Republic First Bank
Regulators have taken action to close Republic First Bank, a regional financial institution operating in Pennsylvania, New Jersey, and New York.
On Friday, the Federal Deposit Insurance Corp. announced the seizure of the Philadelphia-based bank, known as Republic Bank, which boasted approximately $6 billion in assets and $4 billion in deposits as of January 31st.
Fulton Bank, headquartered in Lancaster, Pennsylvania, has agreed to take on the majority of the failed bank’s deposits and acquire nearly all of its assets, according to the agency.
The transition will see Republic Bank‘s 32 branches reopening as branches of Fulton Bank as early as Saturday. Depositors of Republic First Bank will have access to their funds via checks or ATMs starting Friday night, as confirmed by the FDIC.
The failure of the bank is anticipated to incur a cost of $667 million for the deposit insurance fund.
This lender marks the first FDIC-insured institution to fail in the U.S. this year. The previous bank failure, Citizens Bank, based in Sac City, Iowa, occurred in November.
Typically, in a robust economy, only four or five banks close each year.
However, rising interest rates and declining commercial real estate values, particularly for office buildings grappling with surging vacancy rates following the pandemic, have intensified financial risks for many regional and community banks. Outstanding loans backed by devalued properties present challenges for refinancing.
In the past month, an investor group including Steven Mnuchin, who served as U.S. Treasury secretary during the Trump administration, committed to injecting over $1 billion to rescue New York Community Bancorp. The bank has faced significant challenges due to weakness in commercial real estate and the integration struggles resulting from its acquisition of a distressed bank.
