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Posted on 04/26/2024 6:17:46 PM PDT by george76
US regulators have seized Republic First Bancorp and agreed to sell it to Fulton Bank, the Federal Deposit Insurance Corp. said Friday, underscoring the challenges facing regional banks a year after the collapse of three peers.
The Philadelphia-based bank, which had abandoned funding talks with a group of investors, was seized by the Pennsylvania Department of Banking and Securities.
The FDIC, appointed as a receiver, said Fulton Bank, a unit of Fulton Financial, will assume substantially all deposits and purchase all the assets of Republic Bank to “protect depositors.”
Republic Bank had about $6 billion in total assets and $4 billion in total deposits, as of Jan. 31, 2024. The FDIC estimates that the cost to the Deposit Insurance Fund related to the failure of Republic Bank will be $667 million.
...
The decision marks the latest regional bank failure following the unexpected collapses of three lenders – Silicon Valley and Signature in March 2023 and First Republic in May.
Republic Bank had struck a deal with an investor group that included veteran businessman George Norcross, high-profile attorney Philip Norcross late last year, but that was terminated in February.
After that deal collapsed, the FDIC resumed efforts to seize and sell the bank,
...
The bank’s stock price has tumbled from just over $2 at the start of the year to about 1 cent on Friday, leaving it with a market capitalization below $2 million.
Its shares were delisted from the Nasdaq in August and now trade over the counter.
(Excerpt) Read more at nypost.com ...
It just sounds like the feds are putting regional out of banks out of business and transferring the assets to favoured banks.
That’s a relatively small bank, by assets.
The WaMu smash and grab is the new model.
White House: ‘Underlying Economy Is Solid as Ever’
Breitbart
04/26/2024
By Ian Hanchett
Yes
As near as I can tell someone came up with the bright idea of these banks buying long term treasuries. That under the accounting rules this would still count toward the amount of money they need to keep on hand. It gave them a small extra amount of profit somehow and everything seemed OK. This spread as a common practice at the regional banks.
Then when inflation hit and interest rates climbed those long term treasuries were worth half of what they were originally purchased for. Now if the customers don't need their money back, no big deal, you just wait out the 10 years and get all your money back. But if enough money starts leaving the bank and now you are forced to sell off those 10 year treasuries at present value you go bankrupt rather quickly.
Had these banks kept their reserves in a ladder of short term treasuries there wouldn't have been a problem. You can likely set up the cash flow to maximize getting your full amount of money out of the short terms.
I have never seen an article as to why this practice was so wide spread in the industry. I suspect the Fed needed buyers of the long term and convinced the regionals they would have their back.
The fed for a while was floating many of these regional banks by covering their long term exposure under the Bank Term Funding Program but that ended back in March 2024.
The kicker on this from what I have read is the FDIC doesn't have enough money to cover all the regional banks that will fail. That's why they are working out sales of assets to kick the can down the road so to speak. But as we saw with the deal the FDIC put together for Signature bank last year, New York Community Bank (the new owner of Signature's assets) is now having trouble.
Sounds like it was planned.
They were stupid to fall for it.
The story: Commerce bank was a huge local bank in the Philly region and was a fantastic bank. They had long hours, open 7 days a week, outstanding customer service. I think over the 80s and 90s their stock outperfomed Microsoft. Then they got bought by TD Bank from Canada and slowly all that has been eroding.
Meanwhile after the sale the owner of the original Commerce had a non-compete and when it expired he created Republic Bank, a clone of the old Commerce Bank and their model of customers first. But I've noticed that the branches never seem busy at all. For whatever it just never caught on. I think because changing is just too big a pain in the butt to change banks due to electronic bill payment, once it's in place. That's why I never went to it.
However my mom doesn't have that issue and did open an account there and I manage her money (she's in her 90s) so this does effect me, unfortunately.
My understanding is that the bank's stock was all owned by the holding company, and not traded at all. Reporter may not know the difference between the two entities.
Pennsylvania Ping!
Please ping me with articles of interest.
FReepmail me to be added to the list.
Bidenpression.
BidenDepression 2024?
I missed it by a year 🤔
Oh wait greatest economy ever I meant
A depression is when you lose your job.
A recovery is when Joe Biden loses his job.
🔝🔝
[The story: Commerce bank was a huge local bank in the Philly region and was a fantastic bank. They had long hours, open 7 days a week, outstanding customer service. I think over the 80s and 90s their stock outperfomed Microsoft. Then they got bought by TD Bank from Canada and slowly all that has been eroding.
Meanwhile after the sale the owner of the original Commerce had a non-compete and when it expired he created Republic Bank, a clone of the old Commerce Bank and their model of customers first. But I’ve noticed that the branches never seem busy at all. For whatever it just never caught on. I think because changing is just too big a pain in the butt to change banks due to electronic bill payment, once it’s in place. That’s why I never went to it.]
I would agree with your assessment. Adding:
1. Commercial real estate actions (planned out in the past 20 years) didn’t really calculate the pain off Covid and serious downturns in property use/value. You see a number of small mall operations, store-fronts, and even hotels which are failing....going back to the ownership of the bank. In this case, even if they take it and resell...I doubt if you get more than 50-percent of the previous accepted value.
2. Car repossess actions on the upswing. Lot of stupid people buying $75,000 cars on a 8-year plan, with only 20-percent down. They run into a crisis period at work/office, and miss three or four payments. Bank takes over a 4-year old car, which has maybe 60-percent of the original value, and can never get what they loaned back.
3. Because of car loan issues...rejection of car loans is presently around 20-percent...meaning fewer people being accepted than ever before.
4. Even if you see some regional bank swallowed up by a mid-sized operation...it doesn’t mean the branches still continue to exist. Look around....large number of bank structures empty.
Lot of signals that show a relationship to 1929. Hobo-traffic of that era...very much existing in homeless traffic today.
corralling the sheep into banks working with the government that will eventually tell you one day we are going digital
I, many years ago at the center city branch, noticed what looked like a bullet hole in the window to the bank. I went in and told them about it. not sure what they did.
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