Market Overview

Fulton Financial Reports Third Quarter Earnings of $0.28 Per Share

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  • Diluted earnings per share for the third quarter of 2017 were 28
    cents, a 7.7 percent increase from the second quarter of 2017 and a
    16.7 percent increase from the third quarter of 2016. Net income was
    $48.9 million, an increase of 7.6 percent and 17.9 percent, compared
    to the second quarter of 2017 and third quarter of 2016, respectively.
  • Pre-provision net revenue of $65.5 million was 4.1% higher than the
    second quarter of 2017 and 11.3% higher than the third quarter of 2016.
  • Net interest income for the third quarter of 2017 increased $5.2
    million, or 3.7 percent, compared to the second quarter of 2017 and
    $16.2 million, or 12.4 percent, compared to the third quarter of 2016.
  • Net interest margin decreased two basis points, to 3.27 percent,
    compared to the second quarter of 2017, and increased 13 basis points
    compared to the third quarter of 2016.
  • Loans at September 30, 2017 increased $140.3 million, or 0.9 percent,
    compared to June 30, 2017 and $1.1 billion, or 7.6 percent, compared
    to September 30, 2016. Average loans for the third quarter of 2017
    increased 1.8 percent and 8.3 percent compared to the second quarter
    of 2017 and the third quarter of 2016, respectively.
  • Deposits at September 30, 2017 increased $784.4 million, or 5.1
    percent, compared to June 30, 2017 and $1.2 billion, or 8.0 percent,
    compared, to September 30, 2016. Average deposits for the third
    quarter of 2017 increased 5.2 percent and 7.8 percent compared to the
    second quarter of 2017 and the third quarter of 2016, respectively.
  • The provision for credit losses in the third quarter of 2017 was $5.1
    million, compared to a $6.7 million provision in the second quarter of
    2017, and a $4.1 million provision in the third quarter of 2016.
  • Non-interest income, excluding investment securities gains, decreased
    $3.6 million, or 7.0 percent, in comparison to the second quarter of
    2017, and decreased $770,000, or 1.6 percent, in comparison to the
    third quarter of 2016.
  • Non-interest expense decreased $538,000, or 0.4 percent, compared to
    the second quarter of 2017 and increased $12.3 million, or 10.3
    percent, compared to the third quarter of 2016.

Fulton Financial Corporation (NASDAQ:FULT) reported net income of $48.9
million, or 28 cents per diluted share, for the third quarter of 2017.

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"Overall, we are pleased with our third quarter financial performance as
we've hit a couple of key milestones that help us continue to drive
shareholder value," said E. Philip Wenger, Chairman, President and CEO.
"I'm extremely proud of our team's continued focus on growth, efficiency
and profitability. This resulted in total revenue that hit a record
level in the third quarter and helped our company reach $20 billion in
assets."

Net Interest Income and Margin

Net interest income for the third quarter of 2017 increased $5.2
million, or 3.7 percent, from the second quarter of 2017. Net interest
margin decreased two basis points, or 0.6 percent, to 3.27 percent in
the third quarter of 2017, from 3.29 percent in the second quarter of
2017. The average yield on interest-earning assets increased two basis
points, while the average cost of interest-bearing liabilities increased
five basis points, during the third quarter of 2017 in comparison to the
second quarter of 2017. The two basis point increase in the average
yield on interest-earning assets reflects a seven basis point increase
in loan yields, which was partially offset by higher levels of
lower-yielding other interest-earning assets in the third quarter of
2017.

Average Balance Sheet

Total average assets for the third quarter of 2017 were $19.9 billion,
an increase of $571.8 million from the second quarter of 2017. Average
loans, net of unearned income, increased $264.9 million, or 1.8 percent,
in comparison to the second quarter of 2017. Average loans and yields,
by type, for the third quarter of 2017 in comparison to the second
quarter of 2017, are summarized in the following table:

       
Three Months Ended Increase (decrease)
September 30, 2017 June 30, 2017 in Balance
Balance   Yield (1) Balance Yield (1)   $     %
(dollars in thousands)
Average Loans, net of unearned income, by type:
Real estate - commercial mortgage $ 6,208,630 4.07 % $ 6,163,844 4.00 % $ 44,786 0.7 %
Commercial - industrial, financial and agricultural 4,257,075 4.08 % 4,221,025 4.00 % 36,050 0.9 %
Real estate - residential mortgage 1,841,559 3.83 % 1,707,929 3.77 % 133,630 7.8 %
Real estate - home equity 1,569,898 4.48 % 1,587,680 4.33 % (17,782 ) (1.1 %)
Real estate - construction 943,029 4.05 % 897,321 3.98 % 45,708 5.1 %
Consumer 318,546 4.94 % 300,966 5.03 % 17,580 5.8 %
Leasing and other   253,330 4.91 %   248,440 5.04 %   4,890   2.0 %
 
Total Average Loans, net of unearned income $ 15,392,067 4.12 % $ 15,127,205 4.05 % $ 264,862   1.8 %

(1) Presented on a fully-taxable equivalent basis using a 35% Federal
tax rate and statutory interest expense disallowances.

Total average liabilities increased $537.6 million, or 3.1 percent, from
the second quarter of 2017, while average deposits increased $786.4
million, or 5.2 percent. Average deposits and interest rates, by type,
for the third quarter of 2017 in comparison to the second quarter of
2017, are summarized in the following table:

       
Three Months Ended Increase (decrease)
September 30, 2017 June 30, 2017 in Balance
Balance   Rate Balance Rate $   %
(dollars in thousands)
Average Deposits, by type:
Noninterest-bearing demand $ 4,494,897 - % $ 4,387,517 - % $ 107,380 2.4 %
Interest-bearing demand 3,943,118 0.39 % 3,690,059 0.30 % 253,059 6.9 %
Savings and money market deposits   4,603,155 0.34 %   4,315,495 0.25 %   287,660 6.7 %
Total average demand and savings 13,041,170 0.24 % 12,393,071 0.18 % 648,099 5.2 %
Brokered deposits 89,767 1.23 % - - % 89,767 - %
Time deposits   2,744,532 1.15 %   2,696,033 1.10 %   48,499 1.8 %
 
Total Average Deposits $ 15,875,469 0.40 % $ 15,089,104 0.34 % $ 786,365 5.2 %
 

Average short-term borrowings decreased $230.8 million, or 36.4%, from
the second quarter of 2017, as a portion of these borrowings were repaid
with funds provided by the strong growth in deposits experienced during
the third quarter of 2017.

