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Fulton Financial Announces Second Quarter Earnings

Fulton Financial Corporation (NASDAQ:FULT) (“Fulton” or the “Corporation”) reported net income of $40 million, or $0.24 per diluted share, for the second quarter of 2020.

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“COVID-19 continues to have a significant impact on our world and our company,” said E. Philip Wenger, Chairman and CEO, “however, we are pleased with what Fulton was able to achieve in the second quarter during this period of great uncertainty. Our earnings were strong, with lower credit losses and relatively stable fee income and expenses. And our employees have done an outstanding job, continuing to support our customers through this challenging and ever-changing environment."

Net Interest Income and Balance Sheet

Net interest income for the second quarter of 2020 was $153 million, a decrease of $8 million from the first quarter of 2020, driven by lower yields on loans and other interest-earning assets. Net interest margin for the second quarter of 2020 decreased 40 basis points, to 2.81% from 3.21% in the first quarter of 2020.

Total average assets for the second quarter of 2020 were $24.1 billion, an increase of $1.9 billion from the first quarter of 2020. Average loans, net of unearned income, of $18.3 billion increased $1.5 billion from the first quarter of 2020. The increase was principally due to loans originated under the Paycheck Protection Program ("PPP"), which were $1.9 billion as of June 30, 2020.

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

Three months ended

June 30, 2020

March 31, 2020

Growth

Balance

Yield (1)

Balance

Yield (1)

$

%

(dollars in thousands)

Average Loans, net of unearned income, by type:

Real estate - commercial mortgage

$

6,875,872

3.47

%

$

6,746,766

4.20

%

$

129,106

1.9

%

Commercial and industrial

5,710,145

3.35

%

4,446,750

4.21

%

1,263,395

28.4

%

Real estate - residential mortgage

2,769,682

3.88

%

2,670,019

3.97

%

99,663

3.7

%

Real estate - home equity

1,271,190

3.91

%

1,300,132

4.73

%

(28,942)

(2.2)

%

Real estate - construction

941,079

3.53

%

929,529

4.13

%

11,550

1.2

%

Consumer

465,728

4.17

%

466,415

4.34

%

(687)

(0.1)

%

Equipment lease financing

284,658

3.44

%

284,566

4.32

%

92

0.0

%

Other

13,443

N/A

15,890

N/A

(2,447)

(15.4)

%

Total Average Loans, net of unearned income

$

18,331,797

3.52

%

$

16,860,067

4.23

%

$

1,471,730

8.7

%

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

Total average liabilities increased $1.9 billion, from the first quarter of 2020 driven by increases in noninterest-bearing demand deposits. Average deposits and interest rates, by type, for the second quarter of 2020 in comparison to the first quarter of 2020 are summarized in the following table:

Three months ended

June 30, 2020

March 31, 2020

Growth

Balance

Rate

Balance

Rate

$

%

(dollars in thousands)

Average Deposits, by type:

Noninterest-bearing demand

$

5,789,788

0.00

%

$

4,307,027

0.00

%

$

1,482,761

34.4

%

Interest-bearing demand

5,103,419

0.17

%

4,649,905

0.49

%

453,514

9.8

%

Savings

5,446,368

0.25

%

5,127,662

0.56

%

318,706

6.2

%

Total average demand and savings

16,339,575

0.14

%

14,084,594

0.36

%

2,254,981

16.0

%

Brokered

312,121

0.54

%

275,359

1.57

%

36,762

13.4

%

Time

2,624,962

1.71

%

2,761,474

1.84

%

(136,512)

(4.9)

%

Total Average Deposits

$

19,276,658

0.36

%

$

17,121,427

0.62

%

$

2,155,231

12.6

%

Asset Quality

The provision for credit losses for the second quarter of 2020 was $20 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 $145 million, or 0.59% of total assets, at June 30, 2020, a decrease from both March 31, 2020 and June 30, 2019.

Annualized net charge-offs (recoveries) for the quarter ended June 30, 2020 were 0.09% of total average loans, compared to 0.26% and (0.04)% for the quarters ended March 31, 2020 and June 30, 2019, respectively.

Non-interest Income

Non-interest income in the second quarter of 2020, excluding investment securities gains, was $53 million, a decrease of $2 million, or 3%, from the first quarter of 2020, primarily driven by a decline in overdraft and wealth management fees, partially offset by higher mortgage banking income.

Mortgage banking income increased $4 million from the first quarter of 2020, reflecting the net result of a $10 million increase in gains on mortgage loan sales due largely to higher refinance activity, partially offset by a $7 million mortgage servicing rights impairment charge recorded in the second quarter of 2020 as a result of rapidly declining interest rates and related increases in current and expected levels of prepayments. A $1 million mortgage servicing rights impairment charge was recorded in the first quarter of 2020.

Compared to the second quarter of 2019, non-interest income, excluding investment securities gains, decreased $1 million or 2% in the second quarter of 2020 due mainly to declines in overdraft fees, merchant and card income and wealth management fees, partially offset by an increase in mortgage banking and capital markets income.

Net investment securities gains of $3 million were realized in the second quarter of 2020, related to a limited balance sheet restructuring that included $3 million of prepayment penalties recorded in non-interest expense for the redemption of FHLB advances.

