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WASHINGTON MUTUAL SIGNS AGREEMENT TO ACQUIRE PACIFIC FIRST BANK

 WASHINGTON MUTUAL SIGNS AGREEMENT TO ACQUIRE
 PACIFIC FIRST BANK
 SEATTLE, Oct. 27 /PRNewswire/ -- Washington Mutual Savings Bank (NASDAQ: WAMU) announced today the signing of a definitive agreement to bring ownership of Pacific First Bank back to the Northwest where Pacific First was founded.
 The agreement calls for Washington Mutual to acquire Pacific First Financial Corporation, the holding company of Pacific First Bank, a Federal Savings Bank, from RT Holdings Inc., a subsidiary of Royal Trustco Limited of Toronto, Canada. Pending regulatory approval, the transaction is expected to close in mid-1993.
 "We are proud to return Pacific First to Northwest ownership, thus making Washington Mutual an even stronger and more dynamic bank for our customers and shareholders," said Kerry Killinger, Washington Mutual's chairman, president and chief executive officer.
 "Acquiring Pacific First is the next step in our strategy of preparing Washington Mutual to be one of the nation's leading consumer banks in the 21st century," continued Killinger.
 As a result of this transaction and the proposed merger between Washington Mutual and Pioneer Savings Bank announced in August 1992, Washington Mutual would, based on financial data as of Aug. 31, 1992, have combined assets of approximately $16 billion and combined deposits of approximately $10 billion. The combined distribution network of all three banks would include 265 financial centers and 26 home loan centers in Washington and Oregon.
 Terms of the Agreement
 "The acquisition of Pacific First meets the criteria we require of a potential transaction: improving the consumer franchise, maintaining our strong asset quality, maintaining strong regulatory capital ratios, and having the potential to add to earnings," Killinger said.
 Under the agreement, Washington Mutual would purchase the stock of Pacific First Financial Corporation from RT Holdings for a purchase price of $663 million. While the purchase price is subject to certain adjustments, it will generally not be adjusted for Pacific First Financial Corporation's future earnings. Pacific First Financial Corporation's stockholders' equity at Aug. 31, 1992, was approximately $695 million and its tangible stockholders' equity was approximately $500 million. The purchase price is 95 percent of book value of the stock and is 1.3 times its tangible book value.
 The agreement also calls for RT Holdings to purchase a minimum of $673 million in gross book value of assets, which Washington Mutual was not prepared to purchase, from Pacific First prior to its sale to Washington Mutual. In addition, Washington Mutual has the right to sell up to $225 million in gross book value of additional assets to RT Holdings prior to closing and the right to substitute up to an additional $75 million in gross book value of assets for assets RT Holdings would otherwise have acquired. RT Holdings has the option of obtaining a $75 million secured loan from Washington Mutual to help facilitate the purchase of the above assets of Pacific First.
 "Because RT Holdings will be retaining the assets which Washington Mutual did not wish to purchase, we will be acquiring a strong and healthy institution, thus better positioning us to protect our own asset quality as we move forward," said Killinger. After closing the transaction, Washington Mutual will downsize the combined balance sheet to approximately $14 billion.
 Washington Mutual anticipates raising additional capital to facilitate this transaction. Under certain circumstances, RT Holdings has agreed to accept up to $150 million of the consideration for this transaction in the form of noncumulative convertible perpetual preferred stock that would be issued at closing.
 The agreement additionally calls for Pacific First, before closing this transaction, either to complete the announced exchange of its 10 branches in California for Great Western Bank's 14 branches in Washington or to make an alternative arrangement for divesting itself of its California branches. In the latter situation, the purchase price would be reduced.
 Pacific First, with headquarters in Seattle, would become part of Washington Mutual's subsidiary, Washington Mutual, a Federal Savings Bank. Washington Mutual's headquarters is also in Seattle.
 The Institutions
 At Aug. 31, 1992, Pacific First Financial Corporation had assets of approximately $6.9 billion, deposits of approximately $4.4 billion and stockholders' equity of approximately $695 million. Currently, it operates 127 branches in Washington, Oregon and California and eight mortgage lending centers in Washington and Oregon.
