Fulton Financial’s(NASDAQ:FULT) shares experienced a significant jump on Monday following its acquisition of the deposits and assets of Republic First in a regulatory-engineered deal, marking the first U.S. bank failure of 2024.
Republic First, operating as Republic Bank, faced challenges including low liquidity, failure to file annual reports with the U.S. SEC, and pressure from activist investors since 2021. With approximately $6 billion in total assets and $4 billion in deposits, Republic Bank was closed by the Pennsylvania Department of Banking and Securities, with the Federal Deposit Insurance Corporation appointed as its receiver.
In February, Republic Bank disclosed the termination of a planned $35 million funding from an investor group, signaling financial distress. Regulators had been discussing a potential sale of the bank prior to the capital infusion deal.
Regional banks like Republic First have struggled amid customer shifts toward larger, more stable rivals and challenges from higher interest rates affecting loan books and commercial real estate values.
Fulton Financial anticipates that the acquisition will double its presence in the Philadelphia market. The bank also launched a common stock offering to raise funds for general corporate purposes and to support new opportunities arising from the acquisition.
Analysts at Jefferies expressed confidence in the integration process, expecting it to enhance the bank’s liquidity. Despite being the largest deal Fulton has undertaken since the global financial crisis, investors responded positively, with Fulton’s stock rising by 10% in morning trading.
The FDIC estimated the cost to the Deposit Insurance Fund related to Republic Bank’s failure to be $667 million, underscoring the significance of the acquisition for both institutions and the broader banking sector.
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