Good morning, ladies and gentlemen. Welcome to the JPMorgan Chase's Conference Call. This call is being recorded. Your line will be muted for the duration of the call. We will now go to the live presentation. Please stand by. At this time, I would like to turn the call over to JPMorgan Chase's Chairman and CEO, Jamie Dimon, and Chief Financial Officer, Jeremy Barnum. Mr. Barnum, please go ahead. Thanks, operator. Good morning, everyone. The presentation is available on our website, and please refer to the disclaimer in the back. Thank you for joining. On this morning's call, we will cover the transaction we closed overnight for assets and liabilities of First Republic Bank. I'll keep my prepared remarks relatively brief so we can get to questions right away. Starting on page one, we always talk about how our fortress balance sheet and consistent operating model allows us to invest through cycles. The overwhelming majority of these investments are organic initiatives. You will hear details about many of them at our Investor Day later this month. Of course, it applies just as much to inorganic opportunities such as this transaction. The key transaction details on page two. We have acquired substantially all of the assets and assumed certain liabilities of First Republic Bank from the FDIC, including approximately $173 billion of loans, $30 billion of securities, $92 billion of deposits, which includes the $30 billion from large U.S. banks, and $28 billion of FHLB advances. We will make a payment of $2.6 billion to the FDIC. We are not assuming First Republic's subordinated debt or preferred stock. The FDIC has provided the traditional 80% loss share with respect to the substantial majority of acquired loans, as is typical in a receivership transaction. We will be repaying the $25 billion of deposits from large U.S. banks. The deal also includes a $50 billion, five-year fixed rate funding facility from the FDIC, which helps manage the ALM profile of the transaction as well as the liquidity consumption. In terms of integration, we have received all necessary regulatory approvals and this transaction has closed. First Republic branches and offices will open today and operate normally. First Republic clients can bank as usual and feel confident that their deposits are backed by the strength and security of JPMorgan Chase. I should pause here for a second to address First Republic employees. They are a critical part of First Republic's well-known value proposition of outstanding customer service, and we are committed to treating them with respect, care, and transparency. In addition, in connection with any job losses, we would emphasize that in the normal course, JPMorgan Chase hires tens of thousands of people in the United States each and every year, which means that there will be many opportunities for career redeployment. Moving to page three, which summarizes the financial impact of the transaction. We expect the transaction will generate a one-time gain at closing of $2.6 billion post-tax. Importantly, this does not include total restructuring costs of approximately $2 billion post-tax, which we expect to incur over the course of 2023 and 2024. Accounting aside, on a net basis, the gain is quite modest. It's worth noting that the loss sharing agreement reduces the risk weighting on the covered loans to an average of about 25%, which significantly contributes to the capital efficiency of the deal. Touching on a few other points, the transaction is modestly accretive to EPS, and we expect to generate more than $500 million of incremental net income per year, not including the one-time gain or restructuring costs. It is also accretive to tangible book value per share and has an IRR of over 20%. The net of the day one gain and the corresponding RWA increase will reduce our CT1 ratio by approximately 40 basis points. Therefore, our pro forma ratio built comfortably above current requirements and consistent with our first quarter 2024 target of 13.5%. Turning to page four for the transaction rationale. As you know, the FDIC invited us, along with a number of other banks, to participate in a competitive bid process. We did not seek out this deal, but it does have financial benefits, as well as enhancing our market positions and accelerating some of our key growth opportunities, particularly in wealth management. We are happy that our financial strength and capabilities enabled us to participate in a process involving multiple bidders that resulted in a rapid and orderly resolution without the use of the systemic risk exceptions. Page five, you'll see the branch map. The branches we are acquiring from First Republic are in attractive locations and affluent markets, which is an opportunity to accelerate our wealth strategy. Moving to the due diligence and the integration plan on page six. After the data room opened, a large team of professionals representing all business and functional areas performed a comprehensive review of the data, led by senior management. In terms of integration, clients will gain access to our leading capabilities, and certain First Republic branches will be converted into new JP Morgan Wealth centers. Over time, we will be