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Business Combinations
 9 Months Ended
Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract]  
Business Combinations Business Combinations
On July 1, 2022, the Corporation completed its acquisition of Prudential Bancorp, a Pennsylvania chartered bank holding company headquartered in Philadelphia, Pennsylvania that primarily served the Greater Philadelphia region. On that date, the Corporation acquired 100% of the outstanding common stock of Prudential Bancorp, Prudential Bancorp was merged with and into the Corporation, and Prudential Bancorp's wholly owned subsidiary, Prudential Bank, became a wholly owned subsidiary of the Corporation. The Corporation merged Prudential Bank with and into Fulton Bank in the fourth quarter of 2022. Results of the operations of the acquired entity were included in the Corporation's consolidated financial statements beginning on July 1, 2022. As a result of the Merger, the Corporation enhanced its presence in Philadelphia, Pennsylvania, expanded its customer base and leveraged operating costs through economies of scale.

In accordance with the terms of the definitive merger agreement, each share of Prudential Bancorp's common stock issued and outstanding immediately prior to the effective time of the Merger was converted into the right to receive the Merger
Consideration. In the aggregate, approximately eighty percent (80%) of the Merger Consideration consisted of the Corporation's common stock with the remaining approximately twenty percent (20%) paid in cash. The receipt of the Corporation’s common stock in the Merger qualified as a tax-free exchange for Prudential Bancorp shareholders.

The acquisition of Prudential Bancorp was accounted for as a business combination using the acquisition method of accounting, and accordingly, the assets acquired, the liabilities assumed, and consideration transferred were recorded at their estimated fair values as of the Merger. The $19.1 million excess of the Merger Consideration over the fair value of assets acquired was recorded as goodwill and is not amortizable or deductible for tax purposes.

The following table summarizes the consideration transferred and the fair values of identifiable assets acquired and liabilities assumed on July 1, 2022:
Fair Value
(dollars in thousands, except share data)
Consideration transferred:
 Common stock shares issued (6,208,516)
$89,713 
Cash paid to Prudential Bancorp shareholders29,343 
     Value of consideration119,056 
Assets acquired:
     Cash and due from banks7,533 
     Investment securities287,126 
     Loans554,091 
     Premises and equipment8,574 
     Other assets73,303 
          Total assets930,627 
Liabilities assumed:
     Deposits532,170 
Borrowings(1)
284,000 
     Other liabilities14,482 
          Total liabilities830,652 
Net assets acquired:99,975 
Goodwill resulting from the Merger$19,081 
(1) Included a $30.5 million intercompany borrowing between Prudential Bank and Fulton Bank.

The amount of goodwill recorded reflects the increased market share and related synergies that are expected to result from the acquisition and represents the excess purchase price over the estimated fair value of the net assets acquired from Prudential Bancorp.
The following table presents information with respect to the fair value and unpaid principal balance of acquired loans and leases at the date of the Merger:
July 1, 2022
Unpaid Principal BalanceFair Value
(dollars in thousands)
Real estate - commercial mortgage$224,904 $216,593 
Commercial and industrial63,560 61,873 
Real-estate - residential mortgage177,327 169,098 
Real-estate - home equity6,034 5,812 
Real-estate - construction98,963 98,546 
Consumer2,306 2,286 
     Total acquired loans$573,094 $554,208 

The following table presents the carrying amount of loans for which, at the date of Merger, there was evidence of more than insignificant deterioration of credit quality since origination:
July 1, 2022
(dollars in thousands)
Book balance of loans with deteriorated credit quality at acquisition$27,057 
Allowance for credit losses at acquisition(1,135)
Non-credit related discount(130)
     Total purchased credit deteriorated loans$25,792 

The following table presents the change in goodwill during the nine months ended September 30, 2023:
September 30,
2023
(dollars in thousands)
Goodwill at December 31, 2022$550,539 
Adjustments to goodwill from the Merger2,807 
Goodwill at September 30, 2023$553,346 
Pro Forma Income Statement (unaudited)

The table below presents the pro forma results of the operations of the combined institutions as if the Merger occurred on January 1, 2022. The pro forma income statement adjustments are limited to the effects of fair value mark amortization and accretion and intangible asset amortization and do not consider future cost savings the Corporation expects to achieve subsequent to the merger of Prudential Bank with and into the Bank.
Nine months ended September 30
20232022
(dollars in thousands)
Net interest income$642,281 $575,996 
Provision for credit losses44,228 19,528 
     Net Interest Income After Provision for Credit Losses598,053 556,468 
Total noninterest income168,300 177,733 
Total noninterest expenses498,656 494,671 
     Income Before Income Taxes267,697 239,530 
Income tax expense47,680 41,825 
     Net Income$220,017 $197,705