Chase Bank's branch facing Post Office Square in Boston's Financial District

Banker & Tradesman file photo

While JPMorgan Chase wants to retain much of the wealth management business it acquired following First Republic Bank’s failure, the bank does not plan to continue First Republic’s low-pricing model on jumbo mortgages.

“First Republic did a great job at service,” JPMorgan Chase CEO and Chairman Jamie Dimon said Monday in a call with analysts. “But being in the low-cost lending business is not what JPMorgan does.”

JPMorgan plans to convert all of First Republic’s operations and technology over time into the Chase and J.P. Morgan brands, the bank said in its investor presentation, and the bank will not retain the First Republic name.

First Republic’s wealth management division will become part of J.P. Morgan Advisors, and the bank does want to retain First Republic’s wealth management teams.

Jeremy Barnum, JPMorgan’s chief financial officer, said in response to an analyst’s question during Monday’s call that the bank in recent weeks had received unsolicited inquiries from a number of First Republic adviser teams about joining JPMorgan in recent weeks.

What First Republic Leaves Behind

“We believe that our brand, the investment platform, the banking capabilities and our research can make us the firm of choice for many of these advisers,” Barnum said. “And we think JPMorgan is a great place for advisers to grow their practice and stay for the rest of their careers.”

Barnum added that because of the quality of First Republic’s advisers, the bank could see some attrition as the teams look at other choices.

Dimon later confirmed in response to an analyst’s question that any deals First Republic had made to attract advisers in recent year years would remain in place. He added that the bank wanted to keep these high quality advisers.

“Every deal I’ve ever been in, everyone else is trying to hire these people at the same time,” Dimon said. “On the other hand, this is a great home for them.”

First Republic’s approach to providing jumbo mortgages quickly at low prices will not continue at JPMorgan. While pointing to the creditworthiness of First Republic’s mortgages, Dimon said he is “not a fan” of putting mortgages on the balance sheet.

“They had extraordinary client service, good wealth management, excellent branch and branch locations, so if you’re dealing with high-net-worth clients, they have a very good model,” Dimon said. He added: “But making very large, cheap mortgage loans will not happen going forward.”

JPMorgan to Ditch First Republic’s Low-Cost Jumbo Lending Model

by Diane McLaughlin time to read: 2 min