Asset Quality

Non-performing assets were $147.0 million, or 0.73 percent of total
assets, at September 30, 2017, compared to $147.2 million, or 0.75
percent of total assets, at June 30, 2017 and $150.1 million, or 0.80
percent of total assets, at September 30, 2016.

Annualized net charge-offs for the quarter ended September 30, 2017 were
0.14 percent of total average loans, compared to annualized net
charge-offs of 0.11 percent for the quarters ended June 30, 2017 and
September 30, 2016. The allowance for credit losses as a percentage of
non-performing loans was 128.1 percent at September 30, 2017, as
compared to 128.9 percent at June 30, 2017 and 119.6 percent at
September 30, 2016.

During the third quarter of 2017, the Corporation recorded a $5.1
million provision for credit losses, compared to a $6.7 million
provision for credit losses in the second quarter of 2017 and a $4.1
million provision in the third quarter of 2016.

Non-interest Income

Non-interest income, excluding investment securities gains, decreased
$3.6 million, or 7.0 percent, in comparison to the second quarter of
2017. Other service charges and fees decreased $2.1 million, or 14.6
percent, due primarily to lower commercial loan interest rate swap fees.
Mortgage banking income declined $1.3 million due to a reversal of the
valuation allowance for mortgage servicing rights recorded in the second
quarter of 2017. Also contributing to the decrease in non-interest
income was lower gains from the sales of Small Business Administration
loans.

Compared to the third quarter of 2016, non-interest income, excluding
investment securities gains, decreased $770,000, or 1.6 percent,
primarily due to lower commercial loan interest rate swap fees,
partially offset by an increase in investment management and trust
services income.

Gains on sales of investment securities increased $3.2 million in
comparison to the second quarter of 2017, and increased $4.6 million
from the third quarter of 2016. These increases resulted from sales in
the Corporation's portfolio of financial institution common stocks,
which has increased in value over the past twelve months.

Non-interest Expense

Non-interest expense decreased $538,000, or 0.4 percent, in the third
quarter of 2017, compared to the second quarter of 2017. Salaries and
employee benefits decreased $1.6 million, or 2.2 percent, largely due to
adjustments made to estimates of incentive compensation expense for 2017
and a seasonal decrease in payroll taxes. Other decreases occurred in
outside services, other real estate expenses and professional fees.
These reductions were offset by increases in data processing and
software and FDIC insurance.

Compared to the third quarter of 2016, non-interest expense increased
$12.3 million, or 10.3 percent, primarily due to increases in salaries
and employee benefits, amortization of tax credit investments, state
taxes, data processing and software and other outside services.

Income Tax Expense

The effective income tax rate for the third quarter of 2017 was 20.5
percent, as compared to 16.6 percent for the second quarter of 2017. The
increase was partially due to an increase in income before income taxes.
In addition, approximately $1.6 million of excess tax benefits
associated with vesting of employee stock awards and stock option
exercises were recorded as a reduction to income tax expense in the
second quarter of 2017.

Additional information on Fulton Financial Corporation is available on
the Internet at www.fult.com.

Safe Harbor Statement

This news release may contain forward-looking statements with respect to
the Corporation's financial condition, results of operations and
business. Do not unduly rely on forward-looking statements.
Forward-looking statements can be identified by the use of words such as
"may," "should," "will," "could," "estimates," "predicts," "potential,"
"continue," "anticipates," "believes," "plans," "expects," "future,"
"intends" and similar expressions which are intended to identify
forward-looking statements. These forward-looking statements are not
guarantees of future performance and are subject to risks and
uncertainties, some of which are beyond the Corporation's control and
ability to predict, that could cause actual results to differ materially
from those expressed in the forward-looking statements.

A discussion of certain risks and uncertainties affecting the
Corporation, and some of the factors that could cause the Corporation's
actual results to differ materially from those described in the
forward-looking statements, can be found in the sections entitled "Risk
Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the Corporation's Annual Report
on Form 10-K for the year ended December 31, 2016 and Quarterly Reports
on Form 10-Q for the quarters ended March 31, 2017 and June 30, 2017,
which have been filed with the Securities and Exchange Commission and
are available in the Investor Relations section of the Corporation's
website (www.fult.com)
and on the Securities and Exchange Commission's website (www.sec.gov).
The Corporation undertakes no obligation, other than as required by law,
to update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise.

Non-GAAP Financial Measures

The Corporation uses certain non-GAAP financial measures in this
earnings release. These non-GAAP financial measures are reconciled to
the most comparable GAAP measures in tables at the end of this release.

