First Republic Tumbles As JPM Snaps Its Assets in Auction

First Republic Bank (FRC:US) shares are having another disastrous day after it was announced that the regional lender’s assets were acquired by JPMorgan Chase & Co (JPM:US).

First Republic stock initially fell 47% on Friday on a Reuters report that the Federal Deposit Insurance Corporation (FDIC) was preparing to place it into receivership imminently. These fears materialized over the weekend before the regulator announced on Monday morning that JPMorgan won the auction to acquire First Republic’s assets.

The banking titan confirmed the auction news, saying it has “acquired the substantial majority of assets and assumed the deposits and certain other liabilities of First Republic Bank” from FDIC.

“Our government invited us and others to step up, and we did,” said Jamie Dimon, Chairman and CEO of JPMorgan Chase. “Our financial strength, capabilities and business model allowed us to develop a bid to execute the transaction in a way to minimize costs to the Deposit Insurance Fund.”

JPMorgan said it acquired around $173 billion of loans and $30 billion of securities, while also assuming $92 billion of deposits. As a result, JPM recognized an upfront, one-time, post-tax gain of approximately $2.6 billion. It also reaffirmed its guidance for a CET1 ratio of 13.5% for Q1 2024.

The news likely concludes the drama surrounding the First Republic Bank, which is now the third-largest bank that failed in the United States. Shares of the company traded just above $2 apiece on Monday, down nearly 97% year-to-date.

For instance, Congressman Ro Khanna was buying the stock on March 09 and 10, when it was trading at $96.01 and $81.76, respectively.