(Reuters) – U.S. regulators seized Republic First Bancorp and agreed to sell it to Fulton Bank, underscoring the challenges facing regional banks a year after the collapse of three similar banks.
Philadelphia-based Republic First, which walked out of financing talks with a group of investors, has been seized by the Pennsylvania Department of Banking and Securities.
The Federal Deposit Insurance Corp (FDIC), named as receiver, said on Friday that Fulton Bank, a unit of Fulton Financial Corp FULT.O, will take over substantially all of the deposits and buy all of the assets of Republic Bank, the bank’s operating name. Republic First, to “protect depositors”.
As of January 31, 2024, Republic Bank had approximately $6 billion in total assets and $4 billion in total deposits. The FDIC estimates the cost of its fund’s failure to be $667 million.
In addition to deposits, Republic also had loans and other liabilities of about $1.3 billion, Fulton said in a statement.
Fulton said the transaction will nearly double its presence in the Philadelphia market, with the companies’ combined deposits of about $8.6 billion.
“With this transaction, we are excited to double our presence throughout the region,” Fulton Chairman and CEO Curt Myers said in a statement.
32 Republic Bank branches in New Jersey, Pennsylvania and New York will reopen as Fulton Bank branches on Saturday or Monday during business hours.
The decision marks the latest failure of a regional US bank following the unexpected collapses of three lenders – Silicon Valley and Signature in March 2023 and First Republic in May.
Republic Bank struck a deal with an investor group that included veteran businessman George Norcross and high-profile attorney Philip Norcross late last year, but the effort ended in February.
After that deal collapsed, the FDIC renewed efforts to seize and sell the bank, according to the Wall Street Journal, which first reported the news.
Republic Bank has cut jobs and exited its mortgage business in early 2023 as it reeled under pressure from higher costs and an inability to improve profitability
The bank’s share price has fallen from just over $2 at the start of the year to about 1 cent on Friday, leaving its market capitalization below $2 million.
Its shares were delisted from the Nasdaq in August and are now traded over the counter.
Piper Sandler & Co and BofA Securities acted as financial advisors to Fulton, while Sullivan & Cromwell LLP acted as legal counsel.