Republic First Bank closes, first FDIC-insured bank to fail in 2024

PHILADELPHIA (CBS/AP) — Philadelphia-based Republic First Financial institution was closed by state regulators Friday evening and its belongings got to the Federal Deposit Insurance coverage Corp., FDIC introduced in a information launch.

Republic Financial institution’s belongings at the moment are being taken over by Lancaster, Pennsylvania-based Fulton Financial institution efficient instantly. Fulton can be assuming all deposits.

Republic First Financial institution is a regional lender working in Pennsylvania, New Jersey and New York. The corporate did enterprise as Republic Financial institution and had roughly $6 billion in belongings and $4 billion in deposits as of Jan. 31.

Republic Financial institution’s 32 branches will reopen as branches of Fulton Financial institution as early as Saturday. Republic First Financial institution depositors can entry their funds by way of checks or ATMs as early as Friday evening, the FDIC stated.

When you’ve got a Republic Financial institution ATM or debit card, or a examine, you possibly can nonetheless use them. When you’ve got a mortgage with Republic, it’s best to nonetheless make funds as regular.

“Depositors of Republic Financial institution will turn into depositors of Fulton Financial institution so clients don’t want to vary their banking relationship to be able to retain their deposit insurance coverage protection,” the FDIC stated. “Clients of Republic Financial institution ought to proceed to make use of their present branches till they obtain discover from Fulton Financial institution that it has accomplished programs adjustments that may enable its department workplaces to course of their accounts as nicely.”

The financial institution’s failure is anticipated to value the deposit insurance coverage fund $667 million, however the FDIC stated Fulton Financial institution buying Republic First Financial institution was the most cost effective decision.

Anybody with lower than $250,000 in any checking account insured by the FDIC is protected even when that particular person’s financial institution fails.  

Why did Republic First Financial institution fail?

The lender is the primary FDIC-insured establishment to fail within the U.S. in 2024. The final financial institution failure  — Residents Financial institution, based mostly in Sac Metropolis, Iowa — was in November 2023.

In a robust financial system, a median of solely 4 or 5 banks shut every year.

Rising rates of interest and falling business actual property values, particularly for workplace buildings grappling with surging emptiness charges following the pandemic, have heightened the monetary dangers for a lot of regional and group banks. Excellent loans backed by properties which have misplaced worth make them a problem to refinance.

Final month, an investor group together with Steven Mnuchin, who served as U.S. Treasury secretary throughout the Trump administration, agreed to pump greater than $1 billion to rescue New York Group Bancorp, which has been hammered by weak spot in business actual property and rising pains ensuing from its buyout of a distressed financial institution.

Methods to contact the FDIC and Fulton Financial institution

The FDIC says clients with questions in regards to the acquisition can contact the FDIC at 1-877-467-0178. 

The decision middle is open from 9 a.m. to six p.m. ET on Saturday and from 12 p.m. to six p.m. on Sunday, 8 a.m. to eight p.m. on Monday and 9 a.m. to five p.m. on days afterward.