Exhibit 99.1

 

January 19, 2005

For Immediate Release

 

 

Washington Mutual Announces Fourth Quarter and Annual 2004 Earnings

Board of Directors Increases Cash Dividend

 

 

SEATTLE – Washington Mutual, Inc. (NYSE: WM) today announced fourth quarter 2004 net income of $668 million, or 76 cents per diluted share versus $842 million, or 93 cents per diluted share for the same period in the previous year.  The company also announced 2004 annual net income of $2.88 billion, or $3.26 per diluted share compared to $3.88 billion, or $4.21 per diluted share in 2003.

 

The difference in net income from the fourth quarter of 2003 was primarily due to several unusual items in that period, including a reversal of reserves for loan and lease losses.  For the year, the difference in net income from 2003 reflects not only the above unusual items, but also lower securities gains and lower home loan mortgage banking income, reflecting a steep decline in national mortgage originations.

 

Washington Mutual’s Board of Directors declared a cash dividend of 46 cents per share on the company’s common stock, up from 45 cents per share in the previous quarter.  Dividends on the common stock are payable on February 15, 2005 to shareholders of record as of January 31, 2005.

 

“As we embark on a new five-year strategic plan, we leave 2004 with strong momentum in all areas of our business,” said Kerry Killinger, chairman and chief executive officer. “I am particularly pleased with the success of the retail bank as well as the progress we’re making to improve the efficiency of our mortgage operations. Within the commercial group, we also have a great opportunity to build on our industry leading multi-family lending business.”

 

Killinger added: “Our teams are focused on delivering great service to our customers, executing our new strategic plan and delivering superior long-term returns to our shareholders.”

 

Key fourth quarter and 2004 highlights:

 

•                   Total assets grew $32.74 billion or 12 percent from year end 2003, and increased $19.09 billion or 7 percent from the third quarter, ending the year at $307.92 billion;

•                   Net interest margin was up slightly at 2.79 percent in the fourth quarter compared to 2.77 percent in the third quarter but declined from 2.90 percent in the fourth quarter of 2003;

•                   Net income in the fourth quarter in the Retail Banking and Financial Services segment grew by 51 percent over the fourth quarter of 2003, driven by a higher mortgage portfolio balance, record growth during the year in the home equity loans and lines of credit portfolio, and a 9 percent increase in depositor and other retail banking fees;

•                   For the year we added 250 new retail banking stores, including 69 new stores in the fourth quarter;

•                   The Mortgage Banking segment continued to make progress in transforming its business as noninterest expense of $2.61 billion in 2004 declined $469 million, or 15 percent from the prior year;

•                   The company achieved its goal of limiting noninterest expense to $7.5 billion for the year, while continuing to grow its retail banking and multi-family businesses;

 

—more—

 

 

•                   Nonperforming assets as a percentage of total assets were 0.58 percent, down slightly from 0.61 percent as of September 30, 2004 and down from 0.70 percent as of December 31, 2003;

•                   The company announced that former JPMorgan Chase executive Steve Rotella has joined the company as President and Chief Operating Officer.

 

FOURTH QUARTER AND 2004 FINANCIAL SUMMARY

 

Net Interest Income

 

Net interest income was $1.85 billion in the fourth quarter of 2004, up 6 percent from $1.74 billion in both the third quarter of 2004 and the fourth quarter of 2003.  The increase from the prior quarter reflects a 6 percent increase in average total interest-earning assets.  The net interest margin in the fourth quarter was 2.79 percent, up slightly from the third quarter, but down 11 basis points from 2.90 percent in the fourth quarter of 2003.

 

For 2004, net interest income was $7.12 billion, a decrease of $513 million from $7.63 billion in 2003.  This decrease was primarily attributable to a 29 basis point decline in the net interest margin year over year, reflecting declining asset yields in the first half of the year, rising short term interest rates and lower noninterest bearing custodial and escrow deposit balances in the mortgage business.

