U.S. regulators have seized Republic First Bancorp and agreed to sell it to Fulton Bank, highlighting the difficulties faced by regional banks following the collapse of three peers in the previous year.
The Pennsylvania Department of Banking and Securities seized Philadelphia-based Republic First, which had abandoned funding talks with a group of investors.
The Federal Deposit Insurance Corp (FDIC), appointed as a receiver, announced on Friday that Fulton Bank, a subsidiary of Fulton Financial Corp FULT.O, would take over practically all deposits and purchase all assets of Republic Bank, the operating name for Republic First, to "protect depositors."
As of January 31, 2024, Republic Bank had approximately $6 billion in total assets and $4 billion in total deposits. The FDIC estimated the cost of the failure to its fund to be $667 million.
Fulton stated in a statement that in addition to deposits, Republic also had borrowings and other liabilities totaling roughly $1.3 billion.
Fulton stated that the agreement nearly doubles its presence in the Philadelphia market, with combined company deposits of approximately $8.6 billion.
"With this transaction, we are excited to double our presence across the region," Fulton Chairman and CEO Curt Myers stated in a statement.
On Saturday or Monday during business hours, Republic Bank's 32 branches in New Jersey, Pennsylvania, and New York will reopen as branches of Fulton Bank.
Following the unexpected collapses of three lenders - Silicon Valley and Signature in March 2023 and First Republic in May - the decision marks the latest U.S. regional bank failure.
Republic Bank had reached an agreement with an investor group led by veteran businessman George Norcross and prominent attorney Philip Norcross late last year, but the effort was abandoned in February.
According to the Wall Street Journal, which first reported the news, the FDIC resumed efforts to seize and sell the bank after that deal fell through.
In early 2023, Republic Bank cut jobs and exited its mortgage origination business as it struggled under pressure from rising costs and an inability to improve profitability.
The bank's stock price has plummeted from just over $2 at the start of the year to about 1 cent on Friday, leaving it with a market capitalization of less than $2 million.
Its shares were delisted from the Nasdaq in August and now trade over the counter.
Piper Sandler & Co and BofA Securities served as financial advisors to Fulton, while Sullivan & Cromwell LLP served as legal counsel.