Republic First fails; Fulton Bank acquires assets, branches

Republic First Bank was shuttered by its state regulator and taken over by the Federal Deposit Insurance Corp. on Friday, ending the Philadelphia-based bank’s yearslong struggle to maintain adequate capital amid a bitter proxy war with investor groups.

Fulton Bank in Lancaster, Pennsylvania, will assume substantially all of Republic First’s $6 billion of assets and $4 billion of deposits, according to a statement from the FDIC.

Republic First’s 32 branches, which are spread across Pennsylvania, New Jersey and New York, will open for business on Monday morning — or Saturday morning for locations that normally operate on the weekend — as Fulton Bank branches, the agency announced. 

Republic First’s parent company, Republic First Bancshares, has been dealing with internal strife since late 2021, when a group of activist investors sought to force a sale of the bank, citing concerns about decisions made by then-CEO Vernon Hill. 

Problems for the bank compounded just six weeks later when a second investor group called for Hill’s ouster. The embattled executive eventually succumbed to the pressure — following the death of a key ally — and lost his chairmanship of the bank’s board in May 2022. Hill ultimately resigned from his post as CEO two months later.

The bank attempted to raise $125 million in additional capital from investors last year — an effort that launched on the same day that Silicon Valley Bank failed — but the deal fell apart only months later.

A subsequent capital infusion came together last fall amid reports that the FDIC was seeking a buyer for the troubled bank. But that capital raise also ultimately fell apart. 

As is customary in a bank failure, the FDIC was appointed receiver for Republic First after its failure. The sale to Fulton Bank will result in a $667 million loss for the Deposit Insurance Fund.

In its announcement, the agency said the sale to Fulton Bank would be the least costly outcome for the fund.

Republic Bank’s demise is the first of this year. The last bank to fail was Citizens Bank in Sac City, Iowa, in November 2023.