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First Republic Bank has been active in Greater Boston’s commercial real estate industry as a lender of small- and medium-sized developments, a provider of business accounts for local developers and mortgage lender for homebuyers.
But in the wake of JPMorgan Chase’s $10.6 billion acquisition of the now-failed lender, local real estate executives say First Republic filled roles in the industry ecosystem that will be hard to replace.
“They were a great resource for a lot of our [buyers] at some of our properties in East Boston,” said Brad Cangiamila, founder and principal of Wellesley-based multifamily developer Crest City Capital. “They have amazing [mortgage] programs that helped us get to the finish line. With interest rates rising, we are sad to see them go.”
According to data compiled by The Warren Group, publisher of Banker & Tradesman, First Republic ranked second among Massachusetts’ residential mortgage lenders in 2022 and 2021. But the bank dominated the market for luxury-oriented residential jumbo loans in Greater Boston’s urban core.
“They were very competitive compared to other traditional banks to get the financing done,” Cangiamila said.
With $1.75 billion in residential purchase mortgages issued last year in Massachusetts, First Republic comprised 9 percent of bank lending volume.
What First Republic Leaves Behind
- First Republic dominated Boston’s luxury real estate scene. Now even luxury buyers could face tighter credit conditions.
- JPMorgan Chase wants to keep much of First Republic’s wealth business – but not its low-cost pricing on jumbo loans.
- First Republic’s local impact by the numbers.
The bank also has been active in commercial acquisition loans, lending $81.1 million for 26 deals last year.
“There certainly should be an opportunity for other folks to step in,” said Ted Sidel, founder and principal at Boston-based commercial mortgage advisor EagleBridge Capital. “There certainly is an opportunity for the middle-market community banks to pick up [First Republic] clients, because I don’t think JPMorgan is going to do anything along the same lines of being a community relationship lender. They are looking for bigger stuff.”
That will create opportunities for lenders such as Cambridge Savings Bank, Brookline Bank, Cambridge Trust, Middlesex Bank and Needham Bank to pick up market share in the $2 million- to $40 million-transaction part of the commercial lending market, Sidel said.
Developers such as Boston-based HYM Investment Group have used First Republic’s cash management services in recent years, which provided a high degree of personalized service, HYM Managing Director Thomas O’Brien said.
Clients now are following the transition and what it means for key local personnel.
“The bank employees for the most part will stay and the bank will operate as an entity under the umbrella of JPMorgan, so that could be good for people as it plays out,” O’Brien said.
While First Republic wasn’t active in construction lending for major developments, it has provided financing for local neighborhood-scale housing projects.
Along with business and personal accounts, Cambridge-based developer Urban Spaces received financing from First Republic for 14 income-restricted condominiums and single-family homes that it’s developing through Boston’s scattered sites disposition program.
“It’s unfortunate that they are no longer going to be on the scene, but there are five to 10 mid-sized banks that work with companies like ours, doing mid-sized projects,” Urban Spaces CEO Paul Ognibene said. “There’s still going to be plenty of lenders, and plenty of competition and capacity.”
