Fulton Financial Corp (NASDAQ:FULT) is set to close 13 of its bank branches as part of a consolidation strategy, according to a recent 8-K filing with the Securities and Exchange Commission. The decision was approved by the Board of Directors of Fulton Bank, a wholly owned subsidiary of the corporation, on Monday.
The closures are a response to the integration of assets and liabilities from the acquisition of Republic Bank, which was completed on April 26, 2024, and are part of the ongoing FultonFirst strategic initiative. The affected branches, located in Pennsylvania and New Jersey, are slated to shut down around November 22, 2024.
Fulton Financial anticipates pre-tax costs related to the closures to be approximately $10 million. These expenses will include $6 million in write-offs of premises and equipment, around $3 million in lease termination fees, and about $1 million earmarked for employee severance. The costs are expected to be recognized in the third quarter of 2024.
Despite the immediate financial impact, the corporation projects annual pre-tax operating expenses to decrease by roughly $8 million, starting from the first quarter of 2025. This move is seen as a realignment to optimize the bank's branch network following the expansion of its footprint with the Republic Bank transaction.
In other recent news, Fulton Financial has been the subject of several strategic actions and analyst adjustments. The company reported a significant uptick in earnings, following its acquisition of FRBK and the release of a positive earnings report. This led to DA Davidson increasing the price target for Fulton Financial shares to $20.00, while maintaining a Neutral rating. Janney also maintained its Buy rating on Fulton Financial after the company completed the sale-leaseback of 40 financial centers, resulting in a pre-tax gain of $20.4 million.
Furthermore, Fulton Financial's acquisition of FRBK led to multiple adjustments in stock price targets by various firms, including Stephens and Keefe, Bruyette & Woods. This acquisition is expected to deliver a substantial 20% increase in earnings per share (EPS) and is anticipated to enhance the efficiency ratio by 300 basis points. Finally, Fulton Financial announced the pricing of its public stock offering at $15 per share, expected to raise $250 million in aggregate. These are the recent developments in Fulton Financial's strategic actions and financial performance.
InvestingPro Insights
As Fulton Financial Corp (NASDAQ:FULT) navigates through its consolidation strategy, real-time metrics from InvestingPro provide a snapshot of the company's financial health and market performance. With a solid market capitalization of $3.49 billion and a price-to-earnings (P/E) ratio of 11.27, the company showcases a reasonable valuation in the market. The slight uptick in the adjusted P/E ratio to 11.88 in the last twelve months as of Q2 2024 indicates a stable earnings outlook. Additionally, the company's revenue growth of 4.71% over the same period reflects a steady increase in its financial performance.
InvestingPro Tips highlight that Fulton Financial has seen a significant return over the last week, with a 12.67% price total return, and an impressive 59.2% return over the past year, underscoring the stock's strong recent performance. Moreover, the company has demonstrated a commitment to shareholders by maintaining dividend payments for 43 consecutive years, with a current dividend yield of 3.46%. However, potential investors should note the company's weak gross profit margins, which could impact future profitability.
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