WASHINGTON MUTUAL INC (Form: 8-K, Received: 07/19/2006 16:28:52)

Nonaccrual loans held for sale, which are excluded from the nonaccrual balances presented above, were $122 million, $201 million, $245 million, $152 million and $108 million at June 30, 2006, March 31, 2006, December 31, 2005, September 30, 2005 and June 30, 2005. Loans held for sale are accounted for at lower of aggregate cost or fair value, with valuation changes included as adjustments to noninterest income.

Represents purchased subprime home loan portfolios and subprime home loans originated by Long Beach Mortgage Company and held in its investment portfolio.

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.

Foreclosed real estate securing Government National Mortgage Association (“GNMA”) loans of $142 million, $167 million, $79 million, $80 million and $72 million at June 30, 2006, March 31, 2006, December 31, 2005, September 30, 2005 and June 30, 2005 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 Veteran’s Affairs (“VA”).

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

Date of Report: July 19, 2006

Washington Mutual, Inc.

(Exact name of registrant as specified in its charter)

Washington	1-14667	91-1653725
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)


1201Third Avenue, Seattle, Washington	98101
(Address of principal executive offices)	(Zip Code)

(206) 461-2000

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On July 19, 2006, Washington Mutual, Inc. issued a press release regarding its results of operations and financial condition for the quarter and six months ended June 30, 2006. The text of the press release is included as Exhibit 99.1 to this report and the financial supplement is included as Exhibit 99.2 to this report. The information included in the press release text and the financial supplement is considered to be “furnished” under the Securities Exchange Act of 1934. The Company will include final financial statements and additional analyses for the quarter and six months ended June 30, 2006, as part of its Form 10-Q covering that period.

Item 9.01 Financial Statements and Exhibits

(d) The following exhibits are being furnished herewith:

Exhibit No.	Exhibit Description
99.1	Press release text of Washington Mutual, Inc. dated July 19, 2006.
99.2	Financial supplement of Washington Mutual, Inc.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

		WASHINGTON MUTUAL, INC.

Dated: July 19, 2006		By: / s/ Fay L. Chapman
		Fay L. Chapman
		Senior Executive Vice President

July 19, 2006

For Immediate Release

Washington Mutual Reports Second Quarter Earnings Per Share of 79 Cents;

94 Cents Per Share Before the Second Quarter Impact of the Pending Sale

of Mortgage Servicing Rights and Restructuring Charges

Company Announces Intention to Sell its Asset Management Company

Board of Directors Increases Cash Dividend to 52 Cents

and Approves New 150 million Share Repurchase Plan

SEATTLE - Washington Mutual, Inc. (NYSE: WM) today reported second quarter 2006 net income of $767 million, or $0.79 per diluted share, including an after tax adjustment of $101 million to reflect the pending sale of $2.6 billion of mortgage servicing rights and an after tax restructuring charge of $52 million related to the company’s efficiency initiatives.

Net income excluding these two items would have been $920 million, or $0.94 per diluted share, compared with net income of $844 million, or $0.95 per diluted share in the second quarter of 2005.

The company announced today a series of actions it is taking that will significantly improve the company’s market risk profile, greatly accelerate the achievement of its operating efficiency goals, and be accretive to earnings in 2006 and 2007.

“Our retail banking and card services businesses produced excellent results and our business model is performing well in this challenging interest rate environment,” said Kerry Killinger, Washington Mutual Chairman and Chief Executive Officer. “The transformational actions we’re taking will make us an even more diversified bank positioned for improved financial performance as we move forward.”

As part of the company’s Home Loans strategy of focusing on higher-margin products, driving superior operating efficiency and reducing its exposure to market risk, the company entered into a definitive agreement to sell $2.6 billion of mortgage servicing rights. The pending sale includes all of the company’s government loan servicing and a portion of its conforming, fixed-rate servicing, which is predominantly for single service customers, the majority of whom are outside the company’s retail footprint. The pending sale also includes the transfer of the company’s Milwaukee loan servicing operation and approximately 800 employees. In addition to the $101 million after tax adjustment booked in the second quarter, the company expects to incur additional transaction and shutdown-related costs of approximately $50 million, after tax, most of which will be incurred in the third quarter.

The company is announcing the intent to sell WM Advisors, Inc., its subsidiary that provides investment management, distribution and shareholder services to the WM Group of Funds. The decision is consistent with the company’s strategy of streamlining its business model. Therefore, WM Advisors is being shown as discontinued operations in the company’s financial statements.

The sale of WM Advisors is anticipated to be completed by year end and the gain from the sale is expected to more than offset the 2006 financial impact of the sale of mortgage servicing rights and the company’s restructuring charges, including the relocation of back office operations to lower cost domestic and offshore locations, and consolidation of real estate that remains in higher cost markets.

Washington Mutual’s Board of Directors declared a cash dividend of 52 cents per share on the company’s common stock, up from 51 cents per share in the previous quarter. Dividends on the common stock are payable on August 15, 2006 to shareholders of record as of July 31, 2006. Consistent with the company’s commitment to optimize its use of shareholder capital, the Board also approved a new 150 million share repurchase program. There is no fixed termination date for the new program, and purchases may be made in the open market, through block trades, accelerated share repurchases, private transactions, or otherwise.

Earnings Highlights

(In millions, except per share data)

	Three Months Ended
	June 30,		March 31,		June 30,
	2006		2006		2005
Total revenue	$	3,638	$	3,755	$	3,115
Net income		767		985		844
Diluted earnings per common share		0.79		0.98		0.95

Total assets, end of period	$	350,696	$	348,667	$	323,533

Second Quarter Earnings Impact

(In millions, except per share data)

	Pretax Impact		After tax Impact		EPS Impact
Net income		$	$767	$	0.79
Action items
Restructuring costs*	81		52		0.05
Adjustment on sale of MSR	157		101		0.10
Net income, excluding the impact
of restructuring costs and MSR adjustment		$	920	$	0.94

* Pretax restructuring costs include $30 million compensation and benefits expense, $49 million occupancy and equipment expense, and $2 million in professional fees.

Momentum continues with WaMu Free Checking™. WaMu’s new free checking product drove another quarter of record account growth with 404,000 net checking accounts, up from 340,000 net accounts in the previous quarter when the product was first launched. This quarter’s growth also represents a 66 percent increase in net accounts from a year ago. The introduction of this new product has enhanced WaMu’s position as one of the industry leaders in customer acquisition.

Card Services drives strong customer and loan growth. The successful marketing of credit cards to existing WaMu customers has helped grow both the number of customers and loan balances. Managed card receivables grew significantly, up $1.0 billion, or 5 percent, on a linked quarter basis, to $21.1 billion at June 30. During the quarter, Card Services opened 771,000 new credit card accounts, of which 274,000 were with WaMu retail customers. The number of new WaMu accounts opened since the company added Card Services less than a year ago now totals 694,000.

-more-

SECOND QUARTER FINANCIAL SUMMARY

Financial Summary	Three Months Ended
	June 30,			March 31,			June 30,
(In millions)	2006			2006			2005
Income Statement
Net interest income	$	2,060		$	2,117		$	2,009
Provision for loan and lease losses		224			82			31
Noninterest income		1,578			1,638			1,106
Noninterest expense		2,229			2,138			1,767
Net income		767			985			844

Balance Sheet
Average total assets	$	349,561		$	344,562		$	320,845
Average total deposits		200,252			191,034			183,521

Profitability Ratios
Return on average common equity		11.39	%		14.18	%		15.33	%
Net interest margin		2.65			2.75			2.77
Efficiency ratio		61.27			56.95			56.70
Nonperforming assets/total assets		0.62			0.59			0.53
Tangible equity/total tangible assets		5.94			5.85			5.13

EARNINGS PERFORMANCE

Net interest income reflects pressure from rising short-term interest rates. Net interest income in the second quarter was down 3 percent from the prior quarter as the increase in earning assets was more than offset by margin compression. Compared with the second quarter a year ago, net interest income was up 3 percent as average interest earning assets increased 8 percent and more than offset the impact of a 200 basis point rise in the Fed Funds rate.

Provision reflects loan growth and charge-off level. The provision for loan and lease losses of $224 million in the second quarter reflected a modest increase in the level of charge-offs, as well as incremental loan growth. The $82 million provision and level of charge-offs in the first quarter benefited from the surge of bankruptcy-related charge-offs in the fourth quarter as consumers sought bankruptcy protection in advance of the effective date of bankruptcy reform. The provision a year ago reflected not only the benign credit environment but also the absence of the credit card portfolio. Nonperforming assets as a percentage of total assets were up slightly to 62 basis points at quarter end, compared with 59 basis points at the end of the prior quarter and 53 basis points at the end of the last year’s second quarter.

Noninterest income reflects strong fee growth. Noninterest income of $1.58 billion in the second quarter included the $157 million loss on the $2.6 billion of MSR being sold. This compares with noninterest income of $1.64 billion in the first quarter, which included income of $134 million from the partial settlement of the Home Savings goodwill litigation. Excluding these items, noninterest income would have been up 15 percent, reflecting the strength of the company’s customer account growth. Compared with the prior year, the increase in noninterest income was primarily due to a 19 percent increase in depositor and other retail banking fees, plus the inclusion of Card Services which added $575 million from the sale and servicing of consumer loans and credit card fees.

Company continues to focus on expense management. Included in this quarter’s noninterest expense were restructuring charges totaling $81 million related to the company’s efficiency initiatives. Excluding these charges, noninterest expense would have been up only 2 percent from the previous quarter as the company opened another 35 retail banking stores, but reduced total staffing by 7 percent. The increase in expenses compared with a year ago reflects the addition of Card Services and the company’s growth initiatives, including the addition of 204 net new retail banking stores during the past twelve months.

-more-

BALANCE SHEET ACTIVITY

Company strategically manages balance sheet. Average assets were up 1 percent on a linked quarter basis with the increase in the balance of loans held in portfolio, particularly hybrid loans and credit card receivables. Compared with the second quarter of 2005, average assets were up 9 percent reflecting growth in adjustable-rate loans and the addition of Card Services receivables.

Average deposits up with strong growth in wholesale products. Average deposits were up 5 percent on a linked quarter basis as the company utilized wholesale deposits, in part, to reduce the level of Federal Home Loan Bank advances. Compared with last year’s second quarter, average deposits were up $16.73 billion, or 9 percent, due to the inclusion of acquired deposits from the company’s merger with Providian and growth in both retail and wholesale deposits.

SECOND QUARTER OPERATING SEGMENT RESULTS

Retail Banking Group

Selected Segment Information	Three Months Ended
	June 30,		March 31,		June 30,
(In millions, except accounts and households)	2006		2006		2005
Net interest income	$	1,509	$	1,523	$	1,458
Provision for loan and leases losses		37		50		40
Noninterest income ¹		732		674		619
Noninterest expense ¹		1,138		1,107		1,042
Net income from continuing operations ¹		670		651		625

Average loans	$	195,985	$	189,142	$	181,396
Average retail deposits		138,803		139,062		135,539
Net change in retail checking accounts ²		404,190		340,157		244,028
Net change in retail households		259,000		210,000		173,000

¹	Prior quarters have been restated to reflect WM Advisors as discontinued operations due to the company’s intent to sell.
²	Includes retail checking and small business checking.

