Washington Mutual to Acquire Bank United for $1.5 Billion; Combination to Create Leading Consumer Banking Platform in Texas

Business Wire, August 22, 2000

Business Editors

SEATTLE & HOUSTON--(BUSINESS WIRE)--Aug. 21, 2000

Transaction Extends Washington Mutual's Position in the

Fast-Growing Texas Retail Banking Market

In a move that will significantly expand its presence in Texas, Washington Mutual, Inc. (NYSE: WM) today announced that it has signed a definitive agreement to acquire Bank United Corp. (Nasdaq: BNKU) for approximately $1.5 billion. The transaction will create a $10.7 billion deposit banking operation in Texas and gives Washington Mutual top-tier market share in three of the four largest metropolitan markets in the state.

Under the terms of the agreement, each share of Bank United common stock will be converted into 1.3 shares of Washington Mutual common stock. Based on Washington Mutual's closing stock price of $32 13/16 on Friday, August 18, 2000, the multiple paid is 11.6 times Bank United's trailing 12-month earnings (period ended June 30, 2000) and 1.67 times Bank United's book value as of June 30, 2000. The transaction, which will be accounted for as a purchase, is immediately accretive to cash earnings per share and is expected to be accretive to Washington Mutual on a reported earnings-per-share basis in 2002.

"This transaction gives Washington Mutual the critical mass to capitalize on the outstanding growth potential of the Texas market," said Kerry Killinger, Washington Mutual's chairman, president and CEO.

"It's a logical extension of our strategy to become the leading consumer bank in the nation's most attractive geographic markets. Bank United's strong market share and branch presence in Texas' leading metropolitan markets complements the strong positions we currently maintain in the Pacific Northwest, California and Florida."

In connection with the transaction, Bank United shareholders will receive tradable contingent payment right certificates representing the right to receive the proceeds, if any, received by Bank United or Washington Mutual relating to the pending forbearance claim against the U.S. government, less related taxes and expenses. Bank United will establish a trust to manage that litigation and distribute the proceeds. Also, as part of the transaction, each share of Bank United's 8 percent corporate premium income equity securities will be converted into one share of a new series of Washington Mutual's premium income equity securities with substantially the same terms.

With nearly 20 million consumers, the Texas economy is the third largest in the U.S. and its deposit market is the country's fourth largest. The Texas economy is growing at a rate of 4.6 percent, outpacing the economic growth of the U.S. as a whole.

"Like Washington Mutual, Bank United has demonstrated that it can generate strong loan growth, as well as significantly increase fee income and checking accounts," Killinger said. "Bank United's success in diversifying its business over the past few years is highly complementary to our own strategy to re-mix the balance sheet with higher-yielding consumer, commercial and mortgage banking assets. This is a great fit."

Killinger said that by combining Washington Mutual's solid balance sheet, broad array of products and delivery channels with Bank United's strong Texas retail franchise, "Washington Mutual will be able to deliver a premier retail banking alternative to individuals and small- to medium-sized businesses in Texas.

"This transaction is a win-win for the shareholders of both companies and, with our long track record of successfully integrating substantially larger companies, we expect to complete this transaction seamlessly," Killinger added.

In the first nine months of its current calendar year ending June 30, Bank United generated earnings of $98.3 million, or $2.77 per diluted share, up 17 percent from $78.2 million, or $2.37 per share in the prior year. With 155 branches, Bank United has approximately $8.8 billion in deposits, more than half of which are lower-cost transaction accounts. Bank United has built a particularly strong depository banking franchise with market shares of 3.49 percent in Dallas-Fort Worth and 8.16 percent in Houston.

"We've successfully broken out of the traditional thrift mold and have become an increasingly important force in one of the leading consumer banking markets in the nation," said Bank United's President and CEO Barry C. Burkholder. "We are gratified that, as a result of this transaction, Bank United shareholders will not only realize the value we've created over the past four years, but will now also share in the long-term growth of one of the nation's leading financial institutions -- one that has a history of combining excellent returns and strong revenue growth with superior credit quality and a solid balance sheet.

"We're also very pleased that this transaction will preserve the benefits of Bank United's interest in its forbearance lawsuit for our shareholders," he added.

"Washington Mutual's business approaches, overall strategy and commitment to delivering shareholder value makes it an excellent partner for Bank United," said Lewis S. Ranieri, chairman of Bank United. "I believe that together, the combined companies will be in an even stronger position to deliver superior returns to shareholders over the long term."