For a few short weeks, the $9.9 billion purchase of H.F. Ahmanson & Co. by its Seattle-based rival, Washington Mutual Inc., had dealmakers breathless.

Announcing the purchase in mid-March, Mr. Killinger appeared to have Bank of America in his competitive sights. He said that with Ahmanson, Wamu has "the market share and position critical to be able to become the market leader." He said consumers were tired of the stingy personal service they get at big banks, and Washington Mutual's high-touch approach would help it beat competitors.

Not so fast, Mr. Killinger!

The transcontinental merger of BankAmerica Corp. and NationsBank will give the San Francisco giant new ammunition-sleek products, technology and more capital-in the battle for a share of consumers' wallets, said R. Jay Tejera of Dain Rauscher, Minneapolis.

Instead of "benign neglect," Bank of America's consumer franchise will get big bucks, Mr. Tejera said.

For 20 years, Bank of America "underspent and underdeveloped its consumer franchise," he said. One measure of lackluster performance is that Bank of America sells an average of 1.7. products to each customer, far short of the industry average of 2.6. Another indicator, Mr. Tejera said, is the churning of checking accounts. Bank of America opens 37,000 checking accounts every day, and closes 33,000.

He said with the NationsBank combination, "they'll get a tremendous amount of investment-from a fire hose almost." The bottom line: "It's going to be a tougher foot race" in California, Mr. Tejera said.

He added that Wamu is "a short-term winner." Like any big merger, BankAmerica's combination with NationsBank will generate a raft of discontented customers, and Wamu's aggressive advertising will enable it to pick them off, he said.

Still, the combination of Wamu and Ahmanson strengthens an already impressive franchise. It was also notable for its chutzpah.

Just last year, chairman Kerry K. Killinger of Wamu and Charles R. Rinehart, chairman of Ahmanson, faced off in a bitter contest for another big California thrift, Great Western Financial. When Ahmanson lost its hostile bid for Great Western, many thought Ahmanson would be forced to follow Great Western into the Wamu fold-but not so soon.

Wamu's purchase of Ahmanson was the largest banking deal announced in the first quarter, and Washington Mutual's third major purchase in less than two years. Late in 1996, Wamu entered California with the purchase of American Savings Bank, Irvine, and then last July, it bought Great Western Financial, Chatsworth.

Wamu paid 3.8 times Ahmanson's book value and 20 times estimated 1998 earnings-a hefty price tag by the standards of thrift deals.

When the deal closes in the third quarter, Washington Mutual will have assets of $150 billion and 17% of California's deposits, ranking second behind Bank of America.

Wamu will pick up 409 branch offices with the Ahmanson purchase. The bulk are in California-and many are located within a mile of the former Great Western Financial branches.

With Ahmanson in hand, Washington Mutual will be able to consolidate deposits and substantially reduce the number of retail branches it operates. About 170 branches of the combined total of 1,301 branches at Wamu and Ahmanson will be closed. Wamu will also acquire 120 mortgage loan offices.

The deal is also expected to result in the loss of 3,500 jobs or 11% of the combined companies' 31,380 employees.

With the purchase, Wamu will also enter Texas for the first time. Ahmanson has 40 branches in Texas, and Mr. Killinger said recently Wamu sees great opportunities for growth in that state.

With Bank of America snapped up, some speculated that Wamu's California franchise would make it, too, an attractive-and viable-target.

"People thought Wamu was too big to be acquired. I think fewer people are thinking that now," said analyst Thomas O'Donnell at Salomon Smith Barney. Wamu's stock went up when the Bank of America deal was announced, Mr. O'Donnell noted.

But Wamu's huge mortgage portfolio-$155 billion with Ahmanson-is tantamount to a poison pill, Mr. Tejera said. "There are very few banks that are comfortable with that level of mortgages," he said.

Moreover, banks and thrifts like Washington Mutual have gone after different customer segments. Banks want affluent customers, while Washington Mutual, for example, is going after the mass market.

A bank buying Washington Mutual would be "like Bloomingdale's buying Kmart, which would be an absurd combination," Mr. Tejera said.

Wamu is likely to continue its course as a national consolidator of thrifts, Mr. Tejera said. One likely target would be the merged Golden State Bancorp, which would include the current California Federal Bank and Glendale Federal Bank franchises, he said.

But with the Ahmanson integration on its plate, and the year-2000 around the corner, Wamu is probably done with big deals for now-at least in California, Mr. Tejera said. It may be easier to purchase something in Florida or Texas, which could operate as a separate entity, he said.

Wamu's executives "have said they are willing to do something as late as the first quarter of 1999," Mr. Tejera said.

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