             
FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED ENDING BALANCE SHEETS (UNAUDITED)
dollars in thousands
% Change from
September 30 June 30 March 31 December 31 September 30 June 30 September 30
  2017       2017       2017       2016       2016     2017   2016
 

ASSETS

 
Cash and due from banks $ 99,803 $ 94,938 $ 93,844 $ 118,763 $ 86,497 5.1 % 15.4 %
Other interest-earning assets 645,796 392,842 350,387 291,252 428,966 64.4 % 50.5 %
Loans held for sale 23,049 62,354 24,783 28,697 27,836 -63.0 % -17.2 %
Investment securities 2,561,516 2,488,699 2,506,017 2,559,227 2,508,068 2.9 % 2.1 %
Loans, net of unearned income 15,486,899 15,346,617 14,963,177 14,699,272 14,391,238 0.9 % 7.6 %
Allowance for loan losses   (172,245 )     (172,342 )     (170,076 )     (168,679 )     (162,526 ) -0.1 % 6.0 %
Net loans 15,314,654 15,174,275 14,793,101 14,530,593 14,228,712 0.9 % 7.6 %
Premises and equipment 221,551 217,558 216,171 217,806 228,009 1.8 % -2.8 %
Accrued interest receivable 50,082 47,603 46,355 46,294 43,600 5.2 % 14.9 %
Goodwill and intangible assets 531,556 531,556 531,556 531,556 531,556 0.0 % 0.0 %
Other assets   614,853       637,610       616,362       620,059       617,818   -3.6 % -0.5 %
 
Total Assets $ 20,062,860     $ 19,647,435     $ 19,178,576     $ 18,944,247     $ 18,701,062   2.1 % 7.3 %
 

LIABILITIES AND SHAREHOLDERS' EQUITY

 
Deposits $ 16,141,780 $ 15,357,361 $ 15,090,344 $ 15,012,864 $ 14,952,479 5.1 % 8.0 %
Short-term borrowings 298,751 694,859 453,317 541,317 264,042 -57.0 % 13.1 %
Other liabilities 358,384 365,484 342,323 339,548 389,819 -1.9 % -8.1 %
FHLB advances and long-term debt   1,038,159       1,037,961       1,137,909       929,403       965,286   0.0 % 7.5 %
 
Total Liabilities 17,837,074 17,455,665 17,023,893 16,823,132 16,571,626 2.2 % 7.6 %
 
Shareholders' equity   2,225,786       2,191,770       2,154,683       2,121,115       2,129,436   1.6 % 4.5 %
 
Total Liabilities and Shareholders' Equity $ 20,062,860     $ 19,647,435     $ 19,178,576     $ 18,944,247     $ 18,701,062   2.1 % 7.3 %
 

LOANS, DEPOSITS AND SHORT-TERM BORROWINGS
DETAIL:

 
Loans, by type:
Real estate - commercial mortgage $ 6,275,140 $ 6,262,008 $ 6,118,533 $ 6,018,582 $ 5,818,915 0.2 % 7.8 %
Commercial - industrial, financial and agricultural 4,223,075 4,245,849 4,167,809 4,087,486 4,024,119 -0.5 % 4.9 %
Real estate - residential mortgage 1,887,907 1,784,712 1,665,142 1,601,994 1,542,696 5.8 % 22.4 %
Real estate - home equity 1,567,473 1,579,739 1,595,901 1,625,115 1,640,421 -0.8 % -4.4 %
Real estate - construction 973,108 938,900 882,983 843,649 861,634 3.6 % 12.9 %
Consumer 302,448 283,156 288,826 291,470 283,673 6.8 % 6.6 %
Leasing and other   257,748       252,253       243,983       230,976       219,780   2.2 % 17.3 %
 
Total Loans, net of unearned income $ 15,486,899     $ 15,346,617     $ 14,963,177     $ 14,699,272     $ 14,391,238   0.9 % 7.6 %
 
Deposits, by type:
Noninterest-bearing demand $ 4,363,915 $ 4,574,619 $ 4,417,733 $ 4,376,137 $ 4,210,099 -4.6 % 3.7 %
Interest-bearing demand 4,119,419 3,650,204 3,702,663 3,703,712 3,703,048 12.9 % 11.2 %
Savings and money market accounts   4,790,985       4,386,128       4,251,574       4,179,773       4,235,015   9.2 % 13.1 %
Total demand and savings 13,274,319 12,610,951 12,371,970 12,259,622 12,148,162 5.3 % 9.3 %
Brokered deposits 109,936 - - - - 0.0 % 0.0 %
Time deposits   2,757,525       2,746,410       2,718,374       2,753,242       2,804,317   0.4 % -1.7 %
 
Total Deposits $ 16,141,780     $ 15,357,361     $ 15,090,344     $ 15,012,864     $ 14,952,479   5.1 % 8.0 %
 
Short-term borrowings, by type:
Customer repurchase agreements $ 185,945 $ 174,224 $ 181,170 $ 195,734 $ 189,727 6.7 % -2.0 %
Customer short-term promissory notes 106,994 74,366 87,726 67,013 65,871 43.9 % 62.4 %
Short-term FHLB advances - 240,000 130,000 - - -100.0 % 0.0 %
Federal funds purchased   5,812       206,269       54,421       278,570       8,444   -97.2 % -31.2 %
 
Total Short-term Borrowings $ 298,751     $ 694,859     $ 453,317     $ 541,317     $ 264,042   -57.0 % 13.1 %
                   
FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
in thousands, except per-share data and percentages
             
Three Months Ended   % Change from Nine Months Ended
Sep 30 Jun 30 Mar 31 Dec 31 Sep 30 Jun 30 Sep 30 Sep 30
  2017     2017    

2017

    2016     2016   2017 2016   2017     2016   % Change
 
Interest Income:
Interest income $ 171,511 $ 163,881 $ 158,487 $ 153,012 $ 151,468 4.7 % 13.2 % $ 493,879 $ 450,088 9.7 %
Interest expense   24,702     22,318     20,908     20,775     20,903   10.7 % 18.2 %   67,928     61,553   10.4 %
 
Net Interest Income 146,809 141,563 137,579 132,237 130,565 3.7 % 12.4 % 425,951 388,535 9.6 %
Provision for credit losses   5,075     6,700     4,800     5,000     4,141   (24.3 %) 22.6 %   16,575     8,182   102.6 %
 
Net Interest Income after Provision 141,734 134,863 132,779 127,237 126,424 5.1 % 12.1 % 409,376 380,353 7.6 %
 
