Washington Mutual to acquire Dime Bancorp
January 1, 2002
SEATTLE -- Washington Mutual Inc., the nation's largest thrift, is buying Dime Bancorp Inc. for $5.2 billion in a bid to establish a foothold in the lucrative New York market with its no-fee, no minimum-balance checking accounts and no-fee ATMs.
According to analysts, the deal could prompt New York's consumer banks to provide better service and lower ATM rates for middle-income consumers.
Seattle-based Washington Mutual conducted market research indicating that 28 percent of the customers of banks in New York -- including parts of Connecticut and New Jersey -- are ready to switch banks, said Kerry Killinger, Washington Mutual's chairman, chief executive and president.
"Generally customers said they felt uncomfortable with the fees they were being charged, the service they received was fairly austere, and the service they did get was not always people with warm and friendly and caring kinds of service," Killinger said in a conference call.
Instead of charging monthly fees or requiring minimum balances to get free checking and unlimited ATM usage, Washington Mutual imposes higher-than-normal penalties when customers bounce checks or break other account terms.
In October, Washington Mutual eliminated surcharges at 1,000 of its ATMs in California. Bank of America and Wells Fargo had battled San Francisco and Santa Monica in court over the cities' surcharge bans.
The Dime deal, which requires approval by regulators and Dime shareholders, is expected to be completed early next year. Dime's branches will take the Washington Mutual name, and the bank plans to complete an expansion plan within several months to open more branches, according to Killinger.
Under the deal's terms, Washington Mutual will pay $40.84 for each share of Dime Bancorp, an 11 percent premium over Dime's June 23 closing price of $36.88 on the New York Stock Exchange. Of the purchase price, 70 percent will be in stock and 30 percent will be in cash.
