Another tanker down.. Sorry, bank

Republic First Bank failed, and most of it was purchased by Fulton Financial.
Despite its previous status as a publicly traded entity, it struggled with disclosures, managing only a PowerPoint presentation in July 2023 after regular annual reports ceased in 2021.  This was largely attributed to ongoing difficulties in retaining an auditor. In 2023, Republic's investor presentation confidently outlined a recovery plan from a poorly executed PPP-funded expansion into NYC commercial real estate,  jumbo residential mortgages at below-market rates and acquisitions of low-fixed rate, long-term securities. The bank had even laid off its NYC credit and sales staff in a bid to exit these troubled business lines—though, presumably, (finger-crossed), the restructuring team remained intact.

With new leadership comprising a CEO, CFO, and General Counsel, Republic Frist Bank tried to re-position itself to its core  in the metropolitan Philadelphia and Southern New Jersey markets. It emphasized a niche between smaller community banks with limited resources and larger national banks lacking localized expertise. The strategic positioning was simultaneously precise and vague, casting doubt on the clarity of its vision. Either way, management did not give away their exact plans to exploit their  ( newly)defined strength.

It might not have mattered much. Banks resemble tankers more than yachts, as they cannot swiftly change course in response to macroeconomic shifts. Smaller banks, especially those with assets under $10 billion, are usually left without too many easy options.  Often, these banks are the last to enter risky loan categories and the last to exit, forcing them to sell distressed assets in struggling markets when net interest margins are at their thinnest. Such scenarios require deep capital reserves, usually non-existent, and stakeholders favoring a complete overhaul over a prolonged struggle. Compounded by activist investors, Republic First was without the means to rally capital, struggled with increasing loan losses, and had a name confusingly similar to another troubled bank.

The toughness of course correction isn't isolated to Republic First. Other larger banks like NYCB face similar challenges even after a capital raise. It will be interesting to see how Fulton Financial manages to steer this new acquisition towards recovery.