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Fulton Financial Announces Third Quarter Earnings

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Fulton Financial Corporation (NASDAQ:FULT) ("Fulton" or the "Corporation") reported net income of $62 million, or $0.38 per diluted share, for the third quarter of 2020.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20201020006287/en/

"While it is still too early to fully assess the impact of COVID-19 on our regional economy, we were pleased that our third quarter produced stronger results than we had initially predicted in both our commercial and consumer lines of business," said E. Philip Wenger, Chairman and CEO. "In particular, our mortgage business achieved record growth in the third quarter, coming on the heels of a record second quarter. Loan growth, fee income and credit quality also exceeded our expectations. And after a strategic, company-wide review, we are taking steps to significantly reduce our annual operating expenses for the future, with the goal of prudently managing the company for the longer term."

Net Interest Income and Balance Sheet

Net interest income for the third quarter of 2020 was $154 million, consistent with the second quarter of 2020. Net interest margin for the third quarter of 2020 decreased 11 basis points, to 2.70%, from 2.81% in the second quarter of 2020.

Total average assets for the third quarter of 2020 were $25.2 billion, an increase of $1.0 billion from the second quarter of 2020. Average loans, net of unearned income, of $18.9 billion increased $0.5 billion from the second quarter of 2020. The increase was principally due to loans originated under the Paycheck Protection Program ("PPP") during the second quarter, which had an outstanding balance of $2.0 billion as of September 30, 2020.

Average loans and yields, by type, for the third quarter of 2020 in comparison to the second quarter of 2020 are summarized in the following table:

 

Three months ended

 

 

 

September 30, 2020

 

June 30, 2020

 

Growth

 

Balance

 

Yield (1)

 

Balance

 

Yield (1)

 

$

 

%

 

(dollars in thousands)

Average Loans, net of unearned income, by type:

 

 

 

 

 

 

 

 

 

 

 

Real estate - commercial mortgage

$

6,986,528

 

 

3.27

%

 

$

6,875,872

 

 

3.47

%

 

$

110,656

 

 

1.6

%

Commercial and industrial(2)

5,983,872

 

 

2.53

%

 

5,710,145

 

 

2.83

%

 

273,727

 

 

4.8

%

Real estate - residential mortgage

2,975,516

 

 

3.73

%

 

2,769,682

 

 

3.88

%

 

205,834

 

 

7.4

%

Real estate - home equity

1,237,602

 

 

3.87

%

 

1,271,190

 

 

3.91

%

 

(33,588)

 

 

(2.6)

%

Real estate - construction

981,589

 

 

3.84

%

 

941,079

 

 

3.53

%

 

40,510

 

 

4.3

%

Consumer

464,851

 

 

4.07

%

 

465,728

 

 

4.17

%

 

(877)

 

 

(0.2)

%

Equipment lease financing

279,217

 

 

3.96

%

 

284,658

 

 

3.44

%

 

(5,441)

 

 

(1.9)

%

Other(3)

(28,656)

 

 

N/A

 

13,443

 

 

N/A

 

(42,099)

 

 

N/M

Total Average Loans, net of unearned income

$

18,880,519

 

 

3.38

%

 

$

18,331,797

 

 

3.52

%

 

$

548,722

 

 

3.0

%

 

 

 

 

 

 

 

 

 

 

 

 

(1) Presented on a fully-taxable equivalent basis using a 21% Federal tax rate and statutory interest expense disallowances.

(2) Includes average PPP loans of $2.0 billion and $1.3 billion for the three months ended September 30, 2020 and June 30, 2020, respectively.

(3) Consists of overdrafts and net origination fees and costs.

 

 

 

 

 

 

 

 

 

 

 

 

Total average liabilities increased $1.0 billion, from the second quarter of 2020 driven by increases in demand and savings deposits. Average deposits and interest rates, by type, for the third quarter of 2020 in comparison to the second quarter of 2020 are summarized in the following table:

 

Three months ended

 

 

 

September 30, 2020

 

June 30, 2020

 

Growth

 

Balance

 

Rate

 

Balance

 

Rate

 

$

 

%

 

(dollars in thousands)

Average Deposits, by type:

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

$

6,270,683

 

 

 

 

$

5,789,788

 

 

 

 

$

480,895

 

 

8.3

%

Interest-bearing demand

5,591,548

 

 

0.14

%

 

5,103,419

 

 

0.17

%

 

488,129

 

 

9.6

%

Savings

5,716,050

 

 

0.16

%

 

5,446,368

 

 

0.25

%

 

269,682

 

 

5.0

%

Total average demand and savings

17,578,281

 

 

0.10

%

 

16,339,575

 

 

0.14

%

 

1,238,706

 

 

7.6

%

Brokered

314,721

 

 

0.56

%

 

312,121

 

 

0.54

%

 

2,600

 

 

0.8

%

Time

2,495,445

 

 

1.58

%

 

2,624,962

 

 

1.71

%

 

(129,517)

 

 

(4.9)

%

Total Average Deposits

$

20,388,447

 

 

0.29

%

 

$

19,276,658

 

 

0.36

%

 

$

1,111,789

 

 

5.8

%

Asset Quality

The provision for credit losses for the third quarter of 2020 was $7 million, which reflects current expected credit losses based on forecasted economic and other assumptions, including the estimated impacts of COVID-19, over the remaining expected lives of financial assets and off-balance-sheet credit exposures.

