(Reuters) -U.S. regulators have seized Republic first Bancorp (OTC:) and agreed to sell it to Fulton Bank, underscoring the challenges regional banks face a year after the collapse of three peer banks.
Philadelphia-based Republic First, which had halted financing talks with a group of investors, was seized by the Pennsylvania Department of Banking and Securities.
The Federal Deposit Insurance Corp (FDIC), appointed as receiver, said Friday that Fulton Bank, a unit of Fulton financial (NASDAQ:) Corp will take over substantially all of the deposits and buy up all of the assets of Republic Bank, the corporate name of Republic First, to “protect depositors.”
Republic Bank had approximately $6 billion in total assets and $4 billion in total deposits as of January 31, 2024. The FDIC estimated that the cost of its fund’s failure will be $667 million.
In addition to deposits, Republic also had loans and other liabilities worth about $1.3 billion, Fulton said in a statement.
Fulton said the deal nearly doubles its presence in the Philadelphia market with combined corporate deposits of approximately $8.6 billion.
“With this transaction, we are excited to double our footprint across the region,” said Fulton Chairman and
CEO Curt Myers said in a statement.
Republic Bank’s 32 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 for U.S. regional banks following the unexpected collapse of three lenders: Silicon Valley and Signature in March 2023 and First Republic in May.
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Republic Bank had struck a deal late last year with an investor group that included veteran businessman George Norcross and high-profile attorney Philip Norcross, but the effort ended in February.
After that deal fell through, the FDIC resumed efforts to seize and sell the bank, according to the Wall Street Journal, which first reported the news.
Republic Bank cut jobs and stopped making mortgages in early 2023 as the bank 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 around 1 cent on Friday, leaving its market capitalization below $2 million.
The 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 advisor.
