Cramer Thinks JPMorgan May Be On The Moon But First Republic Shareholders 'Ain't Got Nothing' To Celebrate

Zinger Key Points
  • First Republic's depositors have found redemption with the FDIC takeover and subsequent sale to JPMorgan.
  • The biggest beneficiary of the adverse development is JPMorgan, which now has an no-risk, expanded presence.

First Republic Bank's FRC longtime supporter Jim Cramer chimed in on the bank's collapse and the ramification for different stakeholders.

What Happened: Hours after the Federal Deposit Insurance Corporation confirmed the shuttering of the San Franciso-based regional bank and the sale of its assets and deposits to JPMorgan Chase & Co. JPM, Cramer said, "Great deal for JP Morgan."

He may not be too far away from the truth. The terms of the deal showed that the big bank will recognize a post-tax gain of about $2.6 billion. The company also expects the deal to be modestly accretive to its earnings per share and help generate about $500 million in net income per share, excluding the post-tax gain or the $2 billion in post-tax restructuring costs expected over the course of 2023 and 2024.

JPMorgan said it will assume $92 billion in deposits, including $30 billion of large bank deposits, and acquire $173 billion of loans and about $30 billion of securities.

Incidentally, the FDIC and the bank have executed a loss-sharing agreement for the risky single-family residential mortgage and commercial loans.’

Reacting to the development, JPMorgan shares rose over 3% premarket.

See Also: Best Depression Stocks

Shareholders Shortshrifted: Cramer, who hosts Mad Money on CNBC, suggested shareholders are left in the lurch.

"First Republic shareholders? Ain’t got nothing for you!" he said.

In JPMorgan's press statement, the company said it is not assuming First Republic's corporate debt or preferred stock.

First Republic's shares have taken a big hit since the current banking crisis unfolded. The stock was trading north of $115 before early March when the trouble at the now-defunct Silicon Valley Bank came to light.

Since then, First Republic shares have been on a downhill, as it disclosed measures to shore up its liquidity, which signaled problems at the bank.

Amid rumors of a collapse, the stock fell 43.30% to $3.51 on Friday. In premarket trading on Monday, it plummeted 45.87% to $1.90, according to Benzinga Pro data.

Incidentally, in early March when the banking crisis was just starting to unfold, Cramer touted First Republic as a "very good bank."

Read Next: S&P 500 Primed To Cross 4,200 Today, Says Analyst — But Could A 700-Point Drop Be Coming?

Market News and Data brought to you by Benzinga APIs
Posted In: Analyst ColorEquitiesM&ANewsbank stocksBanking crisisJim Cramer
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!