Philadelphia-based Republic First Bank failed April 26.
The bank was closed by the Pennsylvania Department of Banking and Securities, which appointed the FDIC as receiver. The FDIC then entered into an agreement with Lancaster, Pa.-based Fulton Bank NA to assume the deposits and purchase the assets of Republic First Bank.
Republic First had $6 billion in assets and $4 billion in deposits as of Jan. 31. The bank had 32 branches in New Jersey, Pennsylvania and New York, which reopened as branches of Fulton Bank on Saturday. The FDIC estimated the cost to the Deposit Insurance Fund will be $667 million.
Republic Bank is the first U.S. bank to fail this year. Large regionals Silicon Valley Bank, First Republic Bank and Signature Bank failed last spring. Sac City, Iowa-based Citizens Bank failed on Nov. 3.
According to the Wall Street Journal, Republic First Bank, though much smaller than Silicon Valley, First Republic and Signature, failed for similar reasons. Republic First sustained paper losses on bonds that lost value as interest rates rose and had a high proportion of uninsured deposits. According to FDIC data, around half of Republic First deposits were uninsured at the end of 2023.
Republic First stock was delisted from Nasdaq in August. The bank had been in a proxy fight with an investor group led by Gregory Braca, George Norcross III and Philip Norcross. The group agreed to invest $35 million as the bank looked for additional investors. Republic First revealed in February that it had dismissed its auditor, Crowe, after the company flagged “material weaknesses” in bank controls at the end of 2022. The investor group terminated its agreement the following month after Republic First didn’t complete its 2022 annual securities filing with regulators or schedule a mandatory shareholder meeting.
Citing people familiar with the matter, WSJ reported regulators were prepared to seize Republic First late last year, before the bank reached a deal with investors to shore up its balance sheet. After the deal collapsed last month, the FDIC continued its work to seize and sell the bank.