First Republic Bank seized by U.S. authorities and acquired by JPMorgan

The U.S. Federal Deposit Insurance Corp (FDIC) took possession of First Republic, after the California Department of Financial Protection and Innovation closed the collapsed bank. On Monday, the FDIC announced that it had accepted JPMorgan Chase’s bid for acquisition.

This is the fourth bank collapse since March, third in the United States, and second worst in U.S. history. First Republic was the 14th largest bank in the country, with approximately $229.1 billion in total assets and $103.9 billion in total deposits.

A new wave of concern started last month, when it was revealed that the lender lost more deposits in the first quarter than originally feared. First Republic clients withdrew over $100 billion in deposits, according to its April 24 earnings report. Shares of the bank were down 97-percent on Friday.

On Monday, Federal Deposit Insurance Corp (FDIC) said that customers can continue to use their existing branch until they receive notice from the new owner. “Our government invited us and others to step up, and we did,” said Jamie Dimon, chairman and CEO of JPMorgan.

Not to be confused with First Citizens that acquired Silicon Valley Bank (SVB), which was previously considered the worst bank failure since 2008. First Republic was also headquartered in San Francisco. The branches were located primarily in California and urban areas on the East Coast, in order to serve wealthy clientele. 

After the announcement that First Citizens will acquire SVB, the FDIC said they stepped in to avoid larger financial ‘contagion’ from the collapse. But documents revealed an expectation of a ‘mild’ recession later this year as a result of the banking crisis, although the Fed leaders were publicly more optimistic.