Philadelphia-Based Republic First Bank Collapses in First Bank Failure of 2024
Philadelphia-Based Republic First Bank Collapses in First Bank Failure of 2024

By Tom Ozimek

The troubled Philadelphia-based Republic First Bank has imploded, with federal regulators seizing it and arranging for it to be taken over by fellow regional lender Fulton Financial, in what marks the first bank failure of 2024.

The Federal Deposit Insurance Corporation (FDIC) announced on April 26 that Republic First Bank—which did business as Republic Bank—was seized and closed that same day.

In order to protect people with savings at Republic Bank, the FDIC entered into an agreement with Fulton Financial to assume the deposits and assets of the failed bank. This means that Republic Bank’s 32 branches in New Jersey, Pennsylvania, and New York reopened on Saturday as branches of Fulton Bank, continuing to provide regular banking services to depositors without interruption.

“This evening and over the weekend, depositors of Republic Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on Republic Bank will continue to be processed and loan customers should continue to make their payments as usual,” the FDIC said in a statement.

People with savings at Republic Bank don’t need to change their banking relationship to continue to have their money covered by the FDIC’s deposit insurance guarantee.

Fulton Financial Corporation, which owns Fulton Bank, said on April 26 that all the regulatory approvals had been obtained and that the transaction had closed.

“With this transaction, we are excited to double our presence across the region,” Fulton Chairman and CEO Curt Myers said in a statement. “We look forward to welcoming Republic Bank’s team members and customers to Fulton and providing our comprehensive set of consumer, commercial and wealth advisory products and services to even more customers.”

Republic Bank had roughly $6 billion in assets and $4 billion in deposits as of Jan. 31, 2024, per the FDIC.

As is typical for the type of purchase-and-assumption transaction that the FDIC brokered in Fulton’s takeover of Republic, the deposit insurance agency will bear some of the financial burden. In this case, the FDIC is on the hook for $667 million, with the agency saying that it had determined that the buyout by Fulton was the least costly resolution.

Republic’s collapse was the first bank failure of 2024, with the last collapse being Citizens Bank, Sac City, Iowa, on Nov. 3, 2023.

It’s also the fourth high-profile bank failure since last spring, when a series of bank failures set off a monthslong crisis.

Banking Turmoil

The unexpected collapses of three banks—Silicon Valley and Signature in March 2023 and First Republic in May—put a spotlight on how lenders managed risks to assets and liquidity as the Federal Reserve raised interest rates aggressively in a bid to quash soaring inflation.

With a combined $440 billion of assets, these were the second, third, and fourth biggest bank failures since the FDIC was created during the Great Depression to protect depositors and mitigate the risk of bank runs.

By comparison, the Philadelphia-based Republic First Bank that was taken over by Fulton on Friday had just $6 billion in assets, making its failure less worrisome for regulators.

Last year’s turmoil prompted emergency government measures to stabilize the banking sector, along with downgrades by credit rating agencies.

Federal Reserve officials have said that last year’s bank failures were not just the result of poor risk management but also due to weaknesses in supervision.

The FDIC recently estimated in its annual report that its total cost from bank failures in 2023 amounts to roughly $20.4 billion.

The agency said it would recover that money by one or more special assessments on larger banks, with no banking organizations with total assets under $5 billion subject to the extraordinary fee.

Last year’s banking sector tumult sparked a period of credit pullback as banks cooled on providing both consumer and commercial loans. While both commercial and consumer lending has leveled out, it remains below the levels seen before the crisis.

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