converting First Republic's operations and platforms to Chase and JP Morgan brands and technology platforms. To wrap up on page 7, we are glad to have been able to contribute to the rapid and orderly resolution of First Republic Bank. This transaction is attractive for our shareholders, both from a financial perspective and for the opportunities it presents for our franchises, and we look forward to welcoming First Republic clients and employees to JPMorgan Chase. I want to make a correction here. I think I misspoke. The cash payment is $10.6 billion, not $2.6 billion. With that, we will take any questions. Operator, please open the line. Please stand by. For the first question, it's coming from the line of Steve Chubak from Wolfe Research. You may proceed. Hey, good morning. Morning. Congrats on the deal. You noted, Jeremy, $500 million boost to earnings from the acquisition. You know, FRC generated close to $1 billion of earnings annualized in the most recent quarter. Your funding base is admittedly much lower cost. Just trying to understand why the accretion isn't greater. Any help you can provide just to quantify the benefit in terms of funding or interest expense savings versus legacy First Republic? Yeah, good question, Steve. I would say we're just generally trying to be a bit conservative. Obviously, you know, there are open questions about deposit retention. We are very eager. We're gonna fight hard to keep all the clients. We welcome any clients who left to come back. You know, this is an uncertain situation, and we wanna be a bit conservative. Understood. Maybe just for my follow-up on the because you alluded to deposit attrition. What attrition assumptions are you contemplating for First Republic, whether it's loans, deposits, advisors, as part of the accretion analysis? What expense synergies can be realized just given the strong footprint overlap in terms of wealth deposit coverage that you alluded to? Steve, maybe I'll start with the wealth advisors question. Because not surprisingly, we've had a number of advisor teams from First Republic reach out on an unsolicited basis over the past several weeks who are interested in joining JP Morgan, which, as a starting point, we think is encouraging from the retention perspective. Furthermore, there are still nearly 150 advisors with the firm. We believe that our brand, the investment platform, the banking capabilities, and our research can make us a firm of choice for many of these advisors. We think JP Morgan is a great place for advisors to grow their practice and stay for the rest of their careers. We do understand that these are really good teams of high-quality advisors who have choices, so your question about attrition is well-stated, and we're really looking forward to discussing everything we have to offer when we meet with them. I think you had a few other questions about what I would call general transaction modeling assumptions about attrition and expense synergies and so on. What I would say is that generally we've tried to be conservative, and we'll probably be giving you some more updates on that both at Investor Day and on subsequent earnings calls. All right. Looking forward to that update, Jeremy. Thanks so much for taking my questions. Yep. Next, we'll go to the line of Erika Najarian from UBS. You may proceed. Yes, thank you. Jeremy, my first question is, you know, how much of the loss share agreement, you know, is contemplated in the CET1 impact at close? You know, is there anything else other than the risk-weighted assets, you know, going down to 25% in terms of the loss share agreement impact? And assuming that most of the marks are interest rate related, how are you going to share that net interest income purchase accounting accretion from the FDIC? Or how would that work going forward? A lot of technical details in there, Erika, about loss share, which is, to be fair, complicated stuff and can be a little bit hard to understand. If we need to follow up, we can do that offline. What I would say broadly is that given the nature of the portfolio in question, I think First Republic is very well known for very good credit discipline. As you point out, these are primarily rate marks. Therefore, the benefit of the loss share really is the sort of enhancement to the RWA risk weighting, which in turn is what makes these otherwise generally not very high returning assets, in other words, prime jumbo mortgages primarily, actually quite attractive from a returns perspective. The CET1 numbers, you know, fully incorporate the expected risk weighting of the RWA, and we'll leave it at that, I think. Got it. If Jamie is in the room, I just wanted to ask, I know you mentioned it on the media call, but just in case your investors weren't on that. You know, is this sort of the end of the more acute liquidity issues? In other words, you know, do you expect the resolution of First Republic to sort of be the big signpost that the acute liquidity issues that the industry suffered in March should be mostly behind the industry? Well, you know, no crystal ball is perfect, but yes, I think the banking system is very stable. You guys have reported already on tons of regional banks who actually