Banking major JPMorgan Chase & Co. (JPM) Monday said it has acquired the substantial majority of assets and assumed the deposits and certain other liabilities of First Republic Bank from the Federal Deposit Insurance Corp. or FDIC.
As part of the purchase, the company is assuming all deposits – insured and uninsured.
As a result of the transaction, JPMorgan Chase expects to recognize an upfront, one-time, post-tax gain of approximately $2.6 billion, which does not reflect the approximately $2.0 billion dollars of post-tax restructuring costs anticipated over the course of 2023 and 2024.
The transaction is expected to be modestly EPS accretive and generate more than $500 million of incremental net income per year, excluding the expected gain or restructuring costs.
The deal includes acquisition of the substantial majority of First Republic Bank’s assets, including approximately $173 billion of loans and approximately $30 billion of securities. It also includes assumption of approximately $92 billion of deposits, including $30 billion of large bank deposits, which will be repaid post-close or eliminated in consolidation.
Jamie Dimon, Chairman and CEO of JPMorgan Chase, said, “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 company noted 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 on Monday, May 1, as normal, and clients will continue to receive uninterrupted service, including digital and mobile banking capabilities.
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.
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