WaMu Breaks Through the Half-Trillion Threshold.(Brief Article)

When Washington Mutual inked a deal to buy Dime Bancorp and its North American Mortgage subsidiary, WaMu did more than just add $56 billion of servicing to its mega-portfolio.

It effectively broke the sound barrier of loan administration, becoming the first firm to hit the half- trillion dollar portfolio threshold. Managing over $500 billion in home loan receivables is a job that would have been considered virtually unthinkable just a few years ago.

But WaMu leaders believe lenders may need to pass the $500 billion threshold to earn decent returns from loan servicing in the future.

Ratings agencies generally reacted positively to the news. Fitch reaffirmed its ratings on Washington Mutual's debt and placed Dime on "Ratings Watch Positive," saying the Dime acquisition is considered "a very good strategic fit."

Washington Mutual has taken advantage of its expanded branch presence to attract new customers and cross-sell services to its existing customers, Fitch said.

While the $5.2 billion ($1.4 billion of it cash) deal is considered expensive, Fitch noted that WaMu's strong stock price has "clearly made this transaction more palatable."

"With WaMu, they get scale, they get diversification. They get growth. It's actually a very good strategic fit," Fitch's Sharon Haas said.