JPMorgan Chase Braces for 'Noisy' Quarter

"They did take a large provision on that book in the third quarter, however, we have seen a few [banks] report early numbers and it's looking like the deterioration has been much more rapid," she says.

Ladenburg Thalmann analyst Richard Bove, however, called the WaMu acquisition a "sweetheart deal" that "should contribute meaningfully to earnings" in a Dec. 8 note. While Bove cut 2008 projections, he raised estimates for the bank in 2009 and upgraded the stock to a buy rating from neutral.

"JPMorgan Chase acquired all of the positive aspects of Washington Mutual -- its deposits and branches -- and avoided taking on most of the negatives -- its mortgage business and capital obligations," he wrote.

However, in the near future, widened spreads on securities will lead to further writedowns, severance costs associated with the WaMu deal, and a weak investment banking business, will hurt the company, Bove said. JPMorgan also will have to pay much more in dividend costs associated with the $25 billion preferred equity stake it sold the government in October, he wrote.

Analysts at Deutsche Bank on Monday cut estimates on JPMorgan and several other banks, including Citi and US Bancorp (USB Quote), due to increasing concerns on the loan losses.

Deutsche analyst Mike Mayo estimates JPMorgan will earn 18 cents a share in the fourth quarter, but cut 2009 estimates by 65 cents to $2.05 a share to reflect higher loss rates and lower revenue. He also shaved his earnings estimates for 2010 as well.