Retail Banking continues to show impressive results. Net income from continuing operations of $670 million was up 3 percent from the first quarter and up 7 percent from a year ago. Excluding the impact of portfolio management included in the segment, net income from continuing operations for the Retail Bank network was up 31 percent from the same period a year ago and included the opening of 204 net new retail stores.

Retail Banking fees continue to grow at double digit pace. Depositor and other retail banking fees were up 11 percent from the first quarter and up 19 percent from a year ago reflecting the strong growth in net new checking accounts. Included in this quarter’s results was a $21 million incentive payment as part of the company’s migration of its debit card business to MasterCard. Excluding the payment, the increase in depositor fees from a year ago would have been approximately 15 percent.

WaMu Free Checking™ drives another quarter of record checking account growth. The company’s new Free Checking product was instrumental in the opening of 404,000 net new checking accounts in the second quarter, up from 340,000 in the prior quarter and 244,000 a year ago. The new product was also instrumental in attracting 259,000 net new retail households during the quarter.

-more-

Higher short-term interest rates slow deposit growth. Average retail deposits during the quarter were down slightly from the previous quarter given the overall interest rate and competitive environment. Compared with last year’s second quarter, average retail deposits were up $3.3 billion, or 2 percent.

·	Small business activity continues to expand. With continued strength across small business, the company opened 55,000 net new small business checking accounts during the quarter, up 4 percent from the prior quarter and up 12 percent from a year earlier.

Card Services Group (on a managed basis)

Selected Segment Information	Three Months Ended
	June 30,			March 31,			December 31,
(In millions)	2006			2006			2005
Net interest income	$	610		$	614		$	637
Provision for loan and lease losses		417			330			454
Noninterest income		387			345			352
Noninterest expense		283			289			268
Net income		183			210			166

Average managed receivables	$	20,473		$	20,086		$	19,472
Period end managed receivables		21,095			20,099			19,962
30+ day managed delinquency rate		5.23	%		5.18	%		5.07	%
Managed net credit losses		5.99			5.79			7.28

Card Services continues to produce excellent results. Card Services reported net income of $183 million reflecting the continued strong risk-adjusted return of the portfolio, growth in the amount of outstanding receivables, a favorable credit environment, and the successful marketing of credit cards to WaMu customers.

Managed receivables continue to show significant growth. Solid marketing efforts and continued penetration of the WaMu retail customer base contributed to a 5 percent increase in period end managed receivables for the second quarter compared with the first quarter. During the quarter, Card Services opened approximately 771,000 new accounts, a third of which were with WaMu retail customers.

Credit quality continues to be favorable. At 5.23 percent of total managed receivables, the 30+ day delinquency rate was up slightly from the prior quarter. As expected, managed net credit losses were also up slightly from the first quarter but still remain low compared with historical levels. Credit performance in both the first and second quarters benefited from a much lower level of bankruptcy-related charge-offs in the wake of the surge in the fourth quarter as consumers sought bankruptcy protection in advance of the effective date of bankruptcy reforms.

-more-

Commercial Group

Selected Segment Information	Three Months Ended
	June 30,		March 31,		June 30,
(In millions)	2006		2006		2005
Net interest income	$	203	$	199	$	218
Provision for loan and lease losses		1		1		1
Noninterest income		17		13		3
Noninterest expense		57		68		57
Net income		100		89		102

Loan volume	$	2,961	$	2,769	$	2,864
Average loans		31,625		31,011		29,597

Commercial Group posts solid results. The increase in net income from the first quarter reflects the slight increase in average assets and strong expense management. Net interest income of $203 million was up 2 percent from the prior quarter as higher loan balances offset continued spread compression. However, it was down 7 percent from a year ago due to higher funding costs caused by rising short-term rates. Compared with the previous quarter, the decline in noninterest expense was due to improved efficiencies and reduced staffing.

·	Commercial Group lending volume remains robust . Despite higher interest rates, total loan volume of $2.96 billion increased 7 percent from the prior quarter and 3 percent from a year ago. The quarter’s lending reflects the company’s continued strong position in multi-family lending.

Home Loans Group

Selected Segment Information	Three Months Ended
	June 30,		March 31,		June 30,
(In millions)	2006		2006		2005
Net interest income	$	206	$	269	$	449
Provision for loan and lease losses		1		1		-
Noninterest income		453		408		668
Noninterest expense		588		599		637
Net income		32		39		292

Loan volume	$	41,364	$	44,998	$	53,030
Average loans		30,742		34,586		48,040

·	Home Loan net income continues to reflect challenging rate environment. Second quarter net income of $32 million was down slightly from the prior quarter as the decline in net interest income more than offset the improvement in noninterest income and the benefits of improved expense management.

Higher mortgage rates slow loan production. Higher mortgage rates led to a decline in lending volume and a lower balance of loans outstanding. Net interest income was down 23 percent on a linked quarter basis and 54 percent year over year reflecting the lower loan balance arising from higher short-term rates.

Improvement seen in gain on sale margin and MSR performance. Gain on sale of loans of $251 million was up compared with the prior quarter as margins generally improved . During the quarter, the total cost of MSR risk management was $45 million compared with a cost of $151 million in the first quarter. The lower level of hedging costs reflects a somewhat improved interest rate and hedging environment than existed during the first quarter of this year. Offsetting these positive results were fair value adjustments of $82 million on certain assets held in trading accounts.

-more-

Home Loans refines business model for changing market environments. During the quarter, the Home Loans Group took several steps to further its long-term goals to diversify its product set, leverage distribution, and reduce its cost structure. In May, the company announced that it was realigning its traditional correspondent business to a conduit structure. And, as part of streamlining its product line, the company announced that it will no longer engage in FHA and VA lending. The company’s announced sale of $2.6 billion of mortgage servicing rights is consistent with the Home Loans strategy and will reduce the ratio of MSR to total stockholders’ equity to approximately 25 percent.

Efficiency initiatives continue to reduce expenses. Noninterest expense of $588 million in the second quarter of 2006 was down 8 percent from a year ago as management drove productivity and efficiency improvements. The company plans to continue to attack the cost structure with further site and system consolidation, business process outsourcing, and leveraging distribution in financial centers. Also, the realignment of Long Beach Mortgage under one management team in the Home Loans group was substantially completed in the quarter.

COMPANY UPDATES

On April 23, the company announced that it had entered into a definitive merger agreement with Commercial Capital Bancorp in which Washington Mutual will acquire the outstanding shares of Commercial Capital for $16.00 per share in cash. The transaction is valued at approximately $1.0 billion in aggregate and is expected to close early in the fourth quarter.

About Washington Mutual

Washington Mutual, through its subsidiaries, is one of the nation’s leading consumer and small business banks. At June 30, 2006, Washington Mutual and its subsidiaries had assets of $350.70 billion. The company has a history dating back to 1889 and its subsidiary banks currently operate more than 2,600 consumer and small business banking stores throughout the nation. Washington Mutual’s press releases are available at http://newsroom.wamu.com.

Webcast information : A conference call to discuss the company’s financial results will be held on Wednesday, July 19, 2006, at 5:00 p.m. EDT and will be hosted by Kerry Killinger, chairman and chief executive officer and Tom Casey, executive vice president and chief financial officer. The conference call is available by telephone or on the Internet. The dial-in number for the live conference call is 888-946-6301. Participants calling from outside the United States may dial 210-234-0006. The passcode “WaMu” is required to access the call. Via the Internet, the conference call is available on the Investor Relations portion of the company’s web site at www.wamu.com/ir. A transcript of the prepared remarks will be available on the company’s web site prior to the call and archived for 30 days. A recording of the conference call will be available from 7:00 p.m. EDT on Wednesday, July 19, 2006, through 11:59 p.m. EDT on Friday, July 28, 2006. The recorded message will be available at 866-503-3181. Callers from outside the United States may dial 203-369-1861.

-more-

Forward Looking Statement

Our Form 10-K for 2005 and other documents that we file 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 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 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 described in detail in our Form 10-K for 2005 and Quarterly Report on Form 10-Q for the Period Ended March 31, 2006 and include: volatile interest rates impact the mortgage banking business; rising interest rates, unemployment and decreases in housing prices; risks related to the option adjustable-rate mortgage product; risks related to subprime lending; risks related to the integration of the Card Services business; risks related to credit card operations; changes in the regulation of financial services companies, housing government-sponsored enterprises and credit card lenders; competition from banking and nonbanking companies; 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; and negative public opinion. There are other factors not described in the Form 10-K for 2005 and Form 10-Q for the Period Ended March 31, 2006 and which are beyond the Company’s ability to anticipate or control that could cause results to differ.

# # #

Media Contact	Investor Relations Contact
Alan Gulick	Alan Magleby
Washington Mutual	Washington Mutual
206-500-2760	206-490-5182 (Seattle)
alan.gulick@wamu.net	212-326-6019 (New York)
	alan.magleby@wamu.net

WM - 1

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions, except per share data)

(unaudited)

	Quarter Ended															Six Months Ended
	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,			June 30,			June 30,
	2006			2006			2005			2005			2005			2006			2005
PROFITABILITY
Net income	$	767		$	985		$	865		$	821		$	844		$	1,752		$	1,745
Net interest income		2,060			2,117			2,241			2,005			2,009			4,176			3,972
Noninterest income		1,578			1,638			1,526			1,208			1,106			3,216			2,364
Noninterest expense		2,229			2,138			2,214			1,860			1,767			4,367			3,548

Diluted earnings per common share:
Income from continuing operations	$	0.78		$	0.97		$	0.84		$	0.91		$	0.94		$	1.75		$	1.94
Income from discontinued operations, net		0.01			0.01			0.01			0.01			0.01			0.02			0.03
Net income		0.79			0.98			0.85			0.92			0.95			1.77			1.97

Diluted weighted average number of common shares outstanding ⁽¹⁾		975,504			1,003,460			1,011,395			888,495			887,250			989,408			888,020
Net interest margin		2.65	%		2.75	%		2.88	%		2.73	%		2.77	%		2.70	%		2.80	%
Dividends declared per common share		0.51			0.50			0.49			0.48			0.47			1.01			0.93
Book value per common share ⁽²⁾		27.66			27.45			27.95			25.92			25.62			27.66			25.62
Return on average assets ⁽³⁾		0.88	%		1.14	%		0.99	%		1.00	%		1.05	%		1.01	%		1.11	%
Return on average common equity ⁽³⁾		11.39			14.18			12.49			14.66			15.33			12.81			15.98
Efficiency ratio ⁽⁴⁾⁽⁵⁾		61.27			56.95			58.75			57.88			56.70			59.08			55.99