had good results, very modest outflow. A lot of the deposit outflow is because of Quantitative Tightening. It wasn't because people are having runs. There are only so many banks are offside this way, and I think this is, you know, there may be another smaller one, but this pretty much resolves them all. This part of the crisis is over. That does not. You know, down the road, there are, you know, rates going way up, real estate, recession, that's a whole different issue. For now, everyone should just take a deep breath. Thank you. We'll go to the line of Gerard Cassidy from RBC Capital Markets. You may proceed. Thank you. Good morning, Jeremy. Morning, Gerard. Jeremy, and maybe Jamie as well. Obviously, you guys have experience in buying failed institutions. Washington Mutual, obviously, was the big one back in 2008, 2009. I know this is very different than Washington Mutual. Of course, you bought Bear Stearns in a distressed acquisition. Can you share with us what are the risks that you have identified based on your experience in doing those deals that you really have to focus in on to make this deal as good as it looks on paper? you know, we're leaving behind a lot of things. You're basically getting a very clean bank in the most clean way you can get it. That does not mean there's no risk. It just means you have a very clean bank in the cleanest way you can get it that didn't have those problems. Of course, you know, we didn't have the mortgage crisis that, you know, sitting on top of Bear Stearns and WaMu, et cetera. We feel pretty good about it. That doesn't mean that something doesn't pop its ugly head up down the road. Very good. On the assumptions the deposits you're assuming, do you guys get to reprice those deposits from the get-go, or do you have to wait if there are term deposits, do you have to wait until they mature and then you reprice them? A bunch of nuances in there, Gerard. One set of issues is system integration. Obviously any term deposits, any CDs, anything with a contractual maturity remains that way. I think, you know, the reprice experience will blend over time into the rest of our deposit franchise is what I would say. But it's gonna evolve, I think, over the next. Great. Thank you, guys. Next, we'll go to the line of Ebrahim Poonawala from Bank of America. You may proceed. Good morning. Jeremy, if I could follow up just in terms of the loan book. If you can help us, what's gonna be the yield of these loans that are coming on when you mark-to-market? Just trying to understand the NI contribution tied to the loan and the securities book as we go forward and back into your $500 million net income map. Yeah, good question, Ebrahim. I guess in simple terms, I would just say as part of purchase accounting, all this stuff gets fair valued. You can just kind of look at the screen, mark these things to market and assume the associated yield. Got it. I guess one just separate question, given the amount of time you had to spend with the regulators through this whole FRC transaction, it does feel like the industry is in need of consolidation. Would love to hear, Jamie, your thoughts, or Jamie, your comments around do you think the regulators are prepared for allowing some of the regional banks to consolidate and become a market solution if we get into more stress over the coming months and quarters? Yeah. I would say we've been very clear, you know, we're hoping for an open bank solution here. We support and want community banks and regional banks. You need big banks too, and, you know, to do the type of business we do around the world for our larger clients. Banks will consolidate. You're gonna have all of that taking place. You should ask the bank regulators what their real view is of consolidation. Got it. Thank you. Next, we'll go to the line of Mike Mayo from Wells Fargo Securities. You may proceed. Hi. I have just one specific question. What is the rate on the five-year loan from the FDIC? Mike, I'd rather not disclose the specific rate. It's at market financing is what I would say. Fixed rate. Okay. That's all part of the $500 million accretion. The $500 million accretion is immediate accretion. It assumes zero synergies. Is that correct? The way we talked about it is sort of run rate $500 million-plus excluding the bargain purchase gain day one, as well as the restructuring costs that we expect to incur over the next couple of years. Once all that's worked its way through the income statement, that's when that sort of $500+ kicks in. Jamie, just I guess for the history books, you know, you were reported in the media that you were kind of the ringleader to help stabilize First Republic, help move the industry past this Phase. It didn't play out maybe exactly as planned, but certainly the loss to the FDIC is less than I think almost anybody had expected. No systemic risk exception, anything like that. Just as you pull the lens back, how do you think about JPMorgan's involvement? How do you think about this resolution? How do you think about kind of the way things played out and the way things should have played out? Yeah. I mean, look, I was just the first phone call. All of those banks were deeply involved in trying to