Regulators are closing Philadelphia-based Republic First Bank, the first U.S. bank failure this year

WASHINGTON (AP) — Regulators have shuttered Republic First Bank, a regional lender that operates in Pennsylvania, New Jersey and New York.

The Federal Deposit Insurance Corp. said Friday it had seized the Philadelphia-based bank, which did business as Republic Bank and had about $6 billion in assets and $4 billion in deposits as of Jan. 31.

Fulton Bank, based in Lancaster, Pennsylvania, agreed to take over substantially all of the bankrupt bank's deposits and buy substantially all of its assets, the agency said.

The 32 branches of Republic Bank will reopen on Saturday as branches of Fulton Bank. Republic First Bank depositors will be able to access their money through checks or ATMs as early as Friday evening, the FDIC said.

The bank's bankruptcy is expected to cost the deposit insurance fund $667 million.

The lender is the first FDIC-insured institution to declare bankruptcy in the U.S. this year. The last bank failure – ​​Citizens Bank, based in Sac City, Iowa – occurred in November.

In a strong economy, on average only four or five banks close their doors each year.

Rising interest rates and declining commercial real estate values, especially for office buildings facing rising vacancy rates after the pandemic, have increased financial risks for many regional and community banks. Outstanding loans secured by properties that have lost their value make it challenging to refinance them.

Last month, an investor group including Steven Mnuchin, who served as US Treasury secretary during the Trump administration, agreed to pump more than $1 billion to bail out New York Community Bancorp. has been hammered due to weakness in commercial real estate and growing pains due to the acquisition of an ailing bank.

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