Wamu Conference Call on Sep. 08. 2008 / 9:00AM

FINAL TRANSCRIPT

WM - WaMu Conference Call

Event Date/Time: Sep. 08. 2008 / 9:00AM ET

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© 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial. FINAL TRANSCRIPT Sep. 08. 2008 / 9:00AM, WM - WaMu Conference Call

CORPORATE PARTICIPANTS Alan Magleby Washington Mutual, Inc. - SVP IR Steve Frank Washington Mutual, Inc. - Chairman Alan Fishman Washington Mutual, Inc. - CEO

CONFERENCE CALL PARTICIPANTS Howard Shapiro Fox-Pitt Cochran Caronia - Analyst Paul Miller Friedman, Billings, Ramsey - Analyst Chris Brendler Stifel Nicolaus - Analyst

PRESENTATION Operator Good day ladies and gentlemen, and welcome to the WaMu conference call. My name is Catena and I will be your coordinator for today. At this time all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions) As a reminder this conference is being recorded for replay purposes.

I will now turn the presentation over to your host for today's call, Mr. Alan Magleby, Director of Investor Relations. Please proceed.

Alan Magleby - Washington Mutual, Inc. - SVP IR Good morning and thank you for joining us today. I want to remind you that our comments today may contain forward-looking statements concerning our financial condition, results, and expectations, and that there are a number of factors that may cause actual results in the future to be different from our current expectations. These factors include among other things changes in general business, economic, and market conditions; competitive pressures in the financial services industry; economic trends that negatively impact the real estate lending environment; or legislative and regulatory changes that may impact our business. For additional factors please see our current press release and other recent documents filed with the SEC.

Please note that this is not intended to be an intra-quarter business update. We will not be providing information and will not take questions on quarter-to-date results. We will conclude the call before the market opens in half an hour.

With that I will turn the call over to Steve Frank, Chairman of the board of WaMu. Steve?

Steve Frank - Washington Mutual, Inc. - Chairman Thanks, Alan. Good morning and thank you for joining us on such short notice. With me today is Alan Fishman, WaMu's new CEO. As we announced this morning, Kerry Killinger has left the Company after 18 years as CEO, and we are very pleased that Alan has accepted the Board's offer to succeed him.

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Let me begin by thanking Kerry for his dedication and 25 years of service to WaMu. Kerry is a visionary who built WaMu into a powerful brand and a nationwide banking franchise. The Board appreciates Kerry's many contributions to WaMu, and we wish him the best in his future endeavors.

Like others in the industry WaMu is currently facing unprecedented housing and market conditions. At this juncture in the Company's history, the Board felt that new leadership with a combination of deep industry experience and a fresh perspective would be most effective way to lead the Company through this difficult period and return it to profitability. We conducted a thorough search and considered both internal and external candidates.

After careful consideration we decided that Alan would be the best candidate to lead WaMu. Alan has spent his entire career in the financial services industry as both an executive and an investor. Alan was president and CEO of Independence Community Bank from 2001 to 2006, when it was acquired by Sovereign Bancorp. Alan became president and COO of Sovereign, and then left after ensuring a smooth transition.

Since then he has been involved in a number of business and civic activities including serving as chairman of Meridian Capital Group, one of the country's largest commercial mortgage brokers. Before coming to Independence, he was brought in as CEO of Conti Financial Corporation when the company was going through a very difficult period. Earlier in his career he spent 20 years in senior executive positions at Chemical Bank where, among other positions, he ran the retail branch system and served as CFO. He later moved to AIG where he was in charge of financial services investments in the early '90s.

The Board has great confidence in Alan's ability to lead WaMu through this next stage in its evolution and return the Company to profitability as quickly as possible. We know that WaMu's nationwide retail banking franchise remains strong.

With that short introduction I will turn the call over to Alan.

Alan Fishman - Washington Mutual, Inc. - CEO Thank you, Steve, for that kind introduction. First let me echo Steve's comments about Kerry. Kerry has been responsible for building a very talented team here at WaMu and clearly an incredibly strong franchise. I look forward to working with and getting to know the WaMu team. I want to thank and commend all of the team members at WaMu for their dedication and incredibly hard work through a difficult period. Together, it is my hope that we will make WaMu's franchise even stronger.

Like everyone else in the business, WaMu is facing very significant pressures; and I know I need to hit the ground running, and I am prepared to do that. This has been an unprecedented period in the financial services industry, with the credit markets, the mortgage markets experiencing a dramatic boom and bust. We are now working our way through the bust and the associated problems, and it will take some time before the housing markets and its related financing markets stabilize.

WaMu has already taken significant positive steps to manage this, but I am sure that we will have still a great deal of work ahead of us. My first priority in the next several days will be to ensure that our people have the tools and support they need to serve our customers well in this environment and that we maintain a high level of service to all of our customers.

