Washington Mutual
Washington Mutual, Inc. was an American savings bank holding company based in Seattle. It was the parent company of Washington Mutual Bank, which was the largest savings and loan association in the United States until its collapse in 2008.
On September 25, 2008, the United States Office of Thrift Supervision seized WaMu's banking operations and placed them under the receivership of the Federal Deposit Insurance Corporation. The OTS took the action due to the withdrawal of US$16.7billion in deposits during a 9-day bank run. The FDIC sold the banking subsidiaries to JPMorgan Chase for $1.9billion, which had been considering acquiring WaMu as part of a plan internally nicknamed "Project West". All WaMu branches were rebranded as Chase branches by the end of 2009. The holding company was left with $33billion in assets, and $8billion in debt, after being stripped of its banking subsidiary by the FDIC. The next day, it filed for Chapter 11 voluntary bankruptcy in Delaware, where it was incorporated.
Regarding total assets under management, WaMu's closure and receivership is the largest bank failure in American financial history.
Before the receivership action, it was the sixth-largest bank in the United States.
According to WaMu's 2007 SEC filing, the holding company held assets valued at $327.9billion.
On March 20, 2009, WaMu filed suit against the FDIC in the United States District Court for the District of Columbia, seeking damages of approximately $13billion for an alleged unjustified seizure and unfair low sale price to JPMorgan Chase. JPMorgan Chase promptly filed a counterclaim in the Federal Bankruptcy Court in Delaware, where the WaMu bankruptcy proceedings had been continuing since the Office of Thrift Supervision's seizure of the holding company's bank subsidiaries.
Business operations prior to bank receivership
Despite its name, WaMu ceased being a mutual company in 1983 when it demutualized and became a public company on March 11. On June 30, 2008, WaMu had total assets of $307billion, with 2,239 retail branch offices operating in 15 states, with 4,932 ATMs, and 43,198 employees. It held liabilities in the form of deposits of $188.3billion, and owed $82.9billion to the Federal Home Loan Bank, and had subordinated debt of $7.8billion. It held as assets of $118.9billion in single-family loans, of which $52.9billion were "option adjustable rate mortgages", with $16billion in subprime mortgage loans, and $53.4billion of Home Equity lines of Credit and credit cards receivables of $10.6billion. It was servicing for itself and other banks loans totaling $689.7billion, of which $442.7 were for other banks. It had non-performing assets of $11.6billion, including $3.23billion in payment option ARMs and $3.0billion in subprime mortgage loans.On September 15, 2008, the holding company received a credit rating agency downgrade. From that date through September 24, 2008, WaMu experienced a bank run whereby customers withdrew $16.7billion in deposits over those nine days, and in excess of $22billion in cash outflow since July 2008, both conditions which ultimately led the Office of Thrift Supervision to close the bank.
The FDIC then sold most of the bank's assets to JPMorgan Chase for $1.9billion in cash plus assumption of all secured debt and some unsecured debt. Claims of the subsidiary bank's equity holders, senior and subordinated debt were not assumed by JPMorgan Chase.
History
Mutual savings bank
WaMu was incorporated as the Washington National Building Loan and Investment Association on September 25, 1889, after the Great Seattle Fire destroyed 120 acres of the central business district of Seattle. The newly formed company made its first home mortgage loan on the West Coast on February 10, 1890. It changed its name to Washington Savings and Loan Association on June 25, 1908. By September 12, 1917, it was operating under the name Washington Mutual Savings Bank. The company purchased its first company, the financially distressed Continental Mutual Savings Bank, on July 25, 1930. Its marketing slogan for much of its history was "The Friend of the Family".Post-demutualization growth
In April 1982, WaMu purchased the brokerage firm Murphey Favre for undisclosed amount in cash and demutualized the following year, converting into a capital stock savings bank. Stock in the capital stock savings bank was first offered for sale on March 11, 1983. By 1989, its assets had doubled.In November 1994, WaMu reorganized as a holding company, Washington Mutual, Inc. It separated the non-banking units from its primary banking unit, Washington Mutual Savings Bank, which was simultaneously renamed Washington Mutual Bank. The company's stock continued to trade on Nasdaq under WAMU.
In October 2005, WaMu purchased the formerly "subprime" credit card issuer Providian for approximately $6.5billion, although Providian's new management team's strategy of targeting Prime credit card consumers had been underway since 2001, therefore the credit card unit's nonperforming loan portfolio had improved significantly prior to the company's sale to WaMu. In March 2006, WaMu began the move into its new headquarters, WaMu Center, located in downtown Seattle. The company's previous headquarters, WaMu Tower, stands about a block away from the new building on Second Avenue. In August 2006, WaMu began using the official abbreviation of WaMu in all but legal situations.
