The tension in America’s banking system is not ending. America’s regional bank, Republic First Bank, has gone bankrupt, and America’s banking regulator, the Federal Deposit Insurance Corporation (FDIC), has seized its assets. Republic First Bank has become the first bank to collapse in 2024. Earlier in November last year, Citizens Bank collapsed.
Fulton Bank Will Take Over The Responsibility
The FDIC said on Friday that as of January 31, 2024, Republic First Bank’s total assets were about $6 billion, while about $4 billion were deposited in the bank. The regulator said Fulton Bank of Pennsylvania has agreed to take over Republic First Bank’s operations and buy its assets and deposits. On Saturday, all 32 branches of Republic First Bank operated as Fulton Bank.
The FDIC said Republic First Bank depositors can make transactions by check or ATM. The bank’s failure will cost the Deposit Insurance Fund about $667 million. Most Republic First Bank branches are in New Jersey, Pennsylvania, and New York.
Why Is The Risk Increasing In America?
Rising interest rates and declining commercial property values have increased financial risks for many regional and community banks. Refinancing outstanding loans, especially on lost-value properties, has become a significant challenge for banks.
Talks Failed In February
According to a report in the Wall Street Journal, Republic First Bank started talks with a group of investors about investing last year. However, these talks failed in February this year, and the FDIC began seizing and selling the bank’s assets.
Republic First Bank cut jobs in early 2023 due to high-cost pressures. The bank also exited the lending business by mortgaging property. However, this did not solve the bank’s crisis.
