JPMorgan will trim another 2,800 WaMu jobs

JPMorgan Chase disclosed Thursday that it will eliminate another 2,800 jobs through attrition at its Washington Mutual operations, on top of the 9,200 layoffs announced in December.

But relatively few of the new cuts will be at the former WaMu headquarters in downtown Seattle, a spokesman said.

Most of the reductions, to be made by leaving vacant positions unfilled, will be at WaMu's call centers, mortgage-processing centers and other back-office operations scattered across the country, JPMorgan spokesman Tom Kelly said.

Charlie Scharf, JPMorgan's head of retail financial services, said the company expects to realize net savings of about $2 billion at its former WaMu operations. JPMorgan acquired WaMu's banking business from the Federal Deposit Insurance Corp. late last September, after the giant thrift collapsed under the weight of billions in bad mortgages.

The savings include $1.35 billion related to the job cuts and $1.4 billion in marketing, technology, real estate and other expenses, offset by $750 million in new spending on salespeople, facilities and marketing.

Scharf and other JPMorgan executives spoke at the company's annual "Investors Day" event at its New York headquarters.

At the end of 2008, employees of WaMu accounted for 41,400 of JPMorgan Chase's 225,000-person payroll. About 4,200 of the former WaMu people were in head-office jobs.

In December, JPMorgan said it would lay off 3,400 people in WaMu's former headquarters. Of those, Kelly said, 1,500 have already left; the other 1,900 will be gone before year's end.

In presentations to analysts and investors, JPMorgan also revealed more about the condition of the WaMu businesses it bought.

Two-thirds of the $173.5 billion in WaMu mortgages, or $116.7 billion, that JPMorgan acquired were deemed impaired, and the company wrote down their value to $88.8 billion. The impaired loans included 82 percent of the option ARMs, 80 percent of the subprime loans, and two-thirds of the home-equity loans.

JPMorgan currently expects the total WaMu home-loan portfolio to lose $32.5 billion over the life of the loans. But should house prices fall even more than expected — meaning more borrowers will default and banks can't recover as much on the busted loans — losses could rise to as much as $40 billion.

JPMorgan also said it expects losses from WaMu's $28 billion credit-card portfolio to approach 15 percent in the current quarter.

On the brighter side, JPMorgan said it had stanched the outflow of deposits that helped convince federal regulators last fall that the thrift couldn't survive on its own.

In early September, WaMu had more than $140 billion in deposits, after certain adjustments. On Sept. 25, when it was seized by regulators, it had $124.4 billion; in other words, $15 billion walked out WaMu's doors between the 12th and the 26th, JPMorgan's first day in control.

Since then, WaMu deposits have edged up to $124.9 billion, and checking-account growth has resumed, albeit at low levels, JP Morgan officials said.

The distinction between WaMu and JPMorgan will blur as WaMu branches are rebranded with the Chase colors and logo. The rebranding already has begun in California and is expected to start soon here in Seattle.

Drew DeSilver: 206-464-3145 or ddesilver@seattletimes.com