Killinger Steals Show From Banking’s Stars Washington Mutual Executive Quietly Builds Financial Empire
Kerry K. Killinger.
It’s not a name that has blazed its way across the top of the business pages in the way that Hugh McColl’s or Edward Crutchfield Jr.’s have as they built sleepy local institutions into super-regional financial powerhouses in just a few years.
Yet, with Washington Mutual Inc.’s $9.9 billion purchase last week of H.F. Ahmanson & Co. of Los Angeles, the Seattle-based savings and loan company that Killinger runs has cemented his place alongside the entrepreneurial superstars that have transformed American banking.
With his low-key personality and unpretentious lifestyle, Killinger is unlikely to generate the big headlines that his more flamboyant rivals do.
McColl’s no-holds-barred acquisition binges transformed a backwater North Carolina institution into Nationsbank, the third-biggest bank in the United States. He is famous for keeping a hand grenade on his desk. And Crutchfield earned the nickname Fast Eddy for the speed with which he catapulted First Union Corp. into the No. 6 spot.
By contrast, Killinger, 48, mows his own lawn (with a hand mower) and stays at Holiday Inns when he travels. Lean and boyish-looking in his wire-rimmed glasses, he relaxes by playing golf or practicing his trumpet. (The son and grandson of professional musicians, Killinger met his wife, Debbie, also a trumpet player, in the high school band. They have two grown children.)
His management style is equally unobtrusive, analysts say. “He is very inclusive,” said Jay Tejera, an analyst at Dain Rauscher in Minneapolis. “McColl and Crutchfield have an ‘it’s my way or the highway’ approach. Kerry is more of a motivator and delegator. He is the chief executive of this company, but essentially he has no day-to-day responsibilities.”
But what he lacks in flair, Killinger more than makes up for in drive and ambition. In his eight years at the helm, he negotiated a string of deals - 22 in all - that turned what had been a small Seattle-based savings and loan with $7.6 billion in assets in 1990 into the nation’s largest savings and loan.
During that period, Washington Mutual’s stock has been quietly spectacular, posting an average compound annual return of 30.5 percent.
With the acquisition of H.F. Ahmanson Inc., Killinger created the second-largest consumer bank on the West Coast, trailing only BankAmerica. Once the merger is completed, his bank will have $150 billion in assets, 2,000 branches and $86.3 billion in deposits.
Killinger has lots of fans on Wall Street.
“He is an indefatigable guy with enormous energy and optimism,” said Tejera. “Since he took over in 1990, his stock is the best-performing issue among banks and major thrifts. He has made a lot of people wealthy.”
Jonathan Gray, an analyst at Sanford C. Bernstein & Co. who once referred to Killinger as the “Alexander the Great of the thrift industry,” said, “The highest rate of return for a bank or thrift is to acquire competitors in the same market.” He added, “That is a concept he understands well.”
Amid a record wave of mergers, a handful of banks are pushing to develop nationwide networks. The goal is supposed to be increased profits from a larger customer base and elimination of duplicate branches, computer systems and headquarters staff. In some cases, the increased profits have been slow to come because of high prices paid for new acquisitions.
Killinger dismissed talk he’s only interested in building an empire.
“This has little to do with trying just to get bigger,” Killinger said. “We have no criteria or ambitions for size. What drives us is maximizing return on equity and earnings-per-share growth.”
Investors and analysts said Killinger has proven the bank does a good job both buying companies and fitting the pieces together.
The bank’s return on assets, at 0.99 percent last year, and its 18 percent return on equity are good for a thrift, but only average for a large bank.
A native of Des Moines and a graduate of the University of Iowa, where he earned B.A. and M.B.A. degrees in less than four years, Killinger displayed a penchant for doing deals before he ever got to Washington Mutual.
After a brief stint as an investment analyst at Bankers Life Insurance Co. of Nebraska, Killinger took a position at Murphey Favre Inc., a Spokane-based brokerage firm. To augment his income in support of his young family, he bought fixer-upper homes, restoring them on weekends.
Killinger was no less entrepreneurial at Murphey Favre. A successful mutual-fund manager, he acquired a large stake in the privately held firm by buying stock from retiring co-workers. In 1982, he helped to broker the sale of Murphey Favre to Washington Mutual. He was named president in 1988 and chief executive two years later.
Through his big stock holdings in Washington Mutual, he has become extremely wealthy; analysts estimate he is worth $100 million or more.
Though he is a prodigious worker, Killinger has not been alone in creating the Washington Mutual empire. Analysts say his efforts are augmented by a group of executive vice presidents including Craig Tall, in charge of corporate development; Liane Wilson, who heads corporate operations; Deanna Oppenheimer, head of consumer banking; and William Longbrake, Washington Mutual’s chief financial officer.
“This is a management team that works very hard,” Gray said.
It is also a group that does not appear likely to sit on its laurels after the Ahmanson deal.
Ahmanson operates some 40 branches in the Houston area, and Tejera from Dain Rauscher said he expected Washington Mutual to use that as a beachhead to acquire more properties in Texas.
“I would not be surprised to see them be very active bidders for BankAmerica’s thrift business there,” he said.
BankAmerica has about 175 branches with some $5 billion in assets in its Texas savings and loans.
More deals are likely, Tejera said.
“With the Ahmanson deal, they will be in a number of Western states, Florida and Texas,” he said. “But there is no doubt in my mind that Kerry Killinger has national aspirations.”