 

Noninterest Income

 

Noninterest income was $1.22 billion in the fourth quarter of 2004, compared with $1.26 billion in the third quarter of 2004 and $1.47 billion in the fourth quarter of 2003.  The decline from the fourth quarter of 2003 was driven primarily by lower home loan mortgage banking income.

 

For the year, noninterest income was $4.61 billion, down 21 percent from $5.85 billion in 2003.  The decline was primarily the result of significantly lower securities gains and lower home loan mortgage banking income.

 

Noninterest Expense

 

The company achieved its goal of limiting annual noninterest expense to $7.5 billion, while executing on its targeted growth and retail expansion of 250 new stores in 2004.  These expenses included $274 million of technology-related and restructuring charges.  Excluding technology-related and restructuring costs of $110 million in the fourth quarter and $71 million in the third quarter, noninterest expense increased $30 million quarter over quarter due to a decrease in our deferral rate for loan origination expenses.  The company’s efficiency ratio was 63.18 percent, compared with 62.19 percent for the third quarter of 2004 and 65.51 percent in the fourth quarter of 2003.

 

Lending

 

Total loan volume was $63.22 billion in the fourth quarter, compared with $61.83 billion in the third quarter of 2004 and $69.90 billion in the fourth quarter of 2003, reflecting the company’s ability to generate assets throughout the interest rate cycle.

 

While fourth quarter fixed rate home loan volume declined 46 percent compared with the fourth quarter of 2003, adjustable rate home loan volume was up 27 percent, while home equity loan and line of credit and multi-family volumes rose 17 percent and 36 percent, respectively.  The home loan volume included a 55 percent increase in specialty mortgage finance loan volumes.

 

During the fourth quarter of 2004, ARMs represented 68 percent of the company’s home loan volume, compared with 67 percent in the third quarter of 2004 and 48 percent in the fourth quarter of 2003.

 

—more—

 

 

Credit Quality

 

At December 31, 2004, nonperforming assets as a percentage of total assets were 0.58 percent, down slightly from 0.61 percent at September 30, 2004 and down from 0.70 percent at December 31, 2003.  Net charge offs for the quarter were $38 million versus $97 million in the fourth quarter of 2003, which included a one-time charge off of $39 million that resulted from the sale of the franchise finance loan portfolio.  Net charge offs for the third quarter of 2004 were $27 million.  The company’s fourth quarter provision for loan and lease losses was $37 million, while the allowance for loan and lease losses was $1.30 billion at December 31, 2004.

 

Balance Sheet and Capital Management

 

Total assets increased $19.09 billion from the end of the third quarter to $307.92 billion at year end, primarily the result of a $13.56 billion increase in loans held for sale.

 

Total deposits increased $4.96 billion from the previous quarter to $173.66 billion as of December 31, 2004, as a result of increases of $4.40 billion in wholesale deposits and $665 million in retail deposits.

 

The company’s ratio of tangible common equity to tangible assets was 5.05 percent at the end of 2004.  In addition, the capital ratios of the company’s banking subsidiaries continued to exceed the federal regulatory requirements for classification as “well-capitalized” institutions, the highest regulatory standard.

 

FOURTH QUARTER AND 2004 OPERATING SEGMENT RESULTS

 

Retail Banking and Financial Services Financial Performance

 

Net income for the company’s Retail Banking and Financial Services segment was $565 million in the fourth quarter, up 12 percent from $506 million in the third quarter and up 51 percent from $374 million in the fourth quarter of 2003.  Net interest income performance was strong reflecting the growth in average balances of home equity loans and lines of credit and the mortgage loan portfolio.

 

For the year net income was $1.98 billion, up 32 percent from the prior year due to an increase in net interest income, reflecting a 35 percent increase in average loans outstanding.  At the same time, noninterest income grew 10 percent, primarily driven by a 10 percent year-over-year growth in depositor and other retail banking fees.

