Washington Federal seeks stabilizer for portfolio - Puget Sound Business Journal (Seattle):

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After going public in Washington Federal acquired nine thrifts and openef offices in seven other Westerjstates -- Oregon, Utah, Idaho, Nevada, Colorado and Texas. In May, it announced a definitiv agreement to make its10th acquisition. Washington with $7.3 billion in assets, has agrees to pay $65 million for . Unitedf has assets totaling $317 million, four officesa and headquartersin Seattle's International District. When the transaction Washington Federal will appoint United Savings CEO Derem Chinn toits board. "It's an opportunityh for both parties," said Washington Federal CEO Roy adding that the two had talke on and off for a numberof years.
Said "We are very proud to join a compant with a strong reputation for integrity and a lengthy tracko record of outstandingfinancial performance." Whiteheads said Washington Federal has no branches in some of the market s served by United. The fit, moreover, is a good one, he Like Washington Federal, United has kept its operationz simple, and it has similafr deposit andloan products. Whitehead said thingsa at United will change as littleas possible. Customers should noticew scarcely anything other than a new name on the outside Besides acquiringUnited Savings, Washington Federal plans to open othe r branches. It operates a totakl of 115 ineight states.
Puyallup will host the newesf Washington branch. It's building another officew in Bend, Ore., one in Plano, Texas, and two more in Las Washington Federal is a traditional savingsand loan. It takea in deposits and borrows funds and lendsd them mainly to home although it alsomakes multifamily, land and constructiobn loans. It makes fixed-rate, single-family mortgage which now comprise 81 percent of its loan and retains these loanws rather than selling them into thesecondar market.
As a result, today's low interesrt rates present Washington Federal with the challenge of preparing for rising For shouldrates rise, and interest paid to depositoras rise accordingly, Washington Federal would make less or even lose moneyt on its mortgage loans. "This is not the ideal time for fixed-rate loans," Whitehead said. Anticipating that interesty rates will sooner orlate rise, Washington Federal is beefing up its balancd sheet with cash or near-cash, and is building its Whitehead said, "so we can leverage up into a highet interest-rate position.
" Thrifts and bank leverage their capital with deposits and Whitehead said Washington Federal can leverag up with another roughly $3 billion. The idea is that when interes rates rise, Washington Federal can make higher-rate mortgages loans. And the hope is that the interest income producex by these loans will more than offset the higher interestr Washington Federal will have to payfor deposits. Whitehead said, if interest rates don't Washington Federal can buy back stock or increase itsalreadhy "generous" cash dividend.