Non-Interest Income:
Service charges on deposit accounts 13,022 12,914 12,400 12,814 13,078 0.8 % (0.4 %) 38,336 38,532 (0.5 %)
Other service charges and fees 12,251 14,342 12,437 13,333 14,407 (14.6 %) (15.0 %) 39,030 38,140 2.3 %
Investment management and trust services 12,157 12,132 11,808 11,610 11,425 0.2 % 6.4 % 36,097 33,660 7.2 %
Mortgage banking income 4,805 6,141 4,596 6,959 4,529 (21.8 %) 6.1 % 15,542 12,456 24.8 %
Other   5,142     5,406     4,326     6,514     4,708   (4.9 %) 9.2 %   14,874     13,610   9.3 %
Non-Interest Income before Investment Securities Gains 47,377 50,935 45,567 51,230 48,147 (7.0 %) (1.6 %) 143,879 136,398 5.5 %
Investment securities gains   4,597     1,436     1,106     1,525     2   N/M N/M   7,139     1,025   N/M
 
Total Non-Interest Income 51,974 52,371 46,673 52,755 48,149 (0.8 %) 7.9 % 151,018 137,423 9.9 %
 
Non-Interest Expense:

 

Salaries and employee benefits 72,894 74,496 69,236 73,256 70,696 (2.2 %) 3.1 % 216,626 210,097 3.1 %
Net occupancy expense 12,180 12,316 12,663 11,798 11,782 (1.1 %) 3.4 % 37,159 35,813 3.8 %
Data processing and software 10,301 9,054 8,979 9,442 8,727 13.8 % 18.0 % 28,334 27,477 3.1 %
Other outside services 6,582 7,708 5,546 6,536 5,783 (14.6 %) 13.8 % 19,836 17,347 14.3 %
Amortization of tax credit investments 3,503 3,151 998 - - 11.2 % 100.0 % 7,652 - 100.0 %
Professional fees 3,388 2,931 2,737 2,783 2,535 15.6 % 33.6 % 9,056 8,221 10.2 %
Equipment expense 3,298 3,034 3,359 3,408 3,137 8.7 % 5.1 % 9,691 9,380 3.3 %
FDIC insurance expense 3,007 2,366 2,058 2,067 1,791 27.1 % 67.9 % 7,431 7,700 (3.5 %)
Marketing 2,089 2,234 1,986 1,730 1,774 (6.5 %) 17.8 % 6,309 5,314 18.7 %
Other   14,915     15,405     14,713     16,601     13,623   (3.2 %) 9.5 %   45,033     40,549   11.1 %
 
Total Non-Interest Expense   132,157     132,695     122,275     127,621     119,848   (0.4 %) 10.3 %   387,127     361,898   7.0 %
 
Income before Income Taxes 61,551 54,539 57,177 52,371 54,725 12.9 % 12.5 % 173,267 155,878 11.2 %
Income tax expense   12,646     9,072     13,797     10,221     13,257   39.4 % (4.6 %)   35,515     36,403   (2.4 %)
 
Net Income $ 48,905   $ 45,467   $ 43,380   $ 42,150   $ 41,468   7.6 % 17.9 % $ 137,752   $ 119,475   15.3 %
 
 

PER SHARE:

 
Net income:
Basic $ 0.28 $ 0.26 $ 0.25 $ 0.24 $ 0.24 7.7 % 16.7 % $ 0.79 $ 0.69 14.5 %
Diluted 0.28 0.26 0.25 0.24 0.24 7.7 % 16.7 % 0.78 0.69 13.0 %
 
Cash dividends $ 0.11 $ 0.11 $ 0.11 $ 0.12 $ 0.10 - 10.0 % $ 0.33 $ 0.29 13.8 %
Shareholders' equity 12.71 12.54 12.36 12.19 12.30 1.4 % 3.3 % 12.71 12.30 3.3 %
Shareholders' equity (tangible) 9.68 9.50 9.31 9.13 9.23 1.9 % 4.9 % 9.68 9.23 4.9 %
 
Weighted average shares (basic) 174,991 174,597 174,150 173,554 173,020 0.2 % 1.1 % 174,582 173,248 0.8 %
Weighted average shares (diluted) 176,216 175,532 175,577 174,874 174,064 0.4 % 1.2 % 175,776 174,265 0.9 %
Shares outstanding, end of period 175,057 174,740 174,343 174,040 173,144 0.2 % 1.1 % 175,057 173,144 1.1 %
 

SELECTED FINANCIAL RATIOS:

.
Return on average assets 0.98 % 0.94 % 0.92 % 0.89 % 0.89 % 0.95 % 0.87 %
Return on average shareholders' equity 8.76 % 8.36 % 8.22 % 7.86 % 7.78 % 8.45 % 7.64 %
Return on average shareholders' equity (tangible) 11.52 % 11.06 % 10.93 % 10.47 % 10.38 % 11.18 % 10.24 %
Net interest margin 3.27 % 3.29 % 3.26 % 3.15 % 3.14 % 3.27 % 3.19 %
Efficiency ratio   64.30 %     65.33 %     64.23 %     67.60 %     65.16 %           64.63 %     67.01 %    
 
N/M - Not meaningful
               
FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)
dollars in thousands
 
Three Months Ended
September 30, 2017 June 30, 2017 September 30, 2016
Average Yield/ Average Yield/ Average Yield/
Balance Interest (1) Rate Balance Interest (1) Rate Balance Interest (1) Rate

ASSETS

 
Interest-earning assets:
Loans, net of unearned income $ 15,392,067 $ 159,454 4.12 % $ 15,127,205 $ 152,649 4.05 % $ 14,212,250 $ 140,434 3.93 %
Taxable investment securities 2,115,931 11,423 2.01 % 2,090,120 11,473 2.12 % 2,110,084 10,872 2.06 %
Tax-exempt investment securities 408,594 4,492 4.40 % 404,680 4,394 4.34 % 344,231 3,923 4.56 %
Equity securities   8,709     143   6.52 %   10,759     148   5.52 %   14,209     196   5.50 %
 