Non-performing assets were $147 million, or 0.57% of total assets, at September 30, 2020, representing a decrease, when expressed as a percentage of total assets from June 30, 2020.

Annualized net recoveries for the quarter ended September 30, 2020 were 0.05% of total average loans, compared to annualized net charge-offs of 0.09% and 0.15% for the quarters ended June 30, 2020 and September 30, 2019, respectively. The third quarter of 2020 annualized net recoveries were primarily due to $5 million in real estate construction recoveries.

Non-interest Income

Non-interest income in the third quarter of 2020, excluding investment securities gains, was $63 million, an increase of $10 million, or 20%, from the second quarter of 2020, primarily driven by an increase of $7 million in mortgage banking income, although increases in nearly all non-interest income categories were experienced in the third quarter of 2020 in comparison to the second quarter of 2020.

In the third quarter of 2020, a $1.5 million impairment of mortgage servicing assets was recognized, as compared to a $6.6 million impairment in the second quarter of 2020. This impairment charge is recorded as a reduction to mortgage banking income.

Compared to the third quarter of 2019, non-interest income, excluding investment securities gains, increased $8 million, or 14%, in the third quarter of 2020 due mainly to increases in mortgage banking income. There was no mortgage servicing asset impairment charge in the third quarter of 2019.

Net investment securities gains declined by $3 million in the third quarter of 2020 in comparison to the second quarter of 2020. The second quarter of 2020 included net securities gains of $3 million related to a limited balance sheet restructuring that also involved the redemption of FHLB advances that resulted in $3 million of prepayment penalties recorded in non-interest expense in the same period.

Non-interest Expense

Non-interest expense was $139 million in the third quarter of 2020, a decrease of $4 million compared to the second quarter of 2020. The second quarter of 2020 included a $3 million prepayment penalty on redemption of FHLB advances.

Compared to the third quarter of 2019, non-interest expense decreased $8 million, or 5%, due primarily to decreases in other outside services, FHLB prepayment penalties, marketing and intangible amortization, partially offset by increases in salaries and employee benefits and FDIC insurance. FDIC insurance expense was reduced in the third quarter of 2019 as a result of the receipt of $3 million of assessment credits.

As a result of a recent strategic operating expense review the Corporation is making a number of changes that are expected to result in annual expense savings of $25 million, inclusive of the previously reported financial center closure savings. Of the expected $25 million in annual expense savings, the Corporation expects to reinvest a portion to accelerate digital transformation initiatives.

It is expected that the savings will not be fully realized until mid-2021. In addition, it is expected that a pre-tax charge within the range of $17 to $19 million will be realized for this initiative for employee severance, fixed asset write-offs and lease termination charges, among others. Of this charge, $16 to $17 million is expected to be incurred in the fourth quarter of 2020, with the remaining charges of up to approximately $1 million pre-tax being recognized in the first quarter of 2021.

Income Tax Expense

The effective income tax rate for the third quarter of 2020 was 13%, as compared to 14% for both the second quarter of 2020 and third quarter of 2019.

Additional information on Fulton 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," "projects," the negative of these terms and other comparable terminology. These forward-looking statements may include projections of, or guidance on, the Corporation's future financial performance, expected levels of future expenses. including future credit losses, anticipated growth strategies, descriptions of new business initiatives and anticipated trends in the Corporation's business or financial results.

Forward-looking statements are neither historical facts, nor assurance of future performance. Instead, they are based on current beliefs, expectations and assumptions regarding the future of the Corporation's business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Corporation's control, and actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not unduly rely on any of these forward-looking statements. Any forward-looking statement is based only on information currently available and speaks only as of the date when made. 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.

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, 2019, Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020 and other current and periodic reports, which have been or will be filed with the Securities and Exchange Commission and are or will be 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).

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

 

SUMMARY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)

 

in thousands, except per-share data and percentages

 

 

Three months ended

 

 

Sep 30

 

Jun 30

 

Mar 31

 

Dec 31

 

Sep 30

 

 

2020

 

2020

 

2020

 

2019

 

2019

 

Ending Balances

 

 

 

 

 

 

 

 

 

 

Investments

$

3,097,721

 

 

$

2,974,813

 

 

$

3,141,440

 

 

$

2,867,378

 

 

$

2,705,610

 

 

Loans, net of unearned income

19,028,621

 

 

18,704,722

 

 

17,077,403

 

 

16,837,526

 

 

16,686,866

 

 

Total assets

25,543,281

 

 

24,617,863

 

 

22,929,859

 

 

21,886,040

 

 

21,703,618

 

 

Deposits

20,730,051

 

 

19,884,208

 

 

17,365,026

 

 

17,393,913

 

 

17,342,717

 

 

Shareholders' equity

2,390,261

 

 

2,340,501

 

 

2,285,748

 

 

2,342,176

 

 

2,324,016

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Balances

 

 

 

 

 

 

 

 

 

 

Investments

$

2,977,672

 

 

