JPMorgan Chase (NYSE:JPM) has emerged as a stronger bank after its government-led First Republic buyout. From taking the lead in strategically solving FRC’s prior hiccups in March to becoming the owner of the now-failed bank, JPM has become even bigger with the possession of FRC’s $92 billion in deposits. The majority of them belong to wealthy clients that JPM’s CEO, Jamie Dimon, believes can be leveraged to expand its Wealth Management business.
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The acquisition of FRC brings along 229 financial advisers that will be added to JPM’s growing pool of advisers in the JPMorgan Advisors unit. This unit was formed with the acquisition of Bear Sterns during the 2008 financial crisis and has about 500 advisers on board. Having said that, JPM’s wealth management business still lags behind the likes of Morgan Stanley (NYSE:MS) and Bank of America (NYSE:BAC), which boast tens of thousands of advisers that manage clients’ wealth and earn a fee in exchange.
After acquiring FRC, JPM is now saddled with the task of seamlessly integrating FRC’s roughly 80 branches. It remains to be seen whether both of FRC’s clients and advisers will prefer sticking with the larger bank or turning to other smaller regional banks where they are accustomed to better quality and personalized services.
It is promising that Marianne Lake and Jennifer Piepszak, from JPMorgan’s Consumer and Community Banking units, respectively, will be handling the integration procedures. Both have worked for over two decades at JPM and are in line to inherit Dimon’s role in the future.
What is the Future of JPM Stock?
Post-acquisition announcement, on May 2, BMO Capital analyst James Fotheringham stated that the FRC deal is “only marginally accretive for JPM shareholders.” So, he raised his core EPS estimates by only 2% while also raising the price target to $170 (25% upside potential) from $169. Fotheringham has a Hold rating on JPM stock.
On TipRanks, JPM has a Moderate Buy consensus rating based on 14 Buys and five Hold ratings. Also, the average JPMorgan Chase price target of $160.72 implies 18.2% upside potential from current levels. Meanwhile, JPM stock has gained 2.2% so far this year.