Total Investment Securities 2,533,234 16,058 2.53 % 2,505,559 16,015 2.56 % 2,468,524 14,991 2.43 %
 
Loans held for sale 22,456 243 4.33 % 19,750 201 4.07 % 22,593 210 3.72 %
Other interest-earning assets   590,676     1,667   1.12 %   324,719     802   0.99 %   501,666     1,051   0.84 %
 
Total Interest-earning Assets 18,538,433 177,422 3.80 % 17,977,233 169,667 3.78 % 17,205,033 156,686 3.63 %
 
Noninterest-earning assets:
Cash and due from banks 101,643 103,078 101,927
Premises and equipment 220,129 218,075 227,906
Other assets 1,186,622 1,174,745 1,219,844
Less: allowance for loan losses   (174,101 )   (172,156 )   (163,074 )
 
Total Assets $ 19,872,726   $ 19,300,975   $ 18,591,636  
 
 

LIABILITIES AND SHAREHOLDERS' EQUITY

 
Interest-bearing liabilities:
Demand deposits $ 3,943,118 $ 3,847 0.39 % $ 3,690,059 $ 2,780 0.30 % $ 3,602,448 $ 1,706 0.19 %
Savings deposits 4,603,155 3,962 0.34 % 4,315,495 2,710 0.25 % 4,078,942 2,042 0.20 %
Brokered deposits 89,767 277 1.23 % 0 - 0.00 % - - 0.00 %
Time deposits   2,744,532     7,937   1.15 %   2,696,033     7,394   1.10 %   2,814,258     7,562   1.07 %
 
Total Interest-bearing Deposits 11,380,572 16,023 0.56 % 10,701,587 12,884 0.48 % 10,495,648 11,310 0.43 %
 
Short-term borrowings 402,341 578 0.57 % 633,102 974 0.61 % 426,369 254 0.23 %
FHLB advances and long-term debt   1,038,062     8,100   3.11 %   1,070,845     8,460   3.16 %   965,228     9,338   3.86 %
 
Total Interest-bearing Liabilities 12,820,975 24,701 0.77 % 12,405,534 22,318 0.72 % 11,887,245 20,902 0.70 %
 
Noninterest-bearing liabilities:
Demand deposits 4,494,897 4,387,517 4,227,639
Other   341,465     326,735     356,156  
 
Total Liabilities 17,657,337 17,119,786 16,471,040
 
Shareholders' equity   2,215,389     2,181,189     2,120,596  
 
Total Liabilities and Shareholders' Equity $ 19,872,726   $ 19,300,975   $ 18,591,636  
 
Net interest income/net interest margin (fully taxable equivalent) 152,721 3.27 % 147,349 3.29 % 135,784 3.14 %
Tax equivalent adjustment   (5,912 )   (5,786 )   (5,219 )
 
Net interest income $ 146,809   $ 141,563   $ 130,565  
(1) Presented on a fully taxable-equivalent basis using a 35%
Federal tax rate and statutory interest expense disallowances.
Note: The weighted average interest rate on total average
interest-bearing liabilities and average non-interest bearing demand
deposits ("cost of funds") was 0.57%, 0.53% and 0.52% for the three
months ended September 30, 2017, June 30, 2017 and September 30,
2016, respectively.
 

AVERAGE LOANS, DEPOSITS AND SHORT-TERM
BORROWINGS DETAIL:

             
Three Months Ended   % Change from
September 30 June 30 March 31 December 31 September 30 June 30 September 30
2017 2017 2017 2016 2016 2017 2016
 
Loans, by type:
Real estate - commercial mortgage $ 6,208,630 $ 6,163,844 $ 6,039,140 $ 5,828,313 $ 5,670,888 0.7 % 9.5 %
Commercial - industrial, financial and agricultural 4,257,075 4,221,025 4,205,070 4,081,498 4,066,275 0.9 % 4.7 %
Real estate - residential mortgage 1,841,559 1,707,929 1,637,669 1,572,895 1,503,209 7.8 % 22.5 %
Real estate - home equity 1,569,898 1,587,680 1,613,249 1,633,668 1,640,913 (1.1 %) (4.3 %)
Real estate - construction 943,029 897,321 840,968 845,528 837,920 5.1 % 12.5 %
Consumer 318,546 300,967 284,352 289,864 281,517 5.8 % 13.2 %
Leasing and other   253,330   248,440   237,114   224,050   211,528 2.0 % 19.8 %
 
Total Loans, net of unearned income $ 15,392,067 $ 15,127,205 $ 14,857,562 $ 14,475,816 $ 14,212,250 1.8 % 8.3 %
 
Deposits, by type:
Noninterest-bearing demand $ 4,494,897 $ 4,387,517 $ 4,301,727 $ 4,331,894 $ 4,227,639 2.4 % 6.3 %
Interest-bearing demand 3,943,118 3,690,059 3,650,931 3,714,391 3,602,448 6.9 % 9.5 %
Savings and money market accounts   4,603,155   4,315,495   4,194,216   4,216,090   4,078,942 6.7 % 12.9 %
Total demand and savings 13,041,170 12,393,071 12,146,874 12,262,375 11,909,029 5.2 % 9.5 %
Brokered deposits 89,767 - - - - - -
Time deposits   2,744,532   2,696,033   2,739,453   2,777,203   2,814,258 1.8 % (2.5 %)
 
Total Deposits $ 15,875,469 $ 15,089,104 $ 14,886,327 $ 15,039,578 $ 14,723,287 5.2 % 7.8 %
 
Short-term borrowings, by type:
Customer repurchase agreements $ 176,415 $ 199,657 $ 199,403 $ 200,126 $ 187,587 (11.6 %) (6.0 %)
Customer short-term promissory notes 80,147 77,554 79,985 67,355 70,072 3.3 % 14.4 %
Federal funds purchased 90,453 242,375 308,220 40,613 148,546 (62.7 %) (39.1 %)
Short-term FHLB advances and other borrowings   55,326   113,516   124,889   -   20,163 (51.3 %) N/M
 
