In a significant development that has sent shockwaves through the regional banking sector, Republic First Bank has been seized by U.S. regulators. This marks the first major U.S. bank collapse of 2024.
The Philadelphia-based bank, which operated as Republic Bank, was grappling with higher costs and an inability to improve profitability. This led to job cuts and the bank’s exit from its mortgage origination business.
The Pennsylvania Department of Banking and Securities seized the bank, and the Federal Deposit Insurance Corp (FDIC) has been appointed as a receiver. In a move to protect depositors, Fulton Bank, a unit of Fulton Financial Corp, will assume substantially all deposits and purchase all the assets of Republic Bank.
As of January 31, 2024, Republic Bank had about $6 billion in total assets and $4 billion in total deposits. The FDIC estimates the cost of the failure to its fund will be $667 million.
The bank’s 32 branches in New Jersey, Pennsylvania, and New York will reopen as branches of Fulton Bank on Saturday or Monday during business hours. This decision underscores the challenges facing regional banks a year after the collapse of three peers.
The bank’s stock price has tumbled from just over $2 at the start of the year to about 1 cent on Friday, leaving it with a market capitalization below $2 million. Its shares were delisted from the Nasdaq in August and now trade over the counter.
This news has sparked heated reactions and is expected to have far-reaching implications for the regional banking sector. The closure of Republic First Bank serves as a stark reminder of the volatility in the banking sector and the challenges that regional banks face in maintaining profitability in a rapidly changing economic landscape.
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