The move represents the latest crack - and the latest bandage job - in the beleaguered regional-banking industry
After struggling under the weight of higher interest rates, Republic First Bancorp on Friday found another regional lender willing to rescue it: fellow Pennsylvania-based bank Fulton Financial Corp.
Fulton said late Friday that its subsidiary Fulton Bank had acquired "substantially all of the assets" and snapped up "substantially all of the deposits" of Philadelphia-based Republic First, which ran 32 bank branches in Pennsylvania, New Jersey and New York under the name Republic Bank.
Fulton bought Republic First through an auction run by the Federal Deposit Insurance Corp. after Pennsylvania state banking regulators seized the troubled lender earlier Friday, the Wall Street Journal reported.
In a statement Friday evening, the FDIC said the state regulators had appointed it as Republic First's receiver and that it subsequently "entered into an agreement" with Fulton Bank "to protect depositors." The FDIC described Republic First as "the first U.S. bank failure this year."
The announcement represents the latest crack - and the latest bandage job - in the beleaguered regional-banking industry. However, Republic First was relatively tiny compared to other banks that have failed or teetered on failure since the start of last year.
Higher interest rates in the industry have cut into the value of some banks' bonds - including those at Republic First, the Journal reported Friday - while the ailing market for commercial real estate, especially in the office sector, has hurt others, raising concerns that depositors might flee those financial institutions.
Lancaster, Pa.-based Fulton, which holds around $27 billion in assets, said it had purchased assets worth approximately $6 billion in the transaction - including Republic First's roughly $2 billion investment portfolio and around $2.9 billion in loans. The company said it assumed liabilities of around $5.3 billion, including deposits of some $4 billion and other borrowings and liabilities of roughly $1.3 billion.
Fulton said Republic Bank depositors would still have access to their accounts through online banking or by writing checks and using ATMs and debit cards. Those customers would become part of Fulton's depositors and would not have to make changes to retain federally insured deposit-insurance coverage, the company said.
Fulton also said that beginning as early as Saturday, former Republic Bank locations would reopen as Fulton Bank branches. The company added that it will hold a conference call on Monday morning to offer more details on the transaction.
The move will increase Fulton's presence along the East Coast. Fulton Bank operates at more than 200 locations across Pennsylvania, New Jersey, Maryland, Delaware and Virginia. In a statement, Fulton Chief Executive Curt Myers said the deal would "double our presence across the region."
Shares of Fulton $(FULT)$ were up 12% Premarket on Monday, while shares of Republic First $(FRBK)$ closed at around a penny per share prior to the announcement.
The Wall Street Journal reported on the seizure and imminent sale of Republic First by regulators earlier on Friday. The bank managed to avoid an auction by the FDIC last year after arranging a $35 million capital infusion from an investor. But that deal collapsed earlier this year, and Bloomberg reported on Wednesday that the FDIC was in discussions with possible buyers for the bank.
The rescue of Republic First follows last year's series of failures by much larger regional banks, including Silicon Valley Bank and Signature Bank. The struggling First Republic Bank was acquired by JPMorgan Chase & Co. $(JPM)$ last year.
This year New York Community Bancorp. $(NYCB)$ has encountered similar problems, with the lender struggling with its exposure to the ailing commercial real-estate market and maneuvering to stay afloat following a steep stock selloff.
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