ASSET QUALITY
Nonperforming assets ⁽⁶⁾ to total assets ⁽⁷⁾		0.62	%		0.59	%		0.57	%		0.52	%		0.53	%		0.62	%		0.53	%
Allowance as a percentage of total loans held in portfolio ⁽⁷⁾		0.68			0.68			0.74			0.58			0.58			0.68			0.58
Provision for loan and lease losses	$	224		$	82		$	217		$	52		$	31		$	306		$	47
Net charge-offs		116			105			137			31			39			220			77

CAPITAL ADEQUACY ⁽⁷⁾
Capital Ratios at WMI-consolidated level:
Tangible equity ⁽⁸⁾ to total tangible assets ⁽⁸⁾		5.94	%		5.85	%		5.72	%		5.09	%		5.13	%		5.94	%		5.13	%
Estimated total risk-based capital to total risk-weighted assets ⁽⁹⁾		11.44			10.90			10.90			10.71			11.10			11.44			11.10
Capital Ratios at WMB-bank only level
(well-capitalized minimum) ⁽¹⁰⁾ :
Tier 1 capital to adjusted total assets (5.00%)		6.44			6.84			6.56			5.85			5.74			6.44			5.74
Adjusted tier 1 capital to total risk-weighted assets (6.00%)		8.37			9.04			8.61			8.47			8.38			8.37			8.38
Total risk-based capital to total risk-weighted assets (10.00%)		11.66			11.94			11.62			11.48			11.51			11.66			11.51

SUPPLEMENTAL DATA
Average balance sheet:
Total loans held in portfolio	$	242,334		$	232,505		$	227,568		$	213,016		$	213,638		$	237,446		$	210,496
Total interest-earning assets ⁽⁴⁾		313,239			307,777			314,490			296,529			290,841			310,523			283,971
Total assets		349,561			344,562			349,931			327,292			320,845			347,075			314,544
Total deposits		200,252			191,034			196,799			188,320			183,521			195,668			179,376
Total stockholders' equity		26,932			27,798			27,708			22,412			22,014			27,362			21,848
Period-end balance sheet:
Total loans held in portfolio, net of allowance for loan
and lease losses		241,840			238,362			227,937			216,930			211,494			241,840			211,494
Total assets		350,696			348,667			343,839			333,622			323,533			350,696			323,533
Total deposits		204,558			200,002			193,167			190,412			184,317			204,558			184,317
Total stockholders' equity		26,468			26,156			27,616			22,596			22,350			26,468			22,350
Common shares outstanding at the end of period ^(1)(11)		962,880			958,819			993,914			877,651			878,384			962,880			878,384
Employees at end of period		56,247			60,381			60,798			56,214			54,377			56,247			54,377

⁽¹⁾

Number of shares in thousands.

⁽²⁾

Excludes six million shares held in escrow for all periods reported.

⁽³⁾

Includes income from continuing and discontinued operations.

⁽⁴⁾

Based on continuing operations.

⁽⁵⁾

The efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income).

⁽⁶⁾

Excludes nonaccrual loans held for sale.

⁽⁷⁾

As of period end.

⁽⁸⁾

Excludes unrealized net gain/loss on available-for-sale securities and derivatives, goodwill and intangible assets (except MSR). Minority interests of $1.96 billion and $1.97 billion at June 30, 2006 and March 31, 2006 are included in the numerator.

⁽⁹⁾

The total risk-based capital ratio is estimated as if Washington Mutual, Inc. were a bank holding company subject to Federal Reserve Board capital requirements.

⁽¹⁰⁾

Capital ratios for Washington Mutual Bank ("WMB") at June 30, 2006 are preliminary.

⁽¹¹⁾

Includes six million shares held in escrow for all periods reported.

WM - 2
Washington Mutual, Inc.
Consolidated Statements of Income
(dollars in millions, except per share data)
(unaudited)

	Quarter Ended
	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
	2006			2006			2005			2005			2005
Interest Income
Loans held for sale	$	398		$	466		$	676		$	665		$	580
Loans held in portfolio		3,884			3,576			3,431			2,947			2,833
Available-for-sale securities		368			322			303			238			234
Trading assets		165			198			185			114			91
Other interest and dividend income		120			95			73			65			51
Total interest income		4,935			4,657			4,668			4,029			3,789
Interest Expense
Deposits		1,461			1,221			1,184			996			852
Borrowings		1,414			1,319			1,243			1,028			928
Total interest expense		2,875			2,540			2,427			2,024			1,780
Net interest income		2,060			2,117			2,241			2,005			2,009
Provision for loan and lease losses		224			82			217			52			31
Net interest income after provision for loan and lease losses		1,836			2,035			2,024			1,953			1,978
Noninterest Income
Revenue from sales and servicing of home mortgage loans		222			263			418			710			114
Revenue from sales and servicing of consumer loans		424			376			409			2			2
Depositor and other retail banking fees		641			578			586			578			540
Credit card fees		152			138			139			-			-
Securities fees and commissions		56			52			47			48			47
Insurance income		33			33			37			42			47
Trading assets income (loss)		(129	)		(13	)		(273	)		(171	)		285
Gain (loss) from sales of other available-for-sale securities		-			(7	)		46			(32	)		25
Other income		179			218			117			31			46
Total noninterest income		1,578			1,638			1,526			1,208			1,106
Noninterest Expense
Compensation and benefits ⁽¹⁾		1,021			1,032			1,028			930			876
Occupancy and equipment		435			391			399			372			349
Telecommunications and outsourced information services		145			134			139			107			100
Depositor and other retail banking losses		51			56			60			61			49
Advertising and promotion		117			95			109			78			74
Professional fees		45			36			62			47			38
Other expense		415			394			417			265			281
Total noninterest expense		2,229			2,138			2,214			1,860			1,767
Minority interest expense		37			-			-			-			-
Income from continuing operations before income taxes		1,148			1,535			1,336			1,301			1,317
Income taxes		389			559			479			488			484
Income from continuing operations, net of taxes		759			976			857			813			833
Discontinued Operations ⁽²⁾
Income from discontinued operations before income taxes		12			15			12			12			17
Income taxes		4			6			4			4			6
Income from discontinued operations, net of taxes		8			9			8			8			11
Net Income	$	767		$	985		$	865		$	821		$	844

Basic Earnings Per Common Share:
Income from continuing operations	$	0.80		$	1.00		$	0.87		$	0.94		$	0.97
Income from discontinued operations, net		0.01			0.01			0.01			0.01			0.01
Net income		0.81			1.01			0.88			0.95			0.98

Diluted Earnings Per Common Share:
Income from continuing operations	$	0.78		$	0.97		$	0.84		$	0.91		$	0.94
Income from discontinued operations, net		0.01			0.01			0.01			0.01			0.01
Net income		0.79			0.98			0.85			0.92			0.95

Dividends declared per common share		0.51			0.50			0.49			0.48			0.47
Basic weighted average number of common shares outstanding (in thousands)		947,023			973,614			980,084			866,541			865,221
Diluted weighted average number of common shares outstanding (in thousands)		975,504			1,003,460			1,011,395			888,495			887,250

⁽¹⁾	As of January 1, 2006, the Company applied Statement of Financial Accounting Standards ("Statement") No. 123R, Share-Based Payment. Statement No. 123R requires an entity that previously had a policy of recognizing the effect of forfeitures as they occurred to estimate the number of outstanding instruments for which the requisite service is not expected to be rendered. The effect of this change in accounting principle amounted to $25 million and has been reflected as a decrease to compensation and benefits expense in the first quarter of 2006.
(2)	Represents the operations of the Company's asset management unit, WM Advisors, Inc.

WM-3
Washington Mutual, Inc.
Consolidated Statements of Income
(dollars in millions, except per share data)
(unaudited)

	Six Months Ended
	June 30,			June 30,
	2006			2005
Interest Income
Loans held for sale	$	864		$	1,053
Loans held in portfolio		7,460			5,448
Available-for-sale securities		690			457
Trading assets		363			170
Other interest and dividend income		215			95
Total interest income		9,592			7,223
Interest Expense
Deposits		2,682			1,548
Borrowings		2,734			1,703
Total interest expense		5,416			3,251
Net interest income		4,176			3,972
Provision for loan and lease losses		306			47
Net interest income after provision for loan and lease losses		3,870			3,925
Noninterest Income
Revenue from sales and servicing of home mortgage loans		486			889
Revenue from sales and servicing of consumer loans		801			2
Depositor and other retail banking fees		1,219			1,030
Credit card fees		291			-
Securities fees and commissions		108			94
Insurance income		66			93
Trading assets income (loss)		(142	)		186
Loss from sales of other available-for-sale securities		(8	)		(97	)
Other income		395			167
Total noninterest income		3,216			2,364
Noninterest Expense
Compensation and benefits ⁽¹⁾		2,054			1,744
Occupancy and equipment		826			750
Telecommunications and outsourced information services		279			203
Depositor and other retail banking losses		108			104
Advertising and promotion		211			128
Professional fees		81			71
Other expense		808			548
Total noninterest expense		4,367			3,548
Minority interest expense		37			-
Income from continuing operations before income taxes		2,682			2,741
Income taxes		947			1,019
Income from continuing operations, net of taxes		1,735			1,722
Discontinued Operations ⁽²⁾
Income from discontinued operations before income taxes		27			35
Income taxes		10			12
Income from discontinued operations, net of taxes		17			23
Net Income	$	1,752		$	1,745

Basic Earnings Per Common Share:
Income from continuing operations	$	1.81		$	1.99
Income from discontinued operations, net		0.02			0.03
Net income		1.83			2.02

Diluted Earnings Per Common Share:
Income from continuing operations	$	1.75		$	1.94
Income from discontinued operations, net		0.02			0.03
Net income		1.77			1.97

Dividends declared per common share		1.01			0.93
Basic weighted average number of common shares outstanding (in thousands)		960,245			865,078
Diluted weighted average number of common shares outstanding (in thousands)		989,408			888,020

⁽¹⁾	As of January 1, 2006, the Company applied Statement of Financial Accounting Standards ("Statement") No. 123R, Share-Based Payment. Statement No. 123R requires an entity that previously had a policy of recognizing the effect of forfeitures as they occurred to estimate the number of outstanding instruments for which the requisite service is not expected to be rendered. The effect of this change in accounting principle amounted to $25 million and has been reflected as a decrease to compensation and benefits expense in the first quarter of 2006.
⁽²⁾	Represents the operations of the Company's asset management unit, WM Advisors, Inc.

WM-4

Washington Mutual, Inc.