$

3,096,632

 

 

$

3,071,828

 

 

$

2,830,999

 

 

$

2,829,672

 

 

Loans, net of unearned income

18,880,519

 

 

18,331,797

 

 

16,860,067

 

 

16,768,057

 

 

16,436,507

 

 

Total assets

25,169,508

 

 

24,139,116

 

 

22,252,099

 

 

21,812,438

 

 

21,457,800

 

 

Deposits

20,388,447

 

 

19,276,658

 

 

17,121,428

 

 

17,449,565

 

 

16,950,667

 

 

Shareholders' equity

2,374,091

 

 

2,309,133

 

 

2,337,016

 

 

2,341,397

 

 

2,315,585

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Statement

 

 

 

 

 

 

 

 

 

 

Net interest income

$

154,116

 

 

$

152,754

 

 

$

160,746

 

 

$

159,270

 

 

$

161,260

 

 

Provision for credit losses

7,080

 

 

19,570

 

 

44,030

 

 

20,530

 

 

2,170

 

 

Non-interest income

63,248

 

 

55,922

 

 

54,644

 

 

55,281

 

 

59,813

 

 

Non-interest expense

139,147

 

 

143,006

 

 

142,552

 

 

138,974

 

 

146,770

 

 

Income before taxes

71,137

 

 

46,101

 

 

28,808

 

 

55,047

 

 

72,133

 

 

Net income

61,607

 

 

39,559

 

 

26,047

 

 

47,789

 

 

62,108

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share

 

 

 

 

 

 

 

 

 

 

Net income (basic)

$

0.38

 

 

$

0.24

 

 

$

0.16

 

 

$

0.29

 

 

$

0.38

 

 

Net income (diluted)

$

0.38

 

 

$

0.24

 

 

$

0.16

 

 

$

0.29

 

 

$

0.37

 

 

Cash dividends

$

0.13

 

 

$

0.13

 

 

$

0.13

 

 

$

0.17

 

 

$

0.13

 

 

Shareholders' equity (tangible)(1)

$

11.44

 

 

$

11.15

 

 

$

10.84

 

 

$

11.00

 

 

$

10.91

 

 

Weighted average shares (basic)

162,061

 

 

161,715

 

 

163,475

 

 

164,135

 

 

165,324

 

 

Weighted average shares (diluted)

162,579

 

 

162,267

 

 

164,417

 

 

165,039

 

 

166,126

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Non-GAAP financial measure. Refer to the calculation on the page titled "Reconciliation of Non-GAAP Measures" at the end of this document.

 

 

 

 

 

Three months ended

 

 

Sep 30

 

Jun 30

 

Mar 31

 

Dec 31

 

Sep 30

 

 

2020

 

2020

 

2020

 

2019

 

2019

 

Asset Quality(2)

 

 

 

 

 

 

 

 

 

 

Net (recoveries) charge-offs to average loans (annualized)

(0.05)

%

 

0.09

%

 

0.26

%

 

0.65

%

 

0.15

%

 

Non-performing loans to total loans

0.75

%

 

0.75

%

 

0.82

%

 

0.84

%

 

0.81

%

 

Non-performing assets to total assets

0.57

%

 

0.59

%

 

0.64

%

 

0.68

%

 

0.66

%

 

ACL - loans(3) to total loans

1.40

%

 

1.37

%

 

1.40

%

 

0.97

%

 

1.00

%

 

ACL - loans(3) to non-performing loans

188

%

 

183

%

 

170

%

 

116

%

 

122

%

 

Non-performing assets to shareholders' equity (tangible) and ACL - loans (1)(3)

6.91

%

 

7.04

%

 

7.37

%

 

7.51

%

 

7.35

%

 

 

 

 

 

 

 

 

 

 

 

 

Asset Quality, excluding PPP(1)(4)

 

 

 

 

 

 

 

 

 

 

Net (recoveries) charge-offs to average adjusted loans (annualized)

(0.06)

%

 

0.10

%

 

%

 

%

 

%

 

Non-performing loans to total adjusted loans

0.83

%

 

0.83

%

 

%

 

%

 

%

 

ACL - loans(3) to total adjusted loans

1.56

%

 

1.53

%

 

%

 

%

 

%

 

 

 

 

 

 

 

 

 

 

 

 

Profitability

 

 

 

 

 

 

 

 

 

 

Return on average assets

0.97

%

 

0.66

%

 

0.47

%

 

0.87

%

 

1.15

%

 

Return on average shareholders' equity

10.32

%

 

6.89

%

 

4.48

%

 

8.10

%

 

10.64

%

 

Return on average shareholders' equity (tangible)(1)

13.50

%

 

8.99

%

 

5.84

%

 

10.52

%

 

14.03

%

 

Net interest margin

2.70

%

 

2.81

%

 

3.21

%

 

3.22

%

 

3.31

%

 

Efficiency ratio(1)

62.3

%

 

66.4

%

 

64.5

%

 

63.1

%

 

63.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios

 

 

 

 

 

 

 

 

 

 

Tangible common equity ratio(1)

7.4

%

 

7.5

%

 

7.8

%

 

8.5

%

 

8.5

%

 

Tier 1 leverage ratio(5)

7.4

%

 

7.6

%

 

7.9

%

 

8.4

%

 

8.5

%

 

Common equity Tier 1 capital ratio(5)

9.5

%

 

9.5

%

 

9.4

%

 

9.7

%

 

9.6

%

 

Tier 1 capital ratio(5)

9.5

%

 

9.5

%

 

9.4

%

 

9.7

%

 

9.6

%

 

Total risk-based capital ratio(5)

13.9

%

 

13.8

%

 

13.8

%

 

11.8

%

 

12.0

%

 

 

 

 

 

 

 

 

 

 

 

 

(1) Non-GAAP financial measure. Refer to the calculation on the page titled "Reconciliation of Non-GAAP Measures" at the end of this document.