Total Short-term Borrowings $ 402,341 $ 633,102 $ 712,497 $ 308,094 $ 426,368 (36.4 %) (5.6 %)
 
N/M - Not meaningful
           
FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)
dollars in thousands
Nine Months Ended September 30
2017 2016
Average Average
Balance Interest (1) Yield/Rate Balance Interest (1) Yield/Rate

ASSETS

 
Interest-earning assets:
Loans, net of unearned income $ 15,127,569 $ 458,753 4.05 % $ 14,011,301 $ 416,646 3.97 %
Taxable investment securities 2,117,127 34,811 2.11 % 2,139,378 34,034 2.12 %
Tax-exempt investment securities 405,728 13,268 4.36 % 306,298 10,631 4.63 %
Equity securities   10,391     467   6.01 %   14,272     599   5.60 %
 
Total Investment Securities 2,533,246 48,546 2.56 % 2,459,948 45,264 2.45 %
 
Loans held for sale 19,378 631 4.34 % 18,114 529 3.90 %
Other interest-earning assets   410,250     3,311   1.08 %   406,163     2,813   0.92 %
 
Total Interest-earning Assets 18,090,443 511,241 3.78 % 16,895,526 465,252 3.68 %
 
Noninterest-earning assets:
Cash and due from banks 107,029 100,417
Premises and equipment 218,700 227,237
Other assets 1,170,466 1,182,260
Less: allowance for loan losses   (172,145 )   (164,999 )
 
Total Assets $ 19,414,493   $ 18,240,441  
 

LIABILITIES AND SHAREHOLDERS' EQUITY

 
Interest-bearing liabilities:
Demand deposits $ 3,762,439 $ 8,865 0.32 % $ 3,498,659 $ 4,727 0.18 %
Savings deposits 4,372,453 8,883 0.27 % 4,000,871 5,732 0.19 %
Brokered deposits 30,251 277 1.23 % - - 0.00 %
Time deposits   2,726,693     22,684   1.11 %   2,842,011     22,465   1.06 %
 
Total Interest-bearing Deposits 10,891,836 40,709 0.50 % 10,341,541 32,924 0.43 %
 
Short-term borrowings 581,511 2,407 0.55 % 425,151 739 0.23 %
FHLB advances and long-term debt   1,033,159     24,812   3.21 %   962,997     27,889   3.86 %
 
Total Interest-bearing Liabilities 12,506,506 67,928 0.73 % 11,729,689 61,552 0.70 %
 
Noninterest-bearing liabilities:
Demand deposits 4,395,421 4,091,555
Other   333,250     329,315  
 
Total Liabilities 17,235,177 16,150,559
 
Shareholders' equity   2,179,316     2,089,882  
 
Total Liabilities and Shareholders' Equity $ 19,414,493   $ 18,240,441  
 
Net interest income/net interest margin (fully taxable equivalent) 443,313 3.27 % 403,700 3.19 %
Tax equivalent adjustment   (17,362 )   (15,165 )
 
Net interest income $ 425,951   $ 388,535  
(1) Presented on a fully taxable-equivalent basis using a 35%
Federal tax rate and statutory interest expense disallowances.
Note: The weighted average interest rate on total average
interest-bearing liabilities and average non-interest bearing demand
deposits ("cost of funds") was 0.54% and 0.52% for the nine months
ended September 30, 2017 and 2016, respectively.
 

AVERAGE LOANS, DEPOSITS AND SHORT-TERM
BORROWINGS DETAIL:

     
Nine Months Ended

September 30

2017 2016 % Change
 
Loans, by type:
Real estate - commercial mortgage $ 6,137,824 $ 5,572,356 10.1 %
Commercial - industrial, financial and agricultural 4,227,918 4,080,638 3.6 %
Real estate - residential mortgage 1,729,799 1,428,430 21.1 %
Real estate - home equity 1,590,117 1,656,969 (4.0 %)
Real estate - construction 894,146 817,014 9.4 %
Consumer 301,414 272,402 10.7 %
Leasing and other   246,351   183,492 34.3 %
 
Total Loans, net of unearned income $ 15,127,569 $ 14,011,301 8.0 %
 
Deposits, by type:
Noninterest-bearing demand $ 4,395,421 $ 4,091,555 7.4 %
Interest-bearing demand 3,762,439 3,498,659 7.5 %
Savings and money market accounts   4,372,453   4,000,871 9.3 %
Total demand and savings 12,530,313 11,591,085 8.1 %
Brokered deposits 30,251 - -
Time deposits   2,726,693   2,842,011 (4.1 %)
 
Total Deposits $ 15,287,257 $ 14,433,096 5.9 %
 
Short-term borrowings, by type:
Customer repurchase agreements $ 192,015 $ 179,892 6.7 %
Customer short-term promissory notes 78,955 73,859 6.9 %
Federal funds purchased 212,885 156,812 35.8 %
Short-term FHLB advances and other borrowings   97,656   14,588 N/M
 
Total Short-term Borrowings $ 581,511 $ 425,151 36.8 %
 
N/M - Not meaningful
           
FULTON FINANCIAL CORPORATION
ASSET QUALITY INFORMATION (UNAUDITED)
dollars in thousands
 
Three Months Ended Nine Months Ended
Sep 30 Jun 30 Mar 31 Dec 31 Sep 30 Sep 30 Sep 30
  2017     2017     2017     2016     2016     2017     2016  

ALLOWANCE FOR CREDIT LOSSES:

 
Balance at beginning of period $ 174,998 $ 172,647 $ 171,325 $ 165,169 $ 165,108 $ 171,325 $ 171,412
 
