TD Bank Financial Group didn’t get Washington Mutual in the end, nor did any other Canadian bank for that matter. Instead, JPMorgan Chase & Co. announced that it has acquired all deposits, assets and certain liabilities of WaMu’s banking operations from the U.S. Federal Deposit Insurance Corp., effective immediately.

Excluded from the transaction are the senior unsecured debt, subordinated debt, and preferred stock of WaMu’s banks. JPMorgan Chase will not be acquiring any assets or liabilities of the banks’ parent holding company or the holding company’s non-bank subsidiaries. As part of this transaction, JPMorgan Chase will make a payment of approximately $1.9 billion to the FDIC.

The acquisition is expected to be immediately accretive to earnings and to add more than 50¢ per share in 2009. JPMorgan Chase expects to incur pretax merger costs of approximately $1.5 billion while achieving annual pretax cost savings of approximately $1.5 billion by 2010, net of significant investments in the business. The bank plans to complete most systems integrations and rebranding by year-end 2010, closing less than 10% of branches in the combined network in overlapping markets.

In conjunction with this acquisition, JPMorgan Chase will be marking down the acquired loan portfolio by approximately $31 billion, which primarily represents its estimate of remaining credit losses related to the impaired loans.

To bolster its capital in the wake of this deal, JPM also announced that it intends to offer $8 billion of its common stock for sale to the public.

“This deal makes excellent strategic sense for our company and our shareholders. Our people have worked hard to build a strong franchise and balance sheet, making this compelling transaction possible,” said Jamie Dimon, chairman and CEO. “As we have said in the past, increasing our regional banking presence not only strengthens our Retail business, but also benefits other business lines across our firm, including our commercial banking, business banking, credit card and asset management groups.”

Following the deal’s announcement, Moody’s Investors Service affirmed its ratings on JPMorgan. However, it changed the rating outlook to negative from stable.

Moody’s said that it affirmed JPM’s ratings because of three broad considerations. The first is that JPM is paying $1.9 billion to acquire net assets of $31 billion. This gives JPM substantial protection against further losses on WaMu’s assets. The second consideration is that JPM will maintain comparatively high capital ratios assuming that it is successful in raising $8 billion. The third consideration is that Moody’s believes JPM has the managerial skills to successfully integrate WaMu’s operations.

The change in the outlook to negative from stable reflects the increased possibility that JPM’s asset quality could deteriorate beyond Moody’s current expectations.