FDIC Seizes Republic First Bank in Philadelphia, Sells to Fulton Bank

The Federal Deposit Insurance Corporation (FDIC) has seized Republic First Bank, a Philadelphia-based regional bank, and sold it to Fulton Bank. Republic First Bank had around $6 billion in total assets and $4 billion in deposits as of January 31, 2024. This marks the first U.S. bank failure in 2024, following a series of regional bank collapses in 2022, including Silicon Valley Bank, Signature Bank, and First Republic Bank.

The FDIC said the 32 branches of Republic First Bank in New Jersey, Pennsylvania, and New York will reopen as Fulton Bank branches. Depositors of Republic Bank will become depositors of Fulton Bank, with FDIC deposit insurance coverage up to $250,000 per depositor. Customers can continue to use their existing banking services without interruption.

The Pennsylvania Department of Banking and Securities closed Republic First Bank on Friday and appointed the FDIC as receiver. "The FDIC estimates the cost to the Deposit Insurance Fund related to the failure of Republic Bank will be $667 million," the agency said in a statement.

Why this matters: The failure of Republic First Bank highlights the ongoing challenges facing the credit-dependent regional banking industry due to elevated interest rates. It emphasizes the potential vulnerabilities of smaller banks in the current economic environment, even as the overall banking sector remains stable.

Republic First Bancorp, the parent company of Republic Bank, had been struggling with higher costs and an inability to improve profitability, leading to job cuts and the exit of its mortgage origination business earlier this year. The bank's stock price had plummeted, and its shares were delisted from the Nasdaq, now trading over the counter. The FDIC's swift action in seizing and selling the bank to Fulton Bank ensures that depositors will have uninterrupted access to their funds and banking services.

Key Takeaways

• FDIC seized Republic First Bank, a $6B regional bank, and sold it to Fulton Bank.
• This marks the first U.S. bank failure in 2024, following regional bank collapses in 2022.
• Republic First Bank's 32 branches will reopen as Fulton Bank branches, with FDIC insurance.
• The FDIC estimates the cost to the Deposit Insurance Fund will be $667 million.
• The failure highlights challenges facing credit-dependent regional banks due to high interest rates.