FDIC sells seized First Republic to JPMorgan Chase

The Federal Deposit Insurance Corp. seized First Republic Bank early Monday morning, and sold it to JPMorgan Chase, the New York Times reported.

The FDIC was soliciting bids to acquire the San Francisco-based bank, setting a deadline of noon on Sunday. PNC Financial Services Group and Bank of America were also tapped by the FDIC last week to bid for the bank.

First Republic’s failure — now the second-largest in U.S. history — could have a sizable impact on real estate, including the housing market. Almost 60 percent of the bank’s loans were single-family mortgages, according to the firm’s 2022 annual report.

The immediate transfer to JPMorgan could stave off the impact of First Republic’s failure. The bank’s shares rose 3 percent in premarket trading; the seizure and sell was timed to beat the opening of markets on Monday morning.

On Monday, 84 First Republic locations are expected to reopen as JPMorgan branches. The FDIC’s insurance fund is expected to pay out $13 billion to cover losses; it is also providing $50 billion in financing to JPMorgan, already the largest bank in the country prior to this acquisition.

There may be government backlash regarding JPMorgan’s acquisition, as federal rules bar the bank from taking over another because it has more than 10 percent of the nation’s deposits, Bloomberg reported prior to news of a deal.

JPMorgan was among the consortium of banks that deposited $30 billion into First Republic in March in an effort to shore up its finances. When the bank issued its first report since the other two prominent bank failures, however, it became clear the temporary boost would not be enough.

First Republic last week disclosed it had lost about $102 billion in deposits in the first quarter alone, roughly half the deposits that were on the books at the end of last year. It ended the first quarter with $104 billion in deposits, including the $30 billion infusion from the other banks.

— Holden Walter-Warner