In the wake of a turbulent period for U.S. banks, the Pennsylvania Department of Banking and Securities has shut down Philadelphia-based Republic First Bank, also known as Republic Bank. The Federal Deposit Insurance Corporation (FDIC) has stepped in as receiver, with Fulton Bank assuming nearly all deposits and assets.
Republic First Bank Shuttered as FDIC Steps In, Fulton Bank Takes Over
Following the cascading failures of several major banks in 2023, the closure of Republic First Bank on April 26, 2024, marks another significant setback in the American banking sector. The FDIC facilitated the transition, ensuring that Republic Bank’s 32 branches across New Jersey, Pennsylvania, and New York will continue operations under Fulton Bank, thereby safeguarding depositor interests and minimizing disruption.
As Republic Bank customers face this sudden transition, they retain access to their funds through checks, ATMs, and debit transactions, with all 32 branches slated to reopen promptly. The agency has set up a dedicated call center to address customer queries and concerns during this transition.
“Checks drawn on Republic Bank will continue to be processed and loan customers should continue to make their payments as usual,” the FDIC wrote. “Depositors of Republic Bank will become depositors of Fulton Bank so customers do not need to change their banking relationship in order to retain their deposit insurance coverage.”
This ongoing banking crisis that followed last year’s string of failures, underscores persistent vulnerabilities within the U.S. financial system. Republic Bank, holding about $6 billion in assets, has significantly impacted the Deposit Insurance Fund, with the closure estimated to cost $667 million. The FDIC confirms that Fulton Bank’s acquisition is the most cost-effective resolution, aiming to stabilize the banking landscape and maintain public confidence in the financial system.
Mortgage expert Colin Robertson noted that the collapse of the Philadelphia-based lender could likely be attributed to the bank’s mortgage operations. “It was apparently [because] of its mortgage biz, which like First Republic Bank, relied upon growing its ‘jumbo residential mortgage portfolio at below-market interest rates,’ Robertson wrote. The real estate commentator clarified that Republic Bank implemented several strategies to comply with the market demands.
“Per a company presentation, the previous management ‘Developed an active mortgage lending business, specializing in jumbo mortgage products with aggressive rates, which had higher risk and lower risk-adjusted rates of return than other asset classes.’ This strategy was deployed as recently as the first half of 2022. Just a year later, their ‘new strategy’ was to ‘Wind down and exit the mortgage origination business’ entirely,” Robertson added.
“With this transaction, we are excited to double our presence across the region,” Curt Myers, Fulton Financial Corp’s chairman and CEO said in a statement following the Republic First Bank acquisition.