Consolidated Statements of Financial Condition

(dollars in millions, except per share data)

(unaudited)

	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
	2006			2006			2005			2005			2005
Assets
Cash and cash equivalents	$	6,630		$	5,816		$	6,162		$	4,874		$	4,548
Federal funds sold and securities purchased under agreements to resell		4,112			3,995			2,137			3,194			625
Trading assets		7,445			9,958			10,999			7,351			5,687
Available-for-sale securities, total amortized cost of $28,504, $27,424,
$24,810, $20,757 and $18,999:
Mortgage-backed securities		21,438			21,388			20,648			17,161			14,396
Investment securities		6,358			5,586			4,011			3,603			4,852
Total available-for-sale securities		27,796			26,974			24,659			20,764			19,248
Loans held for sale		23,342			25,020			33,582			48,018			51,122
Loans held in portfolio		243,503			240,004			229,632			218,194			212,737
Allowance for loan and lease losses		(1,663	)		(1,642	)		(1,695	)		(1,264	)		(1,243	)
Total loans held in portfolio, net of allowance for loan and lease losses		241,840			238,362			227,937			216,930			211,494
Investment in Federal Home Loan Banks		3,500			4,200			4,257			4,228			4,194
Mortgage servicing rights		9,162			8,736			8,041			7,042			5,730
Goodwill		8,339			8,298			8,298			6,196			6,196
Other assets		18,530			17,308			17,767			15,025			14,689
Total assets	$	350,696		$	348,667		$	343,839		$	333,622		$	323,533
Liabilities
Deposits:
Noninterest-bearing deposits	$	35,457		$	36,531		$	34,014		$	36,850		$	35,518
Interest-bearing deposits		169,101			163,471			159,153			153,562			148,799
Total deposits		204,558			200,002			193,167			190,412			184,317
Federal funds purchased and commercial paper		6,138			6,841			7,081			7,229			5,864
Securities sold under agreements to repurchase		19,866			15,471			15,532			14,508			14,089
Advances from Federal Home Loan Banks		55,311			65,283			68,771			69,405			71,534
Other borrowings		27,995			24,872			23,777			23,994			20,752
Other liabilities		8,401			8,069			7,880			5,463			4,614
Minority interests ⁽¹⁾		1,959			1,973			15			15			13
Total liabilities		324,228			322,511			316,223			311,026			301,183
Stockholders' equity		26,468			26,156			27,616			22,596			22,350
Total liabilities and stockholders' equity	$	350,696		$	348,667		$	343,839		$	333,622		$	323,533

⁽¹⁾	Primarily comprises perpetual non-cumulative preferred securities issued in March 2006 by Washington Mutual Preferred Funding, LLC, an indirect subsidiary of Washington Mutual, Inc.
(2)	Represents the operations of the Company's asset management unit, WM Advisors, Inc.

WM-5
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)

	Quarter Ended
	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
	2006			2006			2005			2005			2005
Stockholders' Equity Rollforward
Balance, beginning of period	$	26,156		$	27,616		$	22,596		$	22,350		$	21,767
Net income		767			985			865			821			844
Cumulative effect from the adoption of Statement No. 156, net of income taxes ⁽¹⁾		-			35			-			-			-
Other comprehensive (loss) income, net of income taxes		(151	)		(219	)		(91	)		(158	)		98
Cash dividends declared on common stock		(486	)		(499	)		(480	)		(419	)		(409	)
Common stock repurchased and retired		-			(2,108	)		(723	)		(98	)		-
Common stock issued for acquisition		-			-			5,030			-			-
Common stock issued		182			346			419			100			50
Balance, end of period	$	26,468		$	26,156		$	27,616		$	22,596		$	22,350

⁽¹⁾

As of January 1, 2006, the Company prospectively applied Statement of Financial Accounting Standards No. 156, Accounting for Servicing of Financial Assets ("Statement"). This Statement amends Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities , and 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 all classes of servicing assets at fair value. This Statement 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.

WM-6

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Quarter Ended															Six Months Ended
	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,			June 30,			June 30,
	2006			2006			2005			2005			2005			2006			2005
RETAIL BANKING GROUP
Condensed income statement:
Net interest income	$	1,509		$	1,523		$	1,457		$	1,417		$	1,458		$	3,031		$	2,859
Provision for loan and lease losses		37			50			42			47			40			87			77
Noninterest income		732			674			689			653			619			1,406			1,193
Inter-segment revenue		19			14			8			12			11			33			22
Noninterest expense		1,138			1,107			1,120			1,080			1,042			2,244			2,054
Income from continuing operations before income taxes		1,085			1,054			992			955			1,006			2,139			1,943
Income taxes		415			403			372			363			381			817			736
Income from continuing operations		670			651			620			592			625			1,322			1,207
Income from discontinued operations, net of taxes		8			9			8			8			11			17			23
Net income	$	678		$	660		$	628		$	600		$	636		$	1,339		$	1,230
Performance and other data:
Efficiency ratio ⁽¹⁾		50.33	%		50.07	%		52.01	%		51.86	%		49.87	%		50.20	%		50.41	%
Average loans	$	195,985		$	189,142		$	183,780		$	179,361		$	181,396		$	192,587		$	179,526
Average assets		208,869			202,235			196,872			191,929			194,029			205,574			192,273
Average deposits:
Checking deposits:
Noninterest bearing		21,418			20,346			19,953			19,350			18,868			20,885			18,232
Interest bearing		37,518			40,343			43,192			45,186			47,531			38,923			48,648
Total checking deposits		58,936			60,689			63,145			64,536			66,399			59,808			66,880
Savings and money market deposits		38,143			37,433			36,594			35,517			34,875			37,790			35,484
Time deposits		41,724			40,940			40,473			38,688			34,265			41,334			31,904
Average total deposits		138,803			139,062			140,212			138,741			135,539			138,932			134,268
Loan volume		10,488			7,255			11,563			11,191			11,704			17,743			24,197
Employees at end of period		29,311			30,336			30,532			30,123			29,046			29,311			29,046
CARD SERVICES GROUP
Managed basis ⁽²⁾
Condensed income statement:
Net interest income	$	610		$	614		$	637								$	1,223
Provision for loan and lease losses		417			330			454									747
Noninterest income		387			345			352									733
Inter-segment expense		1			-			-									2
Noninterest expense		283			289			268									571
Income before income taxes		296			340			267									636
Income taxes		113			130			101									243
Net income	$	183		$	210		$	166								$	393
Performance and other data:
Efficiency ratio ⁽¹⁾		28.35	%		30.15	%		27.08	%								29.24	%
Average loans		20,473			20,086			19,472									20,281
Average assets		23,044			22,764			22,198									22,905
Employees at end of period		2,627			2,871			3,124									2,627
Securitization adjustments
Condensed income statement:
Net interest income	$	(405	)	$	(432	)	$	(409	)							$	(837	)
Provision for loan and lease losses		(217	)		(225	)		(259	)								(442	)
Noninterest income		188			207			150									395
Performance and other data:
Average loans	$	(11,565	)	$	(12,107	)	$	(11,011	)							$	(11,835	)
Average assets		(9,753	)		(10,219	)		(9,267	)								(9,985	)
Adjusted basis
Condensed income statement:
Net interest income	$	205		$	182		$	228								$	386
Provision for loan and lease losses		200			105			195									305
Noninterest income		575			552			502									1,128
Inter-segment expense		1			-			-									2
Noninterest expense		283			289			268									571
Income before income taxes		296			340			267									636
Income taxes		113			130			101									243
Net income	$	183		$	210		$	166								$	393
Performance and other data:
Average loans	$	8,908		$	7,979		$	8,461								$	8,446
Average assets		13,291			12,545			12,931									12,920
COMMERCIAL GROUP ⁽³⁾
Condensed income statement:
Net interest income	$	203		$	199		$	222		$	222		$	218		$	403		$	446
Provision for loan and lease losses		1			1			1			1			1			2			2
Noninterest income		17			13			109			8			3			29			78
Noninterest expense		57			68			66			63			57			126			111
Income before income taxes		162			143			264			166			163			304			411
Income taxes		62			54			100			62			61			116			155
Net income	$	100		$	89		$	164		$	104		$	102		$	188		$	256
Performance and other data:
Efficiency ratio ⁽¹⁾		25.94	%		32.24	%		19.85	%		27.44	%		25.84	%		29.03	%		21.21	%
Average loans	$	31,625		$	31,011		$	30,950		$	30,455		$	29,597		$	31,260		$	29,580
Average assets		34,188			33,833			34,443			33,854			33,078			33,952			32,904
Average deposits		2,243			2,263			2,428			2,485			2,462			2,253			2,728
Loan volume		2,961			2,769			2,932			3,003			2,864			5,731			5,297
Employees at end of period		1,253			1,332			1,318			1,258			1,284			1,253			1,284

(This table is continued on "WM-7".)
__________________________

⁽¹⁾

The efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income).

⁽²⁾

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. Under this presentation, loans securitized and sold are added back to the balance sheet and the related interest, fee income and credit losses are added back to the income statement. These securitization adjustments are eliminated in the reconciliation of management accounting methodologies to the Company's GAAP financial results.

⁽³⁾

Effective January 1, 2006, the Company reorganized its single family residential mortgage lending operations. This reorganization combined the Company's subprime mortgage origination business, Long Beach Mortgage Company, as well as its Mortgage Banker Finance lending operations with the Home Loans Group. Previously, these operations were reported within the Commercial Group. Prior periods have been recast to reflect this change in organization.

WM-7

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Quarter Ended															Six Months Ended
(This table is continued from "WM-6".)	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,			June 30,			June 30,
	2006			2006			2005			2005			2005			2006			2005
HOME LOANS GROUP ⁽¹⁾
Condensed income statement:
Net interest income	$	206		$	269		$	415		$	480		$	449		$	475		$	848
Provision for loan and lease losses		1			1			1			1			-			3			2
Noninterest income		453			408			324			659			668			861			1,415
Inter-segment expense		18			14			8			12			11			31			22
Noninterest expense		588			599			656			640			637			1,187			1,247
Income before income taxes		52			63			74			486			469			115			992
Income taxes		20			24			29			183			177			44			373
Net income	$	32		$	39		$	45		$	303		$	292		$	71		$	619
Performance and other data:
Efficiency ratio ⁽²⁾		91.82	%		90.19	%		89.42	%		56.62	%		57.48	%		90.99	%		55.67	%
Average loans	$	30,742		$	34,586		$	51,073		$	53,424		$	48,040		$	32,653		$	43,497
Average assets		58,440			64,171			78,365			75,138			68,928			61,289			64,991
Average deposits		20,124			16,530			19,134			21,563			19,119			18,337			18,268
Loan volume		41,364			44,998			48,701			56,471			53,030			86,362			97,525
Employees at end of period		13,964			16,026			16,183			15,677			15,048			13,964			15,048
CORPORATE SUPPORT/TREASURY AND OTHER
Condensed income statement:
Net interest expense	$	(182	)	$	(175	)	$	(196	)	$	(229	)	$	(230	)	$	(358	)	$	(408	)
Noninterest income (expense)		(81	)		153			20			(62	)		(49	)		73			(124	)
Noninterest expense		163			75			104			77			31			239			136
Minority interest expense		37			-			-			-			-			37			-
Income (loss) before income taxes		(463	)		(97	)		(280	)		(368	)		(310	)		(561	)		(668	)
Income taxes (benefit)		(179	)		(52	)		(111	)		(150	)		(126	)		(235	)		(270	)
Net income (loss)	$	(284	)	$	(45	)	$	(169	)	$	(218	)	$	(184	)	$	(326	)	$	(398	)
Performance and other data:
Average loans	$	1,068		$	1,142		$	1,126		$	1,073		$	1,030		$	1,160		$	1,054
Average assets		36,325			33,479			29,036			28,098			26,575			34,966			26,159
Average deposits		39,082			33,179			35,025			25,531			26,401			36,146			24,112
Loan volume		82			24			96			67			20			105			114
Employees at end of period		9,092			9,816			9,641			9,156			8,999			9,092			8,999