 At Sept. 30, 1992, Washington Mutual had assets of $8.4 billion, deposits of $5.4 billion and stockholders' equity of $651.2 million. Currently, Washington Mutual operates 118 financial centers and 17 home loan centers in Washington and Oregon. On Oct. 20, Washington Mutual reported record third-quarter earnings of $25.6 million, up 47 percent from $17.4 million a year earlier. For the first nine months of the year, Washington Mutual earned $68.1 million, up 38 percent from $49.2 million for the same period a year ago. In 1991, Washington Mutual earned $67.5 million.
 On Aug. 20, 1992, Washington Mutual announced the signing of a definitive agreement of merger with Pioneer Savings Bank of Lynnwood, Wash. The transaction, with an approximate purchase price of $181 million, is expected to close in early 1993, pending the approval of regulators and shareholders of both institutions. Pioneer Bank operates 17 branches and one mortgage lending center in the Puget Sound region. At Sept. 30, 1992, Pioneer Bank had assets of $913.5 million, deposits of $660.1 million and stockholders' equity of $108 million. For third quarter 1992, Pioneer Bank earned $3.8 million and for the first nine months of 1992 $11.1 million.
 Market Share and Branch Network
 "The branch network of Pacific First will greatly expand our presence in the Northwest consumer markets that we now serve, especially in Oregon where we will bring 70 new locations on board," said Killinger. "Our share of the deposit and residential mortgage markets in both states will increase measurably, providing an excellent basis for future growth."
 Had all three pending transactions closed (including completion of the Pacific First/Great Western branch exchange), at Aug. 31, 1992, the combined branch distribution network would have included 151 financial centers in Western Washington, 31 in Eastern Washington and 83 in Oregon. The distribution network would also include 26 home loan centers in Washington and Oregon.
 As a result of the transactions with Pacific First and Pioneer Bank, Washington Mutual would become No. 2 in the Washington consumer deposit market with an approximately 17.2 percent share and would increase tenfold its share of the Oregon consumer deposit market to approximately 10.4 percent. On the same pro forma basis, Washington Mutual would solidify its leading position in the Washington residential first- mortgage market at an approximately 13 percent share and would strengthen its position as the No. 2 lender in the greater Portland residential first-mortgage market to an approximately 8.6 percent share.
 Profitability
 Killinger said he believes that the acquisition of Pacific First would rapidly contribute to earnings. "We are confident that the strong asset quality of the restructured bank which we are buying will permit Pacific First to quickly contribute to our earnings power. Furthermore, we believe there are substantial opportunities to reduce operating expenses because of the overlapping branches and support areas produced by this acquisition."
 Between now and the time of closing the transaction, Washington Mutual will consider the consolidation of branches and duplicative support operations. Many factors will be examined, such as proximity to other locations, opportunities for growth of a specific product or in a particular market, age of facilities, capabilities of systems, and potential for reengineering processes and departments.
 "While positions will be affected by the consolidations, it is simply not possible to tell at this time how many. We will look very closely at where we can streamline operations and consolidate branches. But it is also important to remember that Washington Mutual is a growing company. With this acquisition, we will be increasing our assets, deposits, and branches by a significant amount as well as serving a greatly increased share of the Oregon market. That type of growth means opportunity for employment, and employees of acquired institutions receive first consideration," Killinger said.
 The Future
 "Our purpose is to make Washington Mutual the standard by which consumer banks are measured. We will strive to achieve that goal by providing outstanding customer service, offering excellent products at fair prices, creating rewarding career opportunities, and managing conservatively," said Killinger.
 And being a leading bank in the Northwest means commitment to the community, Killinger stated. Washington Mutual is a leader in education reform, with its One-to-One Tutoring Program, and in the development of affordable housing.
 "Returning ownership of Pacific First to the Northwest means that more families and communities will be served by a strong, stable and profitable bank that is dedicated to helping Northwest communities build better places to live and work. We are confident that the families and communities served by Pacific First will enjoy banking with Washington Mutual. We look forward to welcoming them to the Washington Mutual family," said Killinger.
 -0- 10/27/92
 /CONTACT: Scott Selby of Washington Mutual Savings Bank, 206-461-3186/
 (WAMU) CO: Washington Mutual ST: Washington IN: FIN SU: TNM


TM -- NY014 -- 5169 10/27/92 08:04 EST
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