April 27, 2024
Today at
11:33
US regulators have seized Republic First, a struggling Philadelphia bank, and sold it to a peer. This is the fourth bank failure since the liquidity problems in the sector last spring.
U.S. banking regulators seized troubled bank Republic First on Friday evening and sold it to rival Fulton Financial. This was reported by The Wall Street Journal and was confirmed by the bank. This is the fourth bank failure at American regional banks since last spring.
The bank, which manages about $6 billion in savings and other assets, was closed by Pennsylvania’s state regulator on Friday and sold following an auction organized by the Federal Deposit Insurance Corporation (FDIC), a government agency tasked with ensuring stability in the US banking landscape .
Republic First faced some of the same problems as the three regional banks that capsized last year, namely large losses on its bond portfolio that lost value as interest rates rose, and large numbers of uninsured deposits being withdrawn from the bank by customers.
Total equity, or assets minus liabilities, stood at $96 million at the end of 2023, according to FDIC filings. That does not include $262 million in unrealized losses that the bank incurred on its bond portfolio.
Republic First’s assets will now be merged into Fulton, a regional bank with 200 offices in Pennsylvania, Delaware, Maryland, New Jersey and Virginia. The combined assets under management would remain well below $50 billion, a limit that is associated with increased regulation in the US.
Regulators had already been prepared to seize Republic First at the end of last year. Then the bank announced an emergency deal with investors to strengthen its balance sheet. But that agreement failed. In March, the FDIC resumed efforts to seize and sell the bank.
Republic First is much smaller than the collapsed banks Silicon Valley Bank, Signature Bank and its near-namesake First Rebublic bank, which managed between $100 billion and $200 billion in assets. First Republic was merged into JPMorgan.
This new smaller bankruptcy was already in the cards. Republic First’s stock, which was delisted from Nasdaq in August, was already trading at almost 0 (see chart).
