Washington Mutual trying new strategy

Phil Levine

Tuesday, Nov. 9, 1999 | 11:20 a.m.

Washington Mutual is banking on an untried new strategy -- dubbed "click and brick" -- to make its mark in Las Vegas' competitive financial sector.

The nation's eighth-largest bank company, Seattle-based Washington Mutual on Monday revealed plans to open 20 new "retail concept" branches in Las Vegas and Henderson next year. The move is in keeping with the bank's strategy to open several branches at once to gain significant regional market share while minimizing start-up costs.

Deanna Oppenheimer, president of Washington Mutual's Consumer Banking Group, said the company hopes to change the way Las Vegans bank.

"As part of the retail concept, we will employ what's been called a 'click and brick' strategy allowing customers to either bank online in the branches or conduct traditional personalized banking," she said. "Each branch will offer direct Internet access for customers preferring to bank online."

Currently, Washington Mutual operates a single home loan center in Las Vegas at 2625 S. Rainbow Blvd. The bank has about 8,600 home loan customers in Metropolitan Las Vegas, Oppenheimer said.

With its new Las Vegas branches, Washington Mutual hopes to break the mold of the traditional bank office. The new branches will offer concierge service, childrens' play sections -- dubbed "WAMU Kids" areas -- and an an array of retail financial products and services.

Oppenheimer said it was no coincidence the bank chose Las Vegas as the city to introduce its new "retail concept."

"Las Vegas is a market well-known for its willingness to accept change and new ideas," she said. "In addition, we see Las Vegas as a logical extension of our Southern California presence. And of several cities we examined, Las Vegas recorded the highest level of bank customer dissatisfaction."

Oppenheimer said bank surveys also revealed Washington Mutual already has name recognition among 47 percent of Las Vegans.

Reacting to Washington Mutual's forthcoming Las Vegas expansion, representatives of Nevada's largest banks remained respectful but self-confident.

Spokesmen for rivals Bank of America and Wells Fargo concurred that Las Vegas customers would benefit from increased competition.

"In general, more competition is good for both the industry and the consumer," said Bryan Waters, president of Wells Fargo's Southern Nevada operations. "As a bank, you can never be complacent, especially when a new, large competitor enters the market. We will continue to examine our strategies to ensure our current plans adapt to changes in this market."

B of A spokesman Dave Howell echoed those sentiments.

"We compete with them (Washington Mutual) primarily in the Northwest and California, and they're formidable competitors," he said. "But I can understand why they would find Las Vegas an attractive market. Area customers will certainly benefit from increased competition. Still, we offer many similar products and this remains a business based on establishing successful relationships. In the end, that will determine who succeeds."

Tod Little, president of Silver State Bank, said Washington Mutual's impact on Las Vegas community banks will be minimal.

"They can say what they want about competing with community banks, but the fact is they're a very large bank with all the bureaucracy that goes with that," he said. "Also, our focus is more on small business loans, whereas they are more focused on consumer retail."

However, Washington Mutual hopes to broaden its market focus in the new millennium. Chief Executive Officer Kerry Killinger told investors Monday the next five years would be a time for "diversifying our balance sheet, developing new ways to reach new markets, and profitably expand all our business lines."

To that end, the company revised upwards its target goal for return on equity. Over the next five years, the bank has set a target of greater than 20 percent annual return on equity, 2 percentage points higher than its previous five-year goal. Killinger said the new target goal better reflects the company's recent expansions and aquisitions of several smaller financial companies.

The bank also lowered its expectations for earnings-per-share growth for the next five years to 13 percent, down 2 percentage points from the previous five year target.

Washington Mutual has also partnered with San Francisco-based Organic Inc. The company will provide the bank with online media marketing for wamumortgage.com, Washington Mutual's Internet mortgage lending site.