RECONCILING ADJUSTMENTS
Condensed income statement:
Net interest income ⁽³⁾	$	119		$	119		$	115		$	115		$	114		$	239		$	227
Provision (reversal of reserve) for loan and lease losses ⁽⁴⁾		(15	)		(75	)		(22	)		3			(10	)		(91	)		(34	)
Noninterest income (expense) ⁽⁵⁾		(118	)		(162	)		(118	)		(50	)		(135	)		(281	)		(198	)
Income (loss) before income taxes		16			32			19			62			(11	)		49			63
Income taxes (benefit) ⁽⁶⁾		(42	)		-			(12	)		30			(9	)		(38	)		25
Net income (loss)	$	58		$	32		$	31		$	32		$	(2	)	$	87		$	38
Performance and other data:
Average loans ⁽⁷⁾	$	(1,458	)	$	(1,534	)	$	(1,516	)	$	(1,550	)	$	(1,541	)	$	(1,496	)	$	(1,548	)
Average assets ⁽⁷⁾⁽⁸⁾		(1,552	)		(1,701	)		(1,716	)		(1,727	)		(1,765	)		(1,626	)		(1,783	)

TOTAL CONSOLIDATED
Condensed income statement:
Net interest income	$	2,060		$	2,117		$	2,241		$	2,005		$	2,009		$	4,176		$	3,972
Provision for loan and lease losses		224			82			217			52			31			306			47
Noninterest income		1,578			1,638			1,526			1,208			1,106			3,216			2,364
Noninterest expense		2,229			2,138			2,214			1,860			1,767			4,367			3,548
Minority interest expense		37			-			-			-			-			37			-
Income from continuing operations before income taxes		1,148			1,535			1,336			1,301			1,317			2,682			2,741
Income taxes		389			559			479			488			484			947			1,019
Income from continuing operations		759			976			857			813			833			1,735			1,722
Income from discontinued operations, net of taxes		8			9			8			8			11			17			23
Net income	$	767		$	985		$	865		$	821		$	844		$	1,752		$	1,745
Performance and other data:
Efficiency ratio ⁽²⁾		61.27	%		56.95	%		58.75	%		57.88	%		56.70	%		59.08	%		55.99	%
Average loans	$	266,870		$	262,326		$	273,874		$	262,763		$	258,522		$	264,610		$	252,109
Average assets		349,561			344,562			349,931			327,292			320,845			347,075			314,544
Average deposits		200,252			191,034			196,799			188,320			183,521			195,668			179,376
Loan volume		54,895			55,046			63,292			70,732			67,618			109,941			127,133
Employees at end of period		56,247			60,381			60,798			56,214			54,377			56,247			54,377

__________________________

⁽¹⁾

See note 3 on preceding table.

⁽²⁾

See note 1 on preceding table.

⁽³⁾

Represents the difference between home 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, 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 includes this assumed profit factor and must therefore be eliminated as a reconciling adjustment.

⁽⁴⁾

Represents the difference between the long-term, normalized net charge-off ratio used to assess expected loan and lease losses for the operating segments and the "losses inherent in the loan portfolio" methodology used by the Company.

⁽⁵⁾

Represents the difference between gain from mortgage loans primarily recorded by the Home Loans Group and the 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.

⁽⁶⁾

Represents the tax effect of reconciling adjustments.

⁽⁷⁾

Includes the inter-segment offset for inter-segment loan premiums that the Retail Banking Group recognized from the transfer of portfolio loans from the Home Loans Group.

⁽⁸⁾

Includes the impact to the allowance for loan and lease losses per the following table that results from the difference between the long-term, normalized net charge-off ratio used to assess expected loan and lease losses for the operating segments and the "losses inherent in the loan portfolio" methodology used by the Company.


Quarter Ended							Six Months Ended
June 30,	Mar. 31,		Dec. 31,		Sept. 30,		June 30,		June 30,
2006	2006		2005		2005		2006		2005
$(94)		$(167)		$(200)		$(177)		$(224)		($235)

WM-8

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

								Quarter Ended
	June 30, 2006							Mar. 31, 2006							June 30, 2005
						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:
Federal funds sold and securities purchased under
agreements to resell	$	4,413		4.99	%	$	56	$	3,754		4.62	%	$	43	$	1,972		2.96	%	$	15
Trading assets		8,595		7.69			165		11,692		6.80			198		6,252		5.85			91
Available-for-sale securities ⁽¹⁾ :
Mortgage-backed securities		21,840		5.34			292		20,144		5.29			266		15,065		4.67			176
Investment securities		6,215		4.91			76		4,845		4.62			56		4,764		4.84			58
Loans held for sale ⁽²⁾		24,536		6.48			398		29,821		6.25			466		44,884		5.16			580
Loans held in portfolio ⁽²⁾ :
Loans secured by real estate:
Home ⁽³⁾		125,559		5.77			1,809		117,720		5.58			1,643		111,272		4.88			1,358
Specialty mortgage finance ⁽⁴⁾		19,603		6.19			304		19,956		5.92			295		20,913		5.90			309
Total home loans		145,162		5.82			2,113		137,676		5.63			1,938		132,185		5.04			1,667
Home equity loans and lines of credit		52,262		7.29			950		51,331		6.97			884		47,200		5.79			682
Home construction ⁽⁵⁾		2,068		6.47			33		2,059		6.34			33		2,047		6.43			33
Multi-family		26,291		6.23			410		25,758		5.92			382		23,715		5.27			312
Other real estate		5,585		6.97			98		5,157		6.84			88		5,092		6.81			88
Total loans secured by real estate		231,368		6.23			3,604		221,981		6.01			3,325		210,239		5.29			2,782
Consumer:
Credit card		8,448		11.28			238		7,808		10.74			206		-		-			-
Other		594		9.74			14		622		11.03			17		722		10.75			19
Commercial		1,924		5.87			28		2,094		5.42			28		2,677		4.73			32
Total loans held in portfolio		242,334		6.42			3,884		232,505		6.18			3,576		213,638		5.31			2,833
Other ⁽⁶⁾		5,306		4.80			64		5,016		4.17			52		4,266		3.45			36
Total interest-earning assets		313,239		6.30			4,935		307,777		6.07			4,657		290,841		5.21			3,789
Noninterest-earning assets:
Mortgage servicing rights		9,003							8,260							6,195
Goodwill		8,302							8,298							6,196
Other assets ⁽⁷⁾		19,017							20,227							17,613
Total assets	$	349,561						$	344,562						$	320,845
Liabilities
Interest-bearing liabilities:
Deposits:
Interest-bearing checking deposits	$	37,603		2.61			245	$	40,436		2.29			228	$	47,654		1.86			221
Savings and money market deposits		48,095		2.82			339		44,816		2.38			263		41,424		1.60			165
Time deposits		79,541		4.39			877		73,182		4.02			730		60,066		3.10			466
Total interest-bearing deposits		165,239		3.53			1,461		158,434		3.11			1,221		149,144		2.28			852
Federal funds purchased and commercial paper		7,767		4.97			97		7,463		4.46			83		2,749		3.09			21
Securities sold under agreements to repurchase		17,923		4.97			225		15,280		4.46			170		16,390		3.13			130
Advances from Federal Home Loan Banks		60,862		4.85			745		66,995		4.46			746		69,512		3.21			563
Other		26,239		5.27			347		26,636		4.81			320		21,491		4.00			214
Total interest-bearing liabilities		278,030		4.12			2,875		274,808		3.72			2,540		259,286		2.74			1,780
Noninterest-bearing sources:
Noninterest-bearing deposits		35,013							32,600							34,377
Other liabilities ⁽⁸⁾		7,621							8,804							5,155
Minority interests		1,965							552							13
Stockholders' equity		26,932							27,798							22,014
Total liabilities and stockholders' equity	$	349,561						$	344,562						$	320,845
Net interest spread and net interest income				2.18		$	2,060				2.35		$	2,117				2.47		$	2,009
Impact of noninterest-bearing sources				0.47							0.40							0.30
Net interest margin				2.65							2.75							2.77

________________

⁽¹⁾

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

⁽²⁾

Nonaccrual loans and related income, if any, are included in their respective loan categories.

⁽³⁾

Capitalized interest recognized in earnings that resulted from negative amortization within the Option ARM portfolio totaled $239 million, $189 million and $50 million for the three months ended June 30, 2006, March 31, 2006 and June 30, 2005.

⁽⁴⁾

Represents purchased subprime home loan portfolios and subprime home loans originated by Long Beach Mortgage Company 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⁾

Interest-earning assets in nonaccrual status (other than loans) and related income, if any, are included within this category.

⁽⁷⁾

Includes assets of discontinued operations.

⁽⁸⁾

Includes liabilities of discontinued operations.

WM-9

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Six Months Ended
	June 30, 2006							June 30, 2005
						Interest							Interest
						Income/							Income/
	Balance		Rate			Expense		Balance		Rate			Expense
Average Balances and Weighted Average Interest Rates
Assets
Interest-earning assets:
Federal funds sold and securities purchased under agreements to resell	$	4,086		4.82	%	$	99	$	1,665		2.80	%	$	24
Trading assets		10,135		7.18			363		5,984		5.70			170
Available-for-sale securities ⁽¹⁾ :
Mortgage-backed securities		20,997		5.31			558		15,275		4.56			348
Investment securities		5,534		4.78			132		4,696		4.64			109
Loans held for sale ⁽²⁾		27,164		6.36			864		41,613		5.06			1,053
Loans held in portfolio ⁽²⁾ :
Loans secured by real estate:
Home ⁽³⁾		121,661		5.68			3,452		110,705		4.77			2,639
Specialty mortgage finance ⁽⁴⁾		19,779		6.06			599		19,740		5.82			575
Total home loans		141,440		5.73			4,051		130,445		4.93			3,214
Home equity loans and lines of credit		51,800		7.13			1,834		45,947		5.62			1,283
Home construction ⁽⁵⁾		2,063		6.41			66		2,144		6.09			65
Multi-family		26,026		6.08			791		23,194		5.17			600
Other real estate		5,372		6.90			186		5,257		6.76			178
Total loans secured by real estate		226,701		6.12			6,928		206,987		5.17			5,340
Consumer:
Credit card		8,130		11.02			444		-		-			-
Other		607		10.40			32		746		10.62			40
Commercial business		2,008		5.63			56		2,763		4.99			68
Total loans held in portfolio		237,446		6.30			7,460		210,496		5.18			5,448
Other ⁽⁶⁾		5,161		4.50			116		4,242		3.36			71
Total interest-earning assets		310,523		6.19			9,592		283,971		5.09			7,223
Noninterest-earning assets:
Mortgage servicing rights		8,634							6,143
Goodwill		8,300							6,196
Other assets ⁽⁷⁾		19,618							18,234
Total assets	$	347,075						$	314,544
Liabilities
Interest-bearing liabilities:
Deposits:
Interest-bearing checking deposits	$	39,012		2.45			473	$	48,780		1.74			421
Savings and money market deposits		46,464		2.61			602		41,709		1.51			312
Time deposits		76,379		4.22			1,607		55,421		2.95			815
Total interest-bearing deposits		161,855		3.33			2,682		145,910		2.13			1,548
Federal funds purchased and commercial paper		7,616		4.72			179		3,116		2.75			43
Securities sold under agreements to repurchase		16,608		4.74			396		16,505		2.89			240
Advances from Federal Home Loan Banks		63,912		4.65			1,491		68,059		3.02			1,032
Other		26,437		5.04			668		19,954		3.90			388
Total interest-bearing liabilities		276,428		3.92			5,416		253,544		2.57			3,251
Noninterest-bearing sources:
Noninterest-bearing deposits		33,813							33,466
Other liabilities ⁽⁸⁾		8,210							5,673
Minority interests		1,262							13
Stockholders' equity		27,362							21,848
Total liabilities and stockholders' equity	$	347,075						$	314,544
Net interest spread and net interest income				2.27		$	4,176				2.52		$	3,972
Impact of noninterest-bearing sources				0.43							0.28
Net interest margin				2.70							2.80

________________

⁽¹⁾

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

⁽²⁾

Nonaccrual loans and related income, if any, are included in their respective loan categories.

