Q & A:Seattle's Washington Mutual Pushes Fixed-Rate Loans - And

With $20 billion of assets, Washington Mutual Inc. is the nation's fifth-largest thrift company. But unlike most large thrifts, the Seattle- based institution holds both adjustable- and fixed-rate loans. Half of its new applications these days are for fixed-rate loans; about 20% of the total are for refinancings. Jack A. Cornick, a senior vice president at Washington Mutual, spoke with American Banker this week about the market.

Q.: Have you always had a pretty aggressive fixed-rate operation?

CORNICK: What we want to do is do the loans to gather in new customers to the company. We then cross-sell other products and services to that customer.

Q.: What kinds of products do you like to sell?

CORNICK: The whole thing. Checking accounts, CDs, and consumer loans, just anything we have to offer that might fit that particular customer.

Q.: So like banks, you think of mortgages as the entry point into the relationship?

CORNICK: Yes.

Q.: How are your own ARMs holding up to refinancing pressure?

CORNICK: It's probably a little too early to tell. They will certainly be under pressure. We would rather refi ourselves than have somebody else do the new loan. And if it gets to a certain point where we feel an awful lot of those loans are being paid off, then clearly we will be more proactive in trying to retain that business.

Q.: Will you send mailers to your customers?

CORNICK: Exactly.

Q.: Do your loans have prepayment penalties?

CORNICK: Less than 10%.

Q.: So your primary defense against mortgages bankers targeting your portfolio would be what?

CORNICK: The reputation that we have for doing the business, the competitiveness of our products, and the service that we provide our customers when we make them a loan in the first place.

We have an awareness of what the competitors in our various markets are pricing their fixed-rate products at. We just want to maintain a competitive posture there.

Q.: How are your lending volumes doing?

CORNICK: Applications are up from January, February, and March. In January, we had applications for $234 million in loans; in February, for $235 million; in March, for $341 million; in April, $341 million; in May, $429 million.

So far in June, we have had $422 million in applications.

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