| TheStreet.com BOSTON (TheStreet) -- JPMorgan Chase With the Federal Deposit Insurance Corp. offering generous deals for acquirers of failed banks, holding companies of all sizes are emerging as big winners from the credit crisis. In addition to the Troubled Assets Relief Program, or TARP, which propped up hundreds of banks with capital infusions from the government, FDIC agreements buffer acquirers from losses on bad loans and prevent the widespread withdrawals that hobbled failed banks. The FDIC has increased insurance limits on individual deposits to $250,000 through 2013 and waived all caps for business checking accounts until June 30. For acquiring companies, the regulator agreed to cover 80% of losses from commercial loans for five years and 80% of residential-loan losses for 10 years. The FDIC will reimburse 95% of losses that exceed agreed-upon thresholds.
When you factor in the loss-sharing agreements with the minimal premiums paid by acquirers, banks are staring at a rare opportunity to increase deposits with limited risk and the possibility of a big payoff years later. As a result, the FDIC has found buyers for most failed banks. The three largest acquirers on the list -- JPMorgan, U.S. Bancorp and BB&T JPMorgan has been the biggest beneficiary, acquiring Washington Mutual for $1.9 billion in September 2008 after it became the largest U.S. bank failure ever. JPMorgan bought the thrift's deposits, including uninsured balances. U.S. Bancorp has acquired a dozen failed institutions, including the nine subsidiaries of FBOP of Chicago, which regulators closed on Oct. 30. BB&T has acquired two failed institutions, including Colonial Bank, which had $20 billion in deposits when it shut down on Aug. 14. Looking for bargains among troubled regional holding companies hasn't been a bad strategy this year. Shares of Fifth Third Bancorp Not all of the acquiring companies are out of the woods. Zions Bancorp Excluding government-guaranteed balances, Zions' nonperforming assets ratio, which includes loans past due 90 days and repossessed real estate, was 4.9% as of September 30. The average ratio for all banks was 2.8% as of June 30, according to the most recent data available. Its annualized ratio of net charge-offs, or actual losses, to average loans was 3.6%, compared with 2.6% for the industry. The company owes the government $1.4 billion in TARP aid. Still, Zions could offer a buying opportunity for risk-tolerant investors. Zions shares have dropped 55% in the past year, closing at $13.46 on Tuesday, which is 64% of its tangible book value, according to SNL Financial. Many analysts expect regional holding companies to fall prey to stronger competitors through acquisitions. The companies most likely to survive will have stable funding sources and solid deposit growth. -- Reported by Philip van Doorn in Jupiter, Fla. Independent market research, commentary, analysis and news. Learn more. Philip W. van Doorn joined TheStreet.com Ratings., Inc., in February 2007. He is the senior analyst responsible for assigning financial strength ratings to banks and savings and loan institutions. He also comments on industry and regulatory trends. Mr. van Doorn has fifteen years experience, having served as a loan operations officer at Riverside National Bank in Fort Pierce, Florida, and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a Bachelor of Science in business administration from Long Island University.
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