SEATTLE - Kerry Killinger surely raised a few eyebrows when he declared in a presentation at the influential Montgomery Securities investor conference this year that the thrift he runs, Washington Mutual Inc., "is a growth company."

A big thrift a growth company? Casual listeners could be forgiven a chortle or two, since most people believe the thrift industry is dying, or, at a minimum, getting very mature.

But for those investors and analysts who have been following Mr. Killinger's six-year stewardship of "Wamu," his prediction wasn't outlandish at all.

Indeed, many say that Washington Mutual has unusually strong prospects in an industry with more than its share of clunkers.

"Washington Mutual is a franchise worth holding onto," proclaimed James R. Christensen, senior vice president of Jurika & Voyles Inc., a money manager in Oakland, Calif., that owns 3.2 million shares, or 5.2%, of the thrift.

Another big investor, Robert Mohn, a principal of mutual fund company Wanger Asset Management in Chicago, figures that Washington Mutual could be selling for $40 a share by the end of next year. Its recent trading range has been close to $28. Wanger owns 930,000 Wamu shares.

Sound outlandish? Well, consider this: In Washington and Oregon, Wamu says it makes more home mortgages than any other lender.

The company also ranks second in consumer deposits in Washington, and fourth in Oregon.

This gives it a loan or deposit relationship with a quarter of all households in Washington, and a tenth in Oregon. Not bad, since both states are experiencing employment and population growth well above the national average.

Washington Mutual's stock has also been a strong performer. Total annual return for the five years ended Sept. 30 was 45%, more than two and a half times the S&P 500. Since Mr. Killinger became chairman on Jan. 1, 1991, the thrift's market capitalization has grown eightfold, to $1.9 billion.

To be sure, Mr. Killinger, 46, is the beneficiary of circumstance. He took over the thrift just as it was starting to recover from nasty commercial real estate and junk bond problems. He escalated the disposition of problem assets, which eventually caused an earnings rebound.

But Mr. Killinger has also shown himself to be an aggressive and astute dealmaker. Nineteen announced deals since 1988 have transformed Washington Mutual from a sleepy Seattle thrift into a giant with assets of $20.5 billion, deposits of $10.6 billion, and 288 branches in Washington, Oregon, Utah, Idaho, and Montana.

"He makes acquisitions like a neutron bomb," Mr. Mohn said of Mr. Killinger. "He shreds costs by an average of 50% to 60%, but also has a 90% customer retention rate."

For his part, Mr. Killinger said in an interview that he continues to hunger for deals. Indeed, this year he has agreed to buy two commercial banks with a combined total of $910 million of assets.

He's on the lookout for other purchases, both in Washington Mutual's current operating territory and also in Northern California. One deal that came close to fruition earlier this year was an acquisition of the San Francisco thrift SFFed Corp., according to knowledgeable sources. Instead, the thrift was purchased by First Nationwide Bank, which is also based in San Francisco.

But Mr. Killinger stands out in another way, too - his successful pursuit of a more banklike service mix.

Other big thrifts, including Great Western Financial Corp., and Glendale Federal Bank, also are trying to sell more banking services.

The theory is that since banks, on average, are more profitable than thrifts, a thrift can boost its earnings and stock price by selling more checking accounts and making more business and nonmortgage consumer loans.

Washington Mutual expects that becoming more banklike will play a critical role in helping it meet its five-year goals of boosting return on assets from 0.96% to 1.2%, return on equity from 14% to 18%, and reducing its interest rate exposure.

So far, Washington Mutual is proving unusually adept at mimicking banks and, in some ways, besting them.

For instance, Wamu has become an industry leader in moving its branches into low-cost supermarket locations. It began doing this in 1993, when it bought a thrift that already had a network of supermarket branches. Washington Mutual has expanded the network so that it now constitutes a third of its branches. Most of the supermarket branches are in Fred Meyer stores, which are popular in the Northwest.

Banks pursuing a similar transition include Wells Fargo & Co. and BankAmerica Corp.

Washington Mutual has also proven unusually adept at marketing checking accounts. Recent campaigns called "Merge with Washington Mutual" and "That's Different: That's Washington Mutual" have won many marketing awards.

They've been eye-catching, too, touching on the thrift's status as one of the few remaining big institutions based in the Northwest. A recent television ad, for example, features an accordion-player who is also rolling a log on a lake. After a moment of polka playing, a narrator says Washington Mutual's free checking account is even more unusual. The log- roller then falls into the water.

Such ads apparently play well in the Northwest. In the first nine months of this year, Washington Mutual netted a 28% increase in checking accounts to 469,000. Half of the new account sales are coming from supermarket branches, said executive vice president Deanne W. Oppenheimer.

Mr. Killinger's newer focus is on transforming Washington Mutual from an institution that makes only mortgage loans to one that's also a force in lending to small and midsize companies. His goal: "a multi-billion dollar portfolio" of these loans within two or three years.

The acquisitions of $130 million-asset Enterprise Bank, of Bellevue, Wash., and $780 million-asset Western Bank, of Coos Bay, Ore., should help. Both banks specialize in loans to small and midsize companies, and both are believed to have strong growth prospects.

Mr. Killinger said he's putting purchases of other, similar-sized commercial banks at the top of his priority list. Interestingly, he said expanding the commercial banking business is more lucrative at this time than expanding Wamu's nonbank businesses.

This is a remarkable admission, since Washington Mutual is noted for having relatively successful broker-dealer, mutual fund, and annuities underwriting units. These nonbank operations contributed about a sixth of Wamu's $26 million of fee income in the first nine months.

But Mr. Killinger said that the best way to expand these nonbank businesses is through acquisitions. And acquisition targets are now too expensive.

This means that Mr. Killinger is stepping away from what got him into banking in the first place. He came to Washington Mutual when it acquired the broker-dealer Murphy Favre Inc. in 1982, where he was an executive vice president. Before going to Murphy Favre, Mr. Killinger was an investment analyst at a Nebraska life insurance company.

But friends, relatives, and colleagues said that Mr. Killinger, an athletically lean man with wire-rim glasses, is more interested in making money than in sticking with what he's done before.

Indeed, one would have thought that his earlier background would have led him to become a trumpet player rather than a banker. Both his father and grandfather were musicians. What's more, his father directed the Des Moines high school band where Mr. Killinger was drum major, first chair trumpet, and where he met the woman he later married. Debbie Killinger was also a trumpet player.

But Mr. Killinger excelled in other areas, too. He was captain of the North High School tennis team and point guard for its basketball team.

More important, Mr. Killinger said that even when he was in school he liked reading business newspapers and investing. That's why he studied business administration at the University of Iowa.

"My primary interest was in investments," he said.

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