Fulton Financial’s Shares Rise After Launching Stock Offering for Republic First Acquisition

Fulton Financial’s Shares Surge After Acquisition of Troubled Republic Bank

In a move to support its acquisition of the deposits and assets of Republic First, Fulton Financial launched a common stock offering that has sent its shares soaring. The acquisition comes after Republic Bank became the first US bank failure of 2024, with regulators stepping in to close the troubled lender.

Fulton’s stock saw a 12% increase in premarket trading, though it later settled at a 6% gain amidst volatile market conditions. With a market capitalization of $2.53 billion, the bank’s move has been met with optimism by investors.

The KBW Regional Banking Index, which reflects investor sentiment towards the industry, has been down 10.5% this year as regional banks struggle to retain deposits. Customers are increasingly turning to larger ‘too-big-to-fail’ banks for safety, while higher interest rates have impacted the value of loan books.

Republic Bank’s woes included low liquidity, failure to file annual reports with the SEC, and pressure from activist investors. The bank’s closure by the Pennsylvania Department of Banking and Securities has resulted in an estimated cost of $667 million to the Deposit Insurance Fund.

Investors have been on edge following the collapse of three prominent lenders in early 2023, which triggered a global sell-off in banking stocks and heightened regulatory scrutiny. Republic Bank’s failed capital infusion deal with an investor group led by George Norcross and others further exacerbated its financial troubles.

Fulton Financial expects the acquisition to double its presence in the Philadelphia market, with management set to discuss the deal at an investor conference. The bank plans to use the proceeds from the stock offering for general corporate purposes and to capitalize on new opportunities arising from the Republic Bank acquisition.

Analysts at Jefferies are optimistic about the integration, expecting it to boost liquidity despite being the largest deal Fulton has undertaken since the global financial crisis. The move marks a significant step for Fulton Financial as it navigates the challenges facing the banking industry.