Fulton Financial Corporation Announces Second Quarter 2023 Results

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LANCASTER, Pa., July 18, 2023--(BUSINESS WIRE)--Fulton Financial Corporation (NASDAQ:FULT) ("Fulton" or the "Corporation") reported net income available to common shareholders of $77.0 million, or $0.46 per diluted share, for the second quarter of 2023, an increase of $11.3 million, or 17.2%, in comparison to the first quarter of 2023. Operating net income available to common shareholders was $77.8 million, or $0.47 per diluted share(1).

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For the six months ended June 30, 2023, net income available to shareholders was $142.8 million, or $0.85 per diluted share, an increase of $13.6 million, or 10.6%, in comparison to the same period in 2022. Operating net income available to common shareholders was $143.9 million, or $0.86 per diluted share(1).

"We were pleased with our second quarter performance and results," said Curtis J. Myers, Chairman and CEO of Fulton. "We saw credit metrics remain stable and credit losses return to historically low levels, strong non-interest income in many areas of our bank, and loan growth was solid and in line with expectations. Despite the challenges around deposit growth and mix the industry is facing, we meaningfully grew both deposit accounts and deposit households during the quarter."

(1) Non-generally accepted accounting principles ("non-GAAP") financial measure. Refer to the calculation on the page titled "Reconciliation of Non-GAAP Measures" at the end of the press release.

Net Interest Income and Balance Sheet

Net interest income for the second quarter of 2023 was $212.9 million, a decrease of $2.7 million in comparison to the first quarter of 2023. The net interest margin for the second quarter of 2023 decreased 13 basis points, to 3.40%, in comparison to 3.53% in the first quarter of 2023.

The linked-quarter decrease in net interest income was primarily due to an increase in the rate on interest-bearing deposits and a shift in funding mix from noninterest-bearing demand deposits to interest-bearing deposits. An increase in the average balance for net loans of $403.1 million and higher loan yields in the second quarter of 2023 primarily contributed to an increase in interest income of $25.1 million to $314.9 million in comparison to $289.8 million in the first quarter of 2023. Interest expense from interest-bearing liabilities for the second quarter of 2023 increased by $27.9 million to $102.1 million in comparison to $74.2 million in the first quarter of 2023. The linked-quarter increase in interest expense in the second quarter of 2023 was primarily due to an increase in the rate on interest-bearing deposits of 63 basis points, a decline of $620.7 million in the average balance of noninterest-bearing deposits and an increase in the average balance for interest-bearing deposits of $1.3 billion in comparison to the first quarter of 2023.

For the second quarter of 2023, net interest income was $212.9 million, an increase of $34.0 million, or 19.0%, in comparison to the second quarter of 2022. Interest income for the second quarter of 2023 increased by $124.6 million to $314.9 million in comparison to $190.3 million in the second quarter of 2022 primarily driven by rising interest rates resulting in increases in interest income from net loans, investment securities and other interest-earning assets of $120.5 million, $1.2 million and $2.9 million, respectively. Increases in the average balances for net loans in the second quarter of 2023 of $2.2 billion, driven in part by the Prudential Bancorp, Inc. ("Prudential Bancorp") acquisition, contributed to the increase in interest income. Interest expense from interest-bearing liabilities for the second quarter of 2023 increased by $90.6 million to $102.1 million in comparison to $11.5 million in the second quarter of 2022 primarily driven by rising interest rates resulting in increases in interest expense from interest-bearing deposits and borrowings and other interest-bearing liabilities of $64.0 million and $26.6 million, respectively. An increase in the average balance for higher rate interest-bearing deposits and borrowings and other interest-bearing liabilities of $1.3 billion and $1.8 billion, respectively, in the second quarter of 2023 in comparison to the second quarter of 2022 also contributed to the increase in interest expense.

Total average interest-earning assets for the second quarter of 2023 were $25.6 billion, an increase of $384.0 million from the first quarter of 2023 primarily driven by the aforementioned increase in average net loans of $403.1 million and an increase in average other interest-earning assets of $36.5 million, partially offset by a decrease in average investment securities of $55.5 million.

Total average interest-earning assets for the second quarter of 2023 increased by $1.6 billion from the second quarter of 2022. Average net loans for the second quarter of 2023 were $20.9 billion, an increase of $2.2 billion from the same period in 2022. Compared to the second quarter of 2022, average other interest-earning assets decreased $421.9 million and average investment securities decreased $164.3 million in the second quarter of 2023.

