First Republic Bank seized, sold to JPMorgan Chase

The struggling First Republic Bank was seized Monday by federal regulators and sold to JPMorgan Chase, marking the second-biggest U.S. bank failure ever.

JPMorgan Chase says it acquired deposits and “the substantial majority of assets” from First Republic, which the Federal Reserve listed four months ago as the country’s 14th-largest commercial bank.

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

First Republic Bank’s 84 locations — which span eight states — were set to remain open Monday under JPMorgan Chase, the Federal Deposit Insurance Corporation said.

Monday’s developments follow failures this year by Silicon Valley Bank, which was 16th-biggest commercial bank in the U.S., and Signature Bank, which was 29th, according to the Federal Reserve. Those banks and First Republic all operated with mostly uninsured deposits.

[ First Republic Bank claims deposits dropped 40% after losing $72B ]

First Republic Bank users took out more than $100 billion after Silicon Valley and Signature went down. That prompted 11 major U.S. banks to come up with an uninsured $30 billion in an effort to save First Republic, which is based in San Francisco.

In mid-April, the FDIC said First Republic had $229 billion in total assets and $104 billion in deposits. JPMorgan said Monday it acquired about $173 billion in loans and about $30 billion in securities while assuming approximately $92 billion of deposits.

“Deposits will continue to be insured by the FDIC, and customers do not need to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits,” the FDIC said Monday.

The First Republic Bank failure trails only the collapse of Washington Mutual 15 years ago. The 2008 collapse led as well to a JPMorgan Chase acquisition.

With News Wire Services