Odeon Capital’s Dick Bove said JPMorgan Chase & Co.’s deal for failed lender First Republic Bank could prove to be the bank’s best acquisition in decades.
(Bloomberg) — Odeon Capital’s Dick Bove said JPMorgan Chase & Co.’s deal for failed lender First Republic Bank could prove to be the bank’s best acquisition in decades.
JPMorgan’s deal to snap up the San Francisco-based bank that catered to wealthy clients could earn the largest US lender $500 million to $1 billion-plus in net income annually, according to Bove. That potential drove the analyst to lift his rating on JPMorgan to buy from hold, as the acquisition will give the bank access to high-quality loans “with unusually low loan losses” and “an attractive wealth management business.”
JPMorgan shares rose 2.1% on Monday, the most in two weeks, in the wake of the deal for First Republic, making it the best performer in the KBW Bank Index. The firm will make a $10.6 billion payment to the Federal Deposit Insurance Corp., as it scooped up about $173 billion of First Republic’s loans, $30 billion of securities and $92 billion of deposits.
“Given its size, wealth, and management skills, JPMorgan was the best choice to eliminate the problem called First Republic,” Bove wrote in a note Monday. “The bank made this acquisition on a basis that appears to offer very rich rewards over an extended period of time.”
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