 

(2) Effective January 1, 2020, Fulton adopted Accounting Standards Update 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," referred to as the current expected credit loss model ("CECL"). This accounting standard requires that credit losses for financial assets and off-balance-sheet ("OBS") credit exposures be measured based on expected credit losses, rather than on incurred credit losses as in prior periods.

 

(3) "ACL - loans" relates to the allowance for credit losses ("ACL") specifically on "Loans, net of unearned income" and does not include the ACL related to OBS credit exposures.

 

(4) Asset quality information excluding Paycheck Protection Program (PPP) loans. Refer to the calculation on the page titled "Reconciliation of Non-GAAP Measures" at the end of this document.

 

(5) Regulatory capital ratios as of September 30, 2020 are preliminary and prior periods are actual.

 

 

FULTON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED ENDING BALANCE SHEETS (UNAUDITED)

dollars in thousands

 

 

 

 

 

 

 

 

 

 

 

% Change from

 

Sep 30

 

Jun 30

 

Mar 31

 

Dec 31

 

Sep 30

 

Jun 30

 

Sep 30

 

2020

 

2020

 

2020

 

2019

 

2019

 

2020

 

2019

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

139,304

 

 

$

141,702

 

 

$

181,777

 

 

$

132,283

 

 

$

120,671

 

 

(1.7)

%

 

15.4

%

Other interest-earning assets

1,489,550

 

 

1,007,939

 

 

793,572

 

 

482,930

 

 

572,499

 

 

47.8

%

 

160.2

%

Loans held for sale

93,621

 

 

77,415

 

 

40,645

 

 

37,828

 

 

33,945

 

 

20.9

%

 

175.8

%

Investment securities

3,097,721

 

 

2,974,813

 

 

3,141,440

 

 

2,867,378

 

 

2,705,610

 

 

4.1

%

 

14.5

%

Loans, net of unearned income

19,028,621

 

 

18,704,722

 

 

17,077,403

 

 

16,837,526

 

 

16,686,866

 

 

1.7

%

 

14.0

%

Less: ACL - loans(1)

(266,825)

 

 

(256,537)

 

 

(238,508)

 

 

(163,622)

 

 

(166,135)

 

 

4.0

%

 

60.6

%

Net loans

18,761,796

 

 

18,448,185

 

 

16,838,895

 

 

16,673,904

 

 

16,520,731

 

 

1.7

%

 

13.6

%

Premises and equipment

236,943

 

 

239,596

 

 

236,908

 

 

240,046

 

 

237,344

 

 

(1.1)

%

 

(0.2)

%

Accrued interest receivable

70,766

 

 

73,720

 

 

59,365

 

 

60,898

 

 

60,447

 

 

(4.0)

%

 

17.1

%

Goodwill and intangible assets

534,907

 

 

535,039

 

 

535,171

 

 

535,303

 

 

534,178

 

 

%

 

0.1

%

Other assets

1,118,673

 

 

1,119,454

 

 

1,102,086

 

 

855,470

 

 

918,193

 

 

(0.1)

%

 

21.8

%

Total Assets

$

25,543,281

 

 

$

24,617,863

 

 

$

22,929,859

 

 

$

21,886,040

 

 

$

21,703,618

 

 

3.8

%

 

17.7

%

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

$

20,730,051

 

 

$

19,884,208

 

 

$

17,365,026

 

 

$

17,393,913

 

 

$

17,342,717

 

 

4.3

%

 

19.5

%

Short-term borrowings

611,727

 

 

572,551

 

 

1,386,808

 

 

883,241

 

 

832,860

 

 

6.8

%

 

(26.6)

%

Other liabilities

515,230

 

 

525,407

 

 

513,811

 

 

384,941

 

 

477,311

 

 

(1.9)

%

 

7.9

%

FHLB advances and long-term debt

1,296,012

 

 

1,295,196

 

 

1,378,466

 

 

881,769

 

 

726,714

 

 

0.1

%

 

78.3

%

Total Liabilities

23,153,020

 

 

22,277,362

 

 

20,644,111

 

 

19,543,864

 

 

19,379,602

 

 

3.9

%

 

19.5

%

Shareholders' equity

2,390,261

 

 

2,340,501

 

 

2,285,748

 

 

2,342,176

 

 

2,324,016

 

 

2.1

%

 

2.9

%

Total Liabilities and Shareholders' Equity

$

25,543,281

 

 

$

24,617,863

 

 

$

22,929,859

 