 

Highlights of the Retail Banking and Financial Services Segment included:

 

•                   Total retail deposits of $132.67 billion were up $665 million from the prior quarter and $4.22 billion, or 3 percent from the fourth quarter of 2003;

•                   The company’s retail banking network grew to 1,939 retail stores with 250 new stores opened in 2004, including 69 opened during the fourth quarter;

•                   Record volume in home equity loans and lines of credit in 2004 led to a 58 percent annual increase in the portfolio to $43.65 billion at year end 2004;

•                   The cross-sell ratio for the average mature retail banking household increased to 5.90 products and services, up from 5.83 at the end of the third quarter of 2004;

•                   WM Advisors assets under management grew by $4.33 billion, or 24 percent, over the past year to $22.20 billion at December 31, 2004.

 

—more—

 

 

Mortgage Banking Financial Performance

 

Net income for the Mortgage Banking segment was $138 million in the fourth quarter compared with $270 million in the third quarter of 2004 and $232 million in the fourth quarter of 2003.

 

For the year, net income was $570 million, down $728 million from $1.30 billion in 2003, reflecting a steep decline in national mortgage originations.  The slowing mortgage market led to reduced loan volumes and a 45 percent decline in average loan balances, as well as a decline in custodial and escrow deposit balances.  Overall there was a 48 percent reduction in net interest income. In addition, the $682 million decline in noninterest income was partially offset by a $469 million reduction in noninterest expense reflecting the improved efficiencies and continued expense reductions in the Mortgage Banking segment.

 

Highlights of the Mortgage Banking Segment included:

 

•                   Total home loan volume for the quarter, excluding specialty mortgage finance, was $41.59 billion, compared to $40.22 billion in the third quarter of 2004 and $51.50 billion in the fourth quarter of 2003;

•                   MSR performance for the quarter, including amortization and the effect of hedges, contributed a net cost of $277 million, compared to a net cost of $123 million in the third quarter;

•                   Noninterest expense of $635 million for the quarter was up slightly from the previous quarter due to a decrease in our deferral rate for loan origination expenses, but down $230 million from $865 million in the fourth quarter of 2003.  For the year, noninterest expense of $2.61 billion was down $469 million from $3.08 billion in 2003 reflecting the reduction in loan volume related expenses and the streamlining of business operations.

 

Commercial Group Financial Performance

 

Net income for the Commercial Group was $129 million, compared with $146 million in the previous quarter and $112 million from continuing operations in the fourth quarter of 2003.  Net income for the year was $633 million compared with $696 million from continuing operations for 2003.  The difference in net income from the prior year was primarily due to certain previously disclosed transactions occurring in the second half of 2003 totaling $170 million pre-tax.

 

Highlights of the Commercial Group included:

 

•                   Multi-family loan volume in 2004 was a record $8.16 billion, up slightly from 2003 despite a rising interest rate environment;

•                   The average balance for multi-family loans grew 9 percent year over year and contributed significantly to the total Commercial Group average loan growth of $3.31 billion or 9 percent;

•                   Total average deposits of $7.79 billion in the fourth quarter of 2004 increased 27 percent from $6.13 billion in the fourth quarter of 2003.

 

About Washington Mutual

 

With a history dating back to 1889, Washington Mutual is a retailer of financial services that provides a diversified line of products and services to consumers and commercial clients. At December 31, 2004, Washington Mutual and its subsidiaries had assets of $307.92 billion.  Washington Mutual currently operates more than 2,400 retail banking, mortgage lending, commercial banking and financial services offices throughout the nation. Washington Mutual’s press releases are available at www.wamunewsroom.com.

