Republic First Bank became the latest smaller lender to succumb to pressures of higher interest rates on Friday when it was closed by regulators — with most of its deposits and assets acquired by Fulton Bank.
The Federal Deposit Insurance Corp. said in a statement that Republic First’s 32 locations in New Jersey, Pennsylvania and New York will reopen Saturday as branches of Fulton Bank. Republic First — which does business as Republic Bank — had about $6 billion of assets and $4 billion of deposits at the end of January.
The Philadelphia-based bank had struggled with similar issues as other regional lenders: high interest rates that translated into unrealized losses on loans and securities, leading to the collapse last year of Silicon Valley Bank, Signature Bank and First Republic.
The FDIC had sought buyers for Republic First in 2023 but suspended that process after the bank struck a deal with investors for a $35 million cash injection. That agreement — intended to reassure shareholders about the bank’s financial stability — fell apart earlier this year. The FDIC then restarted the sale process.
The agency estimated that the failure will cost its deposit insurance fund $667 million.
The transaction doubles Fulton’s presence in the Philadelphia market, with combined deposits of $8.6 billion, it said in a separate statement.
Shares of the bank’s parent, Lancaster, Pennsylvania-based Fulton Financial Corp., climbed 7.9% to $16.85 in extended trading at 7:12 p.m. in New York. The stock had dropped 5.1% this year through the close of regular trading Friday.
“This was as it should be, in the sense that the regulators were able to seize and sell all of a weak bank to a substantially more stable bank,” said Steven Kelly, associate director of research at the Yale School of Management’s Program on Financial Stability. “That helps preserve the value of the deposit franchise — and thus avoid the unrealized losses and a run on the bank.”
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