Regulators close Republic First Bank in Pennsylvania

• Republic First Bank closed by regulators
• The bank had $6 billion in assets.
• Fulton Bank assumes the majority of deposits.

Last Friday, the Federal Deposit Insurance Corp. (FDIC) decided to close Republic First Bank.

This is a regional lender based in Philadelphia operating in Pennsylvania, New Jersey and New York.

This bank, also known as Republic Bank, had approximately $6 billion in assets and $4 billion in deposits as of January 31.

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Fulton Bank will handle the transition

Fulton Bank, headquartered in Lancaster, Pennsylvania, has agreed to assume the majority of the deposits from Republic First Bank and acquire virtually all of its assets, according to the regulatory agency.

As part of this transition, the 32 branches of Republic Bank will reopen as Fulton Bank branches starting Saturday.

Republic First Bank depositors will be able to access their funds through checks or ATMs starting Friday night, according to the FDIC.

The bank’s closure is estimated to have a significant impact on the deposit insurance fund, with a projected cost of $667 million, reported by WTAJ.

First Republic Bank closed

This seizure represents the first FDIC-insured institution to face this fate in the United States this year.

The last bank failure was Citizens Bank, based in Sac City, Iowa, which occurred last November.

The current economy presents challenges for the banking sector, with an average of only four or five banks closing each year in a robust economic environment.

Rising interest rates and the decline in the value of commercial real estate have increased financial risks for many regional and community banks.

Challenges in the banking sector

The difficulty in refinancing loans backed by properties whose value has decreased has contributed to this situation.

Recently, a group of investors led by Steven Mnuchin, former U.S. Treasury Secretary during the Trump administration, agreed to inject more than a billion dollars New York Community Bancorp, according to WATJ.

This banking entity has faced difficulties due to the weakness in the commercial real estate sector and problems stemming from its acquisition of a troubled bank.