 

—more—

 

 

Webcast information : A conference call to discuss the company’s financial results will be held on Thursday, January 20, 2005, at 10:30 a.m. EST 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 888-780-9655. Participants calling from outside the United States may dial 712-421-1601. 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 on the company’s web site for 30 days following the call. A recording of the conference call will be available after 1 p.m. EST on Thursday, January 20, 2005, through 11:59 p.m. EST on Saturday, January 29, 2005. The recorded message will be available at 866-511-5153.  Callers from outside the United States may dial 203-369-1953.

 

Forward Looking Statement

 

Our Form 10-K/A for 2003 and other documents that we filed with the Securities and Exchange Commission have forward-looking statements. In addition, our senior management may make forward-looking statements orally to analysts, investors, the media and others. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” or words of similar meaning, or future or conditional verbs such 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 10K/A for 2003 and include:

 

•                   General business and economic conditions, including movements in interest rates, may significantly affect our earnings;

•                   If we are unable to effectively manage the volatility of our mortgage banking business, our earnings could be adversely affected;

•                   Our retail banking business faces competition for loans and deposits from banking and nonbanking companies, which may have a disparate impact on our operations in our emerging markets; and

•                   Changes in the regulation of financial services companies and housing government-sponsored enterprises could adversely affect our business.

 

 

###

 

Media Contact		Investor Relations Contact
Alan Gulick		Alan Magleby
Washington Mutual		Washington Mutual
206-377-3637		206-490-5182
alan.gulick@wamu.net		alan.magleby@wamu.net

 

 

Exhibit 99.2

 

WM - 1

 

Washington Mutual, Inc.

Consolidated Statements of Income

(dollars in millions, except per share data)

(unaudited)

 

		Quarter Ended
		Dec. 31, 2004			Sept. 30, 2004			June 30, 2004			Mar. 31, 2004			Dec. 31, 2003
Interest Income
Loans held for sale		$	393		$	341		$	406		$	332		$	441
Loans held in portfolio		2,421			2,226			2,111			2,067			1,967
Available-for-sale securities		157			163			180			265			353
Other interest and dividend income		95			81			55			57			38
Total interest income		3,066			2,811			2,752			2,721			2,799
Interest Expense
Deposits		604			539			458			443			491
Borrowings		612			532			500			546			565
Total interest expense		1,216			1,071			958			989			1,056
Net interest income		1,850			1,740			1,794			1,732			1,743
Provision (reversal of reserve) for loan and lease losses		37			56			60			56			(202		)
Net interest income after provision (reversal of reserve) for loan and lease losses		1,813			1,684			1,734			1,676			1,945
Noninterest Income
Home loan mortgage banking income, net		352			504			-			531			592
Depositor and other retail banking fees		515			514			507			463			472
Securities fees and commissions		110			104			105			107			103
Insurance income		47			61			57			61			49
Portfolio loan related income		101			109			103			87			96
Gain (loss) from other available-for-sale securities		(23		)	11			41			21			(13		)
Loss on extinguishment of borrowings		-			(147		)	(1		)	(89		)	-
Other income		115			108			82			56			166
Total noninterest income		1,217			1,264			894			1,237			1,465
Noninterest Expense
Compensation and benefits		839			841			849			899			877
Occupancy and equipment		462			404			393			400			569
Telecommunications and outsourced information services		115			118			123			123			125
Depositor and other retail banking losses		61			54			40			40			40
Amortization of other intangible assets		13			14			14			15			15
Advertising and promotion		57			76			84			58			88
Professional fees		54			34			32			39			78
Other expense		337			328			313			306			309
Total noninterest expense		1,938			1,869			1,848			1,880			2,101
Income from continuing operations before income taxes		1,092			1,079			780			1,033			1,309
Income taxes		424			405			291			385			488
Income from continuing operations, net of taxes		668			674			489			648			821
Discontinued Operations
Income (loss) from discontinued operations before income taxes		-			-			-			(32		)	34
Gain on disposition of discontinued operations		-			-			-			676			-
Income taxes		-			-			-			245			13
Income from discontinued operations, net of taxes		-			-			-			399			21
Net Income		$	668		$	674		$	489		$	1,047		$	842
Basic Earnings Per Common Share:
Income from continuing operations		$	0.77		$	0.78		$	0.57		$	0.75		$	0.93
Income from discontinued operations, net		-			-			-			0.46			0.02
Net income		0.77			0.78			0.57			1.21			0.95
Diluted Earnings Per Common Share:
Income from continuing operations		$	0.76		$	0.76		$	0.55		$	0.73		$	0.91
Income from discontinued operations, net		-			-			-			0.45			0.02
Net income		0.76			0.76			0.55			1.18			0.93
Dividends declared per common share		0.45			0.44			0.43			0.42			0.41
Basic weighted average number of common shares outstanding (in thousands)		863,055			862,004			860,496			863,299			883,539
Diluted weighted average number of common shares outstanding (in thousands)		883,991			882,323			883,414			886,467			904,840

