WASHINGTON H.F. AHMANSON
MUTUAL & COMPANY
Media Contact: Washington Mutual H.F. Ahmanson
(California) Mary Trigg
Tim McGarry 626-814-7922
818-775-3658
Washington Mutual
(Media outside of California)
Libby Hutchinson
206-461-2484
Investor Contact: Washington Mutual H.F. Ahmanson
Doug Wisdorf Steve Swartz
206-461-3805 626-814-7986
For Washington Mutual
and Ahmanson: Abernathy MacGregor Frank
Mike Pascale (212) 371-5999 March 17, 1998
Ian Campbell (213) 630-6550 FOR IMMEDIATE RELEASE
WASHINGTON MUTUAL, AHMANSON TO MERGER
ENHANCES GROWTH POTENTIAL; SOLIDIFIES NATIONAL CONSUMER
AND SMALL BUSINESS BANKING FRANCHISE
SEATTLE AND IRWINDALE, CA -- Washington Mutual, Inc. (Nasdaq: WAMU) and
H.F. Ahmanson & Company (NYSE: AHM) today announced that they have signed a
definitive agreement for Washington Mutual to acquire Ahmanson in a tax-free
exchange of common stock. The merger will create the nation's seventh-largest
banking company based on total 1997 year-end assets of nearly $150 billion. The
combined company will have deposits of $86.3 billion, and will serve nearly 6
million households through more than 2,000 consumer banking branches, loan
offices, consumer finance locations and commercial banking branches.
Additionally, the combined company will be the nation's leading adjustable-rate
mortgage lender and will further strengthen its position as the West
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Coast's number one mortgage lender. The transaction expands Washington Mutual's
consumer banking reach into Texas where Ahmanson currently operates more than 40
branches.
Terms of the transaction call for the tax-free exchange of 1.12 shares of
Washington Mutual common stock for each of Ahmanson's outstanding common shares.
This ratio represents a price of $80.36 per share for Ahmanson common stock,
based on Washington Mutual's closing price on March 16, 1998. At that price, the
transaction would have an initial value of $9.9 billion, and the combined
company would have a market capitalization of over $27 billion.
"With this transaction, we are creating a premier institution that will
have the size and scope of the largest banks yet continue its focus on consumers
and small business. It further distinguishes our company from the competition,"
said Kerry Killinger, chairman, president and chief executive officer of
Washington Mutual. "Our combination strengthens Washington Mutual's platform for
high growth, creating additional shareholder value and enabling us to better
serve our communities. We look forward to adding the many talented Ahmanson
employees to the already strong team at Washington Mutual."
"The combination of our two companies will create a West Coast-based
financial institution competitive with the nation's largest banking companies,"
said Charles R. Rinehart, chairman and chief executive officer of Ahmanson. "The
people of Ahmanson and Home Savings have substantially transformed our company
over the last several years, in order to meet our customers' needs in today's
competitive banking environment. I am especially proud of them. Their
extraordinary efforts have been a major factor in bringing us to this point in
our history. Because of its strong balance sheet, its tradition of
consumer-friendly service, and its well known commitment to community needs, I
believe Washington Mutual is clearly the best partner for Ahmanson's
shareholders, customers, and the communities we have served for many years."
ADDITIONAL TERMS OF THE TRANSACTION
The definitive agreement has been unanimously approved by the boards of
directors of Washington Mutual and Ahmanson. The transaction is subject to the
approval of the shareholders of both companies and the Office of Thrift
Supervision. The transaction will be structured as a tax-free exchange, and will
be accounted for as a pooling of interests. Closing is expected to take
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place late in the third quarter of 1998. Any proceeds from Ahmanson's goodwill
lawsuit will be shared by the shareholders of the combined company.
As part of the agreement, Ahmanson has agreed to pay a $275 million
break-up fee to Washington Mutual if the merger agreement is terminated under
certain circumstances. The break-up fee is payable either in cash or through
exercise of an option to purchase up to 19.9 percent of Ahmanson's common stock.
In addition, as part of the transaction, Washington Mutual will incur a
transaction-related charge of $370 million ($254 million after-tax).
Administration and operations areas will be combined by the summer of 1999.
Three current Ahmanson directors will join the Washington Mutual board of
directors upon completion of the merger, increasing to 19 the size of that
board. Killinger will continue in his present role in the combined company,
which will be called Washington Mutual, Inc.
STRONG CALIFORNIA PRESENCE
"With this transaction, we have significantly strengthened our competitive
position in California, the nation's most populous state," said Killinger. "The
combination of the Home Savings, Great Western, American Savings and Coast
Savings franchises makes California integral to Washington Mutual's future.
Consequently, we intend to continue to be closely and personally involved with
our California communities as we are in all of our other markets, while
continuing to offer consumer banking and home mortgage expertise to better serve
the financial needs of low- and moderate-income families and individuals."
Following completion of the merger, Washington Mutual will become
California's second-largest depository institution with a 17 percent market
share. It will serve the state with 700 financial centers (retail branches). The
company will be among the top three institutions, based on deposit market share,
in every major metropolitan market in California. The combined company's
California operations will be managed from its current Chatsworth, Irvine,
Stockton locations and from Washington Mutual's headquarters in Seattle.
