($ millions) $373 $333 $342 $369 $373 16% CAGR $382 $374 $427 $483 $508 $567 $539 $579 1 Year CAGR 20% 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 8

9 Focused on Disciplined Deposit Growth Retail Deposits ($ billions) $ % CAGR $121.8 $124.0 $124.1 $128.1 $128.5 $128.3 $129.5 $132.0 $132.7 $134.6 $135.8 $ Year CAGR 5% 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 Period end 9

10 Substantial Home Equity Portfolio Growth Home Equity Portfolio ($ billions) 51% CAGR $36.1 $40.5 $43.7 $45.8 $48.4 $14.0 $15.1 $16.5 $18.1 $20.5 $24.1 $27.6 $ Year CAGR 34% 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 Period end 10

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12 Mortgage Lending Market Leadership with 8.3% Market Share ($ billions) Retail Correspondent Originator Volume Mkt Shr Originator Volume Mkt Shr 1. Wells Fargo $ % 2. Countrywide $ % 3. BofA $ % 4. WaMu $ % 5. Chase $ % Wholesale Originator Volume Mkt Shr 1. Countrywide $ % 2. WaMu $ % 3. Ameriquest $ % 4. Chase $ % 5. Wells Fargo $ % 1. Countrywide $ % 2. Wells Fargo $ % 3. CitiMortgage $ % 4. WaMu $ % 5. GMAC Mortgage $ % Total Originator Volume Mkt Shr 1. Countrywide $ % 2. Wells Fargo $ % 3. WaMu $ % 4. Chase $ % 5. BofA $ % Source: Inside Mortgage Finance, 2Q05 12

13 Productive and Efficient Operations Noninterest Expense and Headcount ($ millions) $2,000 $1,880 $1,848 $1,869 $1,938 NIE - Total NIE - Home Loans $1,839 $1,828 $1,750 $1,500 $1,250 $1,000 $750 $500 $250 $677 $666 $614 $629 $567 $574 $0 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 Headcount Home Loans Group 21,203 18,630 16,524 13,843 12,565 12,534 Total WaMu 59,173 57,274 55,488 52,579 52,488 54,377 13

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15 Multi -Family Targets Markets with Multi-Family Competitive Advantage Seattle #3 10% Portland #1 25% Boston Chicago San Francisco #2 13% San Diego #1 17% Sacramento #1 37% Denver #2 6% New York #1 12% Washington D.C./ Baltimore Mature markets Los Angeles/ Orange County #1 17% Emerging markets New markets Miami #5 3% Source: DataQuick 15

16 Growing Subprime Mortgage Business Long Beach Loan Volumes ($ millions) 61% CAGR increase $5,480 $5,912 $8,164 $1,965 $2,061 $3,330 $2,784 $2,966 $2,557 $2,644 $2,626 $3,995 $4,074 1 Year CAGR 104% 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 16

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18 WaMu s Acquisition of Providian is a Strategically Compelling Combination Key transaction dates Announcement made on June 6 th OTS approval received on August 24 th Providian shareholders overwhelmingly approved the deal on August 31 st Expected close date is October 1 st Integration on fast track Adding credit cards strengthens WaMu s leadership position with middle market consumers, while accelerating card growth through WaMu s national distribution and customer base Strong card platform with proven management team Turn-key transaction: low risk execution and good cultural fit Financially attractive transaction that diversifies portfolio and earnings 18

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20 Prudent ALM Management Mitigates Net Interest Margin Compression NIM and Fed Funds NIM Fed Funds 2.89% 2.86% 2.77% 2.79% 2.73% 2.75% 3.25% 2.66% 2.25% 1.75% 1.00% 1.25% 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 20

21 Tightening MSR Performance Range Total MSR Risk Management and Amortization ($ millions) $0 Changes made to hedging profile -$200 -$400 -$600 -$800 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 21

22 Nonperforming Assets to Total Assets NPAs to Total Assets ($ millions) Nonperforming $ Nonperforming % 0.86% 0.78% $2,387 $2, % $2, % 0.66% $1,937 $1, % $1, % $1,752 $1, % $1, % $1, % 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 22

23 Low LTVs Reflect Solid Underwriting Home Loan Average LTV at Origination 1 = 71% Home Loan Average Current LTV 1,2 = 69% > % > % > % % > % > % > % % > % > % > % % > % > % Home Equity Average Combined LTV = 69% Multi-Family Average LTV 3 = 59% Specialty Mortgage Finance Average LTV = 78% 1 As of 6/30/05; includes Specialty Mortgage Finance loans 2 Unpaid principal balance at 6/30/05 compared to value at origination 3 Based on permanent multi-family loans 23

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25 Shareholder Returns Have Exceeded S&P 500 and S&P Financial Indices A $10,000 Investment in 1983 is Now Worth Over $600,000 $634,085 S&P Financial $170,388 S&P 500 Index $140,634 1Q Q05 Assumes an initial investment of $10,000 when WaMu went public in March 1983 and quarterly reinvestment of dividends compounded through 6/30/05. Shareholder returns (CAGR) and cumulative value calculated from 3/31/83 through 6/30/05 Source: Standard & Poor s 25

26 Shareholder Returns Compare Well to the S&P 500 1, 3, 5, 10 and 20 Year Total Return (CAGR) WaMu S&P 500 Index 20% 18% 21% 10% 6% 7% 8% 10% 12% -2% 1 Year 3 Year 5 Year 10 Year 20 Year As of 6/30/05 Source: original data from Standard & Poor s 26

27 Key Takeaways Franchise located in key growth markets Retail Bank expansion is highly profitable Home Loans Group is competitive and growing Commercial Group provides high returns and asset diversification Sound risk management Attractive shareholder returns 27