Since 2017, 15 banks have failed, with five banks failing in 2023 alone. Republic First Bank's demise on April 26 was the first failure of 2024. Its collapse renewed fears that last year's financial instability is still lingering.
Republic First Bank was shuttered last week by its state regulator and taken over by the Federal Deposit Insurance Corp. Fulton Bank in Lancaster, Pennsylvania, assumed 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 underwater bond troubles mirrored those at First Republic Bank and Silicon Valley Bank, two of the institutions that collapsed in 2023, said Brian Graham, a partner at Klaros Group. He added that based on unrealized losses, dozens of banks across the country are also insolvent or nearly there.
"This dynamic is not limited to Republic First," Graham told American Banker's Kyle Campbell. "It's playing out in a whole bunch of other bank balance sheets, even as we speak. This disconnect between the economic reality of how much capital a bank really has and the stated regulatory capital level … is troubling."
In this week's BankThink column, American Banker's Washington Bureau Chief John Heltman offered his take: "The failure of Republic First, then, is on the one hand a blip — banks fail all the time (or at least they should), and when they do there is usually a boring, happy bank willing to step in and ensure that life goes on. But what is striking about the failure of Republic First is that there are many unhappy banks out there that are unhappy in substantially the same way — and may be facing the same inevitable demise."
First Republic Bank failed on April 28, 2023. Signature Bank failed on March 12, 2023. Silicon Valley Bank failed on March 10, 2023. Almena State Bank failed on October 23, 2020.
State regulators closed Republic First Bank in April 2024, marking the first bank failure of the year. Fulton Bank entered into an agreement with the FDIC to purchase most of Republic First's $6 billion in assets and to assume most of its $4 billion in deposit liabilities.
The collapse of Washington Mutual (WaMu) in 2008 stands out as the largest bank failure in U.S. history, according to the FDIC. When regulators seized it, WaMu had more than $300 billion in assets and $188 billion in deposits, making it the sixth-largest U.S. bank.
Introduction: My name is Edwin Metz, I am a fair, energetic, helpful, brave, outstanding, nice, helpful person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.