Non-interest Expense

Non-interest expense was $143 million in the second quarter of 2020, relatively unchanged compared to the first quarter of 2020. The $3 million prepayment penalty on redemption of FHLB advances as well as an increase in salaries and employee benefits, were offset by decreases in multiple categories.

Compared to the second quarter of 2019, non-interest expenses decreased $1 million, or 1% due primarily to decreases in other outside services, occupancy and marketing, partially offset by increases in salaries and employee benefits and the FHLB prepayment penalty.

Income Tax Expense

The effective income tax rate for the second quarter of 2020 was 14%, as compared to 10% and 14% for the first quarter of 2020 and second quarter of 2019, respectively. The increase in the effective income tax rate compared to the first quarter of 2020 resulted from the increase in income before income taxes.

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, 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 Report on Form 10-Q for the quarter ended March 31, 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

Jun 30

Mar 31

Dec 31

Sep 30

Jun 30

2020

2020

2019

2019

2019

Ending Balances

Investments

$

2,974,813

$

3,141,440

$

2,867,378

$

2,705,610

$

2,853,358

Loans, net of unearned income

18,704,722

17,077,403

16,837,526

16,686,866

16,368,458

Total assets

24,617,863

22,929,859

21,886,040

21,703,618

21,308,670

Deposits

19,884,208

17,365,026

17,393,913

17,342,717

16,388,895

Shareholders' equity

2,340,501

2,285,748

2,342,176

2,324,016

2,308,798

Average Balances

Investments

$

3,096,632

$

3,071,828

$

2,830,999

$

2,829,672

$

2,790,392

Loans, net of unearned income

18,331,797

16,860,067

16,768,057

16,436,507

16,316,076

Total assets

24,139,116

22,252,099

21,812,438

21,457,800

21,057,030

Deposits

19,276,658

17,121,428

17,449,565

16,950,667

16,375,457

Shareholders' equity

2,309,133

2,337,016

2,341,397

2,315,585

2,301,258

Income Statement

Net interest income

$

152,754

$

160,746

$

159,270

$

161,260

$

164,544

Provision for credit losses

19,570

44,030

20,530

2,170

5,025

Non-interest income

55,922

54,644

55,281

59,813

54,316

Non-interest expense

143,006

142,552

138,974

146,770

144,168

Income before taxes

46,101

28,808

55,047

72,133

69,667

Net income

39,559

26,047

47,789

62,108

59,780

Pre-provision net revenue(1)

67,126

74,374

77,224

76,741

76,115

Per Share

Net income (basic)

$

0.24

$

0.16

$

0.29

$

0.38

$

0.36

Net income (diluted)

$

0.24

$

0.16

$

0.29

$

0.37

$

0.35

Cash dividends

$

0.13

$

0.13

$

0.17

$

0.13

$

0.13

Shareholders' equity (tangible)(1)

$

11.15

$

10.84

$

11.00

$

10.91

$

10.63

Weighted average shares (basic)

161,715

163,475

164,135

165,324

168,343

Weighted average shares (diluted)

162,267

164,417

165,039

166,126

169,168

Asset Quality(2)

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

0.09

%

0.26

%

0.65

%

0.15

%

(0.04)

%

Non-performing loans to total loans

0.75

%

0.82

%

0.84

%

0.81

%

0.90

%

Non-performing assets to total assets

0.59

%

0.64

%

0.68

%

0.66

%

0.73

%

ACL - loans(3) to total loans

1.37

%

1.40

%

0.97

%

1.00

%

1.04

%

ACL - loans(3) to non-performing loans

183

%

170

%

116

%

122

%

115

%

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

7.04

%

7.37

%

7.51

%

7.35

%

7.97

%

Asset Quality, excluding PPP(1)(4)

Non-performing loans to total adjusted loans

0.83

%

ACL - loans(3) to adjusted total loans

1.53

%

Profitability

Return on average assets

0.66

%

0.47

%

0.87

%

1.15

%

1.14

%

Return on average shareholders' equity

6.89

%

4.48

%

8.10

%

10.64

%

10.42

%

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

8.99

%

5.84

%

10.52

%

14.03

%

13.60

%

Net interest margin

2.81

%

3.21

%

3.22

%

3.31

%

3.44

%

Efficiency ratio(1)

66.4

%

64.5

%

63.1

%

63.6

%

64.2

%

Capital Ratios

Tangible common equity ratio(1)

7.5

%

7.8

%

8.5

%

8.5

%

8.5

%

Tier 1 leverage ratio(5)

7.4

%

7.9

%

8.4

%

8.5

%

8.7

%

Common equity Tier 1 capital ratio(5)

9.5

%

9.4

%

9.7

%

9.6

%

10.0

%

Tier 1 capital ratio(5)

9.5

%

9.4

%

9.7

%

9.6

%

10.0

%

Total risk-based capital ratio(5)

14.0

%

13.8

%

11.8

%

12.0

%

12.4

%

(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 of $1.9 billion at June 30, 2020.