 

$

21,886,040

 

 

$

21,703,618

 

 

3.8

%

 

17.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL:

Loans, by type:

 

 

 

 

 

 

 

 

 

 

 

 

Real estate - commercial mortgage

$

7,046,330

 

 

$

6,934,936

 

 

$

6,895,069

 

 

$

6,700,776

 

 

$

6,604,634

 

 

1.6

%

 

6.7

%

Commercial and industrial

4,007,278

 

 

4,033,439

 

 

4,450,557

 

 

4,445,634

 

 

4,493,379

 

 

(0.6)

%

 

(10.8)

%

Real estate - residential mortgage

3,061,835

 

 

2,862,226

 

 

2,718,290

 

 

2,641,465

 

 

2,570,793

 

 

7.0

%

 

19.1

%

Real estate - home equity

1,222,709

 

 

1,251,455

 

 

1,292,677

 

 

1,314,944

 

 

1,346,115

 

 

(2.3)

%

 

(9.2)

%

Real estate - construction

1,007,534

 

 

972,909

 

 

947,768

 

 

971,079

 

 

913,644

 

 

3.6

%

 

10.3

%

Consumer

469,551

 

 

465,610

 

 

468,172

 

 

463,164

 

 

464,213

 

 

0.8

%

 

1.1

%

Equipment lease financing

280,286

 

 

281,897

 

 

289,726

 

 

284,537

 

 

280,649

 

 

(0.6)

%

 

(0.1)

%

PPP

1,960,165

 

 

1,937,034

 

 

 

 

 

 

 

 

1.2

%

 

N/M

Other(2)

(27,067)

 

 

(34,784)

 

 

15,144

 

 

15,927

 

 

13,439

 

 

(22.2)

%

 

N/M

Total Loans, net of unearned income

$

19,028,621

 

 

$

18,704,722

 

 

$

17,077,403

 

 

$

16,837,526

 

 

$

16,686,866

 

 

1.7

%

 

14.0

%

Deposits, by type:

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

$

6,378,077

 

 

$

6,239,055

 

 

$

4,531,872

 

 

$

4,453,324

 

 

$

4,240,478

 

 

2.2

%

 

50.4

%

Interest-bearing demand

5,813,935

 

 

5,099,405

 

 

4,724,520

 

 

4,720,188

 

 

4,771,109

 

 

14.0

%

 

21.9

%

Savings

5,805,431

 

 

5,667,893

 

 

5,092,865

 

 

5,153,941

 

 

5,094,387

 

 

2.4

%

 

14.0

%

Total demand and savings

17,997,443

 

 

17,006,353

 

 

14,349,257

 

 

14,327,453

 

 

14,105,974

 

 

5.8

%

 

27.6

%

Brokered

317,588

 

 

310,689

 

 

313,337

 

 

264,531

 

 

256,870

 

 

2.2

%

 

23.6

%

Time

2,415,020

 

 

2,567,166

 

 

2,702,432

 

 

2,801,929

 

 

2,979,873

 

 

(5.9)

%

 

(19.0)

%

Total Deposits

$

20,730,051

 

 

$

19,884,208

 

 

$

17,365,026

 

 

$

17,393,913

 

 

$

17,342,717

 

 

4.3

%

 

19.5

%

Short-term borrowings, by type:

 

 

 

 

 

 

 

 

 

 

 

 

Customer funding

$

611,727

 

 

$

572,551

 

 

$

461,808

 

 

$

383,241

 

 

$

337,860

 

 

6.8

%

 

81.1

%

Federal funds purchased

 

 

 

 

200,000

 

 

 

 

20,000

 

 

N/M

 

N/M

Short-term FHLB advances

 

 

 

 

725,000

 

 

500,000

 

 

475,000

 

 

N/M

 

N/M

Total Short-term Borrowings

$

611,727

 

 

$

572,551

 

 

$

1,386,808

 

 

$

883,241

 

 

$

832,860

 

 

6.8

%

 

(26.6)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

N/M - Not meaningful

 

 

 

 

(1) "ACL - loans" relates to the ACL specifically on "Loans, net of unearned income" and does not include the ACL related to OBS credit exposures.

(2) Consists of overdrafts and net origination fees and costs.

 

FULTON FINANCIAL CORPORATION

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

 

dollars in thousands

 

 

 

 

Three Months Ended

 

% Change from

 

 

 

Nine months ended

 

 

 

 

 

 

Sep 30

 

Jun 30

 

Mar 31

 

Dec 31

 

Sep 30

 

Jun 30

 

Sep 30

 

 

 

Sep 30

 

 

 

 

 

 

2020

 

2020

 

2020

 

2019

 

2019

 

2020

 

2019

 

 

 

2020

 

2019

 

% Change

 

Interest Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

$

179,159

 

 

$

180,696

 

 

$

199,378

 

 

$

202,159

 

 

$

208,413

 

 

(0.9)

%

 

(14.0)

%

 

 

 

$

559,233

 

 

$

623,147

 

 

(10.3)

%

 

Interest expense

 

 

25,043

 

 

27,942

 

 

38,632

 

 

42,889

 

 

47,153

 

 

(10.4)

%

 

(46.9)

