Republic First becomes the first FDIC-insured bank failure of 2024

The news: Last Friday, Pennsylvania financial regulators seized and shut down Philadelphia-based Republic First Bank in the first FDIC-insured bank failure of 2024.

• The deposit insurance fund is expected to pay out $667 million to cover the bank’s failure.

How we got here: Struggling under the weight of higher interest rates, Republic First had planned to exit the mortgage business and refocus on consumer deposits.

• Nasdaq delisted it last August after it failed to hand in its annual report to the Securities and Exchange Commission.
• Its attempts to raise capital were unsuccessful. Earlier this year, an expected investment of $35 million fell through.

What’s next: In a FDIC-run auction, Lancaster, Pa.-based Fulton Bank acquired all of the failed bank’s deposits and bought all of its assets.

• As of January 1, those amounts consisted of roughly $4 billion in deposits and $6 billion in assets.
• Over the past weekend, Republic First’s 32 branches reopened as Fulton Bank branches.

Shares in Fulton Financial, the owner of Fulton Bank, jumped 10% in morning trading on the Monday after the deal. The bank said its acquisition would nearly double its size in the Philadelphia market. Current estimates have it now holding approximately $30 billion in assets.

The bigger picture: Though much ink has been expended in analyzing the plight of regional banks—particularly those that trade heavily in commercial real estate lending—Republic First’s failure is likely an isolated incident that occurred within an otherwise stable banking sector.

• Banks collapsed at a rate of around four to five annually between 2011 and 2020, after the collateral damage from the Great Recession was cleared away, per a Forbes Advisor analysis.
• Zero banks failed in 2021 and 2022—so last spring’s falling dominoes may have surprised those with short institutional memories. The collapses of some highly specialized lenders showed the importance of diversification within bank portfolios.

An unlucky name? On the first day of May in 2023, San Francisco-based First Republic Bank failed. (JPMorgan Chase won the majority of its assets in a highly competitive bidding process.)

As a result, then-healthy Republic First was briefly a victim of mistaken identity. CEO Thomas Geisel issued an open letter on his bank’s website to straighten out the branding confusion—not knowing that Republic First wouldn’t survive to see the first anniversary of First Republic’s collapse.