Bank Investors, This Is Going to Hurt

Additionally, JPMorgan Chase also said in preliminary results announced at the same time as the WaMu deal that net charge offs in its retail franchise are continuing to trend higher. The bank plans to add roughly $600 million to its allowance for loan losses to prepare for further losses in its subprime and prime mortgage portfolios, it said. It also plans to take $3 billion to $3.5 billion in writedowns on mortgage-backed securities and leveraged loans. JPMorgan Chase reiterated that card losses will be roughly in the 5% range, among other things.

"We see JPMorgan Chase as a relative winner in the current stressed market conditions," according to Richard Staite, an analyst in London at Atlantic Equities, in a note where he upgraded the stock to overweight following the deal announcement.

"Its size, financial strength and diversity ensure it is seen as a safe haven counterparty for clients that range from the man on the street to hedge funds," Staite wrote.

Wells Fargo

Wells Fargo, another stalwart in the banking industry, could have "depressed" results from further deterioration in home prices, the Fox-Pitt analysts write.

The San Francisco-based bank, while sticking to relatively stringent lending standards even during the credit boom, was not immune to the credit crisis. One hangover the bank has is in regards to its home equity portfolio, specifically so-called brokered home-equity loans.

Wells Fargo had already separated what it perceives to be the worst of the home equity lot into a $12 billion-liquidating portfolio, but the Fox-Pitt analysts are nevertheless concerned about the remaining home equity exposure totaling $84 billion. The analysts estimate that roughly $24 billion is in a second-lien position, "not behind a Wells Fargo first" mortgage, they write.