The Federal Deposit Insurance Corporation (FDIC) announced on Friday that Republic First Bank, based in Philadelphia, has been closed by Pennsylvania state regulators. This marks the first bank failure in the United States this year. The Pennsylvania Department of Banking and Securities appointed the FDIC as the receiver for Republic First Bank.
With approximately $6 billion in total assets and $4 billion in total deposits as of January, Republic Bank is significantly smaller than the regional bank failures witnessed last year. The FDIC has arranged for Fulton Bank, National Association of Lancaster, Pennsylvania, to assume most of the deposits and assets of Republic Bank to protect depositors.
The FDIC stated that the 32 branches of Republic Bank in New Jersey, Pennsylvania, and New York will reopen as branches of Fulton Bank starting Saturday or Monday, depending on normal business hours. Depositors at Republic Bank will now be depositors at Fulton Bank, with FDIC insurance covering up to $250,000 per depositor.
Republic Bank's closure comes amidst a challenging period for regional banks, impacted by elevated interest rates affecting the credit-dependent industry. Last year, the collapse of Silicon Valley Bank triggered a broader crisis, followed by the failure of Signature Bank and First Republic Bank. In 2023, a total of five bank failures were recorded by the FDIC.
Notably, Republic First Bank is distinct from First Republic Bank, a San Francisco-based commercial bank that was closed in May 2023, with most assets sold to JPMorgan Chase. The recent turmoil in regional banks was exemplified by New York Community Bank experiencing significant stock price fluctuations as customers withdrew funds following the identification of 'material weakness' in the company's controls. The bank received a $1 billion equity investment from investors, including former Treasury Secretary Steven Mnuchin's firm.
