Fulton Bank buys Philly’s Prudential Bank, pledges city aid

Fulton Financial Corp. of Lancaster says it will pay $142 million, or about $18 a share, for Philadelphia-based Prudential Bancorp, as mergers continue to gobble up the region’s remaining independent lenders.

The deal brings Fulton more assertively into the city from its base in south-central Pennsylvania and the suburbs.

Fulton has $26 billion in loans and other assets, and 156 branches, about one-third of them in the Philadelphia area. But just three of those are in the city, including a Center City office opened in 2016 to seek business accounts and a Brewerytown office opened in 2019 as that aging neighborhood attracted new investment from apartment and retail developers.

The bank also invested in Philadelphia’s Black-owned United Bank in 2017 when that two-branch institution needed capital.

After testing the market with new offices in Brewerytown and Philadelphia, bank leaders believe that the city is now “a good fit for us — strategically, culturally and geographically,” Fulton chairman E. Philip Wenger said in a statement. He promised “community-oriented” banking, which will include “fostering affordable housing, driving economic development, and increasing financial literacy in and around Philadelphia.”

Prudential is based at 18th and Oregon in South Philly and has seven other branches in South Philly, Center City, and the river wards, plus outposts in Huntingdon Valley and Drexel Hill. The banks each have a branch two blocks apart near Logan Circle, but otherwise little overlap in their networks.

But Fulton plans deep cuts to Prudential, which employs about 90 people. The buyer hopes to save $1.9 million a year, or 45% of Prudential’s operating expenses, after it absorbs the smaller bank, analyst Erik Zwick told clients of Boenning & Scattergood, the Conshohocken-based investment bank.

On a day that most bank stocks rose, both Fulton and Prudential traded higher on news of the deal. Fulton rose more than 2% to close at $17.82. Its shares have been stuck in the $17 to $20 range for most of the last five years.

Prudential shares peaked at $19.20 in 2018 but have lately traded at about $13. They jumped more than 18% Wednesday to close at $17.11.

Both banks have added Philadelphia-area customers rapidly in recent years. Fulton’s area deposits rose to $4.4 billion at 52 local branches as of June 30, up from $2.6 billion at a slightly larger area branch network five years earlier.

Prudential rose to $734 million in deposits at 10 branches, from $396 million at six offices, in the same five-year period. Both rose more rapidly than the area banking market as a whole, according to Federal Deposit Insurance Corp. data.

Prudential profits last year fell to about $7.8 million, after topping $9.5 million in each of the previous two years.

Bank analysts have predicted a wave of mergers as rising interest rates boost bank profits, by enabling them to invest more profitably and charge higher loan rates.

WSFS Corp. of Wilmington has swallowed Beneficial and Bryn Mawr Trust in the last couple of years, cementing its status as the largest bank still based in the region. Veteran banker Vernon Hill’s Philadelphia-based Republic Bank is facing a shareholder rebellion pressuring management to boost profits or seek a buyer.

The banks hope to close the deal this fall, pending regulators’ approval. The Prudential name will be replaced by Fulton and the branches integrated into the larger bank’s systems.

Fulton’s price includes almost 0.8 Fulton shares for each Prudential share, plus $3.65 in cash, tax-free to Prudential shareholders. Both boards have approved the deal, according to a joint statement by Wenger and Prudential boss Dennis Pollack.

As part of the deal, Fulton says it will set aside $2 million in additional funds to its Fulton Forward nonprofit foundation to finance “gifts in support of nonprofit community organizations in Philadelphia that are focused on advancing economic empowerment,” especially in poor neighborhoods.

Pollack praised Fulton’s focus as compatible with Prudential’s own.