JPMorgan buys First Republic; acquires all deposits and ‘substantially all assets’

JPMorgan buys First Republic; acquires all deposits and 'substantially all assets'
© Reuters JPMorgan (JPM) buys First Republic (FRC); Acquires all deposits and ‘substantially all assets’

The Federal Deposit Insurance Corporation (FDIC) said it accepted the bid from JPMorgan Chase (NYSE:JPM) to acquire First Republic Bank (NYSE:FRC), according to a statement.

JPMorgan confirmed it has “acquired the substantial majority of assets and assumed the deposits” of First Republic. The failed regional lender had total assets of around $229.1 billion and total deposits of approximately $103.9B.

“In carrying out this transaction, JPMorgan Chase is supporting the U.S. financial system through its significant strength and execution capabilities,” the banking giant said in a press release.

First Republic will open its branches on May 1 as normal.

“Our government invited us and others to step up, and we did,” said Jamie Dimon, Chairman and CEO of JPMorgan Chase. “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.”

JPMorgan said it expects to recognize an upfront, one-time, post-tax gain of approximately $2.6B. The bank remains “very well-capitalized with a CET1 ratio consistent with its 1Q 24 target of 13.5% and maintain healthy liquidity buffers.”

JPM also expects that the FRC transaction will be “modestly EPS accretive and generate more than $500 million of incremental net income per year.”

First Republic shares are down 39% in pre-open Monday on the news.