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|Washington Mutual To Sell Consumer Finance Subsidiary to CitiFinancial Credit Unit of Citigroup|
SEATTLE--(BUSINESS WIRE)--Nov. 24, 2003--Washington Mutual, Inc. (NYSE:WM) announced today that it has entered into a definitive agreement to sell its Washington Mutual Finance subsidiary to the CitiFinancial Credit Company subsidiary of Citigroup (NYSE:C) for $1.25 billion in cash.
Washington Mutual Finance offers consumer installment loans and consumer real estate-secured loans from more than 400 offices located mostly in smaller communities in the Southeastern and Southwestern United States. At Sept. 30, 2003, the subsidiary had $4.1 billion of assets.
"This transaction is good for all parties," said Kerry Killinger, Washington Mutual's chairman, president and CEO. "The sale of this business at an attractive premium meets Washington Mutual's financial objectives and allows us to use our capital for our core growth businesses. Additionally, the sale represents another step in the realignment of our organization around our two primary customer segments: middle-market consumers and commercial clients. For Washington Mutual Finance employees, it represents an opportunity to join another well-regarded leader in the consumer finance industry."
The company intends to redeploy the released capital to fund retail store growth, asset generation and other initiatives in 2004. The company's previous 2004 earnings guidance reflects the anticipated gain and other effects of this transaction.
In connection with the transaction, Washington Mutual Finance's public debt will remain outstanding.
Killinger added that Washington Mutual Finance's mostly smaller-market geographic focus differs from the parent company's strategy of targeting larger urban and suburban markets.
Washington Mutual acquired the consumer finance unit, then known as Aristar, Inc., in 1997 as part of its acquisition of Great Western Financial Corp. Since that time, net receivables at Washington Mutual Finance have grown more than 68 percent from $2.3 billion at Dec. 31, 1997, to $3.8 billion at Sept. 30, 2003.
"For our customers it is business as usual," said Dan Gilbert, President of Washington Mutual Finance. "Their loans remain unchanged and current policies and procedures are still in effect. Every effort will be made to ensure a smooth transition for customers and they will receive information about their loans well in advance of any potential changes."
The transaction is expected to be completed in the first quarter of 2004, pending Hart, Scott, Rodino federal notification and state regulatory approvals.
Lehman Brothers acted as exclusive financial advisor to Washington Mutual in the transaction.
About Washington Mutual
With a history dating back to 1889, Washington Mutual is a retailer of financial services that provides a diversified line of products and services to consumers and commercial clients. At Sept. 30, 2003, Washington Mutual and its subsidiaries had assets of $286.63 billion. Washington Mutual currently operates more than 2,700 consumer banking, mortgage lending, commercial banking, consumer finance and financial services offices throughout the nation. Washington Mutual's press releases are available at www.wamunewsroom.com.
Our Form 10-Q and other documents that we file with the Securities and Exchange Commission contain forward-looking statements. In addition, our senior management may make forward-looking statements orally to analysts, investors, the media and others. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could" or "may." Forward-looking statements provide our expectations or predictions of future conditions, events or results. They are not guarantees of future performance. By their nature, forward-looking statements are subject to risks and uncertainties. These statements speak only as of the date they are made. We do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements were made. There are a number of factors, many of which are beyond our control, that could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. Some of these factors are:
-- General business and economic conditions may significantly affect our earnings; -- If we are unable to effectively manage the volatility of our mortgage banking business, our earnings could be adversely affected; -- Many of our interest rate and MSR risk management strategies depend on trading in mortgage-related financial instruments in the secondary market. If periods of illiquidity develop in these markets, our ability to effectively implement our risk management strategies could be adversely affected; -- If we are unable to effectively implement our business operations technology solutions, our earnings and financial condition could be adversely affected; -- If we are unable to fully realize the operational and systems efficiencies and revenue enhancements sought to be achieved from our recently announced business segment realignment, our earnings could be adversely affected; -- The financial services industry is highly competitive; and -- Changes in the regulation of financial services companies and government-sponsored enterprises could adversely affect our business.
CONTACT: Washington Mutual, Inc., Seattle Media Contact: Alan Gulick, 206-377-3637 email@example.com Investor Contacts: JoAnn DeGrande, 206-461-3186 firstname.lastname@example.org Ruthanne King, 206-461-6421 email@example.com SOURCE: Washington Mutual, Inc.