JPMorgan, U.S. Bancorp Grow as Banks Fail

BOSTON (TheStreet) -- JPMorgan Chase(JPM), U.S. Bancorp(USB) and eight other holding companies have boosted their deposits by more than a third in the past two years by acquiring failed banks.

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.

Acquisitions of Failed Banks Boost Deposits - Sep. 30 ($Mil) Company City Domestic Deposits 2-year Deposit Growth Total Assets JPMorgan Chase (JPM) New York $610,683 30% $2,041,009 U.S. Bancorp (USB) Minneapolis, Minn. $154,051 36% $265,058 BB&T Corp. (BBT) Winston-Salem, N.C. $110,912 38% $165,329 Zions Bancorporation (ZION) Salt Lake City $40,997 24% $53,425 First Citizens Bancshares (FCNCA) Raleigh, N.C. $15,349 18% $18,513 MB Financial (MBFI) Chicago $11,430 95% $14,135 East West Bancorp (EWBC) Pasadena, Calif. $8,425 13% $12,486 Prosperity Bancshares (PRSP) Houston $7,119 48% $8,961 First Citizens Bancorp (FCBN) Columbia, S.C. $7,013 42% $8,336 First Financial Bancorp (FFBC) Cincinnati, Ohio $5,836 105% $7,260 Iberiabank (IBKC) Lafayette, La. $4,776 38% $6,467 PacWest Bancorp (PACW) San Diego $4,049 17% $5,481 CVB Financial (CVBF) Ontario, Calif $4,040 18% $6,547 Westamerica Bancorp (WABC) San Rafael, Calif $4,028 21% $4,970 First Bancorp (FBNC) Troy, N.C. $2,923 61% $3,530 Great Southern Bancorp (GSBC) Springfield, Mo. $2,743 54% $3,728 First Financial Holdings (FFCH) Charleston, S.C. $2,428 29% $3,481 TIB Financial (TIBB) Naples, Fla. $1,335 31% $1,721 First California Financial (FCAL) Westlake Village, Calif $1,125 47% $1,470 Stonegate Bank Fort Lauderdale, Fla. $361 92% $466 Source: Regulatory data from consolidated financial statements for bank holding companies (FR Y-9C) provided by SNL Financial. Data for First Financial Holdings comes from the Thrift Financial Report for main subisidiary First Federal FS&LA. Data for Stonegate Bank comes from the institution's regulatory call report.

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 (BBT) -- have increased deposits by more 30% during the past two years. All three have improved their net interest margins and repaid TARP funds. Despite the run-up in bank stocks since the S&P 500 Financials bottomed on March 6, these companies could rise further when the economy recovers.