Acquisitions
After the acquisition of Murphey Favre, WaMu made numerous acquisitions with the aim of expanding the corporation. By acquiring companies including PNC Mortgage, Fleet Mortgage and Homeside Lending, WaMu became the third-largest mortgage lender in the U.S. With the acquisition of Providian Financial Corporation in October 2005, WaMu became the nation's 9th-largest credit-card company.Many of WaMu's acquisitions became reviled as the rapid post-merger integrations resulted in numerous errors. The purchase of the original PNC Mortgage came at a time when subprime lending was in a "boom" period, with PNC Financial Services believing that the market was too volatile. The Dime merger resulted in account ownership to be split with account beneficiaries. The Fleet Mortgage merger resulted in entire loans simply disappearing—being serviced, but unable to be found by customer service representatives.
Expansion
Washington
In April 1983, WaMu announced the pending acquisition of three branch offices from the Tacoma-based United Mutual Savings Bank for $3.25million. In April 1984, WaMu announced the pending acquisition of the Spokane-based Lincoln Mutual Savings Bank with 14 of its 16 branch offices for $4.5million. At the time of the announcement, WaMu had 39 branch offices, mostly in western Washington.In May 1987, WaMu announced the pending acquisition of the Wenatchee-based Columbia Federal Savings Bank for $40million and also the Seattle-based Shoreline Savings Bank for $7.5million. At the time of the announcement in May 1987, WaMu had 50 branch offices, all within Washington state. Both acquisitions were completed in April 1988.
In January 1990, WaMu announced the pending acquisition of all seven offices of the Seattle-based Old Stone Bank of Washington from the Rhode Island
In June 1990, WaMu announced the completed acquisition of all six offices of the failed Walla Wallabased Frontier Federal Savings and Loan Association in Eastern Washington from the Resolution Trust Corporation for $1.8million.
In September 1990, WaMu announced the completed acquisition of all three Washington branches of the failed Utah-based Williamsburg Federal Savings and Loan Association from the Resolution Trust Corporation for $1.3million.
In November 1990, WaMu announced the pending acquisition of the Vancouver-based VanFed Bancorp with its Vancouver Federal Savings Bank subsidiary for $23.3million. At the time of the announcement in November 1990, WaMu had 75 branch offices, all within Washington state. The acquisition was completed in August 1991.
The acquisition of the Pacific Northwest branch offices from the New Yorkbased CrossLand Savings Bank that was announced in April 1991 and completed in November 1991 gave WaMu four offices within the state of Washington in addition to other offices located in the state of Oregon.
In August 1991, WaMu announced the pending acquisition of the Seattle-based Sound Savings and Loan Association for an undisclosed amount. At the time of the announcement in August 1991, WaMu had 84 branch offices, all within Washington state. The acquisition was completed in January 1992.
In September 1991, WaMu announced the pending acquisition of the Bremerton-based GNW Financial Corporation with its Great Northwest Bank subsidiary for $64million in cash and stock. The acquisition was completed in April 1992.
In December 1991, WaMu announced the pending acquisition of both Washington state branch offices of the California-based World Savings and Loan Association of America, a subsidiary of Golden West Financial, for an undisclosed amount. The acquisition was completed in March 1992.
In August 1992, WaMu announced the pending acquisition of the Lynnwood-based Pioneer Savings Bank for $181million in stock. The acquisition was completed in March 1993.
In October 1992, WaMu announced the pending acquisition of the ailing Seattle-based Pacific First Financial Corporation with its Pacific First Bank subsidiary for $663million from its Canada-based parent Royal Trustco. The acquisition was contingent on having Pacific First dispose of its branch offices in California and having its Canadian parent Royal Trustco assume all of Pacific First's bad loans. The acquisition was completed in April 1993. At the time of the initial announcement in October 1992, WaMu had 118 branch offices in Washington and Oregon while Pacific First had 127 branch offices in Washington, Oregon and California. Pacific First had previously announced that it was trading its California offices for Great Western's Washington offices. As a result of the Pacific First acquisition, WaMu became one of the largest banking institution based upon consumer deposits in the state of Washington, second only to Seafirst.
In June 1994, WaMu announced the pending acquisition of the Bellevue-based Summit Bancorp with its Summit Savings Bank subsidiary for $25million in stock. At the time of the announcement, WaMu had 231 branch offices in Washington and Oregon. The acquisition was completed in November 1994.
In June 1995, WaMu announced the pending acquisition of the Bellevue-based Enterprise Bank for $26.8million in stock, this was WaMu's entry into the commercial banking sector. Enterprise Bank was a highly profitable one unit carriage trade business bank staffed with highly successful management. WaMu named Tom Cleveland President of the commercial banking unit which later included Western Bank in Coos Bay Oregon. At the time of the announcement, WaMu had 260 branch offices. Unlike the previous acquisition targets, Enterprise held a commercial bank charter and not a thrift charter.