Philadelphia’s Republic First Bank Closed By State Regulators, Assets Transferred to FDIC

(CTN News) – State regulators closed Philadelphia-based Republic First Bank on Friday night, with its assets handed over to the Federal Deposit Insurance Corp. (FDIC), as announced in a news release.

Lancaster, Pennsylvania-based Fulton Bank is now taking over Republic Bank’s assets, effective immediately, along with assuming all deposits.

Republic First Bank, operating regionally in Pennsylvania, New Jersey, and New York, conducted business under the name Republic Bank, holding approximately $6 billion in assets and $4 billion in deposits as of January 31.

The 32 branches of Republic Bank will reopen as branches of Fulton Bank as early as Saturday. Depositors of Republic First Bank can access their funds via checks or ATMs as early as Friday night, according to the FDIC.

Customers with Republic Bank ATM or debit cards, as well as checks, can continue to use them. Loan repayments to Republic should proceed as usual.

In the words of the FDIC, “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.”

Until receiving notice from Fulton Bank indicating completion of systems changes, customers of Republic Bank should continue using their existing branches.

The FDIC estimates the bank’s failure will cost the deposit insurance fund $667 million, but acquiring Republic First Bank was deemed the most cost-effective resolution by the FDIC.

FDIC insurance protects deposits of up to $250,000 per depositor, per bank, even in the event of bank failure.

Factors Leading to the Failure of Republic First Bank

Republic First Bank’s failure can be attributed to a confluence of factors, making it the first FDIC-insured institution to collapse in 2024. In contrast, prior to this event, the last bank failure occurred in November 2023 with Citizens Bank, based in Sac City, Iowa.

Under normal economic circumstances, only a modest average of four or five banks close annually. However, recent economic conditions have been less forgiving.

The combination of increasing interest rates and declining values in commercial real estate, particularly in office spaces facing elevated vacancy rates post-pandemic, has escalated financial risks for numerous regional and community banks.

Loans tied to properties experiencing devaluation pose significant challenges for refinancing.

An illustrative example of the strain on banks is New York Community Bancorp, which recently faced considerable pressure due to weaknesses in the commercial real estate sector and the integration challenges stemming from its acquisition of a troubled bank.

To mitigate these challenges, an investor consortium, including Steven Mnuchin, former U.S. Treasury secretary during the Trump administration, committed over $1 billion to stabilize the situation.

These circumstances highlight the precarious position many banks find themselves in amid the evolving economic landscape, where the interplay of various factors can significantly impact their stability and viability.

Contact Information for FDIC and Fulton Bank

FDIC: Customers with inquiries regarding the acquisition can reach the FDIC at 1-877-467-0178. The call center operates during the following hours:

• Saturday: 9 a.m. to 6 p.m. ET
• Sunday: 12 p.m. to 6 p.m. ET
• Monday: 8 a.m. to 8 p.m. ET
• Subsequent days: 9 a.m. to 5 p.m. ET

Fulton Bank: For inquiries related to Fulton Bank, customers can contact the bank directly at their customer service number.

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