figure out what we can do to stem the run and the tide, slow things down for First Republic to give them chance to seek out a open bank. We didn't know at the time whether that would be possible. Some thought yes, and some thought no, but we wanted to give them the time. It did, in fact, calm things down and stop the run. It did give them time to look at it, and they couldn't get there. I think Jeremy's made the point that this is actually a very good outcome for everyone because this is how the system was meant to work. No systemic, SRE, systemic, whatever you call that. It was put up for bid. It was competitive bidding. Cheapest cost to the DIF, which the FDIC said will be something north of $13 billion. Remember, and everyone should remember that DIF is paid for by the banks. I think you're never gonna have no bank failure. If this is how these things work in the future, that's a rather good thing. You know, all in all, okay, and hopefully this, our mini bank crisis is over. One last quick follow-up. In terms of you said this part of the crisis is over, have you seen that in the deposit flows? Like for a while, you got an influx of deposits. Is that still stable like it was? No, I think, you know, really, I was reading all the regional bank reports from you and other, some of the analysts out there, they're all mostly, you know, some of the banks are down 2% or 3%. A lot had to do with QT. They were not having runs. The runs were really limited to the people who had too big uninsured deposits and money that can move very quickly and stuff like that. Yeah, I think that's over, you know. Obviously, there's always future issues, but I think that's mostly over. All right. Thank you. Next, we'll go to the line of Betsy Graseck from Morgan Stanley. Please go ahead. Hi, good morning. How are you? Can you hear me okay? We can hear you fine. Okay, great. A couple of questions. One, when I think about First Republic, the loan book, it feels to me like a loan book that is, you know, priced differently from how you would go to market for those types of loans. I'm talking specifically around, you know, the mortgage and high net worth loans. And I'm trying to think through how to, you know, model this out. Should I expect that the loan portfolio that you have is, you know, more of a melting ice cube that you would be, you know, replacing with your own lending profile on your own standards and yields, et cetera, over time, and that would be, you know, maybe a multi-year fade and then rebuild? Part of the reason for asking the question is the $500 million net income accretion seemed a little light, and I'm trying to think through how to, how to get there. Thanks. Look, you know, I'm not a fan of putting mortgages on the balance sheet. These are pristine loans, so keep that in mind. Largely high net worth, jumbo high net worth loans. The loans themselves are really creditworthy. Being marked, they're obviously gonna have a much higher return going forward. But we're not gonna be putting a lot of jumbo, you know, cheap jumbo mortgage loans on our books. We've already incorporated all of our numbers, you know, potential runoff. You know, First Republic did a great job at service. You know, being in the low-cost lending business is not what JPMorgan does. The follow-up on this is, when I'm thinking through the IRRs, what are you thinking about with regard to how you're gonna take this client set and expand what business they're doing, you know, with you, the former FRC? You're not gonna keep the First Republic name, are you? We're not. Like I said, I think, you know, they did do a lot of, you know, mortgages very quickly for people, and the people are very happy with it. Remember, they also had extraordinary client service, good wealth management, excellent branch location. You're dealing with high net worth clients, they have a very good model, but that one piece of it, I'm fond of. It's all built into our forecast going forward. Okay. All right. Thank you so much. We can't. We assume a little bit of attrition. We assume a bunch of little stuff and, but making very large, cheap mortgage loans will not happen going forward. This is a multi-year repositioning of the client activity with the folks that you are bringing in from First Republic. Is that a fair way of thinking about it? Yeah. All right. This is, you know, they. You know, my experience has always been when you do an acquisition, there are some things the other side does really well, and you should learn from that. This gives us a kind of an opportunity to look at how we deal with high net worth clients. You know, we have Chase Private Client, we have Chase Wealth Management, we have JPMorgan Advisors, and how we wanna fit them in in a way that's great for them and their clients. We hope to learn a lot from them. Betsy, there's also like a Northern California nexus, too, you know, an interesting opportunity to. A business banking nexus. They do a lot of good business banking relationships. You know, we like that business. You know, at the risk of pointing out the obvious, this happened, you know, relatively quickly. This is not the outcome that we necessarily planned for or expected, although we do