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J.P. Morgan-WaMu conference call highlights

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Published September 25, 2008 at 11:18 PM
J.P. Morgan Chase & Co. made the highest bid in a shotgun auction of the banking assets of Washington Mutual Inc. by the Federal Deposit Insurance Corp., winning them with a $1.9 billion offer. Highlights from the J.P. Morgan conference call on the deal include:

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  • J.P. Morgan Chase is paying $1.9 billion to the FDIC for the assets and the transaction closed immediately. 
  • In addition to the purchase J.P. Morgan is raising $8 billion through an offering of its common stock to the public.
  • J.P. Morgan is acquiring "the bank branches and assets, not the holding company," giving it all of the deposits and certain liabilities of Washington Mutual's banks.
  • Included in the purchased assets are mortgage assets, which J.P. Morgan said it valued at $176 billion. Those assets will be immediately written down by 19%, or $30.7 billion.
  • Left on behind are the assets and liabilities of the holding company, including unsecured senior debt and subordinated debt amounting to roughly $20 billion.
  • The transaction is expected to generate $12 billion over the next three years. The Washington Mutual banking operations should be immediately accretive to earnings and add more than 50 cents per share in 2009.
  • The deal leaves J.P. Morgan Chase with over 5410 branches and $911 billion in deposits. It expects to realize cost savings of $1.5 billion. Less than 10% of combined branches are expected to be closed.
  • In its own business J.P. Morgan expects $3 billion - $3.5 billion in markdowns on mortgage and leveraged loans.
- George White

See Dealscape post on J.P. Morgan purchase
See Crisis on Wall Street Dealwatch


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