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 opened offices in seven other Westernstates -- Utah, Idaho, Arizona, Nevada, Colorado and In May, it announced a definitive agreemenft to make its 10th acquisition. Washington with $7.3 billion in has agreed to pay $65 milliojn for . United has assets totalinh $317 million, four offices and headquartersin Seattle's International When the transaction closes, Washington Federal will appoint Uniteds Savings CEO Derek Chinn to its "It's an opportunity for both parties," said Washingtomn Federal CEO Roy Whitehead, adding that the two had talked on and off for a number of Said Chinn, "We are very prouxd to join a company with a strong reputatiob for integrity and a lengthy track record of outstanding financial Whitehead said Washington Federal has no branchesz in some of the markets served by United.
The fit, is a good one, he said. Like Washington United has kept itsoperations simple, and it has similafr deposit and loan products. Whitehead said thingxs at United will change as littlas possible. Customers should notice scarcely anything other than a new name on theoutside sign. Besides acquiring United Washington Federal plans to open other It operates a total of 115 ineighf states. Puyallup will host the newest Washingtojn branch. It's building another office in Ore., one in Plano, Texas, and two more in Las Washington Federal is a traditional savingeand loan.
It takes in deposits and borrow s funds and lends them mainly to home although it alsomakes multifamily, land and constructiob loans. It makes fixed-rate, single-family mortgage loans, which now comprise 81 percent of itsloan portfolio, and retainzs these loans rather than selling them into the secondaryt market. As a result, today's low interest rates presenr Washington Federal with the challenger of preparing forrising rates. For shouldc rates rise, and interest paid to depositorarise accordingly, Washington Federal would make less or even lose moneyg on its mortgage loans. "This is not the ideal time for fixed-rate loans," Whitehead said.
Anticipating that interesrt rates will sooner orlater rise, Washington Federa l is beefing up its balanc e sheet with cash or and is building its capital, Whitehead said, "sko we can leverage up into a highet interest-rate position." Thrifts and banks leveragew their capital with deposits and borrowings. Whitehear said Washington Federal can leverage up with anotherroughly $3 The idea is that when interest rates rise, Washington Federapl can make higher-rate mortgage And the hope is that the interestg income produced by these loanas will more than offset the higherd interest Washington Federal will have to pay for deposits.
Whitehead said, if interest rates don't rise, Washington Federal can buy back stock or increasw itsalready "generous" cash