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

FULTON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED ENDING BALANCE SHEETS (UNAUDITED)

dollars in thousands

% Change from

Jun 30

Mar 31

Dec 31

Sep 30

Jun 30

Mar 31

Jun 30

2020

2020

2019

2019

2019

2020

2019

ASSETS

Cash and due from banks

$

141,702

$

181,777

$

132,283

$

120,671

$

107,091

(22.0)

%

32.3

%

Other interest-earning assets

1,007,939

793,572

482,930

572,499

488,968

27.0

%

106.1

%

Loans held for sale

77,415

40,645

37,828

33,945

45,754

90.5

%

69.2

%

Investment securities

2,974,813

3,141,440

2,867,378

2,705,610

2,853,358

(5.3)

%

4.3

%

Loans, net of unearned income

18,704,722

17,077,403

16,837,526

16,686,866

16,368,458

9.5

%

14.3

%

Less: ACL - loans

(256,537)

(238,508)

(163,622)

(166,135)

(170,233)

7.6

%

50.7

%

Net loans

18,448,185

16,838,895

16,673,904

16,520,731

16,198,225

9.6

%

13.9

%

Premises and equipment

239,596

236,908

240,046

237,344

243,300

1.1

%

(1.5)

%

Accrued interest receivable

73,720

59,365

60,898

60,447

62,984

24.2

%

17.0

%

Goodwill and intangible assets

535,039

535,171

535,303

534,178

535,249

%

%

Other assets

1,119,454

1,102,086

855,470

918,193

773,741

1.6

%

44.7

%

Total Assets

$

24,617,863

$

22,929,859

$

21,886,040

$

21,703,618

$

21,308,670

7.4

%

15.5

%

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits

$

19,884,208

$

17,365,026

$

17,393,913

$

17,342,717

$

16,388,895

14.5

%

21.3

%

Short-term borrowings

572,551

1,386,808

883,241

832,860

1,188,390

(58.7)

%

(51.8)

%

Other liabilities

525,407

513,811

384,941

477,311

435,171

2.3

%

20.7

%

FHLB advances and long-term debt

1,295,196

1,378,466

881,769

726,714

987,416

(6.0)

%

31.2

%

Total Liabilities

22,277,362

20,644,111

19,543,864

19,379,602

18,999,872

7.9

%

17.3

%

Shareholders' equity

2,340,501

2,285,748

2,342,176

2,324,016

2,308,798

2.4

%

1.4

%

Total Liabilities and Shareholders' Equity

$

24,617,863

$

22,929,859

$

21,886,040

$

21,703,618

$

21,308,670

7.4

%

15.5

%

LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL:

Loans, by type:

Real estate - commercial mortgage

$

6,934,936

$

6,895,069

$

6,700,776

$

6,604,634

$

6,497,973

0.6

%

6.7

%

Commercial and industrial

5,970,473

4,451,239

4,446,701

4,494,496

4,365,248

34.1

%

36.8

%

Real estate - residential mortgage

2,862,226

2,718,290

2,641,465

2,570,793

2,451,966

5.3

%

16.7

%

Real estate - home equity

1,251,455

1,292,677

1,314,944

1,346,115

1,386,974

(3.2)

%

(9.8)

%

Real estate - construction

972,909

947,768

971,079

913,644

922,547

2.7

%

5.5

%

Consumer

465,610

468,172

463,164

464,213

452,874

(0.5)

%

2.8

%

Equipment lease financing and other

247,113

304,188

299,397

292,971

290,876

(18.8)

%

(15.0)

%

Total Loans, net of unearned income

$

18,704,722

$

17,077,403

$

16,837,526

$

16,686,866

$

16,368,458

9.5

%

14.3

%

Deposits, by type:

Noninterest-bearing demand

$

6,239,055

$

4,531,872

$

4,453,324

$

4,240,478

$

4,226,404

37.7

%

47.6

%

Interest-bearing demand

5,099,405

4,724,520

4,720,188

4,771,109

4,083,615

7.9

%

24.9

%

Savings

5,667,893

5,092,865

5,153,941

5,094,387

4,938,998

11.3

%

14.8

%

Total demand and savings

17,006,353

14,349,257

14,327,453

14,105,974

13,249,017

18.5

%

28.4

%

Brokered

310,689

313,337

264,531

256,870

246,116

(0.8)

%

26.2

%

Time

2,567,166

2,702,432

2,801,929

2,979,873

2,893,762

(5.0)

%

(11.3)

%

Total Deposits

$

19,884,208

$

17,365,026

$

17,393,913

$

17,342,717

$

16,388,895

14.5

%

21.3

%

Short-term borrowings, by type:

Customer funding

572,551

461,808

383,241

337,860

338,390

24.0

%

69.2

%

Federal funds purchased

200,000

20,000

200,000

N/M

N/M

Short-term FHLB advances

725,000

500,000

475,000

650,000

N/M

N/M

Total Short-term Borrowings

$

572,551

$

1,386,808

$

883,241

$

832,860

$

1,188,390

(58.7)

%

(51.8)

%

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.

