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SEATTLE-Locally based Washington Mutual Inc. is acquiring Irvine, CA-based Commercial Capital Bancorp Inc. for $16 per share. The two publicly held companies say the deal is worth approximately $983 million.

The acquisition will enhance WaMu’s commercial and retail banking business in California, one of its core markets. The acquisition also is expected to add assets with higher risk-adjusted rates of return to WaMu’s balance sheet without a negative effect on its credit quality.

WaMu CEO Kerry Killinger especially likes the fact that the acquisition improves on its position in the “attractive” California multifamily and small commercial real estate lending markets. “Commercial Capital is the third largest multifamily lender in California and has had an eight-year record of strong growth and excellent credit performance,” says WaMu CEO Kerry Killinger. “Its production team is recognized as an industry leader… .”

As well, Killinger says the transaction provides opportunities for household acquisition, deposit growth and increased retail product cross-sell to Commercial Capital’s existing retail customer base. “And we believe that there are significant operating efficiencies to be gained by bringing our two very similar operations together, with very low integration risk,” he says.

The acquisition is expected to be completed in the third quarter of 2006. WaMu expects the transaction to add $.04 per share on a GAAP basis to the company’s 2007 earnings.

Shares of Commercial Capital rose $1.54 on the day to close at $15.69. Shares of WaMu fell $0.45 to close at $44.45.

Simpson Thacher & Bartlett LLP provided legal advice to WaMu for the transaction. Patton Boggs LLP provided legal advice to Commercial Capital while Credit Suisse Securities (USA) LLC and Sandler O’Neill & Partners LP provided financial advice to Commercial Capital.

WaMu operates 2,600 retail consumer and business banking stores and has assets of $348.6 billion. Commercial Capital is financial services company with $5.5 billion of total assets as of the end of the year.

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