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FDIC says Republic First Bank has been shut down by Pennsylvania regulators

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Nathan Howard/Bloomberg/Getty Images

The headquarters of the Federal Deposit Insurance Corp. (FDIC) in Washington, DC, US, on Wednesday, August 23, 2023. US banking watchdogs will next week propose requiring banks with just $100 billion in assets to issue enough long-term debt to cover capital losses if they ever fail.



CNN

The Federal Deposit Insurance Corporation said Friday that Republic First Bank has been closed by Pennsylvania state regulators, in what the FDIC said was the first U.S. bank failure this year.

“Philadelphia-based Republic First Bank (doing business as Republic Bank) was closed today by the Pennsylvania Department of Banking and Securities, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. “To protect depositors, the FDIC has entered into an agreement with Fulton Bank, National Association of Lancaster, Pennsylvania to assume substantially all of the deposits and purchase substantially all of the assets of Republic Bank,” the FDIC said in a statement.

The bank had approximately $6 billion in total assets and $4 billion in total deposits at the end of January, the FDIC said in its news release.

That makes Republic Bank (FRBK) much smaller than the regional bank failures that rocked the financial world last year. For example, Silicon Valley Bank had approximately $209 billion at the end of 2022; it collapsed in March 2023.

The FDIC said the former bank's “32 branches in New Jersey, Pennsylvania and New York will reopen as branches of Fulton Bank on Saturday (for branches with regular Saturday hours) or on Monday during normal business hours.”

Those who have deposits at Republic Bank will become depositors at Fulton Bank, the FDIC said. The agency's deposit insurance covers up to $250,000 per depositor.

Bloomberg News reported earlier this week that the FDIC had approached buyers for the regional lender.

The FDIC said Republic Bank was the first bank to fail in the United States since Citizens Bank in Sac City, Iowa, in November 2023.

Republic First Bank is a separate entity from First Republic Bank, a San Francisco-based commercial bank that closed in May 2023. The majority of the bank's assets were sold to JPMorgan Chase.

The Philadelphia-based bank's failure comes at a tumultuous time for regional banks as high interest rates have hurt the credit-dependent sector.

The collapse of Silicon Valley Bank led to a broader crisis last year. Signature Bank's bankruptcy followed days later, and First Republic Bank went bankrupt a few weeks after that. There were a total of five bank failures in 2023, according to the FDIC.

Recently, New York Community Bank saw wild swings in its stock price as customers began withdrawing their money from the regional lender after it said it had identified “material weakness” in the company's controls. The bank received a $1 billion equity lifeline in March from investors including Liberty Strategic Capital, the firm of former Treasury Secretary Steven Mnuchin.

This story has been updated.

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