Regulators have shuttered Republic First Bank, a regional lender operating in Pennsylvania, New Jersey and New York.
The Federal Deposit Insurance Corp. announced Friday the seizure of the Philadelphia-based bank, also known as Republic Bank, with assets totaling around USD 6 billion and deposits of approximately USD 4 billion as of 31 January.
Fulton Bank, headquartered in Lancaster, Pennsylvania, has stepped in to absorb the majority of Republic Bank's deposits and acquire nearly all of its assets, according to the agency.
The 32 branches of Republic Bank are set to reopen under the Fulton Bank name, potentially starting as early as Saturday. Depositors of Republic First Bank can access their funds through checks or ATMs as soon as Friday night, as stated by the FDIC.
The bank's collapse is anticipated to incur a USD 667 million cost to the deposit insurance fund.
This marks the first FDIC-insured institution to fail in the U.S. this year, following the last bank failure of Citizens Bank, based in Sac City, Iowa, which occurred in November.
Even during robust economic conditions, only an average of four or five banks close annually.
The combination of rising interest rates and declining commercial real estate values, particularly in office spaces facing increased vacancy rates post-pandemic, has intensified financial challenges for many regional and community banks. Loans tied to devalued properties pose difficulties for refinancing.
Just last month, an investor consortium, including Steven Mnuchin, former U.S. Treasury secretary under the Trump administration, committed to inject over USD 1 billion to stabilise New York Community Bancorp. The bank has been grappling with the effects of weakened commercial real estate and integration issues stemming from its acquisition of a troubled bank.
