FULTON FINANCIAL CORP Fulton Financial Corp Expands with Key Acquisition of Blue Foundry Bancorp

Fulton Financial Corp (FFC) is set to significantly expand its presence and strengthen its financial position through the acquisition of Blue Foundry Bancorp. This all-stock transaction represents a pivotal moment in Fulton's growth strategy, designed to deliver substantial benefits to shareholders, customers, and the communities it serves.

Key Transaction Details

Fulton Financial Corp, parent company of Fulton Bank, N.A., is acquiring Blue Foundry Bancorp (BFBC), the holding company for Blue Foundry Bank. This all-stock transaction means Blue Foundry Bancorp shareholders will exchange their shares for Fulton Financial common stock.

• Agreement Date: Fulton announced the merger agreement on November 24, 2023.
• Transaction Value: Fulton values the acquisition at approximately $204 million, based on its closing stock price at the time of the announcement.
• Exchange Ratio: Blue Foundry Bancorp shareholders will receive 0.80 shares of Fulton Financial common stock for each share of Blue Foundry Bancorp common stock they own.
• Regulatory Approvals: Regulators have granted all necessary approvals. The Federal Reserve approved the deal on February 19, 2024, following earlier approval from the Office of the Comptroller of the Currency for the bank merger.
• Expected Closing: Fulton expects the transaction to close on or about April 1, 2024. Upon closing, Blue Foundry Bank will merge into Fulton Bank, N.A.

Strategic Rationale and Expected Benefits

Fulton aims to expand its footprint and strengthen its market position with this acquisition, especially in the attractive New Jersey market, where Blue Foundry Bank operates approximately 20 branches.

• Expanded Scale: The combined company will have approximately $28.5 billion in assets, $22.9 billion in deposits, and 200 financial centers across five states (Pennsylvania, Maryland, Delaware, Virginia, and New Jersey). Blue Foundry Bancorp adds approximately $2.6 billion in assets and $2.1 billion in deposits to Fulton.
• Financial Accretion: Fulton expects the transaction to be approximately 8% accretive to its earnings per share (EPS) in 2025, excluding one-time merger-related costs.
• Cost Synergies: Fulton expects the acquisition to generate approximately $15 million in annual cost savings, primarily from operational efficiencies and reduced overhead, fully realized by late 2025.
• Strategic Growth: This move allows Fulton to deepen its presence in key growth markets, gain new customers, and leverage Blue Foundry's established relationships and local market expertise, avoiding the time and cost of organic branch expansion.

Impact on Stakeholders

The acquisition will affect several key groups:

• Fulton Financial Shareholders: Although issuing new shares to Blue Foundry shareholders will modestly dilute existing Fulton shares by approximately 3%, Fulton expects this to be more than offset by projected EPS accretion and long-term value creation from the expanded scale and synergies.
• Blue Foundry Bancorp Shareholders: They will become Fulton Financial shareholders, participating in the future growth and financial performance of the larger, combined institution.
• Customers: Blue Foundry Bank customers will transition to Fulton Bank, gaining access to an expanded branch network, a broader range of products and services, and enhanced digital banking capabilities. Existing Fulton Bank customers will benefit from a larger network and potentially new offerings.
• Employees: The integration process will bring changes. While some roles may overlap, Fulton aims to retain talent and leverage the expertise of Blue Foundry employees, especially those with strong local market knowledge.

Risks and Considerations for Investors

Investors should be aware of potential risks associated with the integration of two financial institutions:

• Integration Challenges: Combining complex banking systems, operations, and cultures presents challenges and may incur higher-than-anticipated integration costs, estimated at approximately $20 million. Delays or difficulties in integration could impact the realization of expected synergies.
• Execution Risk: The projected cost savings and EPS accretion are estimates. These benefits may not be fully realized or may take longer to achieve than anticipated.
• Market Conditions: Broader economic conditions, interest rate fluctuations, and competitive pressures in the banking sector could influence the combined company's performance.
• Regulatory Environment: Ongoing regulatory scrutiny in the financial industry could impact operations and strategic decisions.

What Happens Next?

With regulatory approvals secured, attention now turns to successfully closing the transaction on or about April 1, 2024. After closing, Fulton will begin a comprehensive integration plan, typically spanning 12 to 18 months. This process includes:

• Systems Conversion: Migrating Blue Foundry's customer accounts and operational systems to Fulton's platforms.
• Branch Rebranding: All Blue Foundry Bank branches will be rebranded as Fulton Bank.
• Customer Communication: Fulton will provide extensive communication to customers regarding account transitions, new services, and branch information.

Investors should monitor Fulton's future earnings calls and investor presentations for updates on the integration progress, the realization of synergies, and the financial impact of the acquisition. The success of this acquisition will largely depend on Fulton's ability to execute a smooth integration and achieve the anticipated financial and strategic benefits.