Kerry Killinger, the chairman of Washington Mutual Bank, almost sounded like an old-line thrift executive last week.
Announcing his purchase of American Savings Bank, Mr. Killinger expressed unabashed excitement about the possibilities for making and holding home loans. In fact, he vowed that the new, $42 billion-asset thrift would become California's largest mortgage lender, vaulting past leader BankAmerica Corp.
American "has perhaps the best mortgage origination group of any of the California thrifts," Mr. Killinger said in an interview. "That mortgage origination capability is very, very important to us, because we very much want the loans that they are able to originate for our portfolio."
Such talk is increasingly rare among thrift executives. Stung by years of high losses and thin profits, some of California's largest thrifts are beating a retreat from the business of making and holding mortgages.
These thrifts are shepherded by a new breed of executive - migrants from consumer finance companies or insurance and stock brokerages, who are leading the staid mortgage factories into auto loans, home equity loans, and mutual funds.
Mr. Killinger is among the leaders of this new generation. A former investment broker, he has taken Washington Mutual into decidedly new territory - hawking checking accounts, home equity loans, and investment products, to name a few.
But to enter the lucrative California market, he chose a traditional thrift that has excelled in the mortgage field. American is currently the No. 2 player in the California mortgage arena, though its market share is only half BankAmerica's.
American's prowess in adjustable-rate mortgages was a big draw for Mr. Killinger. The thrifts' combined portfolio will have substantially lower interest rate risk than Washington Mutual's alone because American's $20 billion of holdings carry mostly adjustable rates. More than half of Washington Mutual's $8.3 billion mortgage portfolio has fixed rates.
Mr. Killinger said he believes a mix of aggressive loan agents, new capital, and a strengthening California economy will propel Washington Mutual to the top spot in California.
Analyst Charlotte Chamberlain of Wedbush Morgan Securities, Los Angeles, contrasted the strategies at Washington Mutual and other large California thrifts.
At the Seattle-based thrift, mortgages remain a top priority, Ms. Chamberlain said. By contrast, Home Savings Bank, Irwindale, Calif., and Great Western Bank, Chatsworth, Calif., put higher priority on the new push into consumer banking and "will let the mortgage business fend for itself," she said.
BankAmerica, for its part, said it welcomes the competition. Washington Mutual is "rational and they're good," said Arthur D. Ringwald, executive vice president. "They will be a good add to the marketplace."