 

 

WM -   2

 

Washington Mutual, Inc.

Consolidated Statements of Income

(dollars in millions, except per share data)

(unaudited)

 

		Year Ended
		Dec. 31, 2004			Dec. 31, 2003
Interest Income
Loans held for sale		$	1,472		$	2,501
Loans held in portfolio		8,825			7,668
Available-for-sale securities		764			1,738
Other interest and dividend income		289			256
Total interest income		11,350			12,163
Interest Expense
Deposits		2,043			2,165
Borrowings		2,191			2,369
Total interest expense		4,234			4,534
Net interest income		7,116			7,629
Provision for loan and lease losses		209			42
Net interest income after provision for loan and lease losses		6,907			7,587
Noninterest Income
Home loan mortgage banking income, net		1,387			1,974
Depositor and other retail banking fees		1,999			1,818
Securities fees and commissions		426			395
Insurance income		226			188
Portfolio loan related income		401			439
Gain from other available-for-sale securities		50			676
Loss on extinguishment of borrowings		(237		)	(129		)
Other income		360			489
Total noninterest income		4,612			5,850
Noninterest Expense
Compensation and benefits		3,428			3,304
Occupancy and equipment		1,659			1,592
Telecommunications and outsourced information services		479			554
Depositor and other retail banking losses		195			154
Amortization of other intangible assets		56			61
Advertising and promotion		276			278
Professional fees		158			267
Other expense		1,284			1,198
Total noninterest expense		7,535			7,408
Income from continuing operations before income taxes		3,984			6,029
Income taxes		1,505			2,236
Income from continuing operations, net of taxes		2,479			3,793
Discontinued Operations
Income (loss) from discontinued operations before income taxes		(32		)	137
Gain on disposition of discontinued operations		676			-
Income taxes		245			50
Income from discontinued operations, net of taxes		399			87
Net Income		$	2,878		$	3,880
Basic Earnings Per Common Share:
Income from continuing operations		$	2.88		$	4.20
Income from discontinued operations, net		0.46			0.09
Net income		3.34			4.29
Diluted Earnings Per Common Share:
Income from continuing operations		$	2.81		$	4.12
Income from discontinued operations, net		0.45			0.09
Net income		3.26			4.21
Dividends declared per common share		1.74			1.40
Basic weighted average number of common shares outstanding (in thousands)		862,215			903,666
Diluted weighted average number of common shares outstanding (in thousands)		884,050			921,757

 

 

WM - 3

 

Washington Mutual, Inc.

