Federal regulators have seized First Republic Bank and sold it to JPMorgan Chase Bank in a deal aimed at quelling renewed weakness in the nation’s banking industry.

In a statement issued early Monday, the Federal Deposit Insurance Corp. said that all depositors of First Republic Bank will become depositors of JPMorgan and will have full access to their deposits.

The deal involved a “highly competitive bidding process,” the FDIC said in its statement, but it did not say what JPMorgan is paying to purchase First Republic.

Under the deal, JPMorgan acquires “substantially all” First Republic assets and agrees to assume responsibility for all of its deposits, including those above the federal insurance limit of $250,000 per account. First Republic had about $229.1 billion in assets and $103.9 billion in deposits.

JPMorgan personnel are now reaching out to First Republic customers, CEO Jamie Dimon said.

Federal regulators approached JPMorgan about bidding on First Republic’s assets, said Jeremy Barnum, JPMorgan’s chief financial officer. The bank “did not seek out this deal,” Barnum told reporters Monday.

Dimon reiterated that the broader banking system was sound and said the deal would stabilize the system after the country’s third bank failure in two months. Still, Dimon acknowledged that as interest rates continue to rise, the economy is not immune to consequences or stress.

“Hopefully people will be properly prepared for it,” Dimon said.

In March, JP Morgan was one of the banks that put billions of dollars into beleaguered First Republic, as regulators and the industry scrambled to contain a crisis that had led to the failures of Silicon Valley Bank and Signature Bank. Barnum said the ultimate demise of First Republic wasn’t a sign that that effort failed. Rather, it helped buy time “when time was needed.”

JP Morgan is not assuming First Republic’s corporate debt or preferred stock, it said in a statement.

First Republic’s failure is expected to cost the FDIC about $13 billion, the agency said. The money will come from the FDIC’s deposit insurance fund, which insured banks pay into every quarter.

First Republic’s 84 offices in eight states will reopen as branches of JPMorgan, and depositors will be able to access all of their money when they open Monday.

The closure and sale of First Republic comes seven weeks after the abrupt failure of Silicon Valley Bank in California prompted an extraordinary federal rescue effort aimed at averting a wider financial crisis.

Unlike SVB, which failed in a matter of days, First Republic has been wobbling for weeks. The delay gave regulators and industry executives time to evaluate the bank and prepare for its demise.

In recent weeks, the bank hemorrhaged more than $100 billion in deposits. As investors became more sensitive to banking risks, shares of First Republic lost 97 percent of their value.

“Normally, regulators don’t react to stock prices. But this one fell so precipitously. It raised public concern and encouraged regulators to act to preserve public confidence,” said John Popeo, a partner at the Gallatin Group, a financial consultancy, and a former FDIC attorney.

After the exodus of deposits, the bank became “a zombie institution,” he added.

Like SVB, First Republic blundered into trouble as the Fed began raising interest rates almost 14 months ago. It invested in long-term assets, such as home mortgages and government securities, when rates were low.

Those now earn the bank a return of about 3 percent, even as it is paying around 5 percent to obtain fresh funds for its operations from the Fed and the Federal Home Loan Bank.

“Both of them essentially committed financial suicide by putting all these fixed-rate assets on their books and exposing themselves to a rising interest rate environment,” said Bert Ely, a banking consultant in Alexandria, Va.

Like the failure of SVB and Signature Bank of New York, First Republic’s collapse is likely to raise questions about the performance of federal regulators. On Friday, reports from the Fed and the FDIC blamed bank executives in both cases for mismanaging their operations and said federal supervisors had been lax.

Among the attractions for JPMorgan in acquiring First Republic is the failed bank’s wealth management business, with $289.5 billion in assets. That unit, which provides investment services for affluent clients, produced $223 million in fee revenue during the first quarter.

Continued banking upheaval poses a dilemma for the Federal Reserve. The central bank has been raising interest rates for more than a year, aiming to slow the economy and curb inflation. The fight against rising prices is not yet won, but higher rates are causing cracks to appear in the banking system.

“A lot depends on what happens with interest rate policy,” Ely said. “The Fed is facing a real conflict in this because inflation pressures are still there. And knocking down inflation is more important to the Fed.”

Bank borrowings from the Fed’s discount window and a new loan program it established as part of the SVB shutdown rose last week to $155 billion from $144 billion the week before, an indicator that some banks remain under stress.

Investors expect the Fed to raise rates at least once more at its May meeting this week, probably by a quarter of a percentage point.

Trouble in the nation’s banks could hurt the economy. Amid a trio of recent bank failures, loan officers could grow skittish about taking risks. Fewer loans would make it harder for companies to expand and hire, slowing the economy’s momentum at a time when Fed economists anticipate a recession later this year.

Small-business owners say it is getting harder to obtain credit. The National Federation of Independent Business gauge of loan availability is at its tightest level in roughly a decade. Overall, banks reported a total of $2.8 trillion in commercial and industrial loans as of April 19, down only fractionally from the prior week, according to the Federal Reserve.

“Lending is somewhat weaker than before the banking sector turmoil in March, but we haven’t seen a pure credit crunch,” said Gregory Daco, chief economist at EY-Parthenon. “Banks are still lending, but they are exercising more discretion in terms of their loans.”

All banks with more than $50 billion in assets are required to file with the FDIC a “resolution plan” designed to provide insight into how the institution could be wound down in the event it failed.

In its most recent plan, submitted at the end of last year, First Republic said that “its focused business model, uncomplicated structure and conservative market share” would make it easy to wind down in a crisis.

“First Republic believes that a resolution of the Bank by the FDIC would not require the use of any extraordinary government support and would substantially mitigate the risk that the failure of the Bank could have a serious adverse impact on the financial stability of the United States,” the bank said in the December 2022 document.