Regulators late Friday seized Republic First Bancorp, a troubled Philadelphia lender, in the first U.S. bank failure this year.
Republic First Bancorp, known as Republic Bank, had about $4 billion in deposits at the end of January and assets worth $6 billion, the Federal Deposit Insurance Corporation said in a statement.
“Substantially all” of its deposits will be assumed by Fulton Bank of Lancaster, Pa., the F.D.I.C. said, with Republic First’s 32 branches in Pennsylvania, New Jersey and New York reopening as soon as Saturday as Fulton Bank branches.
Founded in 1988, Republic First was smaller than the midsize banks that collapsed last year — including First Republic Bank and Silicon Valley Bank, whose assets each topped $200 billion. The F.D.I.C. expects the cost to the Deposit Insurance Fund to be $667 million.
The failure comes amid continuing concern about the health of regional banks. In a presentation for investors in July, Republic First said that deposits were declining and that the bank’s mortgage lending business had become less valuable as interest rates increased.
It had planned to exit the mortgage business and refocus on consumer deposits. It was delisted by Nasdaq in August, after it failed to file its annual report with the Securities and Exchange Commission, and an expected $35 million investment in the bank was scuttled this year, as reported by Banking Dive.
Feddie Strickland, a bank analyst at Janney Montgomery Scott, said that Republic First’s failure was likely to be an isolated incident and that the overall banking sector is stable.
“I think small banks are in good shape,” Mr. Strickland said. “Some of the failures we saw last year were really banks with a certain specialization. I think there’s an importance of being diversified.”
Mr. Strickland called Fulton, which is taking over Republic First’s deposits, “a boring bank in the best way,” calling the commercial bank “careful” and “good operators.”
“Depositors should feel safe with Fulton,” he added.
Maureen Farrell contributed reporting.
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