Executives of Washington Mutual Inc.-which already dominates the West Coast-are saying their branches could soon start popping up across the Southeast and Midwest like so many Starbucks coffee shops.

With the help of its coffee-marketing neighbor, the Seattle-based thrift company has developed an expansion strategy that would entail setting up operations in markets where acquisition prices are too high, chairman Kerry Killinger said last week. "This will be a growing percentage of our business," he vowed.

The program is not meant to replace Washington Mutual's hallmark acquisition strategy but will reduce pressure to pay the high premiums that banks are fetching these days, Mr. Killinger said.

If successful, Washington Mutual would deliver a blow to the notion that expensive acquisitions are the only way to expand, analysts said.

"This could really change the dynamics of the industry," said Sean Ryan, a banking analyst with Bear, Stearns & Co. "The more agile big banks will show they really can move in and win market share without having to buy it."

The start-up strategy may also send a message to community banks that believe they can demand high prices because they supply the only entree to an area, Mr. Ryan said. "You've got to figure at some point it's more effective to build your own."

To be sure, Washington Mutual has successfully used purchases to build a network along the Western Seaboard and in Florida and will not pass up opportunities for more buying.

But now "we are looking more carefully at bank acquisitions as prices go up," Mr. Killinger said. "Our returns on investment are being affected."

Washington Mutual is expanding its start-up program after a successful test in Idaho, where new branches were used exclusively and an 18% return on investment was achieved, Mr. Killinger said.

The company will scout new markets this year and probably begin opening more free-standing and in-store branches in early 1999, said Deanna Oppenheimer, executive vice president for consumer banking.

Washington Mutual wants to get bigger in the Southeast, possibly by adding branches in Georgia and South Carolina, and is eager to move into high population areas in the Central states, she said.

Because it holds a thrift charter, the holding company needs to apply only to the Office of Thrift Supervision-not the states-to open new branches, said Maria Richmond, the OTS deputy regional director for the Southeast.

Washington Mutual will continue to use start-up branches to fill in areas where it already has a presence, Ms. Oppenheimer said.

She said that in developing the strategy she spoke to former and current executives of Starbucks, a Seattle neighbor that expanded nationwide by seemingly putting a shop on every corner. Though impressed by Starbucks' success, Ms. Oppenheimer said, Washington Mutual will take a more precise approach.

The company is looking for growing markets that it feels are underserved and can be blanketed by centralized advertising, she said.

The biggest challenges are finding the right locations, the right people, and offering the right product mix, she said.

Analysts see a more basic difficulty: bringing customers to a start-up branch. But they also say Washington Mutual has a tool-a free checking account-that is very successful at wooing customers and building relationships that lead to other products.

"This has been a real door opener for them," said Mr. Ryan of Bear Stearns.

Washington Mutual is also known for providing very good service, which could appeal to customers of other institutions, Mr. Ryan said.

Some analysts see an additional strategic advantage in stepping up start-up openings.

The program gives Washington Mutual more flexibility to pursue other growth opportunities, including the addition of less traditional products through purchases of consumer finance companies, said Joseph Morford, a banking analyst with Van Kasper & Co.

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