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 U.S. 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 U.S. 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.”

That’s put JPMorgan on track for the biggest annual profit in the history of American banking.

Its earnings from the first nine months alone would rank as the company’s second-best year ever.

Analysts predict that by the end of this month, its annual net income will be 36% higher than last year – while the combined earnings of the next five largest banks rises about 1%.

JPMorgan’s stock has soared to a record, gaining 26% in 2023 and outpacing every major competitor.

The 24-member KBW Bank Index and 50-firm KBW Regional Banking Index are both down.

“There’s a certain level of frustration from other banks,” said Lee Raymond, the oil veteran who spent 33 years on JPMorgan’s board.

“When things kind of get in tough shape, it’s an opportunity for somebody like JPMorgan to acquire some things that they would like to acquire but aren’t in a position to.”

Raymond would know: He helped create the country’s largest oil company just before steering JPMorgan through its own massive deals.

When the Federal Deposit Insurance Corp. announced that JPMorgan won the auction for First Republic, it called the process “highly competitive” and noted that the bank, which Jamie Dimon has led for 18 years, offered the smallest hit to the agency’s main insurance fund.

Still, some regulators were uneasy with the outcome.