Kerry Killinger, the chief executive of Washington Mutual Inc., told investors Thursday that its pending acquisition of Dime Bancorp Inc. is partly motivated by the belief that the New York region is ripe for a friendlier, less expensive alternative to big commercial banks.
Speaking at an investor conference in Washington, D.C., sponsored by the Arlington, Va., investment bank Friedman Billings Ramsey, Mr. Killinger touted Wamu's national expansion and brand-building efforts.
The Seattle thrift company's June announcement of an agreement to buy New York-based Dime for $5.2 billion continued an expansion thrust on the East Coast that has included deals for the mortgage portfolios of PNC Financial Services Group Inc. and FleetBoston Financial Corp.
Wamu filed its merger application for Dime with the Office of Thrift Supervision on Wednesday. Approval from Dime shareholders is also awaited, but officials say they hope to complete the transaction in early 2002.
Mr. Killinger promises to continue the assault on larger competitors then. He said Wamu marketing surveys found that New Yorkers want better, more personal service. In the various markets where Wamu has conducted research, he said, New York ranked the highest in customer dissatisfaction, at 28%.
New Yorkers think banks charge "too many little fees," Mr. Killinger said. They find that large banks are "cold and unfriendly, inflexible" places where "people don't care about people - it's just about profits they don't care about me," he said.
He said that Wamu's research convinced him that "the greater New York marketplace offers the best opportunity for growth that we have seen anywhere in the country."
Observers have said that Wamu may well do more acquisitions in the New York region.
Wamu has already begun spending heavily to promote its brand in the East, including New York, Philadelphia, the District of Columbia, and other markets. Wamu is also No. 1 or No. 2 lender in New York, New Jersey, Pennsylvania, Connecticut, and Massachusetts. Besides acquiring Dime and its office network, Washington Mutual plans to use its own Occasio branch concept, which relies heavily on ideas borrowed from non-banking retailers, he said.
"One of the questions everyone has is 'will your brand travel?' The good news for us is the brand has translated to every market that we have gone into and has done extremely well," he said.
Mr. Killinger also decried short-term thinking among investors, saying he thinks steady customer growth and high satisfaction ratings will contribute to long-term shareholder value. "I believe the best long-term returns are realized when you find the combination of a company that has a viable strategy and excellent execution," Mr. Killinger said. He said Wamu's annual shareholder return has averaged 33.9% a year over the past 10 years, better than either the S&P 500 or the S&P financial index.
Also on Thursday, Wamu announced that it had hired Lori Vella, a regional executive for Freddie Mac, to run its national retail lending operation.
Ms. Vella, who becomes senior vice president for national retail lending, will manage the 300 home loan centers and 1,500 loan consultants in the Washington Mutual home loans and insurance services group. She was Freddie Mac's western region vice president in charge of credit, sales, and customer service.
Ms. Vella succeeded Brad Blackwell, who left the company several months ago, according to a Wamu spokesman. She will report to Eric Spence, the executive vice president of production in Wamu's loan group.
Among other things, Ms. Vella will help Wamu expand its network of loan centers nationwide. "Washington Mutual has laid a strong foundation for our growth, and Lori will play a pivotal role in maintaining, and building our position as the nation's leading mortgage lender," Mr. Spence said in a prepared statement.