Fulton Financial in Lancaster, Pa., will sell $250 million of common stock to support its purchase of the failed Republic First Bank.
The $27.6 billion-asset Fulton said in a press release that it will sell about 16.7 million shares of stock at $15 each. The underwriters could sell another 2.5 million shares if there is enough demand, which could bring in another $37.5 million.
Net proceeds should be about $238 million.
Fulton, which did not enter into a loss-sharing agreement with the Federal Deposit Insurance Corp., disclosed in its registration statement for the stock sale that, in order to secure approval from the Office of the Comptroller of the Currency for the deal, it agreed to seek OCC non-objection before declaring dividends over the next two years.
Fulton said it expects to buy $5.2 billion of assets that include $200 million of cash, $2 billion of investment securities, $2.9 billion of loans (bought at a $374 million discount), and $100 million of other assets. The company also expects to receive $800 million of cash from the FDIC.
Fulton plans to sell the securities portfolio, using the proceeds, along with the cash from the FDIC, to repay about $2.3 billion of wholesale funding sources in the near term. About 45% of the acquired loans are tied to commercial real estate and a third are mortgages. Roughly a fifth of the portfolio is commercial loans.
About half of the $4.2 billion of assumed deposits are interest-bearing demand deposits. About 16% are money market deposits accounts and savings accounts, 18% are noninterest-bearing demand deposits and 16% brokered and time deposits.
After selling common stock, Fulton said its total risk-based capital ratio could increase to 13.2% from 12.4%.