Total average interest-bearing liabilities increased $1.0 billion, to $18.0 billion, in the second quarter of 2023 in comparison to $17.0 billion in the first quarter of 2023 driven by an increase in the average balance for total interest-bearing deposits of $1.3 billion, partially offset by a decrease in the average balance for borrowings and other interest-bearing liabilities of $0.3 billion.

Total average interest-bearing liabilities for the second quarter of 2023 increased $3.1 billion, to $18.0 billion, in comparison to $14.9 billion in the second quarter of 2022, driven by increases in the average balances for borrowings and other interest-bearing liabilities and total interest-bearing deposits of $1.8 billion and $1.3 billion, respectively.

Asset Quality

In the second quarter of 2023, a provision for credit losses of $9.7 million was recorded in comparison to a provision for credit losses of $24.5 million in the first quarter of 2023, and a provision for credit losses of $1.5 million in the second quarter of 2022. The provision for credit losses of $9.7 million recorded in the second quarter of 2023 was primarily due to loan growth and the macroeconomic outlook.

Non-performing assets were $151.6 million, or 0.55% of total assets, at June 30, 2023, in comparison to $167.9 million, or 0.62% of total assets, at March 31, 2023, and $178.3 million, or 0.71% of total assets, at June 30, 2022.

Net charge-offs for the second quarter of 2023 were 0.04% of total average loans in comparison to 0.27% and negative 0.08% in the first quarter of 2023 and the second quarter of 2022, respectively.

Non-interest Income

Non-interest income before investment securities gains in the second quarter of 2023 was $60.6 million, an increase of $8.9 million, or 17.1%, from the first quarter of 2023. The increase in non-interest income was primarily due to an increase in commercial banking income of $5.6 million, driven by increases in commercial customer interest rate swap fee income, reflected in capital markets, and merchant and card income of $3.6 million and $0.9 million, respectively. In addition, increases from mortgage banking, wealth management, higher income from equity method investments, reflected in other non-interest income, and consumer banking of $1.0 million, $0.6 million, $0.6 million and $0.5 million, respectively, contributed to the increase in non-interest income in the second quarter of 2023.

Compared to the second quarter of 2022, non-interest income before investment securities gains in the second quarter of 2023 increased $2.2 million, or 3.8%, from $58.4 million. The increase in non-interest income was primarily due to increases in commercial customer interest rate swap fee income, reflected in capital markets, and merchant and card income of $2.1 million and $0.3 million, respectively.

Non-interest Expense

Non-interest expense was $168.0 million in the second quarter of 2023, an increase of $8.4 million, or 5.3%, compared to $159.6 million in the first quarter of 2023. The increase was primarily due to increases of $4.8 million in salaries and employee benefits expense, $1.0 million in data processing and software expense and $0.7 million in other outside services expense. Additional contributors to the increase in non-interest expense were increases of $1.3 million in owned real estate and repossession expenses and $0.5 million in state tax expense, in each case, reflected in other expense. The $4.8 million increase in salaries and benefits expense was primarily driven by annual merit increases and one additional calendar day in the quarter.

Compared to the second quarter of 2022, non-interest expense, excluding merger-related expenses of $1.0 million in the second quarter of 2022, increased $19.3 million, or 13.0%. The increase was primarily due to increases of $8.7 million in salaries and employee benefits expense, $2.1 million in other outside services expense, $2.1 million in data processing and software expense, $1.9 million in FDIC insurance expense, primarily due to the adoption of a final rule to increase base deposit insurance assessment rates effective January 1, 2023, $0.9 million in intangible amortization expense and $0.8 million in net occupancy expense. Higher expense levels compared to the second quarter of 2022 are in part due to the Prudential Bancorp acquisition. The $8.7 million increase in salaries and benefits expense was primarily driven by annual merit increases, an increase in the number of employees, employee benefits due to higher claims experience and higher pension costs.

Income Tax Expense

For the second quarter of 2023, the effective tax rate was 16.8%, in comparison to 17.3% for the full-year of 2022.

Additional information on Fulton is available on the Internet at www.fultonbank.com.

Safe Harbor Statement

This press 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, the statements 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, 2022, Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 and other current and periodic reports, which have been, or will be, filed with the Securities and Exchange Commission (the "SEC") and are, or will be, available in the Investor Relations section of the Corporation's website (www.fultonbank.com) and on the SEC's website (www.sec.gov).

Non-GAAP Financial Measures

The Corporation uses certain financial measures in this press release that have been derived from methods other than GAAP. These non-GAAP financial measures are reconciled to the most comparable GAAP measures in tables at the end of this press release.

