If or when an American bank fails, it’s a serious red flag for the economy.
And while some bank failures have been the central story of major news outlets, others haven’t even made it as a blip on the radar.
And another U.S. bank just failed but it didn’t make the headlines.
Republic Bank shutters with little fanfare
Republic Bank had 32 branches in Pennsylvania, New Jersey, and New York, but now the bank has been seized and a sale to Fulton Bank is pending.
The FDIC announced the closure late on a Friday after the stock market had already closed.
A key program that was keeping banks afloat expired last month, and by the time the news of Republic Bank’s failure became public, most people were already focusing on their weekend plans.
In an FDIC announcement, the organization said that, “Philadelphia-based Republic First Bank (doing business as Republic Bank) was closed today by the Pennsylvania Department of Banking and Securities, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver.”
“To protect depositors, the FDIC entered into an agreement with Fulton Bank, National Association of Lancaster, Pennsylvania to assume substantially all of the deposits and purchase substantially all of the assets of Republic Bank,” the statement continued.
The FDIC also said that all of Republic Bank’s 32 branches would reopen that Saturday as branches of Fulton Bank.
Before the seizure of the bank was announced, a sales agreement had already been made.
According to the FDIC, the agreement will cost them $667 million.
However, “compared to other alternatives, Fulton Bank’s acquisition of Republic Bank is the least costly resolution for the DIF, an insurance fund created by Congress in 1933 and managed by the FDIC to protect the deposits at the nation’s banks.”
While the DIF has plenty of money allocated for such acquisitions, it could lead to a catastrophe if multiple banks fail.
Republic Bank’s stock price fell to $.01 and the company was sitting on “$262 million of unrealized losses on bonds.”
The bank had a stock price of $2 at the start of the year, then fell to $.01 on April 26, which caused its shares to be delisted from the NASDAQ.
More banks could face closures
Silicon Valley Bank and Republic Bank failed, but other financial institutions could face a similar fate.
If it weren’t for a group of investors who were convinced to pump billions of dollars into the troubled New York Community Bank, then it may have also failed.
Shark Tank’s Kevin O’Leary believes thousands of banks will fail in the coming years.
“In the next three to five years, more regional institutions will fail. That’s why I don’t have a dime saved or invested in a single one,” he said.
Meanwhile, the nation is also facing a commercial real estate collapse that could lead more regional banks to crumble.
The tallest office building in St. Louis just sold for an eye-watering 98% less than what it sold for in 2006, which is an ominous sign of what’s to come.
Patriot Political will keep you up-to-date on any developments to this ongoing story.
