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 ( FITB), which has questionable asset quality and owes $3.4 billion in TARP money, have risen seven-fold since March 6. The stock is trading for more than its tangible book value. Not all of the acquiring companies are out of the woods. Zions Bancorp ( ZION), for example, has bought three banks, including Vineyard National Bank, which closed on July 18. Zions subsidiary California Bank & Trust of San Francisco purchased $1.5 billion in deposits and $1.8 billion in assets from the failed institution, with the FDIC agreeing to share the losses on $1.5 billion of the acquired assets. 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.
Steve Ricchiuto, MZUHO Securities chief economist, and Bob Michele asset management global CIO with JP Morgan (JPM), joined BloomberTV's 'Bloomberg GO' to discuss the economy and the Fed raising rates.