FX168 Financial News (North America) — The US Federal Deposit Insurance Corporation (FDIC) said on Friday (April 27) that Pennsylvania regulators have closed Republic First Bank (Republic First Bank), the first bank in the US to go bankrupt this year.

“Philadelphia-headquartered First Republic Bank (operating under the name of Republic Bank) was today closed by the Bank of Pennsylvania Department of Securities (PDBS) and the FDIC was appointed as the receiver. To protect depositors, the FDIC reached an agreement with Fulton Bank (Fulton Bank) to accept almost all of Republic Bank's deposits and acquire almost all of its assets,” the FDIC said in a statement.

(Screenshot from CityNewsEverywhere)

The US Federal Deposit Insurance Corporation said in its press release that the bank's total assets at the end of January were about 6 billion US dollars, and total deposits were 4 billion US dollars.

The FDIC said that compared to the regional bank collapse that shocked the financial world last year, Bank of the Republic is much smaller. For example, Silicon Valley Bank (Silicon Valley Bank) had assets of about US$209 billion at the end of 2022, and the bank went out of business in March 2023. #银行业危机 #

The FDIC said that the depositors at First Bank of the Republic will be the depositors of Fulton Bank. The institution's deposit insurance covers up to $250,000 per saver.

The bank's bankruptcy is expected to cost deposit insurance funds $667 million.

Fulton said in a statement that in addition to deposits, Republic First Bank also has about $1.3 billion in loans and other liabilities.

Fulton said the deal almost doubled its share in the Philadelphia market, and the company's total deposit was about US$8.6 billion.

Fulton Chairman and CEO Curt Myers said in a statement: “With this deal, we are delighted to have doubled our business in the region.”

Republic Bank's 32 branches in New Jersey, Pennsylvania, and New York will reopen as Fulton Bank branches during business hours on Saturday or Monday.

At the end of last year, Bank of the Republic reached an agreement with a group of investors, including veteran businessman George Norcross and well-known lawyer Philip Norcross, but the agreement ended in February of this year.

According to the Wall Street Journal, which first reported the news, the FDIC resumed efforts to take over and sell the bank after the deal broke down.

The bank's stock price has dropped from slightly above $2 at the beginning of the year to around 1 cent on Friday, with a market capitalization of less than $2 million.

(Source: Google Finance)

The company's shares were delisted from NASDAQ in August last year and are currently traded off the market.

High interest rates and falling commercial real estate triggered a banking crisis

According to the FDIC, Bank of the Republic is the first bank in the US to go out of business since Citizens Bank (Citizens Bank) in Iowa went out of business in November 2023.

First Republic Bank is two separate entities from First Republic Bank (First Republic Bank), a commercial bank headquartered in San Francisco, which went out of business in May 2023. Most of the bank's assets have been sold to J.P. Morgan.

The bank of Philadelphia's collapse occurred at a time of unease for regional banks, and high interest rates hurt the credit-based industry.

The collapse of Silicon Valley Bank last year sparked a wider crisis. A few days later, Signature Bank went out of business, and within a few weeks, First Republic Bank also went out of business. According to data from the US Federal Deposit Insurance Corporation, a total of 5 banks went out of business in 2023.

Recently, New York Community Bank's stock price fluctuated sharply as customers began withdrawing cash from the regional bank, after the bank said it had discovered a “major flaw” in the company's controls. The bank received a $1 billion equity investment lifebuoy in March, with investors including former Treasury Secretary Steven Mnuchin (Steven Mnuchin)'s corporate free strategic capital.

With a strong economy, on average, only four to five banks fail each year.

Rising interest rates and falling commercial real estate values, particularly office buildings where vacancy rates soared after the outbreak of the pandemic, have exacerbated the financial risks of many regional and community banks. Outstanding loans backed by properties that have lost their value make it difficult to refinance them.