Washington Mutual, Inc. (WM), the largest U.S. savings and loan provider, said Monday that Alan Fishman has been appointed as the company's chief executive officer and has joined its board of directors. He succeeds Kerry Killinger, who is leaving the company after serving as chief executive officer since 1990. The company's stock is currently down more than 11% in the regular trading session.
Killinger has been forced to depart from Washington Mutual after the company disclosed a huge $3.33 billion loss for the second quarter two months ago as it significantly increased its loan loss reserves in response to continued declines in U.S. housing prices. The company was also forced to seek capital infusion from private equity TPG and other investors earlier this year.
The Seattle, Washington-based Washington Mutual, or WaMu, whose shares have fallen about 85% in the past year, has been severely affected by the U.S. subprime mortgage crisis. The company has cut more than 10% of its work force in a bid to cut $500 million-$600 million in annual expenses. The bank, which lost more than $6 billion in the nine months ended June 30, is currently focusing on four areas for a turnaround, namely, maintaining ample capital and liquidity, tightening credit, strengthening its retail services, and managing expenses.
Killinger joined WaMu in 1982 through the company's acquisition of Murphey Favre, Inc., the Northwest's oldest securities brokerage firm, at which he served as executive vice president. Prior to that, he served as an investment analyst with Banker's Life Insurance of Nebraska.
Killinger commenced his career at Washington Mutual as executive vice president and later as senior vice president for financial management, research, investor relations and corporate marketing, where he helped return the company to profitability in a deregulated environment. He also served as a member of a three-person Office of the President, from which he became the company's president in 1988 and chief executive officer in 1990. He was named chairman of the board of directors in 1991 and served in that role until June 2008.
WaMu stripped Killinger of the chairman's position in June after a majority of shareholders voted to name an independent director, Stephen Frank, as chairman.
Killinger thus joins the growing list of chief executives who have lost their jobs due to the credit crunch. Earlier on Sunday, the chief executives of mortgage giants Freddie Mac (FRE) and Fannie Mae (FNM) were forced out after the U.S. government took over control of the companies. Citigroup's former CEO Charles Prince, Wachovia's CEO Ken Thompson and Merrill Lynch's CEO Stanley O' Neal have also been dismissed after the companies reported mounting losses due to the credit crunch.
Meanwhile, Washington Mutual's new CEO, Fishman has more than 25 years of experience as a senior executive in banking and financial services. He served as president and chief operating officer of Sovereign Bank until 2007. He joined Sovereign through its 2006 acquisition of Independence Community Bank, where he had been president and chief executive officer since March 2001. Previously, he served as the President and Chief Executive Officer at ContiFinancial Corp. from July 1999 to December 2000.
Fishman, 62, has recently been involved in a variety of business and civic activities, including serving as chairman of New York-based commercial mortgage brokerage firm Meridian Capital Group, and as chairman of the Brooklyn Academy of Music.
Commenting on the appointment, Stephen Frank, chair of the Board, said, "We believe Alan Fishman is the ideal executive to succeed Kerry Killinger and lead WaMu through its current challenges. Alan has had a distinguished career in many aspects of the financial services business and brings a unique combination of in-depth industry knowledge, an entrepreneurial approach, and strong management skills that make him the right choice to be CEO of WaMu at this critical juncture."
WaMu also announced that it has entered into a Memorandum of Understanding with its chief regulator, the Office of Thrift Supervision, regarding aspects of the bank's operations, principally in several areas of its risk management and compliance functions. This includes its Bank Secrecy Act compliance program.
WaMu said it has committed to provide the OTS an updated, multi-year business plan and forecast for its earnings, asset quality, capital and business segment performance. The company noted that the business plan will not require it to raise capital, increase liquidity or make changes to the products and services it provides to customers.
In Monday's regular trading session, WM is trading at $3.80, down $0.47 or 11.01% on a volume of 50.79 million shares. The stock has been trading in a range of $3.03-$39.25 in the past 52 weeks.
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