Republic First Bank: In a move to protect depositors, the Federal Deposit Insurance Corporation (FDIC) has appointed Fulton Bank, N.A. of Lancaster, Pennsylvania, to assume substantially all deposits and purchase most assets of the failed Republic First Bank, based in Philadelphia.
Table of Contents
Lancaster-based Fulton Bank announced the acceptance of transitioning all deposits and purchasing most assets of the failed Republic First Bank, based in Philadelphia, on April 26, as per an official release. The move comes after the Pennsylvania Department of Banking and Securities closed down Republic First Bank on April 25 and appointed the Federal Deposit Insurance Corporation (FDIC) as the receiver.
The Pennsylvania Department of Banking and Securities executed the seizure after Republic Bank ceased funding discussions with a group of investors. The FDIC announced that Fulton Bank, part of Fulton Financial Corp, would assume nearly all the bank’s deposits and purchase its assets to “protect depositors.”
As of January 31, 2024, Republic Bank reported approximately USD 6 billion in total assets and $4 billion in deposits. The FDIC estimated that the bank’s failure will cost its insurance fund about $667 million.
Republic Bank’s 32 branches across New Jersey, Pennsylvania, and New York are scheduled to reopen as Fulton Bank branches either on April 27 or April 29, depending on the location, the release further added.
Republic First Bank
Republic First, a small Pennsylvania lender doing business as Republic Bank, was seized Friday by regulators who sold most of its assets and liabilities to rival Fulton Bank.
It had only about $6 billion in assets across 32 branches in Pennsylvania, New York and New Jersey.
- Its equity value — the value of its assets minus the value of its liabilities — was $96 million at the end of 2023, but that number didn’t take into account $262 million in mark-to-market losses on its bond portfolio.
- An attempted $35 million rescue fell apart in March.
- The FDIC said its insurance fund is set to take a loss of $667 million on the deal.
Republic Bank failure not first in US
This incident marked yet another significant failure in the US regional banking landscape, following the collapses of Silicon Valley. Bank and Signature Bank in March 2023, and First Republic Bank in May of the same year.
Previously, Republic Bank had reached an agreement with an investor group that included notable figures such as veteran businessman George Norcross and high-profile attorney Philip Norcross. However, the arrangement fell through in February, leading the FDIC to resume its efforts to stabilize and sell the troubled bank, as first reported by the Wall Street Journal.
What will happen to Republic First Bank users?
Depositors of Republic Bank will become depositors of Fulton Bank so customers do not need to change their banking relationship to retain their deposit insurance coverage. Customers of Republic Bank should continue to use their existing branches until they receive notice from Fulton Bank that it has completed systems changes that will allow its branch offices to process their accounts as well, as per the official statement.
Customers with questions about Fulton Bank’s acquisition of Republic Bank may call the FDIC toll-free at 1-877-467-0178. The FDIC Call Center will be open this evening until 9 p.m. Eastern Time (ET) on 5aturday from 9:00 a.m. to 6:00 p.m. ET; on Sunday from noon to 6:00 p.m. ET; on Monday from 8:00 a.m to 8:00 p.m. ET; and thereafter from 9:00 a.m. to 5:00 p.m. ET. Interested parties may also visit the FDIC website, as per the official release.
The bottom line: Republic is small enough to fail, and none of its depositors are going to lose money, not even the ones with more than $250,000 in the bank. But its failure shows that the Fed’s rate hikes continue to hurt bank asset values.
