Washington Mutual Finance Corporation (Tampa, Florida) Assigned Short-Term Debt Rating of TBW-1

Washington Mutual Finance Corporation (WMF) is the wholly-owned consumer finance subsidiary of Washington Mutual, Inc. (WM). The company, formerly known as Aristar, was acquired with Great Western Financial. Recently, WMF has benefited from several new senior management additions, who have been instrumental in reinvigorating the franchise. With $3.2 billion in assets, WMF is part of the broader WM with $186.5 billion in assets. As WM works to change its balance sheet mix away from residential mortgage loans, WMF will play a key role in helping the company achieve those goals. The recent name change effective March 2000, is part of the company’s efforts to grow, leveraging off the WM name and advertising budget. Performance has been very good and is expected to remain so throughout 2000. WMF returned 2.3% on managed assets during 1999. The company has also maintained a conservative balance sheet. The loan portfolio is 51% secured by real estate with the remainder (40%) personal loans and (9%) sales finance. Management is emphasizing real estate secured loans to be the growth vehicle for the company. The total portfolio is only 2.27% 60+ days contractually delinquent. As of March 31, 2000, NCOs were 2.80%. Reserves are solid at 3.4% of managed receivables. Both capital and liquidity levels are good. Debt to tangible equity of 6.1x (as of March 31, 2000) is expected to increase to 6.5x by YE2000. The company has a $700 million commercial paper program with a $1.2 billion fully committed back-up facility.


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