INTEGRATION
Washington Mutual and Ahmanson will immediately begin planning the
integration of the two companies' operations. "A smooth integration of Great
Western remains our immediate priority
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for the first half of 1998. Once that integration has been completed, we will
turn our focus on the integration of Ahmanson," said Killinger. "Conversion of
Ahmanson's systems will occur in two phases: Texas in the fourth quarter of 1998
and California in the second quarter of 1999."
"Having completed 21 mergers and acquisitions in the last decade, our
company has successfully managed multiple integrations in the past," said
Killinger. "Our recent integration of American Savings, completed last July, was
conducted while the planning for the conversion of Great Western was underway."
"While in a transaction of this magnitude it is inevitable that positions
will be eliminated, the actual number of job losses should be significantly
lessened as a result of strong growth and natural attrition," Killinger said.
"The company anticipates that approximately 3,000-3,500 positions will be
consolidated as a result of the merger, due to both branch consolidations and
redundant administrative functions.
Washington Mutual anticipates that between 160-170 branches will be
consolidated as a result of the transaction. In those branches, the company will
give special consideration to the needs of low- and moderate-income
communities," Killinger said.
The company projects cost savings equal to approximately 40 percent of
Ahmanson's existing cost structure. Annual savings of $330 million are expected
to be realized by 2000. Washington Mutual expects the transaction to be
accretive to earnings per share in the year 2000.
COMMITMENT TO THE COMMUNITY
Washington Mutual's banking subsidiaries and Ahmanson's banking
subsidiaries have "outstanding" ratings under the Community Reinvestment Act
(CRA).
Throughout its history, Washington Mutual has demonstrated a strong
commitment to serving the financial needs of its local communities," said
Killinger. "In consultation with a wide variety of community-based
organizations, we will listen carefully to the needs of their constituents. We
are seeking to expand our relationships as our presence in California and other
areas grows. We will continue to strive to be the leader in meeting the
financial requirements of low to moderate income individuals and families."
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"At a time when large bank mergers have sometimes come under attack for the
depersonalization of customer service and civic involvement, Washington Mutual
has consciously built a company that combines all the conveniences of large
commercial banks with the highly personalized services that reflect the
communities it serves," Killinger continued. "As we go forward with our new
partners at Ahmanson, we intend to build on the commitments to community that
have grown out of our prior expansions."
With a history dating back to 1889, Washington Mutual is a financial
services company that provides a diversified line of products and services to
consumers and small- to mid-sized businesses. At Dec. 31, 1997, Washington
Mutual and its subsidiaries had assets of $97.0 billion. The company operates
more than 1,600 offices throughout the nation.
Ahmanson, with more than $52.5 billion in assets, is the parent company of
Home Savings of America, one of the nation's largest full-service consumer and
small business banks.
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EDITOR'S NOTE: Washington Mutual's press releases are available at no charge
through the News On Demand Plus System. For a menu of Washington Mutual press
releases or to retrieve a specific release, call 1-(800) 329-6236. On the
Internet, press releases may be accessed at
http://www.businesswire.com/cnn/wamu.htm.
This press release contains forward-looking statements regarding the benefits of
the merger of Washington Mutual and Ahmanson, including cost savings to be
realized, earnings accretion, transaction charges and additional loan-loss
reserves and revenue enhancement opportunities following the merger. Actual
results may vary from the forward-looking statements as described in Washington
Mutual's Current Report on Form 8-K dated March 17, 1998, to which reference is
made. These factors include without limitation possible delays in integration of
Ahmanson's operations into Washington Mutual's, competitive factors which could
adversely affect consumer banking strategy and general economic conditions which
could negatively impact the volume of loan originations and the amount of loan
losses.
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Washington Mutual/H.F. Ahmanson
At-A-Glance
December 31, 1997 figures (all dollar figures in thousands, except per share
prices). Financial ratios reflect year-to-date figures. Ahmanson figures reflect
the acquisition of Coast Savings. Pro Forma numbers include adjustments for
transaction charges and other pro forma adjustments.
Washington Ahmanson Pro Forma
Mutual
---------- --------- ---------
Total Assets $96,981.1 $52,511.2 $149,176.3
Total Deposits $50,986.0 $35,386.6 $86,372.6
Total Loans $67,140.2 $36,405.8 $103,546.0
Net Income $481.8* $413.8 $895.6
Nonperforming Assets $806.6 $694.6 $1,501.2
Nonperforming Assets/Assets 0.83% 1.32% 1.01%
Reserves $670.5 $484.3 $1,154.8
Reserves/Nonperforming Loans 112% 99% 106%
Stockholders' Equity/Assets 5.47% 5.95% 5.47%
Book Value Per Share $20.80 $25.87 $20.91
Closing Stock Price Per Share (3/16/98) $71.75 $65.50
Market Capitalization (billions) (3/16/98) $17.9 $7.9 $27.6
Retail Branches 892 409 1,252
Loan Offices 187 120 307
Commercial Bank Offices 54 0 54
Consumer Finance Offices 502 0 502
Total ATM Locations +1,000 541 +1,541
Total Banking Locations 2,635 1,070 3,705
Households Served (mm) 3.9 2.0 5.9
Employees 22,000 9,380 31,380
<FN>
* includes one-time restructuring and other charges associated with the Great Western transaction
</FN>
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