Loans charged off:
Commercial - industrial, financial and agricultural (2,714 ) (5,353 ) (5,527 ) (1,319 ) (3,144 ) (13,594 ) (13,957 )
Consumer and home equity (920 ) (1,022 ) (1,554 ) (2,156 ) (1,394 ) (3,496 ) (5,556 )
Real estate - construction (2,744 ) (774 ) (247 ) 0 (150 ) (3,765 ) (1,218 )
Real estate - commercial mortgage (483 ) (242 ) (1,224 ) (174 ) (1,350 ) (1,949 ) (3,406 )
Real estate - residential mortgage (195 ) (124 ) (216 ) (116 ) (802 ) (535 ) (2,210 )
Leasing and other   (739 )   (1,200 )   (639 )   (589 )   (832 )   (2,578 )   (3,226 )
Total loans charged off (7,795 ) (8,715 ) (9,407 ) (4,354 ) (7,672 ) (25,917 ) (29,573 )
Recoveries of loans previously charged off:
Commercial - industrial, financial and agricultural 665 1,974 4,191 2,192 1,539 6,830 6,789
Consumer and home equity 445 685 373 580 463 1,503 1,886
Real estate - construction 629 373 548 1,080 898 1,550 2,844
Real estate - commercial mortgage 106 934 450 885 296 1,490 2,488
Real estate - residential mortgage 219 151 230 288 228 600 784
Leasing and other   407     249     137     485     168     793     357  
Recoveries of loans previously charged off   2,471     4,366     5,929     5,510     3,592     12,766     15,148  
Net loans (charged off) recovered (5,324 ) (4,349 ) (3,478 ) 1,156 (4,080 ) (13,151 ) (14,425 )
Provision for credit losses 5,075 6,700 4,800 5,000 4,141 16,575 8,182
             
Balance at end of period $ 174,749   $ 174,998   $ 172,647   $ 171,325   $ 165,169   $ 174,749   $ 165,169  
 
Net charge-offs (recoveries) to average loans (annualized)   0.14 %   0.11 %   0.09 %   (0.03 %)   0.11 %   0.12 %   0.14 %
 

NON-PERFORMING ASSETS:

 
Non-accrual loans $ 123,345 $ 122,600 $ 117,264 $ 120,133 $ 124,017
Loans 90 days past due and accruing   13,124     13,143     14,268     11,505     14,095  
Total non-performing loans 136,469 135,743 131,532 131,638 138,112
Other real estate owned   10,542     11,432     11,906     12,815     11,981  
 
Total non-performing assets $ 147,011   $ 147,175   $ 143,438   $ 144,453   $ 150,093  
 

NON-PERFORMING LOANS, BY TYPE:

 
Commercial - industrial, financial and agricultural $ 54,209 $ 51,320 $ 43,826 $ 43,460 $ 47,330
Real estate - commercial mortgage 34,650 32,576 36,713 39,319 39,631
Real estate - residential mortgage 21,643 21,846 23,597 23,655 23,451
Real estate - construction 13,415 16,564 13,550 9,842 11,223
Consumer and home equity 12,472 13,156 13,408 15,045 16,426
Leasing   80     281     438     317     51  
 
Total non-performing loans $ 136,469   $ 135,743   $ 131,532   $ 131,638   $ 138,112  
 
 

TROUBLED DEBT RESTRUCTURINGS (TDRs), BY
TYPE:

 
Real-estate - residential mortgage $ 26,193 $ 26,368 $ 27,033 $ 27,617 $ 26,854
Real-estate - commercial mortgage 14,439 13,772 15,237 15,957 16,085
Consumer and home equity 14,822 12,064 9,638 8,633 7,707
Commercial - industrial, financial and agricultural 7,512 8,086 7,441 6,627 7,488
Real estate - construction   169     1,475     273     726     843  
Total accruing TDRs 63,135 61,765 59,622 59,560 58,977
Non-accrual TDRs (1)   28,742     29,373     27,220     27,850     27,904  
Total TDRs $ 91,877   $ 91,138   $ 86,842   $ 87,410   $ 86,881  
 
(1) Included within non-accrual loans above.
 
Total Delinquency %

DELINQUENCY RATES, BY TYPE:

Sep 30 Jun 30 Mar 31 Dec 31 Sep 30
  2017     2017     2017     2016     2016  
 
Real estate - commercial mortgage 0.75 % 0.66 % 0.78 % 0.78 % 0.87 %
Commercial - industrial, financial and agricultural 1.54 % 1.43 % 1.25 % 1.31 % 1.48 %
Real estate - construction 1.50 % 1.82 % 1.99 % 1.29 % 1.61 %
Real estate - residential mortgage 2.25 % 2.08 % 2.44 % 2.74 % 2.67 %
Consumer, home equity, leasing and other   1.38 %   1.34 %   1.22 %   1.45 %   1.53 %
Total   1.28 %   1.20 %   1.23 %   1.27 %   1.38 %
 

ASSET QUALITY RATIOS:

                 
Sep 30 Jun 30 Mar 31 Dec 31 Sep 30
  2017     2017     2017     2016     2016  
 
Non-accrual loans to total loans 0.80 % 0.80 % 0.78 % 0.82 % 0.86 %
Non-performing loans to total loans 0.88 % 0.88 % 0.88 % 0.90 % 0.96 %
Non-performing assets to total loans and OREO 0.95 % 0.96 % 0.96 % 0.98 % 1.04 %
Non-performing assets to total assets 0.73 % 0.75 % 0.75 % 0.76 % 0.80 %
Allowance for credit losses to loans outstanding 1.13 % 1.14 % 1.15 % 1.17 % 1.15 %
Allowance for credit losses to non-performing loans 128.05 % 128.92 % 131.26 % 130.15 % 119.59 %

Non-performing assets to tangible common shareholders' equity and
allowance for credit losses

7.87 % 8.02 % 7.99 % 8.20 % 8.51 %
 
FULTON FINANCIAL CORPORATION
RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED)
in thousands, except per share data and percentages
 

Explanatory note:

