Regulators have shuttered Republic First Bank, a regional financial institution serving Pennsylvania, New Jersey, and New York. The closure, announced by the Federal Deposit Insurance Corp. (FDIC), comes as a significant development in the banking sector.
Republic Bank, based in Philadelphia and boasting approximately $6 billion in assets and $4 billion in deposits as of January 31, has been acquired by Fulton Bank, headquartered in Lancaster, Pennsylvania. Fulton Bank has agreed to absorb most of Republic Bank’s deposits and assets, ensuring the continuity of banking services for customers.
Following the closure, Republic Bank’s 32 branches will transition into Fulton Bank branches, effective as early as Saturday. Customers of Republic First Bank will be able to access their funds through checks or ATMs starting Friday night, according to the FDIC.
The closure of Republic First Bank is projected to incur a cost of $667 million to the deposit insurance fund. Notably, this marks the first FDIC-insured institution to fail in the United States in 2024. The last bank failure occurred in November with the closure of Citizens Bank, headquartered in Sac City, Iowa.
The banking industry has faced increased challenges amidst rising interest rates and declining commercial real estate values, particularly in the aftermath of the pandemic.
Regional and community banks, in particular, are grappling with the financial risks associated with outstanding loans backed by devalued properties, such as office buildings experiencing surging vacancy rates.
In an effort to address financial vulnerabilities, an investor group led by Steven Mnuchin, former U.S. Treasury secretary, recently committed over $1 billion to rescue New York Community Bancorp.
The move aims to mitigate the impact of weaknesses in commercial real estate and challenges stemming from the bank’s acquisition of a distressed institution.
The closure of Republic First Bank underscores the ongoing dynamics within the banking sector, highlighting the importance of financial stability and regulatory oversight in safeguarding the interests of depositors and ensuring the resilience of the banking system.