FULTON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

dollars in thousands

Three Months Ended

% Change from

Six months ended

Jun 30

Mar 31

Dec 31

Sep 30

Jun 30

Mar 31

Jun 30

Jun 30

2020

2020

2019

2019

2019

2020

2019

2020

2019

% Change

Interest Income:

Interest income

$

180,696

$

199,378

$

202,159

$

208,413

$

210,034

(9.4)

%

(14.0)

%

$

380,074

$

414,734

(8.4)

%

Interest expense

27,942

38,632

42,889

47,153

45,490

(27.7)

%

(38.6)

%

66,574

86,875

(23.4)

%

Net Interest Income

152,754

160,746

159,270

161,260

164,544

(5.0)

%

(7.2)

%

313,500

327,859

(4.4)

%

Provision for credit losses

19,570

44,030

20,530

2,170

5,025

(55.6)

%

N/M

63,600

10,125

N/M

Net Interest Income after Provision

133,184

116,716

138,740

159,090

159,519

14.1

%

(16.5)

%

249,900

317,734

(21.3)

%

Non-Interest Income:

Wealth management

13,407

15,055

14,419

13,867

14,153

(10.9)

%

(5.3)

%

28,462

27,392

3.9

%

Mortgage banking

9,964

6,234

5,076

6,658

6,593

59.8

%

51.1

%

16,198

11,365

42.5

%

Consumer banking:

Card

4,966

4,685

4,991

5,791

5,047

6.0

%

(1.6)

%

9,651

9,733

(0.8)

%

Overdraft

2,107

4,058

4,750

4,682

4,413

(48.1)

%

(52.3)

%

6,165

8,517

(27.6)

%

Other consumer banking

2,065

2,496

2,688

2,860

2,907

(17.3)

%

(29.0)

%

4,561

5,494

(17.0)

%

Total consumer banking

9,138

11,239

12,429

13,333

12,367

(18.7)

%

(26.1)

%

20,377

23,744

(14.2)

%

Commercial banking:

Merchant and card

5,326

5,624

5,841

6,166

6,512

(5.3)

%

(18.2)

%

10,950

12,070

(9.3)

%

Cash management

4,503

4,742

4,697

4,696

4,638

(5.0)

%

(2.9)

%

9,245

8,999

2.7

%

Capital markets

5,004

5,075

5,939

4,448

4,053

(1.4)

%

23.5

%

10,079

6,568

53.5

%

Other commercial banking

1,914

2,978

3,664

3,478

3,815

(35.7)

%

(49.8)

%

4,892

6,631

(26.2)

%

Total commercial banking

16,748

18,419

20,141

18,788

19,018

(9.1)

%

(11.9)

%

35,167

34,268

2.6

%

Other

3,660

3,651

3,216

2,675

2,009

0.2

%

82.2

%

7,311

4,056

80.3

%

Non-interest income before investment securities gains

52,917

54,598

55,281

55,321

54,140

(3.1)

%

(2.3)

%

107,515

100,825

6.6

%

Investment securities gains, net

3,005

46

4,492

176

N/M

N/M

3,051

241

N/M

Total Non-Interest Income

55,922

54,644

55,281

59,813

54,316

2.3

%

3.0

%

110,566

101,066

9.4

%

Non-Interest Expense:

Salaries and employee benefits

81,012

80,228

76,975

78,211

78,991

1.0

%

2.6

%

161,240

156,748

2.9

%

Net occupancy

13,144

13,486

13,080

12,368

14,469

(2.5)

%

(9.2)

%

26,630

27,378

(2.7)

%

Data processing and software

12,193

11,645

11,468

11,590

11,268

4.7

%

8.2

%

23,838

21,621

10.3

%

Other outside services

7,600

7,881

8,215

12,163

11,259

(3.6)

%

(32.5)

%

15,481

19,611

(21.1)

%

Equipment

3,193

3,418

3,475

3,459

3,299

(6.6)

%

(3.2)

%

6,611

6,641

(0.5)

%

Professional fees

3,331

4,202

2,873

3,331

2,970

(20.7)

%

12.2

%

7,533

6,930

8.7

%

Marketing

1,303

1,579

1,503

3,322

2,863

(17.5)

%

(54.5)

%

2,882

5,023

(42.6)

%

Amortization of tax credit investments

1,450

1,450

1,505

1,533

1,492

%

(2.8)

%

2,900

2,983

(2.8)

%

FDIC insurance

2,133

2,808

2,177

239

2,755

(24.0)

%

(22.6)

%

4,941

5,364

(7.9)

%

Intangible amortization

132

132

142

1,071

107

%

23.4

%

264

214

23.4

%

Prepayment penalty on FHLB advances

2,878

4,326

N/M

N/M

2,878

N/M

Other

14,637

15,723

17,561

15,157

14,695

(6.9)

%

(0.4)

%

30,360

29,479

3.0

%

Total Non-Interest Expense

143,006

142,552

138,974

146,770

144,168

0.3

%

(0.8)

%

285,558

281,992

1.3

%

Income Before Income Taxes

46,101

28,808

55,047

72,133

69,667

60.0

%

(33.8)

%

74,909

136,808

(45.2)

%

Income tax expense

6,542

2,761

7,258

10,025

9,887

136.9

%

(33.8)

%

9,303

20,366

(54.3)

%

Net Income

$

39,559

$

26,047

$

47,789

$

62,108

$

59,780

51.9

%

(33.8)

%

$

65,606

$

116,442

(43.7)

%

PER SHARE:

Net income:

Basic

$

0.24

$

0.16

$

0.29

$

0.38

$

0.36

50.0

%

(33.3)

%

$

0.40

$

0.69

(42.0)