%

 

 

 

91,617

 

 

134,028

 

 

(31.6)

%

 

Net Interest Income

 

 

154,116

 

 

152,754

 

 

160,746

 

 

159,270

 

 

161,260

 

 

0.9

%

 

(4.4)

%

 

 

 

467,616

 

 

489,119

 

 

(4.4)

%

 

Provision for credit losses

 

 

7,080

 

 

19,570

 

 

44,030

 

 

20,530

 

 

2,170

 

 

(63.8)

%

 

N/M

 

 

 

70,680

 

 

12,295

 

 

N/M

 

Net Interest Income after Provision

 

 

147,036

 

 

133,184

 

 

116,716

 

 

138,740

 

 

159,090

 

 

10.4

%

 

(7.6)

%

 

 

 

396,936

 

 

476,824

 

 

(16.8)

%

 

Non-Interest Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wealth management

 

 

14,943

 

 

13,407

 

 

15,055

 

 

14,419

 

 

13,867

 

 

11.5

%

 

7.8

%

 

 

 

43,405

 

 

41,259

 

 

5.2

%

 

Mortgage banking

 

 

16,801

 

 

9,964

 

 

6,234

 

 

5,076

 

 

6,658

 

 

68.6

%

 

152.3

%

 

 

 

32,998

 

 

18,023

 

 

83.1

%

 

Consumer banking:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Card

 

 

5,002

 

 

4,966

 

 

4,685

 

 

4,991

 

 

5,791

 

 

0.7

%

 

(13.6)

%

 

 

 

14,653

 

 

15,524

 

 

(5.6)

%

 

Overdraft

 

 

3,015

 

 

2,107

 

 

4,058

 

 

4,750

 

 

4,682

 

 

43.1

%

 

(35.6)

%

 

 

 

9,180

 

 

13,199

 

 

(30.4)

%

 

Other consumer banking

 

 

2,406

 

 

2,065

 

 

2,496

 

 

2,688

 

 

2,860

 

 

16.5

%

 

(15.9)

%

 

 

 

6,967

 

 

8,354

 

 

(16.6)

%

 

Total consumer banking

 

 

10,423

 

 

9,138

 

 

11,239

 

 

12,429

 

 

13,333

 

 

14.1

%

 

(21.8)

%

 

 

 

30,800

 

 

37,077

 

 

(16.9)

%

 

Commercial banking:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchant and card

 

 

6,237

 

 

5,326

 

 

5,624

 

 

5,841

 

 

6,166

 

 

17.1

%

 

1.2

%

 

 

 

17,187

 

 

18,236

 

 

(5.8)

%

 

Cash management

 

 

4,742

 

 

4,503

 

 

4,742

 

 

4,697

 

 

4,696

 

 

5.3

%

 

1.0

%

 

 

 

13,987

 

 

13,695

 

 

2.1

%

 

Capital markets

 

 

4,696

 

 

5,004

 

 

5,075

 

 

5,939

 

 

4,448

 

 

(6.2)

%

 

5.6

%

 

 

 

14,775

 

 

11,015

 

 

34.1

%

 

Other commercial banking

 

 

2,636

 

 

1,914

 

 

2,978

 

 

3,664

 

 

3,478

 

 

37.7

%

 

(24.2)

%

 

 

 

7,528

 

 

10,109

 

 

(25.5)

%

 

Total commercial banking

 

 

18,311

 

 

16,748

 

 

18,419

 

 

20,141

 

 

18,788

 

 

9.3

%

 

(2.5)

%

 

 

 

53,477

 

 

53,055

 

 

0.8

%

 

Other

 

 

2,769

 

 

3,660

 

 

3,651

 

 

3,216

 

 

2,675

 

 

(24.3)

%

 

3.5

%

 

 

 

10,080

 

 

6,733

 

 

49.7

%

 

Non-interest income before investment securities gains

 

 

63,246

 

 

52,917

 

 

54,598

 

 

55,281

 

 

55,321

 

 

19.5

%

 

14.3

%

 

 

 

170,761

 

 

156,147

 

 

9.4

%

 

Investment securities gains, net

 

 

2

 

 

3,005

 

 

46

 

 

 

 

4,492

 

 

N/M

 

N/M

 

 

 

3,053

 

 

4,733

 

 

(35.5)

%

 

Total Non-Interest Income

 

 

63,248

 

 

55,922

 

 

54,644

 

 

55,281

 

 

59,813

 

 

13.1

%

 

5.7

%

 

 

 

173,814

 

 

160,880

 

 

8.0

%

 

Non-Interest Expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

79,227

 

 

81,012

 

 

80,228

 

 

76,975

 

 

78,211

 

 

(2.2)

%

 

1.3

%

 

 

 

240,467

 

 

234,959

 

 

2.3

%

 

Net occupancy

 

 

13,221

 

 

13,144

 

 

13,486

 

 

13,080

 

 

12,368

 

 

0.6

%

 

6.9

%

 

 

 

39,851

 

 

39,746

 

 

0.3

%

 

Data processing and software

 

 

12,285

 

 

12,193

 

 

11,645

 

 

11,468

 

 

11,590

 

 

0.8

%

 

