Regulators seized First Republic Bank FRC -43.30%decrease; red down pointing triangle and struck a deal to sell the bulk of its operations to JPMorgan JPM 0.87%increase; green up pointing triangle Chase & Co., heading off a chaotic collapse that threatened to reignite the recent banking crisis.
JPMorgan said it will assume all of First Republic’s $92 billion in deposits—insured and uninsured. It is also buying most of the bank’s assets, including about $173 billion in loans and $30 billion in securities.
As part of the agreement, the Federal Deposit Insurance Corp. will share losses with JPMorgan on First Republic’s loans. The agency estimated that its insurance fund would take a hit of $13 billion in the deal. JPMorgan also said it would receive $50 billion in financing from the FDIC.
San Francisco-based First Republic, the second-largest bank to fail in U.S. history, lost $100 billion in deposits in a March run following the collapse of fellow Bay Area lender Silicon Valley Bank. It limped along for weeks after a group of America’s biggest banks came to its rescue with a $30 billion deposit. Those deposits will be repaid after the deal closes, JPMorgan said.
Three of the four largest-ever U.S. bank failures have occurred in the past two months. First Republic, with some $233 billion in assets at the end of the first quarter, ranks just behind the 2008 collapse of Washington Mutual Inc. Rounding out the top four are Silicon Valley Bank and Signature Bank, a New York-based lender that also failed in March.
Both First Republic and Washington Mutual are now substantially owned by JPMorgan. The nation’s largest bank, it has been known to step in during banking crises. Chief Executive Officer Jamie Dimon was pivotal in earlier efforts to rescue First Republic.