First Republic Zombie Bank Dismembered, Pieces Handed to JP Morgan, Uninsured Depositors Bailed Out. Stockholders, some Bondholders Bailed in. Cost to FDIC Fund: $13 Billion, by Wolf Richter

A First Republic post mortem, from Wolf Richter at

A one-time “bargain purchase gain” of $2.6 billion, “over $500 million” in net income accretion, lots of other goodies amounting to an IRR of “over 20%.”

So JP Morgan Chase won the “highly competitive bidding process” for the dismembered pieces of First Republic. It will cost the FDIC’s insurance fund about $13 billion, the FDIC said. Even the uninsured depositors were made whole, mainly the 11 banks, including JPM itself, that put in $30 billion on deposit at First Republic back in March to prop it up. Stockholders and preferred stockholders were bailed in and wiped out. We discussed all this here.

But JP Morgan came out this morning and in a presentation to its shareholders bragged about the great deal it got – another instance of a bank and its owners getting rich off yet another government bailout.

This is how JPM will benefit, according to JPM:

  • A one-time “bargain purchase gain” of $2.6 billion in 2023.
  • “Over $500 million” in annual net income accretion.
  • All producing an “IRR” (internal rate of return) of over 20%.
  • “Accelerates growth initiatives” in JPM’s U.S. wealth strategy.
  • “Increased penetration with U.S. high net worth clients.
  • “Adds prime locations in affluent markets” (including San Francisco Bay Area, Los Angeles, Portland, Seattle, New York City, Boston, Jackson (Wyoming)…
  • “Accretive to tangible book value per share.”

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