'Great Deal For JPMorgan': Bank Analysts Weigh In On First Republic Acquisition

JPMorgan Chase & Co JPM shares gained 2.9% Monday morning after the bank acquired the deposits and a "substantial majority of assets" from First Republic Bank FRC.

First Republic is the latest victim of the U.S. regional banking crisis that has also taken down Silvergate, Silicon Valley Bank and Signature Bank. Several analysts and experts are now weighing in on the First Republic deal and the stability of the banking sector on Monday.

The Federal Deposit Insurance Corporation (FDIC) seized First Republic and completed an auction for the bank's assets over the weekend. As part of the deal, the FDIC will share losses on mortgages and commercial loans that JPMorgan took on, and the FDIC will also provide a $50 billion credit line to JPMorgan. JPMorgan is taking on about $92 billion in deposits, $173 billion in loans and $30 billion in securities.

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

Valuable Assets: Bank of America analyst Ebrahim Poonawala said Monday that the First Republic buyout is bullish for JPMorgan and for bank sector investor sentiment in general.

"For JPM, FRC adds an army of private bankers (and high net worth client relationships) on the US West and East coasts, providing a boost to JPM’s private bank strategy," Poonawala said.

In addition, Poonawala said he believes there will likely be no other bank seizures and forced sales for the time being.

"We believe the FRC sale should likely end forced sales of banks due to deposit flight," he said.

Bank of America has a Buy rating and $158 price target for JPMorgan.

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UBS analyst Erika Najarian said Monday that JPMorgan's acquisition will calm fears of banking contagion.

"This deal does not change the rates, recession, and regulatory headwinds that regional banks are facing. But, we think this elegant solution should lay to rest outstanding investor concerns on liquidity," Najarian said.

Not Like 2008: CFRA analyst Kenneth Leon is also bullish on JPMorgan's First Republic assets.

"Unlike JPM's acquisitions of Bear Stearns and Washington Mutual in 2008, JPM says it is buying a 'clean bank' from the FDIC," Leon says.

"JPM conservatively estimates that there is $500M of earnings accretion from the purchase of the closed bank."

CFRA has a Buy rating and $160 price target for JPMorgan.

The Wall Street analysts have echoed the bullish sentiment CNBC's Jim Cramer had for JPMorgan on Monday morning, calling the transaction a "great deal for JPMorgan."

Benzinga's Take: Experts seem to unanimously believe JPMorgan got a good deal for the First Republic assets it acquired, and it seems like the FDIC is stepping up to provide all the liquidity JPMorgan would ever need to manage any risks associated with the deal. It's easy to see why JPMorgan shares are trading higher on the news on Monday, and this deal should boost the bank's earnings upside in coming years.

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