%

Diluted

0.24

0.16

0.29

0.37

0.35

50.0

%

(31.4)

%

0.40

0.68

(41.2)

%

Cash dividends

0.13

0.13

0.17

0.13

0.13

%

%

$

0.26

$

0.26

%

Weighted average shares (basic)

161,715

163,475

164,135

165,324

168,343

(1.1)

%

(3.9)

%

162,582

169,109

(3.9)

%

Weighted average shares (diluted)

162,267

164,417

165,039

166,126

169,168

(1.3)

%

(4.1)

%

163,326

170,042

(3.9)

%

FULTON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)

dollars in thousands

Three months ended

June 30, 2020

March 31, 2020

June 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

$

18,331,797

$

160,613

3.52

%

$

16,860,067

$

177,496

4.23

%

$

16,316,076

$

190,694

4.69

%

Taxable investment securities

2,200,870

15,171

2.76

%

2,284,457

16,294

2.85

%

2,348,443

15,935

2.71

%

Tax-exempt investment securities

830,836

6,737

3.23

%

720,223

5,960

3.29

%

444,227

4,141

3.70

%

Total Investment Securities

3,031,706

21,908

2.89

%

3,004,680

22,254

2.96

%

2,792,670

20,076

2.87

%

Loans held for sale

55,608

509

3.66

%

27,178

320

4.71

%

24,568

350

5.71

%

Other interest-earning assets

815,910

766

0.38

%

602,270

2,532

1.69

%

409,617

2,168

2.12

%

Total Interest-earning Assets

22,235,021

183,796

3.32

%

20,494,195

202,602

3.97

%

19,542,931

213,288

4.37

%

Noninterest-earning assets:

Cash and due from banks

153,728

138,248

116,285

Premises and equipment

240,417

239,619

240,666

Other assets

1,761,038

1,590,666

1,321,057

Less: ACL - loans(2)

(251,088)

(210,629)

(163,909)

Total Assets

$

24,139,116

$

22,252,099

$

21,057,030

LIABILITIES AND SHAREHOLDERS' EQUITY

Interest-bearing liabilities:

Demand deposits

$

5,103,419

$

2,219

0.17

%

$

4,649,905

$

5,643

0.49

%

$

4,186,280

$

8,173

0.78

%

Savings deposits

5,446,368

3,331

0.25

%

5,127,662

7,110

0.56

%

4,925,788

10,550

0.86

%

Brokered deposits

312,121

422

0.54

%

275,359

1,073

1.57

%

246,154

1,582

2.58

%

Time deposits

2,624,962

11,145

1.71

%

2,761,474

12,614

1.84

%

2,816,424

12,245

1.74

%

Total Interest-bearing Deposits

13,486,870

17,118

0.51

%

12,814,400

26,440

0.83

%

12,174,646

32,550

1.07

%

Short-term borrowings

707,771

517

0.29

%

1,303,047

4,073

1.25

%

941,504

4462

1.89

%

FHLB advances and long-term debt

1,361,421

10,307

3.03

%

1,063,214

8,119

3.06

%

1,051,919

8,480

3.23

%

Total Interest-bearing Liabilities

$

15,556,062

$

27,942

0.72

%

$

15,180,661

$

38,632

1.02

%

$

14,168,069

$

45,492

1.29

%

Noninterest-bearing liabilities:

Demand deposits

5,789,788

4,307,027

4,200,810

Total Deposits/Cost of Deposits

19,276,658

0.36

%

17,121,427

0.62

%

16,375,456

0.80

%

Other

484,133

427,395

386,893

Total Liabilities

$

21,829,983

$

19,915,083

$

18,755,772

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

21,345,850

0.53

%

19,487,688

0.80

%

18,368,879

0.93

%

Shareholders' equity

2,309,133

2,337,016

2,301,258

Total Liabilities and Shareholders' Equity

$

24,139,116

$

22,252,099

$

21,057,030

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

155,854

2.81

%

163,970

3.21

%

167,796

3.44

%

Tax equivalent adjustment

(3,100)

(3,224)

(3,252)

Net interest income

$

152,754

$

160,746

$

164,544

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

FULTON FINANCIAL CORPORATION

AVERAGE LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL (UNAUDITED):

dollars in thousands

Three months ended

% Change from

Jun 30

Mar 31

Dec 31

Sep 30

Jun 30

Mar 31

Jun 30

2020

2020

2019

2019

2019

2020

2019

Loans, by type:

Real estate - commercial mortgage

$

6,875,872

$

6,746,766

$

6,561,029

$

6,489,456

$

6,424,213

1.9

%

7.0

%

Commercial and industrial

5,710,145

4,446,750

4,574,047

4,414,992

4,440,860

28.4

%

28.6

%

Real estate - residential mortgage

2,769,682

2,670,019

2,606,136

2,512,899

2,366,685

3.7

%

17.0

%

Real estate - home equity

1,271,190

1,300,132

1,331,088

1,364,161

1,404,141

(2.2)

%

(9.5)

%

Real estate - construction

941,079

929,529

934,556

905,060

943,080

1.2

%

(0.2)

%

Consumer

465,728

466,415

464,606

457,524

445,666

(0.1)

%

4.5

%

Equipment lease financing and other

298,101

300,456

296,595

292,415

291,431

(0.8)

