Shares of Fulton Financial Corporation (FULT - Free Report) jumped 7.6% following the announcement of the acquisition of substantially all assets and deposits of Republic First Bank (“Republic Bank”) from the Federal Deposit Insurance Corporation (FDIC). The transaction has been successfully completed following the necessary regulatory approvals.
Republic Bank was seized by U.S. regulators on Apr 26 as it struggled amid a high interest rate regime. This adversely impacted its balance sheet and market valuation, given its high exposure to commercial real estate loans.
Despite taking several measures, including the divestiture of mortgage origination business, headcount reduction and capital infusion, the company struggled to remain solvent. Thus, the bank became the first casualty of the regional banking crisis in 2024.
There were three major bank failures last year. Silicon Valley Bank and Signature Bank collapsed in early 2023. Silicon Valley Bank was acquired by First Citizens Bancshares, Inc. (FCNCA - Free Report) , while New York Community Bancorp, Inc. (NYCB - Free Report) acquired Signature Bank. Further, in May, First Republic Bank collapsed and was bought by JPMorgan (JPM - Free Report) .
FCNCA took over Silicon Valley Bank’s assets worth $110 billion, deposits worth $56 billion and loans worth $72 billion. The bank also received an available line of credit from the FDIC for contingent liquidity purposes. On the other hand, NYCB acquired $38 billion in assets and assumed $36 billion of liabilities of Signature Bridge Bank, N.A., from the FDIC. Meanwhile, JPM paid $10.6 billion for the bulk of First Republic’s $228 billion of assets and assumed deposits worth $92 billion.
Acquisition Aligns With Fulton’s Growth Strategy
For FULT, this strategic move is in sync with the growth plan of doubling its presence in the Philadelphia market. As part of the deal, the company bought assets of roughly $5.2 billion, which includes an investment portfolio of approximately $2 billion and loans & leases worth almost $2.9 billion.
Moreover, Fulton’s assumed liabilities are worth roughly $5.3 billion, which include deposits of approximately $4.2 billion and other borrowings and liabilities of roughly $1.3 billion.
Also, this will reduce FULT’s loan-to-deposit ratio to 92% from 99% and enhance its liquidity profile.
Curt Myers, chairman and CEO of Fulton, said, “We look forward to welcoming Republic Bank’s team members and customers to Fulton and providing our comprehensive set of consumers, commercial and wealth advisory products and services to even more customers.”
Further, the deal is expected to provide immediate operative leverage via purchase accounting, anticipated cost savings and balance sheet restructuring. Additionally, the transaction will be accretive to FULT’s 2024 EPS by roughly 20%. Though some tangible book value dilution (more than 4%) may take place initially, the same is anticipated to be offset within 1.25 years.
FULT Announces Common Stock Offering
Fulton has announced the launch of a common stock offering of 16.7 million shares at $15 per share, aggregated to $250 million. Besides that, underwriters have been granted a 30-day option to buy an additional 2.5 million shares at a public offering price.
FULT expects the net proceeds to be approximately $238 million. The offering is anticipated to close by May 1, 2024, subject to customary conditions.
Management intends to use the proceeds to address general corporate purposes as well as to fund new strategic initiatives going forward.
Conclusion
Over the years, Fulton has been engaged in inorganic growth measures to enhance profitability. In May 2022, it completed the acquisition of Prudential Bank, while it acquired BenefitWorks in 2020. We believe the company will continue expanding through acquisitions, given its solid balance sheet position.
Over the past six months, shares of FULT have jumped 31.6% compared with the industry’s rally of 10.5%.
Currently, FULT carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Shares of Fulton Financial Corporation (FULT - Free Report) jumped 7.6% following the announcement of the acquisition of substantially all assets and deposits of Republic First Bank (“Republic Bank”) from the Federal Deposit Insurance Corporation (FDIC). The transaction has been successfully completed following the necessary regulatory approvals.
Republic Bank was seized by U.S. regulators on Apr 26 as it struggled amid a high interest rate regime. This adversely impacted its balance sheet and market valuation, given its high exposure to commercial real estate loans.
Despite taking several measures, including the divestiture of mortgage origination business, headcount reduction and capital infusion, the company struggled to remain solvent. Thus, the bank became the first casualty of the regional banking crisis in 2024.
There were three major bank failures last year. Silicon Valley Bank and Signature Bank collapsed in early 2023. Silicon Valley Bank was acquired by First Citizens Bancshares, Inc. (FCNCA - Free Report) , while New York Community Bancorp, Inc. (NYCB - Free Report) acquired Signature Bank. Further, in May, First Republic Bank collapsed and was bought by JPMorgan (JPM - Free Report) .
FCNCA took over Silicon Valley Bank’s assets worth $110 billion, deposits worth $56 billion and loans worth $72 billion. The bank also received an available line of credit from the FDIC for contingent liquidity purposes. On the other hand, NYCB acquired $38 billion in assets and assumed $36 billion of liabilities of Signature Bridge Bank, N.A., from the FDIC. Meanwhile, JPM paid $10.6 billion for the bulk of First Republic’s $228 billion of assets and assumed deposits worth $92 billion.
Acquisition Aligns With Fulton’s Growth Strategy
For FULT, this strategic move is in sync with the growth plan of doubling its presence in the Philadelphia market. As part of the deal, the company bought assets of roughly $5.2 billion, which includes an investment portfolio of approximately $2 billion and loans & leases worth almost $2.9 billion.
Moreover, Fulton’s assumed liabilities are worth roughly $5.3 billion, which include deposits of approximately $4.2 billion and other borrowings and liabilities of roughly $1.3 billion.
Also, this will reduce FULT’s loan-to-deposit ratio to 92% from 99% and enhance its liquidity profile.
Curt Myers, chairman and CEO of Fulton, said, “We look forward to welcoming Republic Bank’s team members and customers to Fulton and providing our comprehensive set of consumers, commercial and wealth advisory products and services to even more customers.”
Further, the deal is expected to provide immediate operative leverage via purchase accounting, anticipated cost savings and balance sheet restructuring. Additionally, the transaction will be accretive to FULT’s 2024 EPS by roughly 20%. Though some tangible book value dilution (more than 4%) may take place initially, the same is anticipated to be offset within 1.25 years.
FULT Announces Common Stock Offering
Fulton has announced the launch of a common stock offering of 16.7 million shares at $15 per share, aggregated to $250 million. Besides that, underwriters have been granted a 30-day option to buy an additional 2.5 million shares at a public offering price.
FULT expects the net proceeds to be approximately $238 million. The offering is anticipated to close by May 1, 2024, subject to customary conditions.
Management intends to use the proceeds to address general corporate purposes as well as to fund new strategic initiatives going forward.
Conclusion
Over the years, Fulton has been engaged in inorganic growth measures to enhance profitability. In May 2022, it completed the acquisition of Prudential Bank, while it acquired BenefitWorks in 2020. We believe the company will continue expanding through acquisitions, given its solid balance sheet position.
Over the past six months, shares of FULT have jumped 31.6% compared with the industry’s rally of 10.5%.
Currently, FULT carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners Up
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