The FDIC said Republic First Bank was closed by Pennsylvania regulators

The FDIC said Republic First Bank was closed by Pennsylvania regulators

The Federal Deposit Insurance Corporation on Friday said that Republic First Bank had been shut down by Pennsylvania state regulators, in what the FDIC said was the first US bank failure of the 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 entered into an agreement with Fulton Bank, National Association of Lancaster, Pennsylvania to take over a substantial portion of all deposits and purchase a substantial portion of the assets of Republic Bank,” the FDIC said in a statement.

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

That makes Republic Bank (FRBK) much smaller than the regional bank failure that rocked the financial world last year. Silicon Valley Bank, for example, has about $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 Fulton Bank branches on Saturday (for branches with regular Saturday hours) or on Monday during regular business hours.”

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

Bloomberg News reported earlier in the week that the FDIC had approached a buyer for the regional lender.

The FDIC said that 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. Most of the bank’s assets were sold to JPMorgan Chase.

The failure of the Philadelphia-based bank comes at a turbulent time for regional banks, as high interest rates have hurt credit-dependent industries.

The collapse of Silicon Valley Bank sparked a wider crisis last year. The failure of Signature Bank followed a few days later, and First Republic Bank failed a few weeks after that. In total, there will be five bank failures in 2023, according to the FDIC.

Recently, New York Community Bank saw a big swing in its share price as customers began pulling their cash from the regional lender after it said it had identified a “material weakness” in the company’s controls. The bank got a $1 billion equity investment lifeline from investors, including former Treasury Secretary Steven Mnuchin’s firm, Liberty Strategic Capital, in March.