First Republic Bank seized by regulators; sold to JPMorgan Chase

Regulators seized First Republic Bank early Monday and sold most of its operations to JPMorgan Chase Bank in what is the third major U.S. institution to fail in two months, according to The New York Times.

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The deal to sell First Republic was announced early Monday before U.S. markets are set to open.

Regulators scrambled over the weekend to arrange the deal that would see JP Morgan take $173 billion of loans and about $30 billion of San Francisco-based First Republic Bank securities, including $92 billion of deposits, JPMorgan said in a statement. The financial giant will not assume the bank’s corporate debt or preferred stock.

JPMorgan will “assume all of the deposits and substantially all of the assets of First Republic Bank,” the FDIC said in a statement. According to the regulator, the FDIC’s insurance fund would have to pay out about $13 billion to cover First Republic’s losses.

First Republic’s 84 branches will reopen as part of JPMorgan Monday during normal business hours, according to the FDIC, and customers will have full access to their deposits.

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

Other banks, such as PNC Financial Services, had bid to take over First Republic’s deposits and assets.

JPMorgan Chase, PNC and Bank of America were among 11 large banks that temporarily deposited $30 billion into First Republic in March in order to prop up the bank, the Times reported.

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 Silicon Valley Bank, The Wall Street Journal reported.

According to the Journal, an earnings report released last week sent the bank’s stock down nearly 50% in one day. First Republic shares ended last week at $3.51 compared to $115 on March 8.

Three of the four largest-ever U.S. bank failures have occurred since March. First Republic, with some $233 billion in assets at the end of the first quarter, along with Silicon Valley Bank and Signature Bank, a New York-based lender, have all failed in the past two months.

Check back for more on this developing story.

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