6.0

%

 

 

 

36,123

 

 

33,211

 

 

8.8

%

 

Other outside services

 

 

7,617

 

 

7,600

 

 

7,881

 

 

8,215

 

 

12,163

 

 

0.2

%

 

(37.4)

%

 

 

 

23,098

 

 

31,774

 

 

(27.3)

%

 

Equipment

 

 

3,711

 

 

3,193

 

 

3,418

 

 

3,475

 

 

3,459

 

 

16.2

%

 

7.3

%

 

 

 

10,322

 

 

10,100

 

 

2.2

%

 

Professional fees

 

 

2,879

 

 

3,331

 

 

4,202

 

 

2,873

 

 

3,331

 

 

(13.6)

%

 

(13.6)

%

 

 

 

10,412

 

 

10,261

 

 

1.5

%

 

Marketing

 

 

1,147

 

 

1,303

 

 

1,579

 

 

1,503

 

 

3,322

 

 

(12.0)

%

 

(65.5)

%

 

 

 

4,029

 

 

8,345

 

 

(51.7)

%

 

Amortization of tax credit investments

 

 

1,694

 

 

1,450

 

 

1,450

 

 

1,505

 

 

1,533

 

 

16.8

%

 

10.5

%

 

 

 

4,594

 

 

4,516

 

 

1.7

%

 

FDIC insurance

 

 

1,578

 

 

2,133

 

 

2,808

 

 

2,177

 

 

239

 

 

(26.0)

%

 

N/M

 

 

 

6,519

 

 

5,603

 

 

16.3

%

 

Intangible amortization

 

 

132

 

 

132

 

 

132

 

 

142

 

 

1,071

 

 

%

 

(87.7)

%

 

 

 

397

 

 

1,285

 

 

(69.1)

%

 

Prepayment penalty on FHLB advances

 

 

 

 

2,878

 

 

 

 

 

 

4,326

 

 

N/M

 

N/M

 

 

 

2,878

 

 

4,326

 

 

(33.5)

%

 

Other

 

 

15,654

 

 

14,637

 

 

15,723

 

 

17,561

 

 

15,157

 

 

6.9

%

 

3.3

%

 

 

 

46,014

 

 

44,636

 

 

3.1

%

 

Total Non-Interest Expense

 

 

139,147

 

 

143,006

 

 

142,552

 

 

138,974

 

 

146,770

 

 

(2.7)

%

 

(5.2)

%

 

 

 

424,705

 

 

428,762

 

 

(0.9)

%

 

Income Before Income Taxes

 

 

71,137

 

 

46,100

 

 

28,808

 

 

55,047

 

 

72,133

 

 

54.3

%

 

(1.4)

%

 

 

 

146,045

 

 

208,942

 

 

(30.1)

%

 

Income tax expense

 

 

9,529

 

 

6,542

 

 

2,761

 

 

7,258

 

 

10,025

 

 

45.7

%

 

(4.9)

%

 

 

 

18,832

 

 

30,391

 

 

(38.0)

%

 

Net Income

 

 

$

61,607

 

 

$

39,559

 

 

$

26,047

 

 

$

47,789

 

 

$

62,108

 

 

55.7

%

 

(0.8)

%

 

 

 

$

127,213

 

 

$

178,551

 

 

(28.8)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PER SHARE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

$

0.38

 

 

$

0.24

 

 

$

0.16

 

 

$

0.29

 

 

$

0.38

 

 

58.3

%

 

%

 

 

 

$

0.78

 

 

$

1.06

 

 

(26.4)

%

 

Diluted

 

 

0.38

 

 

0.24

 

 

0.16

 

 

0.29

 

 

0.37

 

 

58.3

%

 

2.7

%

 

 

 

0.78

 

 

1.06

 

 

(26.4)

%

 

Cash dividends

 

 

0.13

 

 

0.13

 

 

0.13

 

 

0.17

 

 

0.13

 

 

%

 

%

 

 

 

$

0.39

 

 

$

0.39

 

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares (basic)

 

 

162,061

 

 

161,715

 

 

163,475

 

 

164,135

 

 

165,324

 

 

0.2

%

 

(2.0)

%

 

 

 

162,416

 

 

167,834

 

 

(3.2)

%

 

Weighted average shares (diluted)

 

 

162,579

 

 

162,267

 

 

164,417

 

 

165,039

 

 

166,126

 

 

0.2

%

 

(2.1)

%

 

 

 

163,083

 

 

168,722

 

 

(3.3)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FULTON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)

dollars in thousands

 

Three months ended

 

September 30, 2020

 

June 30, 2020

 

September 30, 2019

 

Average

 

Interest

 

Yield/

 

Average

 

Interest

 

Yield/

 

Average

 

Interest

 

Yield/

 

Balance

 

(1)

 

Rate

 

Balance

 

(1)

 

Rate

 

Balance

 

(1)

 

Rate

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, net of unearned income

$

18,880,519

 

 

$

160,344

 

 

3.38

%

 

$

18,331,797

 

 

$

160,613

 

 

3.52

%

 

$

16,436,507

 

 

$

188,280

 

 

4.55

%

Taxable investment securities

2,011,893

 

 

