The Philadelphia-based Republic First Bank has been closed by state regulators, with its assets being taken over by the Federal Deposit Insurance Corp. (FDIC). Lancaster-based Fulton Bank is now assuming all deposits and assets of Republic Bank, which operated in Pennsylvania, New Jersey, and New York with $6 billion in assets and $4 billion in deposits. The 32 branches of Republic Bank will reopen as branches of Fulton Bank, allowing depositors to access their funds through checks or ATMs immediately.
The FDIC stated that Republic Bank depositors will become depositors of Fulton Bank, ensuring that customers do not need to change their banking relationship to retain deposit insurance coverage. Customers are advised to continue using their existing branches until notified by Fulton Bank that systems changes have been completed. The failure of Republic First Bank is expected to cost the deposit insurance fund $667 million, but the acquisition by Fulton Bank was deemed the most cost-effective resolution. The FDIC ensures that individuals with less than $250,000 in any bank account insured by them are protected even in the event of a bank failure.
The closure of Republic First Bank marks the first FDIC-insured institution to fail in the U.S. in 2024, with the last bank failure occurring in November 2023. The number of bank closures typically remains low in a strong economy, with only four or five banks closing each year on average. However, the current economic conditions, including rising interest rates and falling commercial real estate values, have increased financial risks for many regional and community banks. The challenges to refinance outstanding loans backed by devalued properties, especially in the office building sector post-pandemic, contribute to these risks.
The FDIC has provided a contact number for customers with inquiries about the acquisition, and they can be reached at 1-877-467-0178. The call center operates on specific hours on different days, ensuring that customers can seek assistance and information regarding the transition. The closure of Republic First Bank highlights the impact of economic conditions on financial institutions, with the FDIC overseeing the transfer of assets and deposits to Fulton Bank to minimize disruption for customers.
Overall, the closure of Republic First Bank and its acquisition by Fulton Bank underlines the challenges faced by banks in the current economic environment. The FDIC’s involvement in the transfer of assets and deposits aims to protect customers and ensure a smooth transition. Customers are encouraged to reach out to the FDIC for any inquiries or assistance during this period of change in their banking relationship.
