Regulators Shut Republic First In A First U.S. Bank Failure This Year, Customers Given Deadline to Withdraw Funds

Regulators have closed Republic First Bank, a regional lender operating in Pennsylvania, New Jersey and New York.

The Federal Deposit Insurance Corp. said Friday it had seized the Philadelphia-based bank, which did business as Republic Bank and had roughly $6 billion in assets and USD 4 billion in deposits as of January 31.

Fulton Bank, which is based in Lancaster, Pennsylvania, agreed to assume substantially all of the failed bank's deposits and buy essentially all of its assets, the agency said. Republic Bank's 32 branches will reopen as branches of Fulton Bank as early as Saturday. Republic First Bank depositors can access their funds via checks or ATMs as early as Friday night, the FDIC said.

The bank's failure is expected to cost the deposit insurance fund USD 667 million. The lender is the first FDIC-insured institution to fail in the U.S. this year. The last bank failure Citizens Bank, based in Sac City, Iowa was in November.

In a strong economy an average of only four or five banks close each year. Rising interest rates and falling commercial real estate values, especially for office buildings grappling with surging vacancy rates following the pandemic, have heightened the financial risks for many regional and community banks. Outstanding loans backed by properties that have lost value make them a challenge to refinance.