JPMorgan to acquire majority of assets of First Republic Bank

JPMorgan (JPM) announced it has acquired the substantial majority of assets and assumed the deposits and certain other liabilities of First Republic Bank (FRC) from the Federal Deposit Insurance Corporation, or FDIC. In carrying out this transaction, JPMorgan Chase is supporting the U.S. financial system through its significant strength and execution capabilities. As part of the purchase, JPMorgan Chase is assuming all deposits – insured and uninsured. Key transaction elements following the FDIC’s competitive bidding process include: Acquisition of the substantial majority of First Republic Bank’s assets, including approximately $173B of loans and approximately $30B of securities. Assumption of approximately $92B of deposits, including $30B 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 $50B of five-year, fixed-rate term financing. JPMorgan Chase is not assuming First Republic’s corporate debt or preferred stock. First Republic branches will open on Monday, May 1, as normal, and clients will continue to receive uninterrupted service, including digital and mobile banking capabilities. As a result of this transaction, JPMorgan Chase expects to: Recognize an upfront, one-time, post-tax gain of approximately $2.6B, which does not reflect the approximately $2B dollars of post-tax restructuring costs anticipated over the next 18 months. Remain very well-capitalized with a CET1 ratio consistent with its 1Q 24 target of 13.5% and maintain healthy liquidity buffers The transaction is expected to be modestly EPS accretive and generate more than $500M of incremental net income per year, not including the approximately $2.6B one-time post-tax gain or approximately $2B of post-tax restructuring costs expected over the course of 2023 and 2024. The acquired First Republic businesses will be overseen by JPMorgan Chase’s Consumer and Community Banking, or CCB, co-CEOs, Marianne Lake and Jennifer Piepszak.