contingency planning. There are a bunch of day two issues about strategy and client retention and all that stuff that we're gonna be working through, clearly. Yeah. Jennifer Piepszak, Marianne Lake, Ben Walter, Kristin Lemkau are on a plane as of six or seven o'clock this morning to go out there to meet the folks, do some town halls, learn a lot. There'll be a lot more to report down the road. All right. Thanks for your time. Appreciate it. Next, we'll go to the line of Glenn Schorr from Evercore ISI. You may proceed. Hi. First, a quick follow-up on the advisor base. FRC had attracted a bunch of advisors over the last couple of years on some of these deals. I don't know if you can share with us how much of them are on deals, but my bigger question is, do the deals stay in place? Do they have change of controls? Sometimes- They. I'm going- They all stay in place. Yes, they did deals. I'm not gonna give any. We should feel good then about the retention going forward. Even though your assumptions are conservative, I would assume that they wanna keep those deals, so. Yeah. It's over 50, so it's not. Yes, I think I'm gonna try to have a call to them myself later on today. They're very, as far as we know, very high quality, and we wanna keep all the high-quality people. Every deal I've ever been in, you know, everyone else is trying to hire these people at the same time. On the other hand, this is a great home for them. If you are an advisor and you're listening to me, we have the best research, best equity, best debt, best munis. We have concierge services. We take care of people. We've got excellent compensation plans. We're very steady. We got unbelievable banking products. We have unbelievable products for your business banking clients, your middle market clients, your corporate clients. We have huge capability we can bring to help them do a great job for their clients. If advisors are listening, I agree with all that except the second-best research. Just kidding. That's why I'm getting involved in that. The question for you. I find it interesting that the deposit cap wasn't a function in this, and there seemed to be plenty of other bidders or at least a few other bidders that were not over the deposit cap. Was it truly about minimizing the cost to the DIF? Just curious. The FDIC is truly about minimizing the cost of the DIF. The United States government is truly about having systemic problems. The OCC decides about the cap. The cap, I think, has always been given up in deals like this for the sake of the system. Okay. Thank you very much. For our final question, we'll go to the line of Scott Siefers from Piper Sandler. You may proceed. Thank you. Good morning, everybody. Jamie, can you maybe walk through just at a top level, you don't have to get too deep in the weeds, but how you arrive at the $2.6 billion after-tax gain. It can just be a little difficult from the outside to get from the sort of the implied asset discount down to the tangible book value impact. Sure. I mean, and we can definitely do this for you offline, but broadly, it's like net asset value, core deposit intangible, you know, associated deferred tax liabilities. It's kind of EU. There's one nuance that might be a little confusing, which is the fact that our $5 billion deposit gets eliminated in consolidation. When you add that to your mental math using whatever that page is in the presentation, I think you'll get there pretty easily. Okay. Perfect. Thank you very much. Then, I guess, Jamie, while we've got you know, certainly, you know, hear what you're saying on the strength of the industry. You know, we do have a situation where over the course of eight weeks, like, three of the top 30 banks in the country failed. You know, deposits flowed to you all and a handful of the other largest banks and to look for the sort of solution to one of the biggest ones, you know, the government looked to you guys. Do you think as we look forward, sort of the rest of the industry is gonna have to be constructed more like a JPMorgan? You know, just higher capital, better liquidity, just sort of all around for people to have the same level of confidence, sort of uniformly across the industry. I, you know, I wrote in my Chairman's Letter, I think people should take a deep breath and be very, very thoughtful about changes. Obviously there should be some changes made about held to maturity, disclosure on interest rate exposure, uninsured deposit%, and held in A-HTM, et cetera. I think they should do that intelligently because what you wanna do is have a healthier, strong, and competitive regional bank and community bank system. If they don't do it intelligently, you'll make it much harder to be a community bank or regional bank, and you can do things that create a lot of security without creating additional unnecessary burden. That's obviously going to be up to the regulators. They already reported out some of the things they think about things. Okay. All right. Well, thank you very much. I appreciate it. Thank you. We have no further questions. Excellent. Thank you. Thank you. Thank you all for participating in today's conference. You may disconnect at this time, and have a great rest of your day.