JPMorgan Chase Acquires WaMu
Saturday, September 27, 2008
JPMorgan Chase & Co. announced last night that it has acquired all deposits, assets, and certain liabilities of Washington Mutual’s banking operations from the Federal Deposit Insurance Corporation (FDIC) for $1.9 billion. The acquisition creates the country's largest depository institution, with over $900 billion in customer deposits.
Thursday evening, Washington Mutual was closed by the Office of Thrift Supervision and the FDIC was named receiver. “WaMu's balance sheet and the payment paid by JPMorgan Chase allowed a transaction in which neither the uninsured depositors nor the insurance fund absorbed any losses,” said Sheila C. Bair, FDIC chairman. Bair said the deal was simply a “combination of two banks,” and would be a seamless transition for customers.
Seattle-based Washington Mutual had been the largest savings and loan in the nation, and now represents the largest single bank failure in U.S. history. The bank, which has been hampered by billions in bad mortgage debt, had reportedly been searching for a buyer for some weeks now. You may recall that shortly after the collapse of IndyMac Bank, DSNews.com covered a report by banking analyst Richard X. Bove, in which Bove claimed Washington Mutual was teetering on the “danger zone” of failure.
Excluded from yesterday's transaction are the senior unsecured debt, subordinated debt, and preferred stock of Washington Mutual’s banks. JPMorgan Chase will not acquire any assets or liabilities of Washington Mutual's parent holding company or the holding company’s non-bank subsidiaries.
The acquisition expands Chase’s consumer branch network into California, Florida, Washington, Georgia, Idaho, Nevada, and Oregon. The combined 5,400 branches in 23 states creates the nation's second largest branch network, with locations reaching 42 percent of the U.S. population, JPMorgan said.
According to a press statement released by JPMorgan, the acquisition of Washington Mutual’s banking operations is expected to be immediately accretive to earnings and to add more than 50 cents per share in 2009. The bank said it plans to complete most systems integrations and rebranding by year-end 2010, closing less than 10 percent of branches in the combined network in overlapping markets.
In addition, JPMorgan Chase plans to mark down the acquired loan portfolio by approximately $31 billion, which represents its estimate of remaining credit losses related to the impaired loans.
“This deal makes excellent strategic sense for our company and our shareholders,” said Jamie Dimon, chairman and CEO of JPMorgan Chase. “As we have said in the past, increasing our regional banking presence not only strengthens our retail business, but also benefits other business lines across our firm, including our commercial banking, business banking, credit card, and asset management groups,”
Thursday evening, Washington Mutual was closed by the Office of Thrift Supervision and the FDIC was named receiver. “WaMu's balance sheet and the payment paid by JPMorgan Chase allowed a transaction in which neither the uninsured depositors nor the insurance fund absorbed any losses,” said Sheila C. Bair, FDIC chairman. Bair said the deal was simply a “combination of two banks,” and would be a seamless transition for customers.
Seattle-based Washington Mutual had been the largest savings and loan in the nation, and now represents the largest single bank failure in U.S. history. The bank, which has been hampered by billions in bad mortgage debt, had reportedly been searching for a buyer for some weeks now. You may recall that shortly after the collapse of IndyMac Bank, DSNews.com covered a report by banking analyst Richard X. Bove, in which Bove claimed Washington Mutual was teetering on the “danger zone” of failure.
Excluded from yesterday's transaction are the senior unsecured debt, subordinated debt, and preferred stock of Washington Mutual’s banks. JPMorgan Chase will not acquire any assets or liabilities of Washington Mutual's parent holding company or the holding company’s non-bank subsidiaries.
The acquisition expands Chase’s consumer branch network into California, Florida, Washington, Georgia, Idaho, Nevada, and Oregon. The combined 5,400 branches in 23 states creates the nation's second largest branch network, with locations reaching 42 percent of the U.S. population, JPMorgan said.
According to a press statement released by JPMorgan, the acquisition of Washington Mutual’s banking operations is expected to be immediately accretive to earnings and to add more than 50 cents per share in 2009. The bank said it plans to complete most systems integrations and rebranding by year-end 2010, closing less than 10 percent of branches in the combined network in overlapping markets.
In addition, JPMorgan Chase plans to mark down the acquired loan portfolio by approximately $31 billion, which represents its estimate of remaining credit losses related to the impaired loans.
“This deal makes excellent strategic sense for our company and our shareholders,” said Jamie Dimon, chairman and CEO of JPMorgan Chase. “As we have said in the past, increasing our regional banking presence not only strengthens our retail business, but also benefits other business lines across our firm, including our commercial banking, business banking, credit card, and asset management groups,”
