The First Republic Bank offices at 101 Pine St. in San Francisco.
JP Morgan Chase will assume the majority of assets of First Republic Bank, following the SF-based bank’s failure and FDIC takeover May 1—in what is being deemed the second-largest bank failure ever. In an agreement announced Monday, JP Morgan Chase assumed the deposits of FRB; the FDIC, meanwhile, will guarantee 80% of all First Republic losses on residential and commercial loans through 2028.
First Republic’s downfall came closely on the heels of Silicon Valley and Signature banks, whose failures and FDIC takeovers made headlines in March. Since that time, First Republic investors had grown increasingly rattled by the bank’s many uninsured deposits and low-interest-rate loan exposure; the bank reported about $100 billion in deposits had been withdrawn in March alone.
In a statement released May 1, Jamie Dimon, chairman and CEO of JPMorgan Chase, said the financial institution was asked to step in by the U.S. Government, “and we did.”
“Our financial strength, capabilities and business model allowed us to develop a bid to execute the transaction in a way to minimize costs to the Deposit Insurance Fund,” said Dimon.
Dimon said the buyout “modestly benefits” JP Morgan Chase overall, advancing the bank’s wealth strategies and complimenting its existing franchise.
JP Morgan highlighted a few key elements of the acquisition, including:
- Acquisition of the substantial majority of First Republic Bank’s assets, including approximately $173 billion of loans and approximately $30 billion of securities
- Assumption of approximately $92 billion of deposits, including $30 billion of large bank deposits, which will be repaid post-close or eliminated in consolidation
- FDIC will provide loss share agreements covering acquired single-family residential mortgage loans and commercial loans, as well as $50 billion of five-year, fixed-rate term financing
- JPMorgan Chase is not assuming First Republic’s corporate debt or preferred stock
For more information, visit jpmorganchase.com/ir/news.