This press release contains supplemental financial information, as
detailed below, which has been derived by methods other than
Generally Accepted Accounting Principles ("GAAP"). The Corporation
has presented these non-GAAP financial measures because it believes
that these measures provide useful and comparative information to
assess trends in the Corporation's results of operations.
Presentation of these non-GAAP financial measures is consistent with
how the Corporation evaluates its performance internally and these
non-GAAP financial measures are frequently used by securities
analysts, investors and other interested parties in the evaluation
of companies in the Corporation's industry. Management believes that
these non-GAAP financial measures, in addition to GAAP measures, are
also useful to investors to evaluate the Corporation's results.
Investors should recognize that the Corporation's presentation of
these non-GAAP financial measures might not be comparable to
similarly-titled measures of other companies. These non-GAAP
financial measures should not be considered a substitute for GAAP
basis measures, and the Corporation strongly encourages a review of
its condensed consolidated financial statements in their entirety.
Reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP measure follow:
             
Three Months Ended Nine Months Ended
September 30 June 30 March 31 December 31 September 30 September 30 September 30
  2017     2017     2017     2016     2016     2017     2016  

Shareholders' equity (tangible), per share

Shareholders' equity $ 2,225,786 $ 2,191,770 $ 2,154,683 $ 2,121,115 $ 2,129,436
Less: Goodwill and intangible assets   (531,556 )   (531,556 )   (531,556 )   (531,556 )   (531,556 )
Tangible shareholders' equity (numerator) $ 1,694,230   $ 1,660,214   $ 1,623,127   $ 1,589,559   $ 1,597,880  
 
Shares outstanding, end of period (denominator)   175,057     174,740     174,343     174,040     173,144  
 
Shareholders' equity (tangible), per share $ 9.68   $ 9.50   $ 9.31   $ 9.13   $ 9.23  
 

Return on average shareholders' equity
(tangible)

Net Income - Numerator $ 48,905   $ 45,467   $ 43,380   $ 42,150   $ 41,468   $ 137,752   $ 119,475  
 
Average shareholders' equity $ 2,215,389 $ 2,181,189 $ 2,140,547 $ 2,132,655 $ 2,120,596 $ 2,179,316 $ 2,089,882
Less: Average goodwill and intangible assets   (531,556 )   (531,556 )   (531,556 )   (531,556 )   (531,556 )   (531,556 )   (531,556 )
Average tangible shareholders' equity (denominator) $ 1,683,833   $ 1,649,633   $ 1,608,991   $ 1,601,099   $ 1,589,040   $ 1,647,760   $ 1,558,326  
 
Return on average shareholders' equity (tangible), annualized   11.52 %   11.06 %   10.93 %   10.47 %   10.38 %   11.18 %   10.24 %
 

Efficiency ratio

Non-interest expense $ 132,157 $ 132,695 $ 122,275 $ 127,621 $ 119,848 $ 387,127 $ 361,898
Less: Amortization of tax credit investments (1)   (3,503 )   (3,151 )   (998 )   -     -     (7,652 )   -  
Non-interest expense - Numerator $ 128,654   $ 129,544   $ 121,277   $ 127,621   $ 119,848   $ 379,475   $ 361,898  
 
Net interest income (fully taxable equivalent) $ 152,721 $ 147,349 $ 143,243 $ 137,571 $ 135,784 $ 443,313 $ 403,700
Plus: Total Non-interest income 51,974 52,371 46,673 52,755 48,149 151,018 137,423
Less: Investment securities gains   (4,597 )   (1,436 )   (1,106 )   (1,525 )   (2 )   (7,139 )   (1,025 )
Denominator $ 200,098   $ 198,284   $ 188,810   $ 188,801   $ 183,931   $ 587,192   $ 540,098  
 
Efficiency ratio   64.30 %   65.33 %   64.23 %   67.60 %   65.16 %   64.63 %   67.01 %
 

Non-performing assets to tangible
shareholders' equity and allowance for credit losses

Non-performing assets (numerator) $ 147,011   $ 147,175   $ 143,438   $ 144,453   $ 150,093  
 
Tangible shareholders' equity $ 1,694,230 $ 1,660,214 $ 1,623,127 $ 1,589,559 $ 1,597,880
Plus: Allowance for credit losses   174,749     174,998     172,647     171,325     165,169  
Tangible shareholders' equity and allowance for credit losses
(denominator)
$ 1,868,979   $ 1,835,212   $ 1,795,774   $ 1,760,884   $ 1,763,049  
 
Non-performing assets to tangible shareholders' equity and allowance
for credit losses
  7.87 %   8.02 %   7.99 %   8.20 %   8.51 %
 

Pre-provision net revenue

Net interest income $ 146,809 $ 141,563 $ 137,579 $ 132,237 $ 130,565 $ 425,951 $ 388,535
Non-interest income 51,974 52,371 46,673 52,755 48,149 151,018 137,423
Less: Investment securities gains   (4,597 )   (1,436 )   (1,106 )   (1,525 )   (2 )   (7,139 )   (1,025 )
Total revenue $ 194,186   $ 192,498   $ 183,146   $ 183,467   $ 178,712   $ 569,830   $ 524,933  
 
Non-interest expense $ 132,157 $ 132,695 $ 122,275 $ 127,621 $ 119,848 $ 387,127 $ 361,898
Less: Amortization of tax credit investments (1) $ (3,503 )   (3,151 )   (998 )   -     -     (7,652 )   -  
Total non-interest expense $ 128,654   $ 129,544   $ 121,277   $ 127,621   $ 119,848   $ 379,475   $ 361,898  
 
Pre-provision net revenue $ 65,532   $ 62,954   $ 61,869   $ 55,846   $ 58,864   $ 190,355   $ 163,035  
(1) Amortization expense for tax credit investments that are
considered to be affordable housing projects under applicable
accounting guidance is included in income taxes. Amortization
expense for other tax credit investments that are not considered to
be affordable housing projects is included in non-interest expense.

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