First Republic Bank Stock: How Is the Bank Faring Under New Ownership?
Key takeaways
- First Republic was taken over by JPMorgan after the worst of the regional banking crisis happened
- JPMorgan decided to ax 15% of First Republic’s staff and close branches earlier this year
- The banking behemoth’s share price has risen 6% this year
March might feel like a distant memory for some, but for the staff at beleaguered bank First Republic, it probably still haunts them. The good news is that the regional bank is now under the safety net of banking titan JPMorgan, though there have had to be some changes along the way to make it work.
Let’s look at what happened with First Republic’s acquisition by JPMorgan and how the two have fared together.
How is First Republic Bank doing at JPMorgan?
JPMorgan purchased the bulk of First Republic Bank’s $228 billion assets by paying a mere $10.6 billion for the failing bank in May after First Republic became the poster child of the March banking crisis that saw three regional banks fail. JPMorgan didn’t acquire any of First Republic’s corporate debt or preferred stock.
At the time, JPMorgan anticipated the takeover would generate $500 million annually for the megabank. Jamie Dimon, chairman and CEO of JPMorgan, said, “This acquisition modestly benefits our company overall, it is accretive to shareholders, it helps further advance our wealth strategy, and it is complementary to our existing franchise.”
JPMorgan confirmed in May it would be closing down First Republic branches and laying off staff, with roughly 15% of the regional bank’s staff axed. The company has now completed the first of those closures, affecting 14 branches in California.
How is JPMorgan faring on the stock market?
Despite the turmoil from earlier this year, JPMorgan is better positioned than the rest of its peers to weather any impending storm. JPMorgan saw a profit surge after the First Republic acquisition and beat Wall Street estimates, with net income interest skyrocketing 44% to $21.9 billion.
The bank’s profit climbed 67% to $14.47 billion for the quarter, or $4.75 a share, and set aside $2.9 billion to cover credit losses. However, JPMorgan also warned net interest income would be substantially lower due to market uncertainty but didn’t have a timeframe for when that would happen.
And a storm is definitely on the way. With sticky inflation, student loan debt repayments squeezing households even more, and potential government shutdowns kicked down the lane, it’s left the markets uneasy.
JPMorgan’s share price has grown by 6.07% since the start of 2023, though the market has taken a hammering in August and September due to global market uncertainties and the potential government shutdown weighing on stocks.
The bottom line
While First Republic is no longer publicly traded and part of the JPMorgan family, the bank has already begun to contribute to its new owner’s bottom line positively. That’s good news for First Republic’s staff, given JPMorgan is in a good position to ride out any rough waves ahead in the economy.
