Published on 30 Apr 2024 on Zacks via Yahoo Finance

Fulton (FULT) Buys Republic First Bank, Expands in Philadelphia

Shares of Fulton Financial Corporation FULT 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, while New York Community Bancorp, Inc. NYCB acquired Signature Bank. Further, in May, First Republic Bank collapsed and was bought by JPMorgan JPM.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.