It Was a Tough Year for Almost Every Bank Not Named JPMorgan

More than a decade after regulators vowed to tame the risks of too-big-to-fail banks, White House officials were on a call. Why, one attendee asked, was JPMorgan Chase & Co. allowed to buy First Republic Bank that morning in a government-led auction?

The answer came, flatly, from Treasury Secretary Janet Yellen: They had the highest bid.

After a year marred by the biggest US bank failures since the 2008 financial crisis, the nation’s largest lender is on familiar footing — scooping up a weakened rival, reeling in its clients and minting record profits along the way.

Yet for most of the industry, 2023 was bleak. In the first half, dozens of regional lenders swooned — and some collapsed — as rising interest rates slashed the value of assets on their books, saddling US banks with $684 billion of unrealized losses. Many firms have since spent heavily to keep depositors from leaving. Some started raising the possibility of defaults on commercial real estate loans. Bond-rating firms have downgraded banks in batches.

As all that trouble started spilling into view in March, nervous depositors showed up at JPMorgan with more than $50 billion. The firm’s executives raised expectations for net interest income – the difference between what a bank earns on loans and what it pays out to savers – a whopping four times throughout the year, eventually pulling in so much that the managers have taken to warning that it’s “over-earning.”