Republic Bank, the first US bank to collapse in 2024: Government provides bailout

American banks continue to be in trouble and the latest one to be seized by U.S. regulators is Republic First Bancorp, which until Friday operated under the Republic Bank name. The bank was officially seized by the Pennsylvania Department of Banking and Securities, home state of the corporation and is now undergoing evaluation in order to be sold off to new owners, Fulton Bank.

It is not the first regional bank to be in trouble in the past few years, and it will probably not be the last to fall. Another three lenders collapsed just last year, Silicon Valley and Signature in March 2023 as well as First Republic in May 2023. This trend is not surprising considering the monopoly bigger banks have created over the country, with unbeatable conditions due to their size. In fact, Republic Bank was already in the process of streamlining their operations in early 2023 when these banks were shutting down by enacting layoffs and exiting their mortgage origination business to alleviate pressure from higher costs. The banks’ inability to become profitable led them to search elsewhere for solutions.

Talks with investors to decide on external funding and a restructuration of the bank were under way late last year, with a deal being in the works with an investor group that included businessman George Norcross attorney Philip Norcross, seasoned vets in the sphere, but after it fell through in February, it was decided that letting the seize happen would be the best course of action in order to truly protect their clients and assets.

Republic Bank’s new owners

Once seized it was left under the control of the Federal Deposit Insurance Corp (FDIC), an independent agency created by the Congress to maintain stability and public confidence in the nation’s financial system. It also supplies deposit insurance to depositors in American commercial banks and savings banks and was thus the perfect agency to confront the daunting task of transferring operations to the banks’ new owners at Fulton Bank.

The operation was not taken lightly by the parties involved and both had independent advisors to ensure success after the failed negotiations. Powerhouses Piper Sandler & Co and BofA Securities acted as financial advisers to Fulton Bank, while Sullivan & Cromwell LLP acted as legal advisers.

Fulton Bank is not an independent institution, it is a part of Fulton Financial Corp, which should give the stability and capital needed for the transaction to succeed whilst impacting clients as little as possible. They will not only assume all deposits, but will also purchase all the assets of Republic Bank and keep internal personnel so that operations will not be disturbed while the transition happens. The amounts announced come to $6 billion in total assets and $4 billion in total deposits, numbers calculated on January 31^st 2024 in preparation for the sale. Other assets Fulton Bank will assume with the purchase are the borrowings and other liabilities coming at approximately $1.3 billion in value.

The Federal Deposit Insurance Corp (FDIC) has also calculated the cost of the failure to the American public and the number will come up to a predicted $667 million. Republic Bank stock took a nosedive, from over $2 in January to 1 cent on Friday before the purchase was announced.

With this purchase Fulton Bank will double their occupancy in Philadelphia and up their deposit numbers to approximately $8.6 billion

In a statement given by Fulton Chairman and CEO Curt Myers it was made clear the position the new bank holds regarding the purchase “With this transaction, we are excited to double our presence across the region.”

On Monday all changes will be made effective, and their 32 physical locations will reopen as Fulton Bank branches in the three states the bank operates in, New Jersey, Pennsylvania and New York.