Magazine article American Banker

Wamu to Buy Loans with Higher Yields from Finance Firm

Magazine article American Banker

Wamu to Buy Loans with Higher Yields from Finance Firm

Article excerpt

Washington Mutual Inc. on Wednesday said it would purchase up to $5 billion of business loans from Franchise Finance Corp. of America, a commercial finance company in Scottsdale, Ariz.

The Seattle thrift holding company said it had agreed to a three-year strategic alliance with Franchise Finance that would let Washington Mutual add higher-yielding loans to its books.

"Our strategic alliance with FFCA creates an effective avenue by which we can accelerate the diversification of the mix of loans in our portfolio," said Craig Tall, vice chairman of corporate development and commercial banking. "Their expertise in single-tenant retail property lending provides Washington Mutual with a tremendous opportunity to add high-quality, high-yield assets."

The loans are to some of the nation's leading fast-food restaurants, convenience stores, and automotive service shops. Buying them is part of Washington Mutual chief executive Kerry K. Killinger's push to give the thrift company a balance sheet more like a commercial bank by focusing less on large acquisitions and more on higher-yielding loans.

"Washington Mutual has a voracious appetite for higher earning assets, and this is a solid, highly attractive lending area," said R. Jay Tejera, an analyst at Ragen MacKenzie Inc. in Seattle. "This is a nice plus for them."

The deal also gives the $180.8 billion-asset company an option to take an ownership stake in Franchise Finance. …

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