Magazine article American Banker

Wamu Chief: Focus on Growth in Revenue, Achieving Savings

Magazine article American Banker

Wamu Chief: Focus on Growth in Revenue, Achieving Savings

Article excerpt

By AARON ELSTEIN Now that he has built the nation's largest thrift company, Kerry Killinger, chairman of Washington Mutual Inc., says he is going to take a break from acquisitions.

"Our focus now is on internal growth and making sure all the cost savings will be achieved, which we are very confident will happen. Everything is moving on target," he said during an interview Wednesday.

Internal growth has never been Mr. Killinger's calling card. His reputation was built through a series of big acquisitions that resulted in an eightfold increase in asset size over two years, bringing Washington Mutual's heft to $158 billion. In the process, it was transformed from a regional thrift to a major financial services provider on the West Coast.

But right now, Mr. Killinger has little choice but to slow down his buying spree. The thrift company's stock is trading at only 12 times next year's estimated earnings, reflecting investors' worries that Mr. Killinger may not be able to make his ambitions pay off for shareholders.

These concerns, and the fact that Washington Mutual's stock was being listed on the New York Stock Exchange, brought Mr. Killinger to New York Wednesday.

He arrived as analysts were cutting the company's earnings estimates. Fourth-quarter results are expected to include hundreds of millions in charges incurred from Mr. Killinger's latest deal, the acquisition of H.F. Ahmanson & Co., which closed Oct. 1.

But Mr. Killinger insisted that the Ahmanson integration is going well and that Washington Mutual is thriving at a time when a waning global economy is hurting the earnings of many commercial banks.

As for internal growth, he said he intends to expand Washington Mutual's consumer finance, mortgage banking, and portfolio lending and even expand into business lending, the domain of BankAmerica Corp., Wells Fargo & Co. …

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