PHILADEPHIA–Just days after the FDIC reported its Deposit Insurance Fund reserve ratio is on track to return to its statutory minimum of 1.35% before its statutory deadline of Sept. 30, 2028, the failure of a bank late last week is expected to cost the fund more than $650-million.
The $6-billion Republic First Bank, which did business as Republic Bank, was shuttered by the Pennsylvania Department of Banking and Securities, which appointed the FDIC as receiver. The FDIC entered into an agreement with Fulton Bank Lancaster, Penn., to assume substantially all deposits and purchase substantially all of the assets of Republic Bank.
Best of Bad Choices
While the FDIC said it estimated that the cost to the insurance fund related to the failure will be approximately $667 million, it said it determined that compared to other alternatives, Fulton Bank’s acquisition of Republic Bank is the least costly resolution for the DIF.
The Republic Bank failure is the first U.S. bank failure this year.
According to Forbes.com, in 2022, Republic First’s financial auditor told the bank it had “material weaknesses in internal control over financial reporting,” according to a regulatory filing. That auditor was dismissed by Republic First in February, Forbes.com reported.
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