JPMorgan’s First Republic Takeover Brings Chance of Keeping 150 Wealth Advisers

JPMorgan CFO Jeremy Barnum cites wealth management division as positive amid a deal the bank “did not seek out.”

JPMorgan Chase & Co. announced Monday it has acquired the substantial majority of the assets of First Republic Bank from the Federal Deposit Insurance Corp., along with its vastly reduced wealth management advisory team with offices around the country.

JPMorgan will be taking on about 150 wealth advisers from First Republic, Jeremy Barnum, chief financial officer for JPMorgan, said during a conference call with analysts Monday morning. The CFO cited the positives of an expanded reach to high-net-worth clients, along with well-placed locations, while admitting the bank will need to woe some of the “high quality advisers.”

“We did not seek out this deal, but it does have financial benefits, as well as enhancing our market positions and accelerating some of our key growth opportunities, particularly in wealth management,” Barnum said on the call.

San Francisco-based First Republic reported in its last earnings call for the first quarter of the year that it had $289.5 billion in wealth management assets. The beleaguered bank also noted it had been losing some advisers, who appear to have been reduced further from the more than 300 wealth managers still listed on First Republic’s website.

“We’ve had a number of adviser teams from First Republic reach out on an unsolicited basis over the past several weeks who are interested in joining JPMorgan, which as a starting point is encouraging,” Barnum said on the call. “We believe that our brand, the investment banking capabilities and our research will make us a firm of choice for many of these advisers.”

He added that the bank understands that “these are really good teams with high-quality advisers who have choices.”

New York-based JPMorgan has been public about its desire to recruit more financial advisers during annual investor days in recent years. The bank’s next investor day will be on May 22.

Pershing LLC, a division of the Bank of New York Mellon Corp., has acted as custodian for First Republic Bank’s wealth division. JPMorgan did not immediately respond to request for comment on the future of the wealth management setup.

The FDIC took control of First Republic on Monday after more than a month of uncertainty following increased scrutiny of the bank’s uninsured deposits and exposure to low-interest-rate loans in the wake of March banking failures at Silicon Valley Bank and Signature Bank. First Republic reported more than $100 billion in deposits flowing out of the bank in the year’s first quarter.

JPMorgan Chase is not assuming First Republic’s corporate debt or preferred stock, according to the announcement.

CFO Barnum said on the call that First Republic service platforms and technology, as well as some branches in key locations, will be moved over to JPMorgan’s infrastructure over time.