U.S. markets open in 3 hours 28 minutes

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.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20200721005932/en/

"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 Corporations 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 Corporations future financial performance, expected levels of future expenses, anticipated growth strategies, descriptions of new business initiatives and anticipated trends in the Corporations 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 Corporations 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 Corporations 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 Corporations 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

...