Kerry Killinger, the chief executive officer of Washington Mutual Inc., brushed aside any skepticism about the thrift's expansion plans by unveiling stellar first-quarter results at the thrift's annual meeting.
Mr. Killinger said Tuesday that the $46.1 billion-asset company, which has grown fivefold in a few years and now is bidding to buy Great Western Financial Corp., is fast becoming one of the premier financial institutions in the West.
"We would be making the same statements had we not intended to enter into an agreement with Great Western," Mr. Killinger said.
The first-quarter results, which included a 28% increase in net income and an efficiency ratio below 50%, constitute proof of that assertion, he said.
For the quarter, the company earned $114.1 million, compared to $88.8 million earned in the year-earlier quarter. Fully diluted earnings amounted to 93 cents a share, beating the consensus of estimates by analysts by 4 cents.
Driving the numbers was strong growth in consumer banking and managing expenses, the company reported. Aggressive marketing, state-of-the-art technology, and the vibrant regional economy contributed to total loan originations of $3.5 billion, up 16% from a year ago, the company said.
The strong income allowed the company to post a 18.88% return on average equity and a 1.01% return on average assets, both figures among the best in the thrift industry. The efficiency ratio dropped from 52.6% to an impressive 49.1%, the company said.
Both H.F Ahmanson, the other bidder for Great Western, and Washington Mutual now have reported good quarters, so the results probably won't make much difference in the takeover battle, said David Hochstim, analyst with Bear, Stearns & Co. "If one of them didn't have a good quarter, then that would've been something different."
The standing-room-only crowd of shareholders that gathered in the Four Seasons Olympic Hotel questioned Wamu's ability to digest Great Western, particularly in light of its recent completion of the American Savings Bank merger, which doubled the company's size. And questions were raised about the prospects of H.F. Ahmanson, which put Great Western in play two months ago with a hostile bid, in thwarting Washington Mutual's deal.
"Our primary focus right now is on our deal," Mr. Killinger said. "And the other maneuvering on the consents is something of interest, but it's not our major issue. Our real issue is to get our offer before shareholders, which we think will happen sometime in June."
Mr. Killinger said that the shareholder vote on the deal-for both Great Western and Washington Mutual shareholders-would take place at special shareholder meetings, as yet unscheduled.
He said that the merger vote was unlikely to take place at Great Western's annual meeting, now scheduled for June 13. The timing of the meetings is important because Ahmanson fears that Washington Mutual wants to get a vote on its deal before Ahmanson has a chance to have three directors elected to Great Western's board, which would take place at the annual meeting.
Washington Mutual's legal counsel predicted that the results of the consent solicitation, which included a question on the scheduling of the annual meeting, would not be available for another week.
A handful of shareholders interviewed said they support the company's attempt to acquire Great Western and expect an easy vote of support in June.
"It does put a lot of pressure on the whole organization, to double their size once again, but I think it bodes well for the company," said Bernard Browne, who traveled from Ireland to be at the meeting.
Said Dick Hawes, a local shareholder, "They don't do things willy-nilly. They seem to have a handle on what's going on, but if they tried a third acquisition, then I might see it as a problem."