13,150

 

 

2.61

%

 

2,200,870

 

 

15,171

 

 

2.76

%

 

2,282,292

 

 

15,565

 

 

2.73

%

Tax-exempt investment securities

861,764

 

 

6,899

 

 

3.19

%

 

830,836

 

 

6,737

 

 

3.23

%

 

516,907

 

 

4,650

 

 

3.57

%

Total Investment Securities

2,873,657

 

 

20,049

 

 

2.79

%

 

3,031,706

 

 

21,908

 

 

2.89

%

 

2,799,199

 

 

20,215

 

 

2.88

%

Loans held for sale

79,999

 

 

728

 

 

3.64

%

 

55,608

 

 

509

 

 

3.66

%

 

31,898

 

 

466

 

 

5.83

%

Other interest-earning assets

1,387,327

 

 

1,028

 

 

0.30

%

 

815,910

 

 

766

 

 

0.38

%

 

509,579

 

 

2,709

 

 

2.12

%

Total Interest-earning Assets

23,221,502

 

 

182,149

 

 

3.13

%

 

22,235,021

 

 

183,796

 

 

3.32

%

 

19,777,183

 

 

211,670

 

 

4.25

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

138,567

 

 

 

 

 

 

153,728

 

 

 

 

 

 

120,967

 

 

 

 

 

Premises and equipment

239,183

 

 

 

 

 

 

240,417

 

 

 

 

 

 

240,383

 

 

 

 

 

Other assets

1,835,190

 

 

 

 

 

 

1,761,038

 

 

 

 

 

 

1,491,115

 

 

 

 

 

Less: ACL - loans(2)

(264,934)

 

 

 

 

 

 

(251,088)

 

 

 

 

 

 

(171,848)

 

 

 

 

 

Total Assets

$

25,169,508

 

 

 

 

 

 

$

24,139,116

 

 

 

 

 

 

$

21,457,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

$

5,591,548

 

 

$

1,913

 

 

0.14

%

 

$

5,103,419

 

 

$

2,219

 

 

0.17

%

 

$

4,448,112

 

 

$

9,163

 

 

0.82

%

Savings deposits

5,716,050

 

 

2,347

 

 

0.16

%

 

5,446,368

 

 

3,331

 

 

0.25

%

 

5,026,316

 

 

11,059

 

 

0.87

%

Brokered deposits

314,721

 

 

440

 

 

0.56

%

 

312,121

 

 

422

 

 

0.54

%

 

253,426

 

 

1,536

 

 

2.40

%

Time deposits

2,495,445

 

 

9,931

 

 

1.58

%

 

2,624,962

 

 

11,145

 

 

1.71

%

 

2,974,993

 

 

13,979

 

 

1.86

%

Total Interest-bearing Deposits

14,117,764

 

 

14,631

 

 

0.41

%

 

13,486,870

 

 

17,118

 

 

0.51

%

 

12,702,847

 

 

35,737

 

 

1.12

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

613,127

 

 

370

 

 

0.24

%

 

707,771

 

 

517

 

 

0.29

%

 

919,697

 

 

4156

 

 

1.78

%

FHLB advances and long-term debt

1,295,515

 

 

10,042

 

 

3.10

%

 

1,361,421

 

 

10,307

 

 

3.03

%

 

842,706

 

 

7,260

 

 

3.44

%

Total Interest-bearing Liabilities

16,026,406

 

 

25,043

 

 

0.62

%

 

15,556,062

 

 

27,942

 

 

0.72

%

 

14,465,250

 

 

47,153

 

 

1.29

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

6,270,683

 

 

 

 

 

 

5,789,788

 

 

 

 

 

 

4,247,820

 

 

 

 

 

Total Deposits/Cost of Deposits

20,388,447

 

 

 

 

0.29

%

 

19,276,658

 

 

 

 

0.36

%

 

16,950,667

 

 

 

 

0.84

%

Other

498,328

 

 

 

 

 

 

484,133

 

 

 

 

 

 

429,145

 

 

 

 

 

Total Liabilities

22,795,417

 

 

 

 

 

 

$

21,829,983

 

 

 

 

 

 

19,142,215

 

 

 

 

 

Total Interest-bearing liabilities and non-interest bearing deposits ("Cost of Funds")

22,297,089

 

 

 

 

0.45

%

 

21,345,850

 

 

 

 

0.53

%

 

18,713,070

 

 

 

 

1.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity

2,374,091

 

 

 

 

 

 

2,309,133

 

 

 

 

 

 

2,315,585

 

 

 

 

 

Total Liabilities and Shareholders' Equity

$

25,169,508

 

 

 

 

 

 

$

24,139,116

 

 

 

 

 

 

$

21,457,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income/net interest margin (fully taxable equivalent)

 

 

157,106

 

 

2.70

%

 

 

 

155,854

 

 

2.81

%

 

 

 

164,517

 

 

3.31

%

Tax equivalent adjustment

 

 

(2,990)

 

 

 

 

 

 

(3,100)

 

 

 

 

 

 

(3,257)

 

 

 

Net interest income

 

 

$

154,116

 

 

 

 

 

 

$

152,754

 

 

 

 

 

 

$

161,260