FULTON FINANCIAL CORPORATION

SUMMARY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)

(dollars in thousands, except per share data)

Three months ended

Jun 30

Mar 31

Dec 31

Sep 30

Jun 30

2023

2023

2022

2022

2022

Ending Balances

Investment securities

$

3,867,334

$

3,950,101

$

3,968,023

$

3,936,694

$

4,117,801

Net loans

21,044,685

20,670,188

20,279,547

19,695,199

18,920,950

Total assets

27,403,163

27,112,176

26,931,702

26,146,042

25,252,686

Deposits

21,206,540

21,316,584

20,649,538

21,376,554

21,143,866

Shareholders' equity

2,642,152

2,618,998

2,579,757

2,471,159

2,471,093

Average Balances

Investment securities

3,916,130

3,964,615

3,936,579

4,254,216

4,216,507

Net loans

20,866,235

20,463,096

20,004,513

19,563,825

18,637,175

Total assets

27,235,567

26,900,653

26,386,355

26,357,095

25,578,432

Deposits

21,207,143

20,574,323

21,027,656

21,788,052

21,523,713

Shareholders' equity

2,647,464

2,613,316

2,489,148

2,604,057

2,531,346

Income Statement

Net interest income

212,852

215,587

225,911

215,582

178,831

Provision for credit losses

9,747

24,544

14,513

18,958

1,500

Non-interest income

60,585

51,753

54,321

59,162

58,391

Non-interest expense

168,018

159,616

168,462

169,558

149,730

Income before taxes

95,672

83,180

97,257

86,228

85,992

Net income available to common shareholders

77,045

65,752

79,271

68,309

67,427

Pre-provision net revenue(1)

106,495

108,375

115,049

113,631

89,384

Per Share

Net income available to common shareholders (basic)

$

0.46

$

0.39

$

0.47

$

0.41

$

0.42

Net income available to common shareholders (diluted)

$

0.46

$

0.39

$

0.47

$

0.40

$

0.42

Operating net income available to common shareholders(1)

$

0.47

$

0.39

$

0.48

$

0.48

$

0.42

Cash dividends

$

0.16

$

0.15

$

0.21

$

0.15

$

0.15

Common shareholders' equity

$

14.75

$

14.67

$

14.24

$

13.61

$

14.15

Common shareholders' equity (tangible)(1)

$

11.36

$

11.26

$

10.90

$

10.26

$

10.81

Weighted average shares (basic)

165,854

166,605

167,504

167,353

160,920

Weighted average shares (diluted)

167,191

168,401

169,136

168,781

162,075

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

Three months ended

Jun 30

Mar 31

Dec 31

Sep 30

Jun 30

2023

2023

2022

2022

2022

Asset Quality

Net charge-offs (recoveries) to average loans

0.04

%

0.27

%

0.23

%

0.01

%

(0.08

)%

Non-performing loans to total net loans

0.70

%

0.80

%

0.85

%

0.98

%

0.92

%

Non-performing assets to total assets

0.55

%

0.62

%

0.66

%

0.76

%

0.71

%

ACL - loans(1) to total loans

1.37

%

1.35

%

1.33

%

1.35

%

1.31

%

ACL - loans(1) to non-performing loans

195

%

169

%

157

%

138

%

143

%

Profitability

Return on average assets

1.17

%

1.03

%

1.23

%

1.07

%

1.10

%

Operating return on average assets(2)

1.18

%

1.04

%

1.26

%

1.25

%

1.11

%

Return on average common shareholders' equity

12.59

%

11.02

%

13.70

%

11.24

%

11.57

%

Return on average common shareholders' equity (tangible)(2)

16.52

%

14.46

%

18.59

%

17.31

%

15.23

%

Net interest margin

3.40

%

3.53

%

3.69

%

3.54

%

3.04

%

Efficiency ratio(2)

60.1

%

58.5

%

58.1

%

57.8

%

61.4

%

Non-interest expenses to total average assets

2.47

%

2.41

%

2.53

%

2.55

%

2.35

%

Operating non-interest expenses to total average assets(2)

2.46

%

2.40

%

2.48

%

2.43

%

2.32

%

Capital Ratios

Tangible common equity ratio ("TCE")(2)

7.0

%

7.0

%

6.9

%

6.7

%

7.0

%

TCE ratio, (excluding AOCI)(2)(3)

8.3

%

8.3

%

8.2

%

8.3

%

8.2

%

Tier 1 leverage ratio(4)

9.3

%

9.2

%

9.5

%

9.2

%

9.1

%

Common equity Tier 1 capital ratio(4)

10.1

%

9.8

%

10.0

%

10.0

%

9.9

%

Tier 1 risk-based capital ratio(4)

10.9

%

10.6

%

10.9

%

10.9

%

10.8

%

Total risk-based capital ratio(4)

13.7

%

13.4

%

13.6

%

13.6

%

13.7

%

(1) "ACL - loans" relates to the allowance for credit losses ("ACL") specifically on "Net Loans" and does not include the ACL related to off-balance-sheet ("OBS") credit exposures.