While we are making sure that we are delivering on our service and performance promise, at the same time it is essential that we will start working on building a winning model for the future. The retail banking and the mortgage business will continue to evolve very rapidly over the next few years, and this provides, I think, a great opportunity for those institutions that identify the kinds of things that will allow us to compete effectively within that new framework.

In fact I believe the opportunity to create a great national retail franchise has never been better. WaMu has a tremendous national brand and retail franchise. We will build on those strengths to create a business that can compete and can win and, at the same time, deliver real value for our shareholders, for our customers, and employees.

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I want to reaffirm our world-class commitment at the same time to serve the communities in which we operate.

So in the early days, those are my objectives and that is why I'm excited and honored to take this position. Clearly I share the Board's confidence in WaMu's underlying strength. While we have a lot of hard work ahead of us, I know that we can and will manage the issues that we face today.

One last comment before we take questions and I turn the call back to Steve. I am sure many of you are interested in my perspective on the various issues WaMu is currently facing. Obviously having been the CEO for only a matter of hours, I am not in a position to respond to those questions yet. But I want to assure you that my style is to be open and transparent. Those of you that know me I think will acknowledge that.

So with that, let me turn the call back to Steve.

Steve Frank - Washington Mutual, Inc. - Chairman Thanks, Alan. We're very happy to have you on board and have great confidence in your leadership.

Before we open the lines for Q&A I want to discuss one other point. This morning we also announced that we have entered into a Memorandum of Understanding with the Office of Thrift Supervision concerning aspects of the bank's operations, principally in several areas of its risk management and compliance functions, including its Bank Secrecy Act compliance program. In addition, the bank has committed to provide the OTS an updated multiyear business plan and forecast for earnings, asset quality, capital, and business segment performance.

This business plan will not require the Company to raise capital, increase liquidity, or make any changes to the products and services that we provide to customers. We intend to work closely with the OTS to strengthen our oversight in those areas.

With that, Alan and I will be happy to take a few questions before the market opens.

QUESTIONS AND ANSWERS Operator (Operator Instructions) Howard Shapiro, FPK.

Howard Shapiro - Fox-Pitt Cochran Caronia - Analyst Thank you very much and congratulations, Mr. Fishman. I know it is your first day and a lot needs to be done and assessed. But I was just wondering if you could maybe very preliminarily answer just two questions.

The first is on the bank's deposit position. Just given all of the concerns about liquidity and viability, are you seeing any signs of notable deposit erosion?

The second question -- and again I know it is very early days -- but how comfortable are you with the current capital position? Thank you very much.

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Alan Fishman - Washington Mutual, Inc. - CEO There has been no dramatic movements one way or the other in the deposit positions for a long time now.

And as to capital, it looks like the plan makes good sense, and we will check everything and report if we think we need to make a change.

Howard Shapiro - Fox-Pitt Cochran Caronia - Analyst Okay, thank you.

Operator Bob Ramsay, FBR.

Paul Miller - Friedman, Billings, Ramsey - Analyst Yes, this is Paul Miller at Friedman Billings Ramsey. Are you contemplating, or any discussion about selling certain assets or selling some of the branches on the East Coast versus the West Coast?

I know you have just been there for a day. But can you just give me some -- can you give us any insight and if any possible asset sales down the road?

Alan Fishman - Washington Mutual, Inc. - CEO I have no response there. It is way early days here.

Paul Miller - Friedman, Billings, Ramsey - Analyst Okay, thank you very much.

Operator (Operator Instructions) Chris Brendler, Stifel.

Chris Brendler - Stifel Nicolaus - Analyst Thanks, good morning. Can you address at all the discussions with the OTS and how you plan on limiting -- or any new discussions on how you plan on limiting the exposures in the portfolio, specifically the option ARMs and HELOCs? Do you get more aggressive on reducing open-to-buy or outstanding availability on those lines? Is that the major focus going forward? And any other discussions you would have on limiting the credit risk in the portfolio. Thanks.

Alan Fishman - Washington Mutual, Inc. - CEO First, just say hi to Ben for me. With our relationship as I understand it from the Board, from Steve, and my own discussions recently with the regulators yesterday and late last week, the relationships are really quite strong with the regulators. I don't see any need to do anything at this point that we haven't already just talked about on the call.

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Operator Gentlemen, this concludes the question-and-answer session. I would now like to turn the call back to Mr. Fishman for closing remarks.

Alan Fishman - Washington Mutual, Inc. - CEO Well, just we really are excited about this. I personally am very excited. My family is excited. We look forward to getting to know all of the people here at WaMu, getting to know the Board in depth. My relationships with the Board have started off in a terrific fashion. We have great discussions. And look forward to talking to all of you as we move this thing forward. So thank you very much for your attention, and we will see you soon.

Operator Ladies and gentlemen, thank you for your participation in today's conference. This concludes your presentation. You may now disconnect. Good day.

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