SEATTLE, Aug 27, 2002 (BUSINESS WIRE) -- Washington Mutual, Inc. (NYSE:WM)
today signed a definitive agreement to acquire the stock of the parent company
of HomeSide Lending, Inc., the U.S. mortgage unit of the National Australia Bank
Limited (the "National") (ASX:NAB) (NYSE:NAB) for an estimated $1.3 billion in
cash. Washington Mutual will also assume $735 million of HomeSide's outstanding
medium-term notes and certain other liabilities as part of the transaction.
The transaction is expected to be completed early in the fourth quarter of 2002,
subject to customary closing conditions. It includes HomeSide's 1.4 million
customer relationships nationwide, its mortgage servicing portfolio, projected
to be approximately $131 billion at closing, along with related hedges and other
assets and liabilities. The transaction is expected to be modestly accretive to
Washington Mutual's earnings per share in 2002.
Based on current interest rates, the purchase price attributable to the acquired
mortgage servicing rights (MSRs) is estimated to be $1.3 billion at closing. The
ultimate MSR purchase price, however, will be based on interest rates at the
time of closing. Washington Mutual expects to sell most of the excess servicing
acquired in the transaction, which will reduce its financial exposure while
maintaining customer relationships.
"This transaction combines attractive financial returns, a favorable stock
acquisition structure and low operational risk," said Kerry Killinger,
Washington Mutual's chairman, president and chief executive officer.
Washington Mutual currently subservices the mortgage loans in the HomeSide
servicing portfolio, using the proprietary loan servicing platform acquired as
part of the transaction completed with HomeSide last March. Consequently, no
systems conversions will be necessary.
"This transaction is consistent with our strategy of adding core mortgage
relationships, while limiting the excess servicing component," added Killinger.
"We believe this strategy will help us produce greater efficiency, enhance
cross-sales opportunities and improve profitability in the mortgage business of
Frank Cicutto, managing director and chief executive officer of the National
Australia Bank, said, "This sale is consistent with the strategic realignment of
our Group businesses. Following the sale of Michigan National in 2001 for a
profit of $1.7 billion and the purchase of MLC in 2000 for $4.6 billion, we are
now clearly focused on our core banking and wealth management businesses."
Morgan Stanley, Heller Ehrman White & McAuliffe LLP and Gibson, Dunn & Crutcher
LLP represented Washington Mutual. The National Australia Bank was represented
by Cohane Rafferty, Lehman Brothers, Black Rock Inc., Sullivan & Cromwell and
Kirkpatrick & Lockhart.
About Washington Mutual, Inc.
With a history dating back to 1889, Washington Mutual is a national financial
services company that provides a diversified line of products and services to
consumers and small- to mid-sized businesses. At June 30, 2002, Washington
Mutual and its subsidiaries had assets of $261.28 billion. Washington Mutual
currently operates more than 2,500 consumer banking, mortgage lending,
commercial banking, consumer finance and financial services offices throughout
the nation. Washington Mutual's press releases are available at www.wamu.com.
To listen to a brief pre-recorded message to investors from Killinger, please
dial 1-800/216-3058 in the U.S. or 1-402/220-3764 for international callers. An
audio webcast of the recording can also be found on the company's website at
This press release contains forward-looking statements, which are not historical
facts and pertain to future operating results. These forward-looking statements
are within the meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements include, but are not limited to, statements
about our plans, objectives, expectations and intentions and other statements
contained in this press release that are not historical facts. When used in this
press release, the words "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" are
generally intended to identify forward-looking statements. These forward-looking
statements are inherently subject to significant business, economic and
competitive uncertainties and contingencies, many of which are beyond our
control. In addition, these forward-looking statements are subject to
assumptions with respect to future business strategies and decisions that are
subject to change. Actual results may differ materially from the results
discussed in these forward-looking statements for the reasons, among others,
discussed under the heading, "Business Factors That May Affect Future Results"
in Washington Mutual's 2001 Annual Report on Form 10-K and under the heading,
"Cautionary Statements," in Washington Mutual's Quarterly Report on Form 10-Q
for the period ended June 30, 2002, which include: (1) changes in general
business and economic conditions may significantly affect our earnings; (2) the
risk of our inability to effectively manage the volatility of our mortgage
banking business could adversely affect our earnings; (3) the risk that the
impact of rising interest rates may result in an increase in our cost of
interest-bearing liabilities, which could outpace the increase in the yield on
interest-earning assets and lead to a reduction in the net interest margin; (4)
the risk of our inability to effectively integrate the operations and personnel
of companies we have acquired could adversely affect our earnings and financial
condition; (5) the concentration of our operations in California could adversely
affect our operating results if the California economy or real estate market
declines; (6) competition from other financial services companies in our markets
could adversely affect our ability to achieve our financial goals; and (7)
changes in the regulation of financial services companies could adversely affect
CONTACT: Washington Mutual, Inc.
Alan Gulick, 206/377-3637
Investor Relations Contacts:
JoAnn DeGrande/Ruthanne King,
206/461-3186 / 206/461-6421