Consolidated Statements of Financial Condition

(dollars in millions, except per share data)

(unaudited)

 

		Dec. 31, 2004			Sept. 30, 2004			June 30, 2004			Mar. 31, 2004			Dec. 31, 2003
Assets
Cash and cash equivalents		$	4,455		$	4,689		$	5,133		$	6,045		$	7,018
Federal funds sold and securities purchased under agreements to resell		82			30			70			1,783			19
Available-for-sale securities, total amortized cost of $19,047, $16,312, $19,392, $22,843 and $36,858:
Mortgage-backed securities		14,923			10,168			10,042			10,766			10,695
Investment securities		4,296			6,319			9,337			12,565			26,012
Loans held for sale		42,743			29,184			27,795			34,207			20,837
Loans held in portfolio		207,071			206,158			194,543			186,380			175,150
Allowance for loan and lease losses		(1,301		)	(1,322		)	(1,293		)	(1,260		)	(1,250		)
Total loans held in portfolio, net of allowance for loan and lease losses		205,770			204,836			193,250			185,120			173,900
Investment in Federal Home Loan Banks		4,059			3,883			3,965			3,916			3,462
Mortgage servicing rights		5,906			6,112			7,501			5,239			6,354
Goodwill		6,196			6,196			6,196			6,196			6,196
Assets of discontinued operations		-			-			-			-			4,184
Other assets		19,488			17,411			15,255			14,931			16,501
Total assets		$	307,918		$	288,828		$	278,544		$	280,768		$	275,178
Liabilities
Deposits:
Noninterest -bearing deposits		$	32,780		$	32,250		$	33,343		$	35,714		$	29,968
Interest-bearing deposits		140,878			136,445			129,123			125,267			123,213
Total deposits		173,658			168,695			162,466			160,981			153,181
Federal funds purchased and commercial paper		4,045			7,025			2,293			4,501			2,011
Securities sold under agreements to repurchase		15,944			15,611			15,764			18,306			28,333
Advances from Federal Home Loan Banks		70,074			59,758			61,379			58,494			48,330
Other borrowings		18,498			12,747			12,113			13,692			15,483
Liabilities of discontinued operations		-			-			-			-			3,578
Other liabilities		4,473			4,172			4,160			4,411			4,520
Total liabilities		286,692			268,008			258,175			260,385			255,436
Stockholders’ equity		21,226			20,820			20,369			20,383			19,742
Total liabilities and stockholders’ equity		$	307,918		$	288,828		$	278,544		$	280,768		$	275,178
Common shares outstanding at end of period (in thousands) (1)		874,262			873,085			872,246			868,953			880,986
Book value per common share (2)		$	24.45		$	24.01		$	23.51		$	23.62		$	22.56
Tangible book value per common share (2)		17.45			16.99			16.47			16.53			15.58
Employees at end of period (3)		52,579			55,488			57,274			59,173			63,720

 

⁽¹⁾               Includes 6,000,000 shares held in escrow in all periods reported.

⁽²⁾               Excludes 6,000,000 shares held in escrow in all periods reported.

⁽³⁾               Includes 2,346 employees reported as part of discontinued operations at December 31, 2003.

 

 

WM - 4

 

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

 

		Quarter Ended
		Dec. 31, 2004			Sept. 30, 2004			June 30, 2004			Mar. 31, 2004			Dec. 31, 2003
Stockholders’ Equity Rollforward
Balance, beginning of period		$	20,820		$	20,369		$	20,383		$	19,742		$	20,441
Net income		668			674			489			1,047			842
Other comprehensive income (loss), net of tax		49			98			(210		)	512			(105		)
Cash dividends declared on common stock		(390		)	(381		)	(372		)	(367		)	(368		)
Cash dividends returned (1)		-			-			-			-			45
Common stock repurchased and retired		-			-			-			(712		)	(1,269		)
Common stock issued		79			60			79			161			156
Balance, end of period		$	21,226		$	20,820		$	20,369		$	20,383		$	19,742

 

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

 

 

WM - 5

 

Washington Mutual, Inc.

