On a bleak January day, Washington Mutual Bank's downtown Seattle branch is a welcome relief from the city's gray skies and cold rain.

Like the Starbucks coffeehouses on every streetcorner, the Wamu branch's teak counters, white walls, and brightly colored advertising mobiles evoke a kind of minimalist cool. That may be no coincidence. The thrift's chairman, Kerry K. Killinger, wants to dominate the business of selling checking accounts, mutual funds, and loans, much as Starbucks does the coffeehouse trade.

Steps away but a world apart, Guy C. Pinkerton, chairman of Washington Federal Inc., runs a very different kind of shop. A surprisingly successful throwback to the thrift of the 1970s, Washington Federal, which had $5.7 billion of assets on Dec. 31, holds mostly fixed-rate home loans-and shuns such modern-day amenities as automated teller machines and even checking accounts.

"It's a very simple formula," says the tall, weatherbeaten Mr. Pinkerton, who predicts, "We'll be around a long time."

Washington Mutual, which held $97.1 billion of assets on Dec. 31, making it the nation's largest thrift, and Washington Federal, embody the two most widely held views on how thrifts can survive and prosper in the years ahead: become bank-like and big, or stick to your knitting and do it very well.

Seattle has provided fertile ground for both strategies. In the 1990s, while California-home to the thrift industry's erstwhile leaders-struggled with a real estate and economic bust, Washington and Oregon have enjoyed a high-tech boom.

As California's thrifts mopped up billions of dollars of bad loans, recapitalized, and otherwise struggled to survive, Seattle's big thrifts flourished. And one, Washington Mutual, readied itself to annex the humbled giants down south.

Mr. Killinger transformed Wamu from a sleepy, marginally profitable business to a powerhouse-first by boosting returns on equity to 15% within two years of becoming chief executive in 1990, and then through a string of asset-doubling acquisitions.

The last two were in 1996 and 1997, when Wamu entered California by buying American Savings Bank from the Bass brothers in December 1996, and then snapped up Great Western Financial last July.

Mr. Killinger, 48, has broadened the thrift's business to include all kinds of banking for consumers, and he speaks of establishing Wamu as a "national brand," like other northwestern consumer giants-Microsoft, Starbucks, and Nike.

He also wants Wamu to be the nation's premier mortgage lender. The thrift is the nation's third-largest mortgage investor, after Fannie Mae and Freddie Mac. As of Dec. 31, Wamu's mortgage investments were $77.1 billion-most of them with adjustable rates.

Washington Federal, meanwhile, has honed its traditional skills-chipping away at costs, cleverly managing its balance sheet during difficult interest rate environments, and burnishing its reputation as a haven for its customers' nest eggs.

Its returns on equity and assets have exceeded Washington Mutual's-in part because Washington Mutual has spent big bucks to grow, while the smaller thrift has kept costs low.

Washington Federal's conservative and somewhat contrary strategy appears to fit the wry and independent personality of its CEO. Mr. Pinkerton says he liked Seattle better when it wasn't as trendy. He lives in an apartment house, not a mansion, and has gone camping twice a year for 20 years with the same group of friends.

In its way, Washington Federal's conservatism is radical. Since the 1980s, big thrifts have shied away from holding the fixed-rate mortgages that Washington Federal continues to favor.

Back then, rising rates led to a mismatch between funding costs and lending revenues, and most thrifts now leave the fixed-rate business to Fannie Mae and Freddie Mac. The two government-sponsored enterprises have the size to fund and hedge fixed-rate mortgage investments profitably.

Mr. Pinkerton scoffs at his colleagues' aversion to holding fixed-rate loans. He points out that Washington Federal had returns on equity of more than 20% in most of the last 15 years.

Adjustable rate loans, which most big thrifts now prefer because their yield moves in tandem with deposit costs, just don't make enough money, he says. Because consumers can refinance into cheaper mortgages so easily, he says, lenders need to get the strongest returns possible from the start of the loan.

Still, doesn't the 63-year-old Mr. Pinkerton worry that his business methods and customer base are, well, old? Washington Federal's mortgages are funded mostly with the savings of elderly, affluent customers who, amid a great bull stock market, stubbornly stick to certificates of deposit.

Mr. Pinkerton has heard the question many times. "Every year, new people get older," he says with a straight face. He pauses, then chuckles, "I can't get over it, it never seems to stop!

"I've heard this expressed many times," he continues. "People say, 'What's going to happen when the computer generation gets older?' I don't know. I think that when you get older, your needs change. If anything, we're living longer, so once we get that customer in, we've got him for a longer period of time."

Washington Mutual Tower, where Mr. Killinger's thrift leases several floors, overlooks Eliot Bay, which empties into the Pacific Ocean. The building's marble lobby, teak-lined elevators, and cavernous headquarters branch couldn't be more different from the 1950s ambiance at Washington Federal.

Mr. Killinger's waterfront office is large, but sparsely furnished. The walls are mostly bare of plaques and awards.

One exception is a framed copy of a local newspaper article that named Mr. Killinger the region's most distinguished business executive over luminaries like Bill Gates of Microsoft. The thrift executive takes clear delight in the newspaper's juxtaposition of a towering photo of himself and a tiny one of Mr. Gates.

The display is the closest he comes to tooting his own horn. But the former trumpet player-he was first chair in the high school band and married the band's second chair-wants to play on an even bigger stage. He thinks consumers welcome a high-service alternative to big, merged banks.

"What we're finding is that the market position is wide open for somebody to come in with (an) alternative to the major commercial banks in just about every market we've studied," Mr. Killinger says. "I think we have a real chance of having that national brand."

Wamu has learned to provide meticulous service in its native Seattle market, and it has lower costs than its competitors, he says.

As the company grows bigger, Mr. Killinger travels extensively to tell new employees and remind existing ones of Wamu's culture and mission.

He held 60 such meetings in bank offices, civic centers, theaters, and hotel ballrooms all over the Northwest, California, and Florida last year. "I've worked very hard to bring all these companies together in one culture," he says.

Mr. Pinkerton, meanwhile, is content to stick close to home, continuing with the strategy that has served his thrift well to date. He says Washington Mutual's strategy is perfectly valid, but he sees no need to experiment.

"Once we see we're not competitive, we'll make the changes we need to make to adapt to that," he says. But "we dissipate our strength going down blind alleys trying to prepare for something that may or may not be there."

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