By JASON BOOTH
L.A., meet Wamu.
Washington Mutual Inc., the giant Seattle thrift company that has been buying up some of L.A.'s biggest financial institutions, is unleashing a publicity blitz of billboards, TV ads and community outreach events and it's just warming up.
"The magnitude of growth in L.A. has been stronger than I thought," said Washington Mutual Chairman Kerry Killinger, who sat down with the Business Journal to lay out the company's massive L.A. campaign.
"I think the more you are here, and I'm here almost every week, the more appreciation you get for the size of the market, the depth of the market. If you can deliver a distinguishable product, the business opportunities here are enormous," he said.
With homey TV commercials, offers of free checking accounts and a stated emphasis on customer service, Washington Mutual is trying to prove it can fill the void left by the three institutions it has bought or is buying: American Savings Bank, Great Western Bancorp and, in a deal expected to close this quarter, H.F. Ahmanson & Co., parent of Home Savings of America.
Like all major publicity campaigns, this one is the product of months of planning and research specifically to assess the perceptions and needs of banking customers in California, Florida and the Northwest, where Washington Mutual does business.
"Our research showed that the customers were clamoring for an alternative," said Killinger. "There was a relatively high dissatisfaction among the public on the level of service. And if we could offer an alternative by offering a higher level of service and have better pricing on our products, then we would be readily accepted."
Killinger said Wamu's marketing strategy for L.A. involves three target audiences: employees, customers, and the community at large.
"Straight out of the blocks after the Great Western acquisition I committed about four months to getting out to meet with every employee of the company to sell them on what our vision is, what our corporate culture is and what our service expectations are," Killinger said. "That's the most important thing to starting the right type of market positioning. You start internal, not external."
Reassuring Great Western personnel and bringing them into the Wamu fold was especially important because about 20 percent of the 12,000 Great Western employees were eliminated through layoffs, early retirement or attrition following the acquisition. Most of the layoffs were among senior executives and back-office staff. At the same time, 25 Great Western and American Savings branches were closed in L.A. County.
The integration of the Great Western and American Savings computer networks into Wamu's system was completed in June. The transition appears to have gone smoothly, according to both Washington Mutual and equity analysts who follow the thrift helped, no doubt, by Wamu having purchased 23 institutions since 1983. That's in stark contrast to the difficulties Wells Fargo Bank experienced in 1997 after it acquired First Interstate Bancorp.
"These guys are true experts in integrating financial institutions. They have an entire department dedicated to it," said Dan Destino, an analyst at Sutro & Co. in West Los Angeles.
Besides computer systems and personnel, another asset Wamu has been integrating is real estate. The thrift has decided to make Great Western's Chatsworth headquarters campus its "operations hub" for the Los Angeles area, Killinger said. H.F. Ahmanson's Irwindale campus will be sold off or leased to third-party users once the acquisition of Ahmanson is complete.
The corporate jet once used by former Great Western Chairman John Maher was sold within a week of the acquisition. That sale was symbolically important, signaling to Great Western employees that they must acclimate to Washington Mutual's no-frills corporate culture. The thrift does not use executive jets or maintain a fleet of company cars.
"For us, efficiency and keeping the back office lean, keeping the executive culture lean, allows us to have the funds to put back into the branches," Killinger said.
Once the internal marketing and employee-training campaign was well along, Washington Mutual turned its attention to convincing L.A. civic groups that it could not only maintain the level of service provided by the institutions it had bought, but actually improve upon it.
Last week, when Killinger hosted a charity breakfast at the Biltmore Hotel, most of the assembled guests were from public education, housing and charitable organizations.
"Our focus in the community tends to be more grass-roots oriented," Killinger said. "It's kind of a reflection of our company. Our overall focus is on the consumer market, the small-business market, rather than large corporations."
At last week's outreach event, invitees were given the chance to sink a few shots on an indoor putting green, with Washington Mutual donating $1,000 to the favorite charity of each of the five winners. The company has held 28 such events across the state in recent weeks.
Civic activists who attended the event said they have been impressed with Washington Mutual, and Killinger in particular. However, they added that it will take months before the full impact of the acquisitions is felt.
"It's still early," said Hector Barreto, chairman of the Latin Business Association. "We are losing three corporate partners (Great Western, American Savings and Home Savings). Right now we are having discussions with Washington Mutual to see how we can replace these relationships."
There also are efforts to make inroads at City Hall, including regular phone conversations between Killinger and L.A. Mayor Richard Riordan.
"We have been discussing with Washington Mutual many of the big economic challenges Los Angeles still faces and so far we have received a warm response," said Deputy Mayor Rocky Delgadillo. "Their whole business plan is more grass-roots, so that bodes well for them fitting into the L.A. economy."
While that may be true, Washington Mutual's takeover has resulted in the loss of dozens of senior-level thrift executives who had provided civic leadership by serving in various capacities at local chambers of commerce and other civic groups. Replacing those civic leaders with Wamu executives will be key to the thrift establishing itself in the community.
"Show up from the top down," advised John Bryant, chairman of Operation Hope, a non-profit group that runs a number of "banking centers" across Los Angeles, offering discount financial services to inner-city residents. "From bank managers showing up at a PTA meeting to the chairman acting as the keynote speaker as civic functions, show up just as you would in Seattle."
The most visible aspect of Wamu's L.A. incursion is advertising.
Wamu's ad campaign, created by McCann-Erickson Seattle, attempts to tap into the popular sentiment that large financial institutions are no longer interested in offering personal service.
But unlike the confrontational campaign of Glendale Federal Bank, which urged customers to dump Wells Fargo, Washington Mutual's campaign uses a softer approach.
In the TV spots that started airing last week, customers are invited to come into the bank and get to know the manager. There isn't an ATM in sight.
"They are taking the wholesome approach. It's the flip side of the Glendale Federal campaign," said John Stafford, vice president of communications at the California Bankers Association. "While the GlenFed ads seemed somewhat disingenuous coming from a $16 billion institution, the Wamu ads look more honest and direct."
But in L.A., where the ATM is king, will the opportunity to know a bank teller on a first-name basis be enough to attract new customers?
"I think they might want to target more to L.A.," said Dean Dudley, chairman of Pasadena-based ad agency DSLV/Lawlor Advertising. "We live in our cars here, we have dual incomes, time is our most precious commodity. I think they should use anything they can to highlight the convenience of their big branch network."
In two years Washington Mutual has gone from having no presence in California to controlling in excess of $30 billion in assets in the state. With the acquisition of Ahmanson, it will rival the size of Wells Fargo and Bank of America both in L.A. and statewide.
Now analysts are wondering where the Seattle giant will strike next. Talk among analysts is that Wamu will take a close look at L.A.-based consumer finance company Aames Financial Corp.
Killinger declined to comment on any particular company, but he did indicate an interest in the consumer finance sector.
"We are currently very focused on getting the Ahmanson transaction closed and don't want to do anything that detracts from that," he said. "However, some of our business units are not affected by that acquisition, and consumer finance would be an example of that. If we found the right situation that fits that business plan, we would certainly take a look at it."
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