Selected Financial Information

(dollars in millions)

(unaudited)

 

		Quarter Ended															Year Ended
		Dec. 31, 2004			Sept. 30, 2004			June 30, 2004			Mar. 31, 2004			Dec. 31, 2003			Dec. 31, 2004			Dec. 31, 2003
RETAIL BANKING AND FINANCIAL SERVICES GROUP
Condensed income statement:
Net interest income		$	1,323		$	1,255		$	1,224		$	1,187		$	1,074		$	4,989		$	3,872
Provision for loan and lease losses		34			42			43			58			49			177			183
Noninterest income		717			715			703			623			647			2,758			2,500
Inter-segment revenue		8			3			7			6			20			24			179
Noninterest expense		1,132			1,116			1,115			1,071			1,072			4,434			3,939
Income before income taxes		882			815			776			687			620			3,160			2,429
Income taxes		317			309			294			260			246			1,180			931
Net income		$	565		$	506		$	482		$	427		$	374		$	1,980		$	1,498
Performance and other data:
Efficiency ratio (1)		48.95		%	49.97		%	50.97		%	51.86		%	54.14		%	50.39		%	52.24		%
Average loans		$	177,204		$	167,569		$	158,966		$	149,377		$	135,338		$	163,329		$	120,705
Average assets		189,872			180,003			171,343			161,359			147,281			175,696			132,427
Average deposits		132,771			131,850			128,680			128,000			128,651			130,337			125,440
Employees at end of period		30,107			30,069			29,640			29,077			29,364			30,107			29,364
MORTGAGE BANKING GROUP
Condensed income statement:
Net interest income		$	293		$	287		$	369		$	288		$	403		$	1,237		$	2,382
Provision for loan and lease losses		-			-			-			-			-			-			14
Noninterest income		566			769			208			761			867			2,304			2,986
Inter-segment expense		8			3			7			6			20			24			179
Noninterest expense		635			619			671			682			865			2,607			3,076
Income (expense) before income taxes		216			434			(101		)	361			385			910			2,099
Income taxes (benefit)		78			164			(38		)	136			153			340			801
Net income (loss)		$	138		$	270		$	(63	)	$	225		$	232		$	570		$	1,298
Performance and other data:
Efficiency ratio (1)		68.51		%	53.78		%	108.54		%	60.45		%	65.00		%	68.19		%	55.28		%
Average loans		$	24,880		$	22,611		$	26,999		$	19,871		$	24,677		$	23,591		$	42,990
Average assets		44,209			40,047			44,573			38,918			48,090			41,938			70,308
Average deposits		15,121			15,385			19,837			14,877			18,347			16,299			27,112
Employees at end of period		14,197			16,826			18,916			21,203			22,541			14,197			22,541
COMMERCIAL GROUP
Condensed income statement:
Net interest income		$	322		$	325		$	342		$	343		$	364		$	1,332		$	1,321
Provision for loan and lease losses		11			8			10			16			65			45			103
Noninterest income		61			65			102			86			53			314			472
Noninterest expense		184			160			144			151			174			639			602
Income from continuing operations before income taxes		188			222			290			262			178			962			1,088
Income taxes		59			76			102			92			66			329			392
Income from continuing operations		129			146			188			170			112			633			696
Income from discontinued operations, net of taxes		-			-			-			-			21			-			87
Net income		$	129		$	146		$	188		$	170		$	133		$	633		$	783
Performance and other data:
Efficiency ratio (1)		40.21		%	33.37		%	25.90		%	28.44		%	34.64		%	31.67		%	26.95		%
Average loans		$	40,917		$	38,799		$	38,496		$	36,984		$	37,801		$	38,804		$	35,490
Average assets		45,668			43,724			43,749			42,805			46,306			43,990			44,037
Average deposits		7,791			7,811			6,898			6,049			6,130			7,141			5,407
Employees at end of period (2)		3,100			3,248			3,207			3,130			5,627			3,100			5,627

 

⁽¹⁾               The efficiency ratio is defined as noninterest expense, excluding a cost of capital charge on goodwill, divided by total revenue (net interest income and noninterest income).

⁽²⁾               Includes 2,346 employees reported as part of discontinued operations at December 31, 2003.