⁽³⁾

Capitalized interest recognized in earnings that resulted from negative amortization within the Option ARM portfolio totaled $428 million and $72 million for the six months ended June 30, 2006 and June 30, 2005.

⁽⁴⁾

Represents purchased subprime home loan portfolios and subprime home loans originated by Long Beach Mortgage Company and held in its investment portfolio.

⁽⁵⁾

⁽⁶⁾

Interest-earning assets in nonaccrual status (other than loans) and related income, if any, are included within this category.

⁽⁷⁾

Includes assets of discontinued operations.

⁽⁸⁾

Includes liabilities of discontinued operations.

WM-10

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Change from
	March 31, 2006			June 30,		Mar. 31,		Dec. 31,		Sept. 30,		June 30,
	to June 30, 2006			2006		2006		2005		2005		2005
Deposits
Retail deposits:
Checking deposits:
Noninterest bearing	$	72		$	22,450	$	22,378	$	20,752	$	20,622	$	19,093
Interest bearing		(3,331	)		35,958		39,289		42,253		44,294		46,031
Total checking deposits		(3,259	)		58,408		61,667		63,005		64,916		65,124
Savings and money market deposits		(533	)		37,664		38,197		36,664		35,579		34,514
Time deposits ⁽¹⁾		2,151			43,685		41,534		40,359		40,476		36,162
Total retail deposits		(1,641	)		139,757		141,398		140,028		140,971		135,800
Commercial business deposits		1,066			15,625		14,559		11,459		9,758		9,648
Wholesale deposits		5,747			37,024		31,277		29,917		24,534		23,638
Custodial and escrow deposits ⁽²⁾		(616	)		12,152		12,768		11,763		15,149		15,231
Total deposits	$	4,556		$	204,558	$	200,002	$	193,167	$	190,412	$	184,317

⁽¹⁾

Weighted average remaining maturity of time deposits was 10 months at June 30, 2006 and March 31, 2006, 11 months at December 31, 2005, 12 months at September 30, 2005 and 13 months at June 30, 2005.

⁽²⁾

Substantially all custodial and escrow deposits reside in noninterest-bearing checking accounts.

	June 30,		Mar. 31,		Dec. 31,		Sept. 30,		June 30,
	2006		2006		2005		2005		2005
Retail Deposit Accounts ⁽¹⁾
Checking		10,627,854		10,223,664		9,883,507		9,680,317		9,427,222
Money market and savings		6,161,187		5,929,653		5,694,102		5,560,060		5,395,091
Total transaction accounts, end of period ⁽²⁾		16,789,041		16,153,317		15,577,609		15,240,377		14,822,313

Net change in checking accounts		404,190		340,157		203,190		253,095		244,028
Net change in total transaction accounts		635,724		575,708		337,232		418,064		388,212

⁽¹⁾

The information provided in this table represents the number of accounts.

⁽²⁾

Transaction accounts include retail checking, small business checking, retail savings and small business savings.

	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
	2006			2006			2005			2005			2005
Retail Banking Stores
Stores, beginning of period		2,168			2,140			2,051			1,997			1,968
Stores opened during the quarter		35			29			97	(1)		56			30
Stores closed during the quarter		(2	) ⁽¹⁾		(1	)		(8	)		(2	)		(1	)
Stores, end of period		2,201			2,168			2,140			2,051			1,997

⁽¹⁾

Includes two retail stores acquired through the merger with Providian Financial Corporation. These stores were not considered to be an integral component of Washington Mutual's retail banking franchise and were subsequently sold in April of 2006.

WM-11

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Quarter Ended
	June 30,		Mar. 31,		Dec. 31,		Sept. 30,		June 30,
	2006		2006		2005		2005		2005
Loan Volume
Home loans:
Short-term adjustable-rate loans ⁽¹⁾ :
Option ARMs	$	11,256	$	8,777	$	12,565	$	16,353	$	19,564
Other ARMs		1,859		2,943		1,222		1,237		367
Total short-term adjustable-rate loans		13,115		11,720		13,787		17,590		19,931
Medium-term adjustable-rate loans ⁽²⁾		16,041		14,865		14,581		16,454		13,388
Fixed-rate loans		13,695		17,605		22,061		22,098		20,082
Total home loan volume ⁽³⁾		42,851		44,190		50,429		56,142		53,401
Home equity loans and lines of credit		8,251		7,306		9,118		10,828		10,888
Home construction loans ⁽⁴⁾		421		493		479		370		258
Multi-family		2,230		2,034		2,595		2,580		2,459
Other real estate		787		716		419		465		371
Total loans secured by real estate		54,540		54,739		63,040		70,385		67,377
Consumer ⁽⁵⁾		36		49		79		182		82
Commercial		319		258		173		165		159
Total loan volume	$	54,895	$	55,046	$	63,292	$	70,732	$	67,618
Loan Volume by Channel
Retail	$	23,709	$	22,580	$	27,676	$	32,614	$	30,565
Wholesale		14,798		16,722		17,190		20,000		20,323
Purchased/correspondent		16,388		15,744		18,426		18,118		16,730
Total loan volume by channel	$	54,895	$	55,046	$	63,292	$	70,732	$	67,618
Refinancing Activity ⁽⁶⁾
Home loan refinancing	$	22,414	$	23,756	$	27,435	$	29,084	$	27,583
Home equity loans and lines of credit and consumer		161		211		219		245		475
Home construction loans		17		17		12		17		13
Multi-family and other real estate		799		774		831		738		700
Total refinancing	$	23,391	$	24,758	$	28,497	$	30,084	$	28,771

Note: Pursuant to regulatory guidance, 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 $104 million, $266 million, $304 million, $466 million and $477 million for the quarters ended June 30, 2006, March 31, 2006, December 31, 2005, September 30, 2005 and June 30, 2005.

_________________
⁽¹⁾	Short-term is defined as adjustable-rate loans that reprice within one year or less.
⁽²⁾	Medium-term is defined as adjustable-rate loans that reprice after one year.
⁽³⁾	Includes specialty mortgage finance loans, which are comprised of purchased subprime home loans and subprime home loans originated by Long Beach Mortgage Company. Specialty mortgage finance loan volumes were $7.28 billion, $6.42 billion, $9.67 billion, $8.41 billion and $8.75 billion for the three months ended June 30, 2006, March 31, 2006, December 31, 2005, September 30, 2005 and June 30, 2005.
⁽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⁾	Excludes credit card loan volume.
⁽⁶⁾	Includes loan refinancing entered into by both new and pre-existing loan customers.

WM-12

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

		Six Months Ended
		June 30, 2006		June 30, 2005
Loan Volume
Home loans:
Short-term adjustable-rate loans ⁽¹⁾ :
Option ARMs	$	20,033	$	35,208
Other ARMs		4,802		1,341
Total short-term adjustable-rate loans		24,835		36,549
Medium-term adjustable-rate loans ⁽²⁾		30,906		26,796
Fixed-rate loans		31,300		37,806
Total home loan volume ⁽³⁾		87,041		101,151
Home equity loans and lines of credit		15,558		19,775
Home construction loans ⁽⁴⁾		914		503
Multi-family		4,264		4,580
Other real estate		1,502		716
Total loans secured by real estate		109,279		126,725
Consumer ⁽⁵⁾		85		126
Commercial		577		282
Total loan volume	$	109,941	$	127,133
Loan Volume by Channel
Retail	$	46,289	$	56,134
Wholesale		31,520		37,039
Purchased/correspondent		32,132		33,960
Total loan volume by channel	$	109,941	$	127,133
Refinancing Activity ⁽⁶⁾
Home loan refinancing	$	46,170	$	56,224
Home equity loans and lines of credit and consumer		372		867
Home construction loans		34		23
Multi-family and other real estate		1,573		1,360
Total refinancing	$	48,149	$	58,474

Note: Pursuant to regulatory guidance, 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 $371 million and $1.04 billion for the six months ended June 30, 2006 and June 30, 2005.

_________________
⁽¹⁾	Short-term is defined as adjustable-rate loans that reprice within one year or less.
⁽²⁾	Medium-term is defined as adjustable-rate loans that reprice after one year.
⁽³⁾	Includes specialty mortgage finance loans, which are comprised of purchased subprime home loans and subprime home loans originated by Long Beach Mortgage Company. Specialty mortgage finance loan volumes were $13.70 billion and $16.41 billion for the six months ended June 30, 2006 and June 30, 2005.
⁽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⁾	Excludes credit card loan volume.
⁽⁶⁾	Includes loan refinancing entered into by both new and pre-existing loan customers.

