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PIONEER SAVINGS BANK SIGNS AGREEMENT TO MERGE WITH WASHINGTON MUTUAL SAVINGS BANK

 PIONEER SAVINGS BANK SIGNS AGREEMENT TO MERGE
 WITH WASHINGTON MUTUAL SAVINGS BANK
 SEATTLE, Aug. 20 /PRNewswire/ -- Pioneer Savings Bank (NASDAQ: PFBK) and Washington Mutual Savings Bank (WMSB) (NASDAQ: WAMU) announced today the signing of a definitive agreement for Washington Mutual to acquire Pioneer Bank.
 The agreement has been approved by both boards of directors. If approved by regulators and three quarters of the shareholders of Pioneer Bank and the majority of the shareholders of Washington Mutual, the transaction is expected to be completed in early 1993.
 The agreement provides for an exchange of Washington Mutual's common stock for Pioneer Bank's stock and the transaction will be accounted for as a pooling of interests. Based on Washington Mutual's current stock price of $25.375, the value of the shares, inclusive of options on Pioneer Bank's stock and shares in Pioneer Bank's employee stock ownership plan (ESOP), received by Pioneer Bank's shareholders would be approximately $181 million or $25.30 per share. On Aug. 20, 1992, Pioneer Bank's stock closed at $24.50. The actual consideration will be determined along the following lines:
 a) Pioneer Bank's shareholders will receive stock valued at $25.30 per share if the average closing price of Washington Mutual's stock is $25 to $27.99 for the 10 trading days preceding the third trading day before closing the transaction.
 b) If that average closing price is $28 to $34.99, then the value will increase as follows: from $28 to $29.99, it will be $25.80; from $30 to $31.99, it will be $26.30; and from $32 to $34.99, it will be $26.80.
 c) If that average closing price is at or above $35, then the value will be $27.30.
 d) Conversely, if that average closing price is $21 to $24.99, then the value will decrease as follows: from $23 to $24.99, it will be $24.80; and from $21 to $22.99, it will be $24.30.
 e) And if that average closing price falls below $21, Pioneer Bank has the option of terminating the transaction or receiving 1.15 shares of Washington Mutual's stock per share of Pioneer Bank's stock.
 In connection with the definitive agreement, Pioneer Bank granted Washington Mutual an option to purchase 19.9 percent of the outstanding shares of Pioneer Bank's stock at $23.438 per share.
 Pioneer Bank operates 17 branches and one mortgage lending center in the Puget Sound region, with 11 in Snohomish County, six in King County and one in Island County. At June 30, 1992, Pioneer Bank had assets of $891.1 million, deposits of $621.4 million and stockholders' equity of $103.4 million.
 Washington Mutual operates 118 financial centers and 18 home loan centers in Washington, Oregon and Idaho, including 53 locations in Snohomish and King counties. At June 30, 1992, Washington Mutual had assets of $8 billion, deposits of $5.4 billion and stockholders' equity of $630 million.
 The merger would strengthen Washington Mutual's position as the state's largest residential first-mortgage lender, currently with nearly 10 percent of the market. The leading home lender in both Snohomish and King counties, Washington Mutual would increase its share of those markets at the closing of the transaction from 6.7 percent to approximately 8 percent and from 9.4 percent to approximately 10.9 percent, respectively.
 The transaction would also strengthen Washington Mutual's position among the state's leading depository institutions. The bank's share of the deposit markets (excluding government deposits) in Snohomish and King counties would increase to 20.3 percent and 13.3 percent, respectively.
 Ralph V. Schapler, Pioneer Bank's chairman and chief executive officer, said, "This merger will combine two strong organizations that are highly profitable, well capitalized and dedicated to consumer banking. The financial strength of Washington Mutual will enable our shareholders to be part of an institution that is becoming recognized as an industry leader. Washington Mutual's focus on customer service means that our customers will continue to receive outstanding service and will enjoy a broader range of financial services. And our employees will have the opportunity to join an outstanding organization that is committed to the communities it serves.
 "This transaction will be the state's largest merger of independent, Washington-based savings institutions. We're joining two independent, financially strong, growing consumer banks to form one bank with an outstanding future."
 Kerry Killinger, Washington Mutual's chairman, president and chief executive officer, said, "This merger will greatly strengthen our system of financial centers in the Puget Sound region, especially in Snohomish County, which is the fastest-growing county in the state. The location of Pioneer Bank's branches complements our current system, enabling us to enter new segments of the Puget Sound market and increase our presence in others.
 "Pioneer Bank is a well-capitalized institution. It has a low percentage of nonperforming loans and its main line of business is residential lending. These qualities closely match Washington Mutual's. We believe that this merger will improve our overall financial strength, increase our capital and enhance our earnings potential.
 "Pioneer Bank concentrates on consumer banking, as does Washington Mutual. Our dedication to outstanding customer service means that Pioneer Bank's customers will feel at home with Washington Mutual. As the largest independently owned and locally managed bank in the state, we are proud to have served families and individuals around Puget Sound for 103 years. We look forward to welcoming Pioneer Bank to the Washington Mutual family."
 FINANCIAL SUMMARIES
 Washington Mutual and Pioneer Bank are FDIC-insured, state- chartered, stockholder-owned savings banks founded in 1889 and 1934, respectively.
 Washington Mutual Pioneer Bank
 At June 30, 1992 At June 30, 1992
 Financial Summary
 Assets $8,007.8 million $891.1 million
 Deposits $5,422.3 million $621.4 million
 Loans $5,411.7 million $607.0 million
 Stockholders' Equity $ 630.0 million $103.4 million
 Nonperforming Assets $ 144.2 million $ 7.7 million
 (1.80 percent of (0.86 percent of
 total assets) total assets)
 Earnings
 First Half 1992 $ 42.5 million $ 7.3 million
 First Half 1992 Per Share $1.40 $1.04
 1991 $ 67.5 million $ 13.1 million
 Per Share 1991 $2.38 $1.88
 At August 20, 1992
 Fully Diluted Shares 33,165,510 6,462,374
 Outstanding
 ESOP and Unexercised Options 687,386
 7,149,760
 Locations
 Snohomish County 12 11
 King County 41 6
 Island County 0 1
 All other Washington
 counties 65 0
 Oregon/Idaho 18 0
 Terms of the Transaction
 The purchase price Washington Mutual will pay for Pioneer Bank's stock is based upon the average closing price of Washington Mutual's stock for the 10 trading days preceding the third trading day before closing the transaction according to the following schedule:
 WMSB Average Stock Price Transaction Price
 Prior to Closing
 Below $21/share (A)
 $21-$22.99/share $24.30
 $23-$24.99/share $24.80
 $25-$27.99/share $25.30
 $28-$29.99/share $25.80
 $30-$31.99/share $26.30
 $32-$34.99/share $26.80
 At or above $35/share $27.30
 (A) If the price of WMSB's stock is below $21 at the closing of the transaction, Pioneer Bank has the option of terminating the transaction or receiving a price equal to 1.15 times the actual average WMSB stock price per share of Pioneer Bank's stock.
 -0- 8/20/92
 /CONTACT: Scott F. Selby of Washington Mutual, 206-461-3186; or Ralph V. Schapler of Pioneer Bank, 206-771-2525/
 (PFBK WAMU) CO: Pioneer Savings Bank; Washington Mutual Savings Bank ST: Washington IN: FIN SU: TNM


SC -- SE004 -- 1959 08/20/92 19:20 EDT
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