The Federal Deposit Insurance Corporation seal is shown outside its headquarters, Tuesday, March 14, 2023. The U.S. had its first bank failure of 2024 with federal regulators seizing control of Pennsylvania-based Republic First over the weekend, which comes a year after a string of larger regional banks collapsed in spectacular fashion and fueled fears of a run on deposits and shook faith in the financial system.
It is a significantly smaller bank than those that failed last year. Silicon Valley Bank, Signature Bank and First Republic Bank all had balance sheets totaling hundreds of billions. Federal regulators were also able to find a buyer in Fulton Financial, which means the FDIC won’t have to backstop deposits over the $250,000 limit like it did for two of 2023’s bank failures. Republic First’s failure is expected to cost the FDIC fund $667 million, the agency said.
Industry analysts aren’t anticipating more widespread trouble despite the closure of Republic First, but there are still several risks hanging over regional-sized banks. Only a handful of banks in the U.S. typically close under a strong economy.found a combination of very poor risk management, weaker regulations and lax government supervision all contributed to its collapse and sparked the run on Signature and First Republic.
“Banks, by and large, are in reasonably better shape than they than they were a year ago,” said Cliff Rossi, a professor of finance at the University of Maryland’s Robert H. Smith School of Business who also worked in high levels of risk management for several large banks. “I don't expect another March 2023 imminent at any point.”