WM-13

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

	Change from
	March 31, 2006					June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
	to June 30, 2006					2006			2006			2005			2005			2005
Loans by Product Type
Loans held in portfolio:
Loans secured by real estate:
Home:
Short-term adjustable-rate loans ⁽¹⁾ :
Option ARMs ⁽²⁾		$	(3,379	)	$	66,790		$	70,169		$	70,191		$	67,863		$	66,533
Other ARMs			956			16,737			15,781			14,666			12,956			10,903
Total short-term adjustable-rate loans			(2,423	)		83,527			85,950			84,857			80,819			77,436
Medium-term adjustable-rate loans ⁽³⁾			2,641			52,032			49,391			41,511			43,610			43,499
Fixed-rate loans			1,482			10,142			8,660			8,922			8,616			8,638
Total home loans ⁽⁴⁾			1,700			145,701			144,001			135,290			133,045			129,573
Home equity loans and lines of credit			1,109			52,981			51,872			50,851			50,066			48,449
Home construction ⁽⁵⁾			(13	)		2,082			2,095			2,037			2,019			2,037
Multi-family			598			26,749			26,151			25,601			25,014			24,240
Other real estate			184			5,537			5,353			5,035			4,929			4,915
Total loans secured by real estate			3,578			233,050			229,472			218,814			215,073			209,214
Consumer:
Credit card			545			8,451			7,906			8,043			-			-
Other			(315	)		287			602			638			669			703
Commercial			(309	)		1,715			2,024			2,137			2,452			2,820
Total loans held in portfolio ⁽⁶⁾			3,499			243,503			240,004			229,632			218,194			212,737
Less: allowance for loan and lease losses			(21	)		(1,663	)		(1,642	)		(1,695	)		(1,264	)		(1,243	)
Total net loans held in portfolio			3,478			241,840			238,362			227,937			216,930			211,494
Loans held for sale ⁽⁷⁾			(1,678	)		23,342			25,020			33,582			48,018			51,122
Total net loans		$	1,800		$	265,182		$	263,382		$	261,519		$	264,948		$	262,616

⁽¹⁾

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

⁽²⁾

The total amount by which the unpaid principal balance ("UPB") of Option ARM loans exceeded their original principal amount was $461 million at June 30, 2006, $291 million at March 31, 2006, $157 million at December 31, 2005, $76 million at September 30, 2005 and $34 million at June 30, 2005.

⁽³⁾

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

⁽⁴⁾

Includes specialty mortgage finance loans, which are comprised of purchased subprime home loans and subprime home loans originated by Long Beach Mortgage Company and held in its investment portfolio. Specialty mortgage finance loans were $20.50 billion, $20.24 billion, $21.15 billion, $21.16 billion and $20.17 billion at June 30, 2006, March 31, 2006, December 31, 2005, September 30, 2005 and June 30, 2005.

⁽⁵⁾

⁽⁶⁾

Includes net unamortized deferred loan origination costs of $1.62 billion, $1.61 billion, $1.53 billion, $1.47 billion and $1.39 billion at June 30, 2006, March 31, 2006, December 31, 2005, September 30, 2005 and June 30, 2005.

⁽⁷⁾

Fair value of loans held for sale was $23.35 billion, $25.03 billion, $33.70 billion, $48.14 billion and $51.39 billion as of June 30, 2006, March 31, 2006, December 31, 2005, September 30, 2005 and June 30, 2005.

WM-14

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

						Weighted					Weighted					Weighted
	Change from					Average					Average					Average
	Mar. 31, 2006			June 30,		Coupon			Mar. 31,		Coupon			June 30,		Coupon
	to June 30, 2006			2006		Rate			2006		Rate			2005		Rate
Selected Loans Secured by Real Estate and MBS
Home loans held in portfolio:
Short-term adjustable-rate loans ⁽¹⁾ :
Option ARMs	$	(3,379	)	$	66,790		6.73	%	$	70,169		6.34	%	$	66,533		5.06	%
Other ARMs		956			16,737		6.81			15,781		6.64			10,903		6.37
Total short-term adjustable-rate loans		(2,423	)		83,527		6.75			85,950		6.39			77,436		5.24
Medium-term adjustable-rate loans ⁽²⁾		2,641			52,032		5.68			49,391		5.61			43,499		5.53
Fixed-rate loans		1,482			10,142		6.28			8,660		6.54			8,638		6.60
Total home loans held in portfolio		1,700			145,701		6.34			144,001		6.13			129,573		5.43
Home equity loans and lines of credit:
Short-term (Prime-based or treasury-based) ⁽¹⁾		(541	)		36,640		8.33			37,181		7.79			36,815		6.16
Fixed-rate loans		1,650			16,341		6.88			14,691		6.69			11,634		6.37
Total home equity loans and lines of credit		1,109			52,981		7.88			51,872		7.48			48,449		6.21
Multi-family loans held in portfolio:
Short-term adjustable-rate loans ⁽¹⁾ :
Option ARMs		(251	)		9,255		6.54			9,506		6.13			8,979		4.98
Other ARMs		(185	)		6,095		6.66			6,280		6.27			6,312		5.13
Total short-term adjustable-rate loans		(436	)		15,350		6.59			15,786		6.19			15,291		5.04
Medium-term adjustable-rate loans ⁽²⁾		990			9,781		5.46			8,791		5.35			7,365		5.26
Fixed-rate loans		44			1,618		6.48			1,574		6.51			1,584		6.75
Total multi-family loans held in portfolio		598			26,749		6.17			26,151		5.93			24,240		5.22
Total selected loans held in portfolio secured by real estate ⁽³⁾		3,407			225,431		6.68			222,024		6.42			202,262		5.59
Loans held for sale ⁽⁴⁾		(1,812	)		23,031		6.43			24,843		6.53			50,986		5.12
Total selected loans secured by real estate		1,595			248,462		6.66			246,867		6.44			253,248		5.50
MBS ⁽⁵⁾ :
Short-term adjustable-rate MBS ⁽¹ ⁾		295			9,058		5.42			8,763		5.13			9,687		4.15
Medium-term adjustable-rate MBS ⁽²⁾		(167	)		3,853		4.97			4,020		4.93			1,571		4.68
Fixed-rate MBS		(78	)		8,527		5.27			8,605		5.21			3,111		5.20
Total MBS ⁽⁶⁾		50			21,438		5.28			21,388		5.13			14,369		4.44
Total selected loans secured by real estate and MBS	$	1,645		$	269,900		6.55		$	268,255		6.33		$	267,617		5.44

⁽¹⁾	Short-term is defined as adjustable-rate loans and MBS that reprice within one year or less.
⁽²⁾	Medium-term is defined as adjustable-rate loans and MBS that reprice after one year.
⁽³⁾	At June 30, 2006, March 31, 2006, and June 30, 2005, the adjustable-rate loans with lifetime caps were $193.17 billion, $193.55 billion and $177.53 billion with a lifetime weighted average cap rate of 12.13%, 12.16% and 12.35%.
⁽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 June 30, 2006, March 31, 2006 and June 30, 2005, the par value of adjustable-rate MBS with lifetime caps were $12.81 billion, $12.92 billion and $11.10 billion with a lifetime weighted average cap rate of 10.42%, 10.36% and 10.15%.

	Mar. 31, 2006			Dec. 31, 2005
	to June 30, 2006			to June 30, 2006
Rollforward of Loans Held for Sale
Balance, beginning of period	$	25,020		$	33,582
Mortgage loans originated, purchased and transferred from held in portfolio		31,243			60,138
Mortgage loans transferred to held in portfolio		(490	)		(2,500	)
Mortgage loans sold and other		(32,565	)		(67,535	)
Net change in consumer loans held for sale		134			(343	)
Balance, end of period	$	23,342		$	23,342

Rollforward of Home Loans Held in Portfolio
Balance, beginning of period	$	144,001		$	135,290
Loans originated, purchased and transferred from held for sale		12,928			31,279
Loan payments, transferred to held for sale and other		(11,228	)		(20,868	)
Balance, end of period	$	145,701		$	145,701

WM-15
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)

	Quarter Ended
							Pro Forma Results Assuming Retrospective Application of SFAS No. 156
Detail of Revenue from Sales and Servicing of Home Mortgage Loans ⁽¹⁾	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
	2006			2006			2005			2005			2005
Gain from home mortgage loans and originated mortgage-backed securities,
net of hedging and risk management instruments ⁽²⁾ :
Gain from home mortgage loans and originated mortgage-backed securities	$	184		$	157		$	213		$	206		$	250
Revaluation gain (loss) from derivatives economically hedging loans held for sale		67			52			25			73			(79	)
Gain from home mortgage loans and originated mortgage-backed securities,
net of hedging and risk management instruments		251			209			238			279			171
Home mortgage loan servicing revenue (expense):
Home mortgage loan servicing revenue ⁽³⁾		586			572			544			534			523
Change in MSR fair value due to payments on loans and other ⁽¹⁾		(460	)		(409	)		(483	)		(480	)		(404	)
Net mortgage loan servicing revenue		126			163			61			54			119
Change in MSR fair value due to valuation inputs or assumptions ⁽¹⁾		435			413			805			1,193			(1,224	)
Revaluation gain (loss) from derivatives economically hedging MSR ⁽¹⁾		(433	)		(522	)		(654	)		(810	)		1,047
Adjustment to MSR fair value for pending MSR sale		(157	)		-			-			-			-
Home mortgage loan servicing revenue (expense), net of MSR valuation
changes and derivative risk management instruments		(29	)		54			212			437			(58	)
Total revenue from sales and servicing of home mortgage loans	$	222		$	263			450			716			113
Reconciliation from pro forma to GAAP results ⁽¹⁾ :
Deduct: Increase in MSR fair value not recorded due to lower of cost or fair value								(39	)		(10	)		(3	)
Other								7			4			4
Total GAAP revenue from sales and servicing of home mortgage loans							$	418		$	710		$	114

	Six Months Ended
				Pro Forma Results Assuming Retrospective Application of SFAS No. 156

Detail of Revenue from Sales and Servicing of Home Mortgage Loans ⁽¹⁾	June 30			June 30,
	2006,			2005

Gain from home mortgage loans and originated mortgage-backed securities,
net of hedging and risk management instruments ⁽²⁾ :
Gain from home mortgage loans and originated mortgage-backed securities	$	341		$	431
Revaluation gain from derivatives economically hedging loans held for sale		119			1
Gain from home mortgage loans and originated mortgage-backed securities,
net of hedging and risk management instruments		460			432
Home mortgage loan servicing revenue (expense):
Home mortgage loan servicing revenue ⁽³⁾		1,159			1,033
Change in MSR fair value due to payments on loans and other ⁽¹⁾		(869	)		(766	)
Net mortgage loan servicing revenue		290			267
Change in MSR fair value due to valuation inputs or assumptions ⁽¹⁾		849			(460	)
Revaluation gain (loss) from derivatives economically hedging MSR ⁽¹⁾		(956	)		649
Adjustment to MSR fair value for pending MSR sale		(157	)		-
Home mortgage loan servicing revenue, net of MSR valuation
changes and derivative risk management instruments		26			456
Total revenue from sales and servicing of home mortgage loans	$	486			888
Reconciliation from pro forma to GAAP results ⁽¹⁾ :
Deduct: Increase in MSR fair value not recorded due to lower of cost or fair value					(8	)
Other					9
Total GAAP revenue from sales and servicing of home mortgage loans				$	889

⁽¹⁾	The results for the quarters ended June 30, 2006, March 31, 2006 and the six months ended June 30, 2006 reflect the adoption of the fair value measurement method of accounting for mortgage servicing rights ("MSR") permitted by Statement of Financial Accounting Standards No. 156, Accounting for Servicing of Financial Assets , an amendment to FASB Statement No. 140 ("Statement"). The Company has adopted the Statement effective January 1, 2006, and the retrospective application of this Statement to prior periods is not permitted. Management believes that due to the significant differences between the fair value measurement method and the amortization method of accounting for MSR, comparative information prepared on a similar basis of accounting is valuable to users of this financial information. The quarterly information for 2005 is a non-GAAP measure, and incorporates the following assumptions: 1) the fair value measurement method of accounting for MSR was in effect during 2005, 2) MSR are initially capitalized at fair value instead of allocated book value, and 3) the change in value of available-for-sale securities that were on the balance sheet at December 31, 2005 and designated as MSR risk management instruments are reported as revaluation gain (loss) on trading securities. A reconciliation of the non-GAAP amounts to the previously disclosed GAAP results has been provided.
⁽²⁾	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.
⁽³⁾	Includes late charges and loan pool expenses (the shortfall of the scheduled interest required to be remitted to investors compared to what is collected from the borrowers upon payoff).

