Fulton Financial to Sell Global Exchange Group Unit, Sees Pretax Gain $6.2M
Fulton Financial Corporation (NASDAQ: FULT) today announced that its wholly-owned bank subsidiary, Fulton Bank, N.A., has entered into an agreement with Cambridge Mercantile Group to divest its Global Exchange Group (GEG) division. GEG provides international payment solutions to meet the needs of companies, law firms and professionals. "In 2006 we acquired GEG, a provider of worldwide payments and funds transfer services, to supplement our proprietary international capabilities," said E. Philip Wenger, Fulton Financial Corporation's president and chief operating officer. "The Corporation's current strategic focus is on community banking within our five-state geographic footprint. Rather than limiting the scope of GEG's future activities to within our regional presence, we located a buyer whose goals and objectives are more compatible with GEG's international strategy."
The transaction is expected to occur prior to the end of 2012 and is subject to customary conditions to closing. The transaction is expected to result in a pre-tax gain in the fourth quarter of approximately $6.2 million ($2.2 million, net of tax). For the twelve months ended October 31, 2012, GEG activities generated revenues of $9.1 million, expenses of $5.2 million and net income of approximately $2.5 million. The proceeds of this transaction and short-term borrowings will be used to prepay approximately $20 million in Federal Home Loan Bank (FHLB) advances, with an interest rate of 4.38% and maturing in January 2017. Fulton Financial Corporation anticipates incurring a penalty in connection with prepaying these FHLB advances of approximately $3.3 million ($2.2 million, net of tax). The annual interest expense savings from the prepayment of the FHLB advances is approximately $825,000, or $540,000 net of tax.
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