Regulators took action late Friday to seize Republic First Bancorp, a troubled Philadelphia-based lender, marking the first U.S. bank failure of the year.
Republic First Bancorp, commonly known as Republic Bank, boasted approximately $4 billion in deposits as of January’s end, with assets totaling $6 billion, according to a statement from the Federal Deposit Insurance Corporation (FDIC).
The FDIC announced that Fulton Bank of Lancaster, Pa., would assume “substantially all” of Republic First’s deposits. This move effectively transfers Republic First’s 32 branches in Pennsylvania, New Jersey, and New York to Fulton Bank, with the branches set to reopen under Fulton Bank’s banner as soon as Saturday.
Established in 1988, Republic First Bancorp was smaller in scale compared to the midsize banks that faced collapse last year, such as First Republic Bank and Silicon Valley Bank, each boasting assets exceeding $200 billion. The FDIC anticipates that the failure will cost the Deposit Insurance Fund approximately $667 million.
This development unfolds against a backdrop of ongoing concerns about the health of regional banks. In a presentation for investors last July, Republic First indicated a decline in deposits and noted that its mortgage lending business had diminished in value due to rising interest rates.
The bank had formulated plans to exit the mortgage sector and pivot towards focusing on consumer deposits. However, its fortunes took a downturn when it was delisted by Nasdaq in August for failing to submit its annual report to the Securities and Exchange Commission. Additionally, a projected $35 million investment in the bank was scrapped this year, as reported by Banking Dive.
Feddie Strickland, a bank analyst at Janney Montgomery Scott, expressed his belief that Republic First’s failure was likely an isolated incident and reassured the public about the stability of the overall banking sector.
The seizure of Republic First Bancorp underscores the ongoing challenges facing regional banks, particularly amid economic uncertainties. While the failure of Republic First may be a cause for concern, analysts like Feddie Strickland emphasize the overall stability of the banking sector and the reliability of institutions like Fulton Bank to safeguard depositor interests. As regulatory authorities navigate these challenges, the focus remains on ensuring the resilience and integrity of the banking industry.
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