First Republic Bank seized, sold to JPMorgan Chase

NEW YORK (AP) — Regulators seized troubled First Republic Bank early Monday, making it the second-largest bank failure in US history, and promptly sold all of its deposits and most of its assets to JPMorgan Chase Bank in a bid to head off further banking turmoil in the US.

San Francisco-based First Republic is the third midsize bank to fail in two months. The only larger bank failure was Washington Mutual, which collapsed at the height of the 2008 financial crisis and was also taken over by JPMorgan.

First Republic has struggled since the March collapses of Silicon Valley Bank and Signature Bank and investors and depositors had grown increasingly worried it might not survive because of a high amount of uninsured deposits and exposure to low interest rate loans.

The Federal Deposit Insurance Corporation said early Monday that First Republic Bank's 84 branches in eight states will reopen as branches of JPMorgan Chase Bank and depositors will have full access to all of their deposits.

Regulators worked through late last week and this weekend to find a way forward before US stock markets opened. They solicited bids for First Republic Bank's assets and once again turned to JPMorgan Chase, the nation's biggest bank, with a reputation as a dealmaker during times of crisis. Treasury officials also enlisted JPMorgan last month to spearhead a $30 billion funding package for First Republic.

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

As of April 13, First Republic had approximately $229 billion in total assets and $104 billion in total deposits, the FDIC said. The FDIC estimated its deposit insurance fund would take a $13 billion hit from taking First Republic into receivership. Its rescue of Silicon Valley Bank cost the fund a record $20 billion.

Before Silicon Valley Bank failed, First Republic had a banking franchise that was the envy of most of the industry. Its clients, mostly the rich and powerful, rarely defaulted on their loans. The bank has made much of its money making low-cost loans to the wealthy, which reportedly included Meta Platforms CEO Mark Zuckerberg.

Flush with deposits from the well-heeled, First Republic saw total assets more than double from $102 billion at the end of 2019's first quarter, when its full-time workforce was 4,600.

But the vast majority of its deposits, like those in Silicon Valley and Signature Bank, were uninsured, that is, above the $250,000 limit set by the FDIC. And that worried analysts and investors. If First Republic were to fail, its depositors might not get all their money back.

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