JPMorgan Chase & Co. will acquire all deposits, assets and certain liabilities of Washington Mutual Inc. from the Federal Deposit Insurance Corp., which has taken control of the nation’s largest thrift.
As part of this transaction, JPMorgan will pay approximately $1.9 billion to the FDIC.
It plans to write down WaMu’s loan portfolio by approximately $31 billion.
The New York-based bank will not be acquiring any assets or liabilities of WaMu’s parent holding company or its non-bank subsidiaries.
JPMorgan said it expects the acquisition of Seattle-based WaMu’s banking operations to be immediately accretive to earnings and to add more than 50 cents per share in 2009.
It also expects to incur pretax merger costs of approximately $1.5 billion and intends to raise additional capital in connection with this transaction to maintain the company’s capital position.
“This deal makes excellent strategic sense for our company and our shareholders," JPMorgan chief executive Jamie Dimon said in a statement.
WaMu shares lost 57 cents, or 25%, falling to $1.69 in Thursday trading.
"For all depositors and other customers of Washington Mutual Bank, this is simply a combination of two banks," FDIC chairwoman Sheila C. Bair said in a statement.
"For bank customers, it will be a seamless transition. There will be no interruption in services and bank customers should expect business as usual come Friday morning."
Year-to-date, WaMu’s shares have dropped by $11.07, or 87%.
The acquisition marks the second time that JPMorgan has taken over a struggling financial institution in the past six months.
In March, with the assistance of the Federal Reserve, JPMorgan bought The Bear Stearns Cos. Inc. of New York in a deal that valued the besieged investment bank at $2.2 billion.
The following is a list of the top 10 bank failures since 1934, based on the size of their assets, as reported by the Federal Deposit Insurance Corp.
1. Washington Mutual of Henderson, Nevada and Park City, Utah; seized Sept. 25 with $307 billion in assets as of June 30.
2. Continental Illinois of Chicago, collapsed in 1984 with $40.0 billion in assets.
3. First RepublicBank Corp of Dallas failed in 1988 with $32.5 billion in assets.
4. IndyMac Bank FSB of Pasadena, California, collapsed in July with assets of $32 billion.
5. The American Savings & Loan Assoc. of Stockton, California, failed in 1988 with assets of $30.2 billion.
6. Bank of New England Corp collapsed in 1991 with assets of $21.7 billion.
7. MCorp of Dallas failed in 1989 with assets of $15.6 billion.
8. Gilbraltar Savings of Simi Valley, California, collapsed in 1989 with assets of $15.1 billion.
9. First City Bancorp of Houston failed in 1988 with assets of $13.0 billion.
10. Homefed Bank FA of San Diego failed in 1992 with assets of $12.2 billion.
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