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

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After going public in 1982, Washington Federal acquired nine thriftz and opened offices in seven othetr Westernstates -- Utah, Idaho, Arizona, Nevada, Colorado and In May, it announced a definitive agreementg to make its 10th acquisition. Washington Federal, with $7.3 billion in has agreed to pay $65 million for . United has assetd totaling $317 million, four offices and headquarterswin Seattle's International District. When the transactiojn closes, Washington Federal will appoint Unitex Savings CEO Derek Chinn toits board. "It's an opportunitg for both parties," said Washington Federao CEO Roy Whitehead, adding that the two had talked on and off for a numbertof years.
Said Chinn, "We are very proud to join a companyh with a strong reputation for integrity and a length y track record of outstandingfinancialp performance." Whitehead said Washingtoh Federal has no branches in some of the markets servedf by United. The fit, moreover, is a good one, he Like Washington Federal, United has kept its operationa simple, and it has similar deposit and loan Whitehead said things at United will change as little as Customers should notice scarcely anything othert than a new name on the outside Besides acquiringUnited Savings, Washington Federal plans to open other branches.
It operates a tota l of 115 in eight Puyallup will host the newestWashington branch. It'se building another office in Bend, one in Plano, Texas, and two more in Las Washington Federal is a traditional savings and It takes in deposits and borrowx funds and lends them mainly to home although it alsomakes multifamily, land and constructiojn loans. It makes fixed-rate, single-familh mortgage loans, which now comprise 81 percent of its loan and retains these loans rather than sellinb them into thesecondary market. As a result, today' low interest rates presentr Washington Federal with the challenge of preparinyg forrising rates.
For should ratex rise, and interest paid to depositorsrise accordingly, Washington Federapl would make less or even lose moneyh on its mortgage loans. "This is not the idea l time for 30-year, fixed-rate loans," Whitehead said. Anticipating that interest rates will sooner orlater rise, Washingto Federal is beefing up its balance sheet with cash or and is building its Whitehead said, "so we can leverage up into a higherd interest-rate position." Thrifts and banks leverage their capital with deposites and borrowings. Whitehead said Washington Federal can leverage up with anothedroughly $3 billion.
The idea is that when interes rates rise, Washington Federal can make higher-rate mortgags loans. And the hope is that the interesyt income produced by these loans will more than offseg the higher interest Washington Federal will have to payfor deposits. Whitehead said, if interest rates don't Washington Federal can buy back stock or increase itsalready "generous" cash dividend.