Washington, Lincoln Savings Banks to Combine in Stock-Mutual Deal

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SEATTLE -- Washington Mutual Savings Bank, Seattle, and Lincoln Mutual Savings Bank, Spokane, have reached a definitive merger agreement.

The transaction will take the form of a merger conversion. Washington Mutual will offer Lincoln depositors the right to subscribe to $6 million or more of its common stock at the market price.

The two banks had announced merger discussions Jan. 11. Washington Mutual, which went public last year, has deposits of $2.9 billion and capital of $190 million; its 39 branches are concentrated in western Washington. Lincoln Mutual had yearend deposits of $447 million. Most of its 16 offices are in eastern Washington.

Lincoln lost about $1 million in 1983, and $6 million in 1982. Its net worth has declined by more than half, to just over $14 million, over the past four years.

William Lynch, assistant to the chairman of Washington Mutual, said the transaction will be similar to a merger conversion in which two Wisconsin thrifts, First Financial Savings & Loan of Stevens Point and Home Savings & Loan of LaCrosse, combined last August. First Financial, a stock-owned savings and loan, purchased Home, a mutual. That deal was the first stock-mutual combination under new Federal Home Loan Bank Board regulations allowing such formations.

William A. Longbrake, Washington Mutual executive vice president and treasurer, said the transactions will not involve federal assistance. He said Lincoln will be independently appraised, just as if it were converting on its own. The value of Washington Mutual stock to be issued will be no less than the appraised value of Lincoln, and may be greater if Washington Mutual wants to raise capital for other purposes. …