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# First Republic Fails With $229 Billion in Assets as JPMorgan Takes Deposits and Most of the Bank
- URL: https://www.theamericanquorum.com/taq-historical-2023-05-06-us/
- Published: 2023-05-07T03:59:00.000Z
- Updated: 2023-05-07T03:59:00.000Z
- Description: California seized First Republic Bank and the FDIC sold its deposits and most assets to JPMorgan Chase, resolving a $229.1 billion bank after a historic deposit run.
- Author: TAQ Staff
- Tags: US, #Import 2026-09-01 00:53

California regulators seized First Republic Bank early Monday and appointed the Federal Deposit Insurance Corporation as receiver, ending weeks of efforts to stabilize the San Francisco lender and producing the second-largest U.S. bank failure by assets. JPMorgan Chase agreed to assume all of First Republic’s deposits and acquire substantially all of its assets, giving customers uninterrupted access to their accounts while shifting much of the failed bank into the nation’s largest bank.

The [FDIC said](https://www.fdic.gov/news/press-releases/2023/pr23034.html?ref=theamericanquorum.com) First Republic had approximately **$229.1 billion in assets and $103.9 billion in deposits** as of April 13\. The agency estimated that the resolution would cost the Deposit Insurance Fund about $13 billion, though the final cost will depend on recoveries as the receivership is wound down. All 84 First Republic offices in eight states were scheduled to reopen as JPMorgan Chase branches Monday.

## A deposit run overwhelms an otherwise unusual bank

First Republic had built a franchise around affluent households, jumbo residential mortgages, private banking and wealth management. That model produced loyal clients and strong credit performance for years, but it also created a funding structure unusually dependent on large deposits above the federal insurance limit. When Silicon Valley Bank and Signature Bank failed in March, customers across the regional banking sector reassessed the safety of uninsured balances almost immediately.

First Republic’s own [first-quarter results](https://www.businesswire.com/news/home/20230424005719/en/First-Republic-Reports-First-Quarter-2023-Results?ref=theamericanquorum.com), released April 24, showed the scale of the damage. Deposits fell by $72 billion during the quarter to $104.5 billion, a 40.8% decline from the end of 2022 even though the March 31 total included $30 billion placed at First Republic by 11 large U.S. banks as a temporary show of support. The bank said it had suffered “unprecedented deposit outflows,” had borrowed heavily from the Federal Reserve and Federal Home Loan Bank system, and planned to reduce its workforce by roughly 20% to 25%.

Those disclosures reignited market pressure. First Republic said deposits had stabilized by April 21, but its stock collapsed after the earnings report as investors questioned whether the bank could restore a viable funding model. By the final week of April, regulators and potential buyers were working against a rapidly narrowing window for a private solution.

## California closes the bank and FDIC chooses JPMorgan

The California Department of Financial Protection and Innovation said it took possession because First Republic was conducting business in an unsafe or unsound manner and was in an unsafe or unsound condition to transact banking business. In its [May 1 announcement](https://dfpi.ca.gov/press%5Frelease/california-financial-regulator-takes-possession-of-first-republic-bank/?ref=theamericanquorum.com), the department appointed the FDIC as receiver and confirmed that JPMorgan would assume all deposits, including uninsured balances, and substantially all assets.

The FDIC described the transaction as the outcome of a competitive bidding process conducted under the Federal Deposit Insurance Act’s least-cost requirements. Its [failed-bank notice](https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/first-republic.html?ref=theamericanquorum.com) told depositors that their full balances had transferred to JPMorgan and that checks, debit cards, direct deposits and other routine services would continue without interruption.

That structure differs from the emergency treatment of Silicon Valley Bank and Signature Bank in March, when federal authorities invoked a systemic-risk exception to protect all depositors. First Republic’s resolution did not require that exception because a private buyer was willing to assume the deposit base under a transaction the FDIC determined met the least-cost test.

## JPMorgan acquires a large loan book with government loss sharing

JPMorgan said it acquired a substantial majority of First Republic’s assets and assumed the deposits and certain other liabilities directly from the FDIC. In its [transaction announcement](https://www.jpmorganchase.com/ir/news/2023/jpmc-acquires-substantial-majority-of-assets-and-assumes-certain-liabilities-of-first-republic-bank?ref=theamericanquorum.com), the bank said it expected an approximately $2.6 billion one-time post-tax gain, excluding roughly $2 billion of anticipated restructuring costs over the following 18 months, and projected more than $500 million in incremental annual net income from the acquired business.

The FDIC and JPMorgan also entered loss-sharing arrangements covering certain single-family residential and commercial loans. That mechanism keeps the loans in the private sector while dividing future losses and recoveries between the receiver and JPMorgan. The approach is intended to reduce disruption for borrowers and improve recovery values compared with a rapid liquidation of the portfolio.

The transaction materially expands JPMorgan’s relationships with high-net-worth households and adds a large mortgage and private-banking book. It also raises a structural question for policymakers: one of the banking system’s most significant failures has been resolved by making the largest U.S. bank still larger. Regulators accepted that tradeoff because the immediate priority was an orderly resolution that protected depositors and minimized the insurance fund’s cost.

## The failure extends the regional-bank stress that began in March

First Republic’s collapse is the third major U.S. bank failure in less than two months. Although its loan losses were not the immediate trigger, the bank’s balance sheet was highly sensitive to the Federal Reserve’s rapid interest-rate increases. Long-duration mortgages and securities lost economic value as rates rose, while the bank increasingly had to replace departing low-cost deposits with far more expensive wholesale borrowing.

Contemporary reporting on the April 24 earnings release noted that deposits had fallen to $104.5 billion and short-term funding had surged. [Fox Business](https://www.foxbusiness.com/markets/first-republic-shares-slide-q1-report-reveals-40-percent-dip-deposits-banking-crisis?ref=theamericanquorum.com) highlighted that estimated uninsured deposits had been a much larger share of the bank’s funding before the March crisis, making First Republic unusually vulnerable when wealthy clients began moving money.

A [May 1 account](https://www.investopedia.com/first-republic-sold-jpmorgan-chase-7369927?ref=theamericanquorum.com) of the sale described the transaction as the culmination of a failed search for a private rescue after the March industry deposit infusion bought the bank only temporary stability. The basic mechanics are now clear: a concentrated depositor base moved faster than First Republic could resize its assets or replace funding economically.

## Deposit safety is preserved, but policy questions remain

For First Republic customers, the immediate operational outcome is intentionally uneventful. Deposits remain available, branches are open and JPMorgan has assumed the accounts. For shareholders and some creditors, the outcome is very different: the bank itself has failed and entered receivership.

The broader policy debate will focus on uninsured deposits, interest-rate risk, liquidity regulation and whether regional banks can remain competitive while carrying concentrated funding bases. First Republic’s failure also demonstrates the speed with which confidence can evaporate in an era of mobile banking and instant electronic transfers. A bank can report strong credit quality and substantial assets yet still become nonviable if depositors withdraw faster than those assets can be converted into cash without large losses.

Monday’s transaction contains the immediate crisis. It does not end the questions raised by three major bank failures since March. Regulators and lawmakers now have to determine whether those failures reflect idiosyncratic business models, gaps in supervision, broader vulnerabilities created by rapidly rising rates — or some combination of all three.