JPMorgan Chase acquired the substantial majority of assets and assumed the deposits and certain other liabilities of First Republic Bank from the Federal Deposit Insurance Corporation. As part of the purchase, JPMorgan Chase is assuming all insured and uninsured deposits.
“Our government invited us and others to step up, and we did,” Jamie Dimon, chairman and CEO of JPMorgan Chase, said. “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. This acquisition modestly benefits our company overall, it is accretive to shareholders, it helps further advance our wealth strategy and it is complementary to our existing franchise.”
The acquisition includes approximately $173 billion of loans and approximately $30 billion of securities as well as the assumption of approximately $92 billion of deposits, including $30 billion of large bank deposits, which will be repaid post-close or eliminated in consolidation. The 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
First Republic branches will open today 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 $2.6 billion, which does not reflect the approximately $2 billion of post-tax restructuring costs anticipated over the next 18 months. In addition, JPMorgan Chase expects to retain a CET1 ratio consistent with its Q1/24 target of 13.5%.
The transaction is expected to be modestly EPS accretive and generate more than $500 million of incremental net income per year, not including the approximately $2.6 billion one-time post-tax gain or approximately $2 billion of post-tax restructuring costs expected over the course of 2023 and 2024.
Marianne Lake and Jennifer Piepszak, co-CEOs of consumer and community banking at JPMorgan Chase, will oversee the acquired First Republic businesses.
“First Republic has built a strong reputation for serving clients with integrity and exceptional service,” Lake and Piepszak said in a joint statement. “We look forward to welcoming First Republic employees. As always, we are committed to treating employees with respect, care and transparency.”
