Fulton Financial (FULT) has agreed to sell a payments business to a Canadian group.
The Lancaster, Pa., company said it will use proceeds from the sale of Global Exchange Group to fund the repayment of its Federal Home Loan Bank advances.
Cambridge Mercantile Group in Toronto will buy the business for an undisclosed amount. Fulton, which expects to complete the sale by the end of this month, said it will book an after-tax gain of $2.2 million in the fourth quarter.
The unit, which is based in Merchantville, N.J., provides foreign-exchange and international-payments services. It posted sales of $9.1 million and net income of $2.5 million during a 12-month period that ended Oct. 31.
Fulton said it will a use combination of proceeds from the sale and short-term debt to repay $20 million in FHLB advances. The company will book an after-tax prepayment penalty of $2.2 million for the early repayment, but will save about $540,000 annually, after taxes, by reducing the debt.
The $16.3 billion-asset company decided to sell Global Exchange Group because it wants to focus on community banking in its five-state territory, Philip Wenger, Fulton's president and chief operating officer, said in a press release Tuesday. The unit's growth prospects would be limited to Fulton's geographic region if it remained owned by the banking company, Wenger said.
Fulton recently bought a 7.3% stake in Bryn Mawk Bank (BMTC), which Fulton described as an investment, rather than a prelude to a takeover.
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