On the Acquisition Date, Fulton Bank acquired substantially all of the assets and assumed substantially all of the deposits and certain liabilities of Republic First Bank from the FDIC, as receiver for Republic First Bank. As part of the Republic First Transaction, the Bank acquired approximately $4.8 billion of assets of Republic First Bank and received approximately $0.8 billion of cash from the FDIC. The Bank assumed approximately $5.6 billion of total liabilities of Republic First Bank. The Bank did not enter into a loss sharing arrangement with the FDIC in connection with the Republic First Transaction. Fulton Bank also has the option to purchase the Republic First Bank branches and office locations.

The Republic First Transaction constitutes a business combination as defined by FASB ASC Topic 805, Business Combinations. Accordingly, the assets acquired and liabilities assumed are presented at their estimated fair values based on preliminary valuations as of the Acquisition Date. The determination of estimated fair values required management to make certain estimates about discount rates, future expected cash flows and market conditions at the time of the Republic First Transaction.

The Bank and the FDIC are awaiting conclusion of the customary final settlement process to determine whether certain assets and liabilities of Republic First Bank will remain with the FDIC or be acquired by the Bank. Until management finalizes its fair value estimates for the acquired assets and assumed liabilities, the preliminary gain on acquisition can be updated for a period not to exceed one year following the Acquisition Date. The preliminary fair value estimates of assets acquired and liabilities assumed, provide a reasonable basis for determining the preliminary gain on acquisition.

The excess of the estimated fair value of net assets acquired and the cash consideration received from the FDIC over the estimated fair value of liabilities assumed was recorded as a preliminary gain on acquisition of $47.4 million, net of income taxes.

The following table summarizes the consideration transferred and the estimated fair values of identifiable assets acquired and liabilities assumed in connection with the Republic First Transaction on the Acquisition Date:


	Estimated Fair Value


Cash payment received from FDIC	$	809,920

Assets acquired:
Cash and due from banks	208,451
Investment securities	1,938,571
Loans	2,505,040
Premises and equipment	970
CDI	92,600
FHLB Stock	37,931
Accrued interest receivable	16,164
Other assets	11,782
Total assets	4,811,509
Liabilities assumed:
Deposits	4,112,325
Borrowings	1,435,976
Other liabilities	11,859
Total liabilities	5,560,160
Net assets acquired:	(748,651)

Gain on acquisition, before income taxes	$	61,269
Gain on acquisition, net of income taxes	$	47,392

Investment securities: The investment portfolio acquired in the Republic First Transaction, with a fair value of $1.9 billion, was sold shortly after the Acquisition Date by the Corporation. The fair value of the investment portfolio was based on the proceeds from the sale.

Loans: The Corporation recorded $2.5 billion of acquired loans that were initially recorded at their estimated fair values as of the Acquisition Date. The estimated fair value for the loans was based on a discounted cash flow methodology that considered credit loss and prepayment expectations, market interest rates and other market factors from the perspective of a market participant. Loan cash flows were generated on an individual loan basis. The PD, LGD, exposure at default and prepayment assumptions are the key factors driving credit losses that are embedded in the estimated cash flows.

The following table presents information with respect to the estimated fair value and unpaid principal balance of acquired loans and leases at the Acquisition Date:


	April 26, 2024
	Unpaid Principal Balance		Estimated Fair Value
	(dollars in thousands)
Real estate - commercial mortgage	$	1,144,465	$	1,024,004
Commercial and industrial	545,374		496,100
Real-estate - residential mortgage	947,135		752,328
Real-estate - home equity	72,730		66,237
Real-estate - construction	153,437		145,597
Consumer	20,789		20,774

Total acquired loans	$	2,883,930	$	2,505,040


	April 26, 2024
	(dollars in thousands)
Book balance of loans with deteriorated credit quality at acquisition	$	1,023,940
Fair value of loans with deteriorated credit quality at acquisition	904,558
Fair value discount	119,382
PCD Loans credit discount	(55,906)
Non-credit discount	$	63,476

The Republic First Transaction resulted in the addition of $79.4 million to the ACL, including the $55.9 million identified in the table above for PCD Loans, and $23.4 million recorded through the provision for credit losses at the Acquisition Date for non-PCD Loans.

Intangible assets: The Corporation recorded $92.6 million of CDI reflected in other assets that is being amortized over seven years using the sum-of-the-years digits method. The estimated fair value of the CDI was determined using the cost savings approach. The cost savings approach is defined as the difference between the cost of funds of core deposits and an alternative cost of funds for those deposits. The CDI estimated fair value was determined by projecting discounted net cash flows that included assumptions related to customer attrition rates, discount rates, deposit interest rates, deposit account maintenance costs and alternative cost of funding rates.

Accrued interest receivable: The Corporation acquired $16.2 million of accrued interest receivable. The fair value of the accrued interest receivable approximated its book value.

Core deposits: Demand deposits, savings and money market deposits and time deposits (less than $250,000) were recorded at book value which approximated fair value. The Corporation recorded $92.6 million of CDI in other assets for these deposits.

Time deposits: Time deposits of $250,000 and greater were valued based on a comparison with the contractual cost of a portfolio of brokered deposits having a similar tenor. As the time deposit portfolio had a remaining average life of approximately three months, the estimated fair value of the time deposits approximated their book value and no adjustment was recorded.

Borrowings: The estimated fair values for borrowings approximated their book value given these were short-term advances. Assumed borrowings were subsequently repaid.

The Corporation developed a comprehensive integration plan under which it incurred direct costs that are expensed as incurred. For the second quarter of 2024, these direct costs included professional fees, a charitable donation, severance, and marketing expense. Costs related to the Republic First Transaction are included in acquisition-related expenses in the unaudited Consolidated Statements of Income.


		Three months ended June 30, 2024
		(dollars in thousands)
Salaries and employee benefits		$	805



Professional fees		7,624

Charitable donation	Charitable donation	5,000
Other		374
		$	13,803

to provide additional impact grants to nonprofit community organizations across the region that share Fulton Bank's vision of advancing economic empowerment, particularly in underserved communities.

The amount of net interest income, non-interest income, non-interest expense and net income of $30.7 million, $50.2 million, $21.1 million and $38.8 million, respectively, attributable to the Republic First Transaction were included in the Corporation's unaudited Consolidated Statements of Income for the three months and six months ended June 30, 2024. Included in non-interest income above is $47.4 million related to the gain on acquisition, net of tax. Net interest income, non-interest income, non-interest expense and net income shown above reflect management's best estimates based on information available as of the date of the filing of this Quarterly Report on Form 10-Q.

Republic First Bank does not have historical financial information that the Corporation could base pro forma information. Additionally, the Bank did not acquire all of the assets or assume all of the liabilities of Republic First Bank. Therefore, it is impracticable to provide pro forma information on revenues and earnings for the Republic First Transaction in accordance with ASC 805-10-50-2.