Leading Thrift to Buy Northeast’s Dime Bancorp
Washington Mutual Inc., the largest U.S. savings and loan, agreed to buy Dime Bancorp for $5.3 billion in stock and cash, making its biggest push into the Northeast U.S. market, people familiar with the situation said Sunday.
Washington Mutual agreed to pay just under $41 per share, or 30% in cash and 70% in stock, for each share of Dime common stock, based on Washington Mutual’s closing share price Friday, the people said. Both boards approved the transaction and an announcement is set for today, they said.
Buying New York’s largest thrift will give Washington Mutual 123 branches for selling its mortgages and checking accounts in and around New York City. The Seattle-based savings and loan, which is the largest U.S. mortgage lender, has been acquiring rivals in California and Texas and has branches in Washington, Oregon, Utah and Florida.
“The question is, can Washington Mutual do on the East Coast what it does very successfully on the West Coast,” said Michael Stead, chief investment officer of the SIFE Trust Fund.
Dime spokesman Thomas Ducca declined to comment, as did Washington Mutual spokeswoman Libby Hutchinson.
In New York Stock Exchange trading Friday, Dime shares fell $1.20 to close at $36.88, and Washington Mutual fell 49 cents to close at $38.90.
The Seattle-based company, led by 52-year-old Chief Executive Kerry Killinger, has more than doubled its assets with nine acquisitions over the last five years. Dime is its largest acquisition since 1998, when it bought Irwindale-based H.F. Ahmanson & Co., parent of Home Savings, for $6.9 billion.
The 112-year-old Washington Mutual, which less than 10 years ago had $8 billion of assets in Washington and Oregon, now accounts for almost one-quarter of the thrift industry’s total assets with $220 billion. It is three times the size of its nearest savings and loan competitor, San Francisco-based Golden State Bancorp.
Earlier this month, Washington Mutual displaced Wells Fargo & Co. as the No. 1 originator of residential mortgage loans in the U.S. after buying FleetBoston’s mortgage unit. In February the company acquired PNC Financial Services Group’s residential mortgage business and spent $2.2 billion to buy Houston-based Bank United Corp. to build its mortgage-servicing portfolio.
Dime had $14 billion of deposits in New York and New Jersey at the end of last year. Its Santa Rosa, Calif.-based mortgage-lending operation, North American Mortgage Co., has been the company’s fastest-growing business this year.
