FDIC Accepts JP Morgan’s Bid to Buy First Republic Bank

Republic Bank, but there’s a glimmer of hope for its customers and investors. JPMorgan Chase Bank has stepped in to assume all deposits, including uninsured ones, and substantially all assets of the struggling bank. This news comes after concerns grew that First Republic Bank may not survive as an independent entity due to its high amount of uninsured deposits and exposure to low-interest rate loans. The purchase agreement is a lifeline for the bank, which has seen a dramatic fall in its stock price and a significant outflow of deposits. The FDIC has set a Sunday deadline for bids, and JPMorgan Chase Bank’s offer has been accepted. This move is a relief for many, as First Republic Bank’s clients mostly include the rich and powerful, who rarely default on their loans. Here’s what we know so far:

FDIC Accepts JPMorgan Chase Bank’s Bid

The California Department of Financial Protection and Innovation (DFPI) announced early Monday morning that the FDIC has accepted a bid from JPMorgan Chase Bank to assume all deposits of First Republic Bank.

Struggles Since the Collapse of Silicon Valley Bank and Signature Bank

First Republic Bank has struggled since the collapse of Silicon Valley Bank and Signature Bank in early March, and it was widely seen as the bank most likely to collapse next.

All Deposits and Substantially All Assets Assumed

JPMorgan Chase Bank’s offer includes all uninsured deposits and substantially all assets of First Republic Bank, providing a lifeline for the struggling bank.

Concerns Over Uninsured Deposits

Many of First Republic Bank’s deposits were uninsured, worrying analysts and investors alike. If the bank were to fail, its depositors might not get all their money back.

Relief for Clients and Investors

First Republic Bank’s clients mostly include the rich and powerful, who rarely default on their loans. The purchase agreement is a relief for them and investors alike.

Deadline for Bids

The FDIC has set a Sunday deadline for bids, and JPMorgan Chase Bank’s offer has been accepted.

First Republic Bank Acquired by JPMorgan Chase Bank

Investors and Depositors Relieved as FDIC Accepts Bid

First Republic Bank, a banking franchise catering to the rich and powerful, has been acquired by JPMorgan Chase Bank, National Association, Columbus, Ohio. The FDIC has accepted the bid, which includes all deposits, including uninsured deposits, and substantially all assets of First Republic Bank. The purchase agreement was reached and announced before U.S. stock markets opened on Monday.

Many investors and depositors were growing increasingly worried that First Republic Bank may not survive as an independent entity due to its high amount of uninsured deposits and exposure to low-interest rate loans. However, the purchase agreement includes all uninsured deposits and substantially all its assets, which has relieved many of these concerns.

FDIC Takes Action Against First Republic Bank

The DFPI took action pursuant to California Financial Code section 592, subdivisions (b) and (c), specifically ‘conducting its business in an unsafe or unsound manner’ and being in a ‘condition that … is unsafe or unsound’ to transact banking business. As of April 13, 2023, First Republic Bank, based in San Francisco, had total assets of approximately $229.1 billion and total deposits of approximately $103.9 billion. Its deposits are federally insured by the FDIC subject to applicable limits.

Uninsured Deposits a Cause for Concern

Many of the bank’s deposits were uninsured as they were above the $250,000 limit set by the FDIC. If First Republic were to fail, its depositors might not get all their money back, worrying analysts and investors alike. These fears materialized in April when the bank’s recent quarterly results showed that depositors pulled more than $100 billion out of the bank as the banking crisis was affecting Silicon Valley Bank and New York’s Signature Bank.

First Republic Bank’s stock closed at $3.51 on Friday. Last year, it traded at $170 a share.

The Associated Press contributed to this report.

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