American Savings Sale Completed

Washington Mutual Inc. said Monday it has completed its $1.7-billion acquisition of Keystone Holdings Inc. and its subsidiary, Irvine thrift American Savings Bank, doubling its size and making it one of the largest thrifts on the West Coast.

Seattle-based Washington Mutual, the nation’s fourth-largest thrift, expands into California for the first time by acquiring American Savings Bank, the state’s second-largest residential first-mortgage lender.

The combined institution has $43 billion in assets, $24 billion of deposits and 500 branches in nine Western states.

“Washington Mutual will be in an even better position to grow and prosper in the years ahead,” said Kerry Killinger, Washington Mutual president, chairman and chief executive.

Washington Mutual said it would pay 26 million shares, worth about $1.11 billion, to Keystone investors. It will pay 14 million shares, worth about $597 million to the Federal Deposit Insurance Corp., which holds stock in a Keystone unit that has owned American Savings. An additional 8 million shares, worth about $341 million, will be issued and held in escrow pending a Keystone lawsuit against the U.S. government.

The thrift valued the payment to investors at about $1.68 billion, based on its Thursday closing price of $42.625. If all 48 million shares are paid, the transaction would have a total value of $2.05 billion.

Washington Mutual stock has risen 41% since the merger was announced July 22.

The company, which said it would assume $365 million in outstanding debt, expects to take a $210-million charge in the fourth quarter for merger-related expenses.