WM-16
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)

	Quarter Ended
							Pro Forma Results Assuming Retrospective Application of SFAS No. 156
	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
	2006			2006			2005			2005			2005
MSR Risk Management ⁽¹⁾ :
Change in MSR fair value due to valuation inputs or assumptions ⁽²⁾	$	435		$	413		$	805		$	1,193		$	(1,224	)
Gain (loss) on MSR risk management instruments:
Revaluation gain (loss) from derivatives		(433	)		(522	)		(654	)		(810	)		1,047
Revaluation gain (loss) from certain trading securities ⁽²⁾		(47	)		(42	)		(165	)		(219	)		259
Gain from certain available-for-sale securities		-			-			-			-			26
Total gain (loss) on MSR risk management instruments		(480	)		(564	)		(819	)		(1,029	)		1,332
Total MSR risk management	$	(45	)	$	(151	)	$	(14	)	$	164		$	108
Reconciliation from pro forma to GAAP results ⁽²⁾ :
Revaluation gain (loss) from certain trading securities							$	(165	)	$	(219	)	$	259
Add back: Decrease in value of trading securities assumed transferred
from the available-for-sale securities portfolio								8			2			-
Total GAAP impact of MSR risk management trading securities							$	(157	)	$	(217	)	$	259

	Six Months Ended
				Pro Forma Results Assuming Retrospective Application of SFAS No. 156
	June 30,			June 30,
	2006			2005
MSR Risk Management ⁽¹⁾ :
Change in MSR fair value due to valuation inputs or assumptions ⁽²⁾	$	849		$	(460	)
Gain (loss) on MSR risk management instruments:
Revaluation gain (loss) from derivatives		(956	)		649
Revaluation gain (loss)from certain trading securities ⁽²⁾		(89	)		150
Loss from certain available-for-sale securities		-			(18	)
Total gain (loss) on MSR risk management instruments		(1,045	)		781
Total MSR risk management	$	(196	)	$	321
Reconciliation from pro forma to GAAP results ⁽²⁾ :
Revaluation gain from certain trading securities				$	150
Add back: Decrease in value of trading securities assumed transferred
from the available-for-sale securities portfolio					-
Total GAAP impact of MSR risk management trading securities				$	150

⁽¹⁾	Excludes $157 million loss on pending MSR sale.
⁽²⁾	Refer to footnote (1) on table WM-15.

WM-17
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)

	Quarter Ended
	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
	2006			2006			2005			2005			2005
Rollforward of Mortgage Servicing Rights ⁽¹⁾⁽²⁾
Balance, beginning of period	$	8,736		$	8,041		$	7,042		$	5,730		$	6,802
Home loans:
Additions		607			633			703			605			555
Changes in MSR fair value due to valuation inputs or
assumptions		435			413			-			-			-
Payments on loans and other		(460	)		(409	)		-			-			-
Adjustment to MSR fair value for pending MSR sale		(157	)		-			-			-			-
Fair value basis adjustment ⁽³⁾		-			57			-			-			-
Amortization		-			-			(482	)		(555	)		(564	)
(Impairment) reversal		-			-			353			413			(250	)
Statement No. 133 MSR accounting valuation adjustments		-			-			419			849			(813	)
Net change in commercial real estate MSR		1			1			6			-			-
Balance, end of period	$	9,162		$	8,736		$	8,041		$	7,042		$	5,730
Rollforward of Valuation Allowance for MSR Impairment
Balance, beginning of period	$	-		$	914		$	1,312		$	1,746		$	1,513
Impairment (reversal)		-			-			(353	)		(413	)		250
Other-than-temporary impairment		-			-			(43	)		(18	)		(11	)
Other		-			(914	) ⁽³⁾		(2	)		(3	)		(6	)
Balance, end of period	$	-		$	-		$	914		$	1,312		$	1,746
Rollforward of Mortgage Loans Serviced for Others
Balance, beginning of period	$	569,501		$	563,208		$	547,578		$	543,324		$	542,797
Home loans:
Additions		30,949			35,026			51,642			43,418			36,174
Loan payments and other		(30,377	)		(29,063	)		(37,245	)		(39,005	)		(35,689	)
Net change in commercial real estate loans serviced for others		279			330			1,233			(159	)		42
Balance, end of period	$	570,352		$	569,501		$	563,208		$	547,578		$	543,324

	June 30,		Mar. 31,		Dec. 31,		Sept. 30,		June 30,
	2006		2006		2005		2005		2005
Total Servicing Portfolio
Mortgage loans serviced for others	$	570,352	$	569,501	$	563,208	$	547,578	$	543,324
Consumer loans serviced for others		12,205		11,822		11,014		-		-
Servicing on retained MBS without MSR		1,262		1,334		1,404		1,487		1,592
Servicing on owned loans		247,489		245,469		242,114		245,165		243,494
Subservicing portfolio		552		588		629		749		825
Total servicing portfolio	$	831,860	$	828,714	$	818,369	$	794,979	$	789,235

	June 30, 2006
	Unpaid		Weighted
	Principal		Average
	Balance		Servicing Fee
			(in basis points,
Mortgage Loans Serviced for Others by Loan Type			annualized)
Government	$	43,339		45
Agency		328,392		32
Private		165,475		47
Specialty home loans		33,146		50
Total mortgage loans serviced for others ⁽⁴⁾	$	570,352		38

⁽¹⁾	Net of valuation allowance for all periods in 2005.
⁽²⁾	MSR as a percentage of mortgage loans serviced for others was 1.61%, 1.53%, 1.43%, 1.29% and 1.05% at June 30, 2006, March 31, 2006, December 31, 2005, September 30, 2005 and June 30, 2005.
⁽³⁾	The Company adopted Statement No. 156, Accounting for Servicing of Financial Assets , on January 1, 2006, and elected to measure mortgage servicing assets at fair value. In accordance with this Statement, this new accounting principle has been applied prospectively to all new and existing mortgage servicing assets. Upon adoption of the fair value election, the valuation allowance was written off against the recorded value of the MSR, and the $57 million difference between the net carrying value and fair value was recorded as an increase to the basis of the Company's mortgage servicing rights.
⁽⁴⁾	Weighted average coupon rate (annualized) was 6.06% at June 30, 2006.

WM-18
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)

	Quarter Ended
	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
	2006			2006			2005			2005			2005
Allowance for Loan and Lease Losses
Balance, beginning of quarter	$	1,642		$	1,695		$	1,264		$	1,243		$	1,280
Allowance transferred to loans held for sale		(87	)		(30	)		(241	)		-			(29	)
Allowance acquired through business combinations		-			-			592			-			-
Provision for loan and lease losses		224			82			217			52			31
		1,779			1,747			1,832			1,295			1,282
Loans charged off:
Loans secured by real estate:
Home		(11	)		(11	)		(7	)		(9	)		(11	)
Specialty mortgage finance ⁽¹⁾		(20	)		(20	)		(14	)		(15	)		(11	)
Total home loans charged off		(31	)		(31	)		(21	)		(24	)		(22	)
Home equity loans and lines of credit		(7	)		(5	)		(6	)		(10	)		(8	)
Home construction ⁽²⁾		-			-			-			-			(2	)
Multi-family		-			-			-			-			(1	)
Other real estate		-			(3	)		(1	)		(4	)		(2	)
Total loans secured by real estate		(38	)		(39	)		(28	)		(38	)		(35	)
Consumer:
Credit card		(94	)		(63	)		(138	)		-			-
Other		(6	)		(7	)		(8	)		(8	)		(9	)
Commercial		(4	)		(8	)		(16	)		(4	)		(8	)
Total loans charged off		(142	)		(117	)		(190	)		(50	)		(52	)
Recoveries of loans previously charged off:
Loans secured by real estate:
Home		1			-			-			-			-
Specialty mortgage finance ⁽¹⁾		1			1			1			1			1
Total home loan recoveries		2			1			1			1			1
Home equity loans and lines of credit		3			1			7			1			1
Multi-family		1			-			-			2			-
Other real estate		1			1			-			8			3
Total loans secured by real estate		7			3			8			12			5
Consumer:
Credit card		15			4			40			-			-
Other		3			4			3			5			6
Commercial		1			1			2			2			2
Total recoveries of loans previously charged off		26			12			53			19			13
Net charge-offs		(116	)		(105	)		(137	)		(31	)		(39	)
Balance, end of quarter	$	1,663		$	1,642		$	1,695		$	1,264		$	1,243

Net charge-offs (annualized) as a percentage
of average loans held in portfolio		0.19	%		0.18	%		0.24	%		0.06	%		0.07	%
Allowance as a percentage of total loans held in portfolio		0.68			0.68			0.74			0.58			0.58

⁽¹⁾	Represents purchased subprime home loan portfolios and subprime home loans originated by Long Beach Mortgage Company and held in its investment portfolio.
⁽²⁾	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-19
Washington Mutual, Inc.
Selected Financial Information
(dollars in millions)
(unaudited)

	June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
	2006			2006			2005			2005			2005
Nonperforming Assets and Restructured Loans
Nonaccrual loans ⁽¹⁾ :
Loans secured by real estate:
Home	$	512		$	490		$	565		$	472		$	495
Specialty mortgage finance ⁽²⁾		1,085			1,012			872			755			692
Total home nonaccrual loans		1,597			1,502			1,437			1,227			1,187
Home equity loans and lines of credit		110			92			88			68			67
Home construction ⁽³⁾		31			15			10			10			11
Multi-family		19			21			25			18			15
Other real estate		56			69			70			69			116
Total nonaccrual loans secured by real estate		1,813			1,699			1,630			1,392			1,396
Consumer		1			6			8			8			8
Commercial		16			26			48			65			59
Total nonaccrual loans held in portfolio		1,830			1,731			1,686			1,465			1,463
Foreclosed assets ⁽⁴⁾		330			309			276			256			256
Total nonperforming assets	$	2,160		$	2,040		$	1,962		$	1,721		$	1,719
As a percentage of total assets		0.62	%		0.59	%		0.57	%		0.52	%		0.53	%
Restructured loans	$	20		$	21		$	22		$	25		$	25
Total nonperforming assets and restructured loans	$	2,180		$	2,061		$	1,984		$	1,746		$	1,744