In a significant move to stabilize the regional banking sector, U.S. regulators have intervened in the case of the troubled lender, Republic First Bancorp, resulting in its acquisition by Fulton Bank. This development comes as a part of the broader efforts to address the vulnerabilities within regional banks, which have been under increased scrutiny following the collapse of three peers in 2023.
The Pennsylvania Department of Banking and Securities, in conjunction with the Federal Deposit Insurance Corp (FDIC), took decisive action by seizing Philadelphia-based Republic First Bancorp. The FDIC, acting as the receiver, facilitated the sale of Republic Bank — the operational name of Republic First — to Fulton Bank, a subsidiary of Fulton Financial Corp.
This strategic acquisition aims to safeguard depositors by allowing Fulton Bank to assume nearly all deposits and acquire all assets of Republic Bank. As of January 31, 2024, Republic Bank reported approximately $6 billion in total assets and $4 billion in total deposits. However, the bank’s failure is anticipated to cost the FDIC’s insurance fund about $667 million, highlighting the financial strain on the regulatory body.
Fulton Bank’s acquisition notably enhances its footprint in the Philadelphia market, with combined company deposits soaring to approximately $8.6 billion. Fulton Chairman and CEO Curt Myers expressed enthusiasm about the expansion, emphasizing the doubled presence across the region.
The transition will see Republic Bank’s 32 branches in New Jersey, Pennsylvania, and New York reopening under the Fulton Bank banner, ensuring continuity for customers and employees alike. This move marks the latest in a series of interventions aimed at preventing the spread of instability within the U.S. banking system, following the unexpected failures of Silicon Valley, Signature, and First Republic banks in the previous year.
Republic Bank’s journey to this point has been turbulent, with failed funding talks and strategic withdrawals such as exiting its mortgage origination business amidst financial challenges. The bank’s shares, which plummeted to about 1 cent, were a stark indicator of its declining fortunes, culminating in its delisting from Nasdaq and relegation to over-the-counter trading.
Contributing article: https://www.reuters.com/business/finance/us-regulators-set-seize-republic-first-bancorp-wsj-reports-2024-04-26/