Philadelphia-based lender Republic First Bancorp has been sold after being seized by regulators.
Fulton Bank, another Pennsylvania financial institution, has agreed to acquire the lender — which does business as Republic Bank — and its assets, the Federal Deposit Insurance Corp. (FDIC) announced late Friday (April 26).
“The FDIC determined that compared to other alternatives, Fulton Bank’s acquisition of Republic Bank is the least costly resolution for the DIF, an insurance fund created by Congress in 1933 and managed by the FDIC to protect the deposits at the nation’s banks,” the regulator said in a news release.
“Republic Bank is the first U.S. bank failure this year; the last failure was Citizens Bank, Sac City, Iowa on November 3, 2023.”
With the deal, Fulton says it has purchased assets of about $6 billion, including an investment portfolio of about $2 billion and roughly $2.9 billion in loans. It also takes on liabilities of about $5.3 billion, including about $4 billion in deposits and other borrowings and liabilities of about $1.3 billion.
“With this transaction, we are excited to double our presence across the region,” said Fulton Chairman and CEO Curt Myers. “We look forward to welcoming Republic Bank’s team members and customers to Fulton and providing our comprehensive set of consumer, commercial and wealth advisory products and services to even more customers.”
The announcement comes days after reports that the FDIC was in talks with potential buyers for Republic Bank, whose market value had plummeted to under $1 million for much of this month after peaking at above $500 million in 2017.
The FDIC had tried to find buyers for the bank last year, though that effort was put on hold when Republic First found an investor who was set to pump $35 million into the bank, though that deal was called off in February.
Writing to shareholders last year, the bank’s leaders noted Republic First had gone through “some difficult times,” citing an “ill-advised” expansion of the bank’s physical footprint and building up long-term fixed-rate residential loan and bond portfolios amid low interest rates.
Earlier this month, former FDIC Chair Sheila Bair warned that she was concerned about the regional banking sector after the failure of three lenders last year.
“I’m worried about a handful of them,” said Bair, who headed the FDIC during the financial crisis of 2008, in an interview with CNBC.
“I think some of them are still overly reliant on industry deposits, have a lot of concentrated commercial real estate exposure, and then I think the larger picture really is the potential instability of their uninsured deposits even for the healthy ones if we have another bank failure.”
The regulatory framework should not prevent banks from providing innovative and competitive products and services, Federal Reserve Gov. Michelle W. Bowman said Monday (Feb. 17).
Speaking at the American Bankers Association’s Conference for Community Bankers in Phoenix, Bowman said that while the framework must promote safety and soundness in the banking system, it should not impede banks’ operations.
“Our work to maintain an effective framework is never really complete,” Bowman said in a speech to be delivered at the event. “Just as complacency can be fatal to the business of a bank, complacency can also prevent regulators from meeting their statutory obligation to promote a safe and sound banking system that enables banks to serve their customers effectively and efficiently.”
In terms of bank supervision, Bowman said supervisory ratings have led to a de-prioritization of core financial risks. Pointing to a Fed report that said most large financial institutions met supervisory expectations with respect to capital and liquidity but only one-third had satisfactory ratings across all relevant ratings components, Bowman said this raised a question about whether non-core and non-financial risks had been over-emphasized.
When it comes to bank applications, Bowman said the process may have created impediments that have led to a current lack of new bank formation. She added that regulators could improve the process by developing specialized expertise, streamlining the application process and improving transparency.
In the case of mergers and acquisitions, Bowman said “the purgatory of a long application process” could be remedied by updating application forms to include all the information that is needed and by adhering to fixed approval timelines.
Addressing regulation, Bowman said that the body of regulations applied to banks has grown dramatically since the 2008 financial crises and that some of those regulations may be outdated, unnecessary and overly burdensome.
“The banking system can be an engine of economic growth and opportunity, particularly when it is supported by a bank regulatory framework that is rational and well-maintained,” Bowman said. “The work of rationalizing and maintaining this system is an ongoing cycle. While my remarks today have touched on a wide range of issues that require rationalization and ‘maintenance,’ this is by no means an exhaustive list.”