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Business Combinations
 9 Months Ended
Sep. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]  
Business Combinations Business combinations
On May 1, 2023, JPMorgan Chase acquired certain assets and assumed certain liabilities of First Republic Bank (the "First Republic acquisition") from the Federal Deposit Insurance Corporation (“FDIC”), as receiver. The acquisition resulted in a bargain purchase gain, which represents the excess of the estimated fair value of the net assets acquired above the purchase price.
The Firm has determined that this acquisition constitutes a business combination under U.S. GAAP. Accordingly, the initial recognition of the assets acquired and liabilities assumed were generally measured at their estimated fair values as of May 1, 2023. The determination of those fair values required management to make certain market-based assumptions about expected future cash flows, discount rates and other valuation inputs at the time of the acquisition. The Firm believes that the fair value estimates of the assets acquired and liabilities assumed provide a reasonable basis for determining the estimated bargain purchase gain.
The First Republic acquisition resulted in a preliminary estimated bargain purchase gain of $2.7 billion. The final bargain purchase gain of $2.9 billion reflects adjustments made during the one-year measurement period, as permitted by U.S. GAAP, to finalize management's fair value estimates for the assets acquired and liabilities assumed, including an increase of $103 million for the nine months ended September 30, 2024. Certain matters related to the final settlement remain outstanding between the Firm and the FDIC. Any subsequent adjustments will not impact the final bargain purchase gain and will be reflected in Other income.
Refer to Note 34 of JPMorgan Chase’s 2023 Form 10-K for further information on the First Republic acquisition.
The computation of the purchase price, the fair values of the assets acquired and liabilities assumed as part of the First Republic acquisition and the related bargain purchase gain are presented below, and reflects adjustments made during the measurement period to the acquisition-date fair value of the net assets acquired.
Fair value purchase
price allocation as of
May 1, 2023
(in millions)
Purchase price consideration
Amounts paid/due to the FDIC, net of cash acquired(a)
$13,555 
Purchase Money Note (at fair value)(b)
48,848 
Settlement of First Republic deposit and other related party transactions(c)
5,447 
Contingent consideration - Shared-loss agreements15 
Purchase price consideration$67,865 
Assets
Securities$30,285 
Loans153,242 
Core deposit and customer relationship intangibles1,455 
Indemnification assets - Shared-loss agreements675 
Accounts receivable and other assets(d)
6,740 
Total assets acquired$192,397 
Liabilities
Deposits$87,572 
FHLB advances27,919 
Lending-related commitments2,614 
Accounts payable and other liabilities(d)
2,792 
Deferred tax liabilities757 
Total liabilities assumed$121,654 
Fair value of net assets acquired$70,743 
Gain on acquisition, after income taxes$2,878 
(a)Net of cash acquired of $680 million, and including disputed amounts.
(b)As part of the consideration paid, JPMorgan Chase issued a five-year, $50 billion secured note to the FDIC (the "Purchase Money Note").
(c)Includes $447 million of securities financing transactions with First Republic Bank that were effectively settled on the acquisition date.
(d)Other assets include $1.2 billion in tax-oriented investments and $683 million of lease right-of-use assets. Other liabilities include the related tax-oriented investment liabilities of $669 million and lease liabilities of $748 million. Refer to Note 14 and Note 18 of JPMorgan Chase's 2023 Form 10-K for additional information.
Refer to JPMorgan Chase’s 2023 Form 10-K for a discussion of the Firm’s accounting policies and valuation methodologies for securities, loans, core deposits and customer relationship intangibles, shared-loss agreements and the related indemnification assets, deposits, Purchase Money Note, FHLB advances and lending-related commitments.
Loans
The following table presents the unpaid principal balance ("UPB") and fair values of the loans acquired as of May 1, 2023, and reflects adjustments made during the measurement period to the acquisition-date fair value of the loans acquired.
May 1, 2023
(in millions)UPBFair value
Residential real estate$106,240 $92,053 
Auto and other3,093 2,030 
Total consumer109,333 94,083 
Secured by real estate37,117 33,602 
Commercial & industrial4,332 3,932 
Other23,499 21,625 
Total wholesale64,948 59,159 
Total loans $174,281 $153,242 
Unaudited pro forma condensed combined financial information
The following table presents certain unaudited pro forma financial information for the three and nine months ended September 30, 2023 as if the First Republic acquisition had occurred on January 1, 2022, including recognition of the estimated bargain purchase gain of $2.8 billion and the provision for credit losses of $1.2 billion. Additional adjustments include the interest on the Purchase Money Note and the impact of amortizing and accreting certain estimated fair value adjustments related to intangible assets, loans and lending-related commitments.
The Firm expects to achieve operating cost savings and other business synergies resulting from the acquisition that are not reflected in the pro forma amounts. The pro forma information is not necessarily indicative of the historical results of operations had the acquisition occurred on January 1, 2022, nor is it indicative of the results of operations in future periods.
Three months ended September 30,Nine months ended September 30,
(in millions)20232023
Noninterest revenue$16,820 $51,480 
Net interest income22,726 66,808 
Net income12,902 39,500