%

2.3

%

Total Loans, net of unearned income

$

18,331,797

$

16,860,067

$

16,768,057

$

16,436,507

$

16,316,076

8.7

%

12.4

%

Deposits, by type:

Noninterest-bearing demand

$

5,789,788

$

4,307,027

$

4,324,568

$

4,247,820

$

4,200,810

34.4

%

37.8

%

Interest-bearing demand

5,103,419

4,649,905

4,699,040

4,448,112

4,186,280

9.8

%

21.9

%

Savings

5,446,368

5,127,662

5,205,260

5,026,316

4,925,788

6.2

%

10.6

%

Total demand and savings

16,339,575

14,084,594

14,228,868

13,722,248

13,312,878

16.0

%

22.7

%

Brokered

312,121

275,359

261,689

253,426

246,154

13.4

%

26.8

%

Time

2,624,962

2,761,474

2,959,008

2,974,993

2,816,425

(4.9)

%

(6.8)

%

Total Deposits

$

19,276,658

$

17,121,427

$

17,449,565

$

16,950,667

$

16,375,457

12.6

%

17.7

%

Short-term borrowings, by type:

Customer funding

$

546,716

$

428,240

$

377,529

$

332,893

$

344,867

27.7

%

58.5

%

Federal funds purchased

74,231

186,868

91,467

101,022

181,769

(60.3)

%

(59.2)

%

Short-term FHLB advances and other borrowings

86,824

687,937

248,815

485,782

414,868

(87.4)

%

(79.1)

%

Total Short-term borrowings

$

707,771

$

1,303,045

$

717,811

$

919,697

$

941,504

(45.7)

%

(24.8)

%

FULTON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)

dollars in thousands

Six months ended June 30

2020

2019

Average

Average

Balance

Interest (1)

Yield/Rate

Balance

Interest (1)

Yield/Rate

ASSETS

Interest-earning assets:

Loans, net of unearned income

$

17,595,932

$

338,110

3.86

%

$

16,255,562

$

376,816

4.67

%

Taxable investment securities

2,242,663

31,465

2.81

%

2,317,257

31,370

2.71

%

Tax-exempt investment securities

775,530

12,698

3.26

%

444,180

8,291

3.71

%

Total Investment Securities

3,018,193

44,163

2.92

%

2,761,437

39,661

2.87

%

Loans held for sale

41,393

829

4.00

%

20,523

590

5.76

%

Other interest-earning assets

709,091

3,297

4.31

%

388,016

4,170

2.16

%

Total Interest-earning Assets

$

21,364,609

386,399

3.63

%

$

19,425,538

421,237

4.36

%

Noninterest-earning assets:

Cash and due from banks

145,988

113,504

Premises and equipment

240,019

238,905

Other assets

1,675,849

1,259,388

Less: allowance for loan losses

(230,858)

(162,624)

Total Assets

$

23,195,607

$

20,874,711

LIABILITIES AND SHAREHOLDERS' EQUITY

Interest-bearing liabilities:

Demand deposits

$

4,876,662

$

8,020

0.33

%

$

4,170,221

$

15,692

0.76

%

Savings deposits

5,287,015

10,441

0.40

%

4,919,357

20,512

0.84

%

Brokered deposits

293,756

1,495

1.02

%

233,244

2,964

2.56

%

Time deposits

2,693,202

23,602

1.76

%

2,791,216

23,071

1.67

%

Total Interest-bearing Deposits

13,150,635

43,558

0.67

%

12,114,038

62,239

1.04

%

Short-term borrowings

1,005,409

4,590

0.91

%

881,115

8,044

1.83

%

FHLB advances and long-term debt

1,212,318

18,426

3.04

%

1,027,328

16,594

3.24

%

Total Interest-bearing Liabilities

$

15,368,362

$

66,574

0.87

%

$

14,022,481

$

86,877

1.25

%

Noninterest-bearing liabilities:

Demand deposits

5,048,408

4,211,782

Total Deposits/Cost of Deposits

18,199,043

0.48

%

16,325,820

0.77

%

Other

455,763

357,170

Total Liabilities

$

20,872,533

$

18,591,433

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

20,416,770

0.65

%

18,234,263

0.96

%

Shareholders' equity

2,323,074

2,283,278

Total Liabilities and Shareholders' Equity

$

23,195,607

$

20,874,711

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

319,825

3.01

%

334,360

3.46

%

Tax equivalent adjustment

(6,325)

(6,501)

Net interest income

$

313,500

$

327,859

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

FULTON FINANCIAL CORPORATION

AVERAGE LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL (UNAUDITED):

dollars in thousands

Six months ended June 30

2020

2019

% Change

Loans, by type:

Real estate - commercial mortgage

$

6,811,318

$

6,401,305

6.4

%

Commercial and industrial

5,078,448

4,451,342

14.1

%

Real estate - residential mortgage

2,719,851

2,321,897

17.1

%

Real estate - home equity

1,285,661

1,418,776

(9.4)

%

Real estate - construction

935,304

936,699

(0.1)

%

Consumer

466,071

435,131

7.1

%

Equipment lease financing and other

299,279

290,412

3.1

%

Total Loans, net of unearned income

$

17,595,932

$

16,255,562

8.2

%

Deposits, by type:

