Employees at Fleet Mortgage barely had time to finish their coffee Friday before the outside signs were changed to reflect the buildings' new owners: Washington Mutual Inc.
With several big-ticket acquisitions and a relentless marketing campaign, Wamu seems to be hanging a lot of signs these days.
In addition to being emblazoned on a huge Times Square advertisement - a cross-section of a furnished house perched on the side of a building - Wamu's brand now greets commuters from Washington, D.C., Metro stops; New Jersey Turnpike billboards; Westchester County train stations; and even atop New York taxicabs.
And the purchases of PNC Mortgage and now Fleet have made it a force east of the Mississippi.
"We've really been promoting the Washington Mutual brand from coast to coast," said Craig S. Davis, the president of Washington Mutual's home loans and insurance services group, in an interview after closing the Fleet Mortgage acquisition. "Bringing the Fleet organization together with Washington Mutual accelerates that; it gives us more marketing power."
The Fleet deal, announced in April and closed last week, not only pushes the Seattle-based lender to No. 1 nationwide in both originations and servicing but also builds on Wamu's frenetic advertising and lending on the East Coast.
Wamu, the No. 1 lender in Washington, Oregon, and California, is also the leader in Pennsylvania, Connecticut, Illinois, and Massachusetts, as well No. 2 in New York and New Jersey.
The Fleet deal added two huge servicing sites - one in Florence, S.C., and one in Milwaukee - to Wamu's centers in Northridge, Calif., and Vernon Hills, Ill. It also brought roughly two dozen wholesale lending sites, as well as Fleet's correspondent lending channel.
Though Fleet has retained its retail lending operation, which it runs through its bank branches, Wamu will purchase most of those loans through a correspondent relationship, Mr. Davis said.
(Wamu has agreed to pay $60 million over the "agreed upon fair-market value" of Fleet Mortgage's equity, a spokesman said, which at the end of the year was $600 million. The May 31 fair market value, which is to be used to set the price, had not been determined as of Tuesday.)
The new servicing offices will not only help handle Wamu's existing portfolio, now at $455 billion, Wamu officials said, but "play an integral role" in supporting the company's future growth initiatives.
Mr. Davis said Florence and Milwaukee are especially strong in correspondent lending, and though Wamu runs that out of Vernon Hills now, it will develop Florence as a second correspondent center for the East Coast.
"Florence will give us the scale that we need and the right people and talent in terms of being a leader in the correspondent distribution channel," he said. "The sites in Florence and Milwaukee are going to be great adds to the other two servicing sites that we have today."
Prior to the PNC deal, which closed in February, Wamu's servicing presence was restricted to Seattle and Northridge. Wamu obtained servicing centers in Vernon Hills and Louisville, Ky., through PNC, and one in Houston through its purchase of Bank United. It consolidated the Louisville and Houston operations into Vernon Hills, officials said.
Size and scale in servicing and originations, which Fleet brings, are "key to success" in the mortgage business, Mr. Davis said, and Wamu plans to add to the 850 employees in Florence and the 500 in Milwaukee.
Though Fleet also brings an administrative center in Columbia, S.C., where 400 employees are based, Mr. Davis said Wamu will not keep it open. He said the administrative support areas for Washington Mutual for the Home Loans group are in Seattle; Irvine, Calif.; and Vernon Hills.
Wamu is offering jobs and relocation packages to Columbia employees willing to move, he said, noting that the company has more than 1,400 open positions within the home loan group. It is offering severance packages to those who want to stay in Columbia. "We clearly recognize that there is a lot of talent in Columbia, and keeping that talent is really a priority for us," Mr. Davis said.
Repeating his mantra for Wamu's business strategy, Mr. Davis said the "buy-and-build" strategy remains in force. "What you've seen here is the buy portion of it," he said of the Fleet deal. "We also have the build portion - new home-loan centers - which we are working on expanding nationally."
Though he acknowledged that the mortgage business has been consolidating over the last several years - a trend that has accelerated recently - Mr. Davis argued that it is still a highly fragmented business. As a result, he said, consolidation will continue to increase in the coming years.
"If you look at the U.K. or Australia, you'll see just a handful of lenders controlling 50% to 60% of the market," he said. "It may not happen in the United States in the near future, but longer term, we expect to see considerably more consolidation than what's occurred, even over the last couple of years."
Mr. Davis said Wamu, like most other mortgage lenders, has had a great year thus far, as lower rates have fueled refinancing activity and the purchase market has remained strong. He said he was pleased with the overall momentum Wamu has maintained, but added, "you know that you just cannot sustain activities at this level. At some point, as rates move up, you're going to see the same activity on the refinance side that we saw earlier."
Yet he said that Wamu's strategy is to be competitive in all environments.
"We are both a mortgage banker and a portfolio lender," he said. "So if we see a slowdown in refinance activity as rates move up, we're very well positioned to capture market share."
Of Fleet he added: "We're very pleased with this acquisition and we're looking forward to continuing to build our business."
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