Republic First Bank Closed by Pennsylvania Regulators

In a significant development, Pennsylvania regulators have taken action to close Republic First Bank, marking the first bank failure in the United States this year. The Federal Deposit Insurance Corporation (FDIC) stepped in as the receiver following the decision by the Pennsylvania Department of Banking and Securities.

To safeguard depositors, an agreement was reached for Fulton Bank, National Association of Lancaster, Pennsylvania to acquire a substantial portion of Republic Bank’s deposits and assets.

Republic Bank, headquartered in Philadelphia, boasted approximately $6 billion in total assets and $4 billion in total deposits as of January. While sizable, Republic Bank’s closure is relatively smaller compared to the regional bank failures seen last year, notably Silicon Valley Bank’s collapse with assets totaling around $209 billion.

With this transition, Republic Bank’s 32 branches spread across New Jersey, Pennsylvania, and New York will reopen under the Fulton Bank banner, either on Saturday or Monday depending on regular business hours.

Customers of Republic Bank will smoothly transition to becoming depositors of Fulton Bank, with the FDIC ensuring deposit insurance coverage of up to $250,000 per depositor.

Earlier reports during the week hinted at the FDIC actively seeking buyers for Republic Bank, sparking speculation about its future.

It’s essential to distinguish Republic First Bank from First Republic Bank, a separate entity based in San Francisco, which faced closure in May 2023, with most of its assets acquired by JPMorgan Chase.

The timing of Republic Bank’s closure adds to the challenges confronting regional banks, especially amidst the impact of elevated interest rates on the credit-dependent industry. The collapse of Silicon Valley Bank last year raised broader concerns, with subsequent failures following suit. In total, the FDIC recorded five bank failures in 2023.

The recent volatility experienced by New York Community Bank underscores the pressures faced by regional lenders, highlighted by customers withdrawing funds following revelations of “material weakness” in the company’s controls.

In March, the bank secured a lifeline of $1 billion in equity investment from investors, including Liberty Strategic Capital, led by former Treasury Secretary Steven Mnuchin.

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