WaMu Provides Update on Expectations for Third Quarter Performance

-- Provision expected to be approximately $1.4 billion less than
second quarter while company continues to build reserves

-- Long-term credit outlook unchanged

-- Liquidity stable at approximately $50 billion

-- Capital significantly above "well-capitalized" levels
SEATTLE--(Business Wire)--
Washington Mutual, Inc. (NYSE:WM) today provided an update on its
expectation for third quarter performance:

Third Quarter Earnings Outlook

-- The company expects its capital ratios at quarter-end to
remain significantly above the levels for well-capitalized
institutions and continues to be confident that it has
sufficient liquidity and capital to support its operations
while it returns to profitability.

-- Net interest income is expected to be in line with the second
quarter.

-- The third quarter provision for loan losses is expected to be
approximately $4.5 billion, down from $5.9 billion in the
second quarter while reserves are expected to build, as
described in greater detail below.

-- Net charge-offs are expected to increase by less than 20
percent in the third quarter compared with a growth rate of
nearly 60 percent during the second quarter.

-- Non interest income is expected to be approximately $1.0
billion, up significantly from the second quarter, reflecting
continued growth in depositor and retail banking fees (up 6%
from the second quarter) as well as stronger MSR results due
to slower prepayment speeds.

-- Non interest expense is expected to be down approximately $200
million, reflecting expectations for lower resizing costs and
lower foreclosed asset expense.

Credit Performance

WaMu expects the third quarter provision to be approximately $4.5
billion, down from $5.9 billion in the second quarter, but nearly two
times expected charge-offs, resulting in an expected increase of
approximately $1.8 billion in the allowance for loan losses at quarter
end. Residential mortgage provisions are expected to be approximately
$3.4 billion, down approximately $2.1 billion from second quarter
residential mortgage provision of approximately $5.5 billion.
Offsetting this decrease is an expected $600 million increase in the
card provision, the majority of which is the result of credit card
securitizations maturing in the ordinary course and returning to the
balance sheet. The company expects its total loan loss reserve to
increase from $8.5 billion at June 30th to approximately $10.3 billion
at the end of the third quarter.

Liquidity and Capital

Retail deposit balances at the end of August of $143 billion were
essentially unchanged from year-end 2007. In addition, the company
continues to maintain a strong liquidity position with approximately
$50 billion of liquidity from reliable funding sources.

The company's tier 1 leverage and total risk-based capital ratios
at June 30, 2008 were 7.76%, and 13.93%, respectively, which were
significantly above the regulatory requirements for well capitalized
institutions. The company expects both ratios to remain significantly
above the levels for well-capitalized institutions at the end of the
third quarter.

Mortgage Agency Preferred Stock

In the third quarter the company expects to record an
other-than-temporary impairment loss related to its investments in
perpetual preferred securities issued by the Federal National Mortgage
Association (Fannie Mae) and the Federal Home Loan Mortgage
Corporation (Freddie Mac). The amortized cost of these
available-for-sale securities was $282 million at June 30, 2008, and
the securities are currently valued at approximately 10 percent of par
value. The impact on third quarter results from other-than-temporary
impairment losses on these perpetual preferred securities and any
other available-for-sale securities will depend on fair values at the
end of the quarter. The company does not hold any common or any other
equity securities issued by Fannie Mae or Freddie Mac. The impairment
follows actions by the U.S. Treasury Department and the Federal
Housing Finance Agency with respect to Fannie Mae and Freddie Mac.

Important Cautionary Statements

WaMu will report its full third quarter results on October 22,
2008. The company expects market conditions to remain volatile during
September and therefore the actual third quarter results could differ
materially from the third quarter earnings outlook provided above. In
addition, the third quarter earnings outlook provided above does not
include any potential goodwill impairment that may result from the
third quarter testing in progress, which may result in a non-cash
charge to earnings if the implied fair value of any reporting unit is
less than its carrying value. The company has not concluded that an
impairment charge in any of its reporting units will be required, but
a charge for goodwill impairment would have no impact on the company's
regulatory capital ratios or liquidity if taken.

The foregoing information should be read in conjunction with the
financial statements, notes and other information contained in the
company's 2007 Annual Report on Form 10-K/A, Quarterly Reports on Form
10-Q, and Current Reports on Form 8-K.

The foregoing information may contain forward-looking statements.
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 management's current expectations
or predictions of future conditions, events or results. They may
include projections of the company's revenues, income, earnings per
share, capital expenditures, dividends, capital structure or other
financial items, descriptions of management's plans or objectives for
future operations, products or services, or descriptions of
assumptions underlying or relating to the foregoing. 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 made and management does not undertake to
update them to reflect changes or events that occur after that date
except as required by federal securities laws. There are a number of
significant factors which could cause actual conditions, events or
results to differ materially from those described in the
forward-looking statements, many of which are beyond management's
control or its ability to accurately forecast or predict. Factors that
might cause our future performance to vary from that described in our
forward-looking statements include market, credit, operational,
regulatory, strategic, liquidity, capital and economic factors as
discussed in "Management's Discussion and Analysis" and in other
periodic reports filed with the Securities and Exchange Commission. In
addition, other factors besides those listed below or discussed in
reports filed with the Securities and Exchange Commission could
adversely affect our results and this list is not a complete set of
all potential risks or uncertainties. Significant among the factors
are the following which are described in greater detail in Part I Item
1A - "Risk Factors" in the company's 2007 Annual Report on Form
10-K/A:

-- Economic conditions that negatively affect housing prices and
the job market have resulted, and may continue to result, in a
deterioration in credit quality of the company's loan portfolios, and
such deterioration in credit quality has had, and could continue to
have, a negative impact on the company's business;

-- The company's access to market-based liquidity sources may be
negatively impacted if market conditions persist, as a result of
recent rating agency actions or if further ratings downgrades occur.
Funding costs may increase from current levels, and gain on sale may
be reduced, leading to reduced earnings;

-- If the company has significant additional losses, it may need
to raise additional capital, which could have a dilutive effect on
existing shareholders, and it may affect its ability to pay dividends
on its common and preferred stock;

-- Changes in interest rates may adversely affect the company's
business, including net interest income and earnings;

-- Certain of the company's loan products have features that may
result in increased credit risk;

-- The company uses estimates in determining the fair value of
certain of our assets, which estimates may prove to be imprecise and
result in significant changes in valuation;

-- The company is subject to risks related to credit card
operations, and this may adversely affect its credit card portfolio
and its ability to continue growing the credit card business;

-- The company is subject to operational risk, which may result in
incurring financial losses and reputational issues;

-- The company's failure to comply with laws and regulations could
have adverse effects on the company's operations and profitability;

-- Changes in regulation of financial services companies, housing
government sponsored enterprises, mortgage originators and servicers,
and credit card lenders could adversely affect the company;

-- The company's business and earnings are highly sensitive to
general business, economic and market conditions, and continued
deterioration in these conditions may adversely affects its business
and earnings;

-- The company may face damage to its professional reputation and
business as a result of allegations and negative public opinion as
well as pending and threatened litigation; and

-- The company is subject to significant competition from banking
and nonbanking companies.

Washington Mutual, Inc.
Media
Derek Aney
206-500-6094 (Seattle)
212-326-6075 (New York)
derek.aney@wamu.net
or
Investor Relations
Alan Magleby
206-500-4148 (Seattle)
212-702-6955 (New York)
alan.magleby@wamu.net

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