bonanza...

WaMu operations sold to J.P. Morgan after regulators seize control of Seattle bank

South Florida Business Journal - by Eric Engleman and Brian Bandell

J.P. Morgan Chase bought the bulk of Washington Mutual's banking operations Thursday in a deal orchestrated by federal regulators who had seized control of the troubled thrift.

If J.P. Morgan Chase keeps WaMu's South Florida branches, it will emerge as a major new competitor in the region. WaMu had 125 branches and $8.8 billion in deposits in the three-county South Florida market on June 30, 2007, according to the FDIC. That placed it third in South Florida in both categories, behind Charlotte, N.C.-based rivals Wachovia and Bank of America.

In a sign of the WaMu's worsening condition, regulators said it had lost $16.7 billion in deposits since Sept. 15. Saying WaMu had insufficient liquidity to meet its obligations and was "in an unsafe and unsound condition to transact business," the federal Office of Thrift Supervision closed the bank and appointed the Federal Deposit Insurance Corp. as receiver. The FDIC held a bidding process that ended in the sale to J.P. Morgan.

WaMu had a 6.13 percent nonaccrual rate in its $52.9 billion option adjustable rate mortgage portfolio in the second quarter. In a list of metropolitan areas in the portfolio, South Florida's three counties had the highest delinquency rates with Miami-Dade performing the worst, at 12.84 percent. These are loans were borrowers can pay less than the monthly accrued interest for a period of time.

WaMu's shares plunged to 45 cents in after-hours trading Thursday as reports of the company's acquisition began circulating through the media. The stock was worth $1.69 at the close of trading Thursday. The 52-week high for WaMu shares was $36.47.

The FDIC said that people with WaMu loans should continue making their payments, as their agreements are still in force. As for interest rates, JPMorgan Chase will review those rates for WaMu customers starting Friday.

While all details of the deal weren't clear, J.P. Morgan Chase & Co. (NYSE: JPM) said it will pay $1.9 billion to the FDIC to acquire WaMu's deposits, branches and a loan portfolio valued at $176 billion. J.P. Morgan anticipates write-downs of about $30 billion on the loans. The acquisition doesn't include some assets and liabilities, which would remain in the holding company,