Noninterest-bearing demand

$

5,048,408

$

4,211,782

19.9

%

Interest-bearing demand

4,876,662

4,170,221

16.9

%

Savings

5,287,015

4,919,357

7.5

%

Total demand and savings

15,212,085

13,301,360

14.4

%

Brokered

293,756

233,244

25.9

%

Time

2,693,202

2,791,216

(3.5)

%

Total Deposits

$

18,199,043

$

16,325,820

11.5

%

Short-term borrowings, by type:

Customer funding

$

487,478

$

356,767

36.6

%

Federal funds purchased

130,549

169,514

(23.0)

%

Short-term FHLB advances and other borrowings

387,382

354,834

9.2

%

Total Short-term Borrowings

$

1,005,409

$

881,115

14.1

%

FULTON FINANCIAL CORPORATION

ASSET QUALITY INFORMATION (UNAUDITED)

dollars in thousands

Three months ended

Jun 30

Mar 31

Dec 31

Sep 30

Jun 30

2020

2020

2019

2019

2019

Allowance for credit losses related to Loans, net of unearned income:

Balance at beginning of period

$

238,508

$

163,620

$

166,135

$

170,233

$

162,109

Impact of adopting CECL

45,724

Loans charged off:

Commercial and industrial

(3,480)

(10,899)

(30,547)

(7,181)

(1,895)

Real estate - commercial mortgage

(2,324)

(855)

(68)

(394)

(230)

Consumer and home equity

(1,303)

(1,529)

(1,416)

(1,375)

(1,001)

Real estate - residential mortgage

(235)

(187)

(223)

(533)

(134)

Real estate - construction

(17)

(45)

(3)

Equipment lease financing and other

(688)

(533)

(727)

(600)

(448)

Total loans charged off

(8,047)

(14,003)

(32,981)

(10,128)

(3,711)

Recoveries of loans previously charged off:

Commercial and industrial

2,978

1,734

2,487

2,311

2,680

Real estate - commercial mortgage

95

244

1,453

444

169

Consumer and home equity

649

646

437

348

802

Real estate - residential mortgage

112

85

206

440

211

Real estate - construction

70

1,098

164

1,245

Equipment lease financing and other

92

108

182

107

148

Recoveries of loans previously charged off

3,926

2,887

5,863

3,814

5,255

Net loans (charged off) recovered

(4,121)

(11,116)

(27,118)

(6,314)

1,544

Provision for credit losses

22,150

40,280

24,603

2,216

6,580

Balance at end of period

$

256,537

$

238,508

$

163,620

$

166,135

$

170,233

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

0.09

%

0.26

%

0.65

%

0.15

%

(0.04)

%

Allowance credit losses related to OBS Credit Exposures(1)

Balance at beginning of period

$

18,963

$

2,588

$

6,662

$

6,708

$

8,263

Impact of adopting CECL

12,625

Provision for credit losses

(2,580)

3,750

(4,074)

(46)

(1,555)

Balance at end of period

$

16,383

$

18,963

$

2,588

$

6,662

$

6,708

NON-PERFORMING ASSETS:

Non-accrual loans

$

125,037

$

120,345

$

125,098

$

124,287

$

133,118

Loans 90 days past due and accruing

14,767

19,593

16,057

11,689

14,598

Total non-performing loans

139,804

139,938

141,155

135,976

147,716

Other real estate owned

5,418

6,593

6,831

7,706

7,241

Total non-performing assets

$

145,222

$

146,531

$

147,986

$

143,682

$

154,957

NON-PERFORMING LOANS, BY TYPE:

Commercial and industrial

$

39,730

$

41,318

$

49,491

$

37,126

$

47,260

Real estate - commercial mortgage

42,374

36,538

37,279

45,710

43,850

Real estate - residential mortgage

22,887

25,832

22,411

20,150

21,659

Consumer and home equity

11,911

11,226

11,026

11,012

12,378

Real estate - construction

4,525

4,379

4,306

4,312

4,632

Equipment lease financing and other

18,377

20,645

16,642

17,666

17,937

Total non-performing loans

$

139,804

$

139,938

$

141,155

$

135,976

$

147,716

(1) The allowance for credit losses related to OBS Credit Exposures is presented in "other liabilities" on the consolidated balance sheets.

 
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

Jun 30

Mar 31

Dec 31

Sep 30

Jun 30

2020

2020

2019

2019

2019

Shareholders' equity (tangible), per share

Shareholders' equity

$

2,340,501

$

2,285,748

$

2,342,176

$

2,324,016

$

2,308,798

Less: Goodwill and intangible assets

(535,039)

(535,171)

(535,303)

(534,178)

(535,249)

Tangible shareholders' equity (numerator)

$

1,805,462

$

1,750,577

$

1,806,873

$

1,789,838

$

1,773,549

Shares outstanding, end of period (denominator)

161,958

161,435

164,218

164,036

166,903

Shareholders' equity (tangible), per share

$

11.15

$

10.84

$

11.00

$

10.91

$

10.63

Return on average shareholders' equity (tangible)

Net income

$

39,559

$

26,047

$

47,789

$

62,108

$

59,780

Plus: Intangible amortization, net of tax

104

104

112

846

85

(Numerator)

$

39,663

$

26,151

$

47,901

$

62,954

$

59,865

Average shareholders' equity

$

2,309,133

$

2,337,016

$

2,341,397

$

2,315,585

$

2,301,258

Less: Average goodwill and intangible assets

(535,103)

(535,235)

(534,190)

(535,184)

(535,301)

Average tangible shareholders' equity (denominator)

$

1,774,030

$

1,801,781

$

1,807,207

$

1,780,401

$

1,765,957

Return on average shareholders' equity (tangible), annualized

8.99

%

5.84

%

10.52

%

14.03

%

13.60

%

Tangible Common Equity to Tangible Assets (TCE Ratio)

Shareholders' equity

$

2,340,501

$

2,285,748

$

2,342,176

$

2,324,016

$

2,308,798

Less: Goodwill and intangible assets

(535,039)

(535,171)

(535,303)

(534,178)

(535,249)

Tangible shareholders' equity (numerator)

$

1,805,462

$

1,750,577

$

1,806,873

$

1,789,838

$

1,773,549

Total assets

$

24,617,863

$

22,929,859

$

21,886,040

$

21,703,618

$

21,308,670

Less: Goodwill and intangible assets

(535,039)

(535,171)

(535,303)

(534,178)

(535,249)

Total tangible assets (denominator)

$

24,082,824

$

22,394,688

$

21,350,737

$

21,169,440

$

20,773,421

Tangible Common Equity to Tangible Assets

7.50

%

7.82

%

8.46

%

8.45

%

8.54

%

Efficiency ratio

Non-interest expense

$

143,006

$

142,552

$

138,974

$

146,770

$

144,168

Less: Intangible amortization

(132)

(132)

(142)

(1,071)

(107)

Less: Amortization of tax credit investments

(1,450)

(1,450)

(1,505)

(1,533)

(1,492)

Less: Prepayment penalty of FHLB advances

(2,878)

(4,326)

Non-interest expense (numerator)

$

138,546

$

140,970

$

137,327

$

139,840

$

142,569

Net interest income (fully taxable equivalent)

$

155,854

$

163,970

$

162,479

$

164,517

$

167,794

Plus: Total Non-interest income

55,922

54,644

55,281

59,813

54,316

Less: Investment securities gains, net

(3,005)

(46)

(4,492)

(176)

Net interest income (denominator)

$

208,771

$

218,568

$

217,760

$

219,838

$

221,934

Efficiency ratio

66.4

%

64.5

%

63.1

%

63.6

%

64.2

%

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

Non-performing assets (numerator)

$

145,222

$

146,531

$

147,986

$

143,682

$

154,957

Tangible shareholders' equity

$

1,805,462

$

1,750,577

1,806,873

1,789,838

$

1,773,549

Plus: ACL - loans

256,537

238,508

163,622

166,135

170,233

Tangible shareholders' equity and ACL - loans (denominator)

$

2,061,999

$

1,989,085

$

1,970,495

$

1,955,973

$

1,943,782

Non-performing assets to tangible shareholders' equity and ACL - loans

7.04

%

7.37

%

7.51

%

7.35

%

7.97

%

Asset Quality, excluding PPP

Non-performing loans (numerator)

$

139,804

$

139,938

$

141,155

$

135,976

$

147,716

Loans, net of unearned income

$

18,704,722

$

17,077,403

$

16,837,526

$

16,686,866

$

16,368,458

Less: PPP loans

(1,937,034)

Total adjusted loans (denominator)

$

16,767,688

$

16,767,688

$

16,767,688

$

16,767,688

$

16,767,688

Non-performing loans to adjusted total loans

0.83

%

0.83

%

0.84

%

0.81

%

0.88

%

ACL - loans (numerator)

$

256,537

$

238,508

163,622

166,135

$

170,233

Loans, net of unearned income

$

18,704,722

$

17,077,403

$

16,837,526

$

16,686,866

$

16,368,458

Less: PPP loans

(1,937,034)

Total adjusted loans (denominator)

$

16,767,688

$

17,077,403

$

16,837,526

$

16,686,866

$

16,368,458

ACL - loans to adjusted total loans

1.53

%

1.40

%

0.97

%

1.00

%

1.04

%

Pre-provision net revenue

Net interest income

$

152,754

$

160,746

$

159,270

$

161,260

$

164,544

Non-interest income

55,922

54,644

55,281

59,813

54,316

Less: Investment securities gains, net

(3,005)

(46)

(4,492)

(176)

Total revenue

$

205,671

$

215,344

$

214,551

$

216,581

$

218,684

Non-interest expense

$

143,006

$

142,552

$

138,974

$

146,770

$

144,168

Less: Prepayment penalty of FHLB advances

(2,878)

(4,326)

Less: Amortization on tax credit investments

(1,450)

(1,450)

(1,505)

(1,533)

(1,492)

Less: Intangible amortization

(132)

(132)

(142)

(1,071)

(107)

Total non-interest expense

$

138,546

$

140,970

$

137,327

$

139,840

$

142,569

Pre-provision net revenue

$

67,126

$

74,374

$

77,224

$

76,741

$

76,115

Note: numbers may not sum due to rounding.

(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.

Contacts:

Media: Laura Wakeley (717) 291-2616
Investors: Mark McCollom (717) 327-2567

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