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

(3) Tangible common equity ("TCE") ratio, excluding accumulated other comprehensive income ("AOCI").

(4) Regulatory capital ratios as of June 30, 2023 are preliminary and prior periods are actual.

FULTON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED ENDING BALANCE SHEETS (UNAUDITED)

(dollars in thousands)

Jun 30

Mar 31

Dec 31

Sep 30

Jun 30

2023

2023

2022

2022

2022

ASSETS

Cash and due from banks

$

123,779

$

129,003

$

126,898

$

143,465

$

158,605

Other interest-earning assets

505,141

545,355

685,209

467,164

383,715

Loans held for sale

14,673

6,507

7,264

14,411

17,528

Investment securities

3,867,334

3,950,101

3,968,023

3,936,694

4,117,801

Net loans

21,044,685

20,670,188

20,279,547

19,695,199

18,920,950

Less: ACL - loans(1)

(287,442

)

(278,695

)

(269,366

)

(266,838

)

(248,564

)

Loans, net

20,757,243

20,391,493

20,010,181

19,428,361

18,672,386

Net premises and equipment

216,322

216,059

225,141

221,496

211,639

Accrued interest receivable

96,991

90,267

91,579

72,821

64,457

Goodwill and intangible assets

561,885

563,502

560,824

561,495

537,700

Other assets

1,259,795

1,219,889

1,256,583

1,300,135

1,088,855

Total Assets

$

27,403,163

$

27,112,176

$

26,931,702

$

26,146,042

$

25,252,686

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits

$

21,206,540

$

21,316,584

$

20,649,538

$

21,376,554

$

21,143,866

Borrowings

2,719,114

2,446,770

2,871,207

1,424,681

1,013,315

Other liabilities

835,357

729,824

831,200

873,648

624,412

Total Liabilities

24,761,011

24,493,178

24,351,945

23,674,883

22,781,593

Shareholders' equity

2,642,152

2,618,998

2,579,757

2,471,159

2,471,093

Total Liabilities and Shareholders' Equity

$

27,403,163

$

27,112,176

$

26,931,702

$

26,146,042

$

25,252,686

LOANS, DEPOSITS AND BORROWINGS DETAIL:

Loans, by type:

Real estate - commercial mortgage

$

7,846,861

$

7,746,920

$

7,693,835

$

7,554,509

$

7,417,036

Commercial and industrial

4,599,759

4,596,096

4,473,004

4,240,865

4,170,975

Real estate - residential mortgage

5,147,262

4,880,919

4,737,279

4,574,228

4,203,827

Real estate - home equity

1,061,891

1,074,712

1,102,838

1,110,103

1,108,808

Real estate - construction

1,308,564

1,326,754

1,269,925

1,273,097

1,177,446

Consumer

763,530

730,775

699,179

633,666

538,747

Leases and other loans(2)

316,818

314,012

303,487

308,731

304,111

Total Net Loans

$

21,044,685

$

20,670,188

$

20,279,547

$

19,695,199

$

18,920,950

Deposits, by type:

Noninterest-bearing demand

$

5,865,855

$

6,403,484

$

7,006,388

$

7,372,896

$

7,530,777

Interest-bearing demand

5,543,320

5,478,237

5,410,903

5,676,600

5,403,805

Savings

6,646,448

6,579,806

6,434,621

6,563,003

6,406,051

Total demand and savings

18,055,623

18,461,527

18,851,912

19,612,499

19,340,633

Brokered

949,259

960,919

208,416

226,883

243,172

Time

2,201,658

1,894,138

1,589,210

1,537,172

1,560,061

Total Deposits

$

21,206,540

$

21,316,584

$

20,649,538

$

21,376,554

$

21,143,866

Borrowings, by type:

Federal funds purchased

$

555,000

$

525,000

$

191,000

$

136,000

$

20,000

Federal Home Loan Bank advances

1,165,000

747,000

1,250,000

265,500

—

Senior debt and subordinated debt

539,994

539,814

539,634

539,461

555,748

Other borrowings

459,120

634,956

890,573

483,720

437,567

Total Borrowings

$

2,719,114

$

2,446,770

$

2,871,207

$

1,424,681

$

1,013,315

(1) "ACL - loans" relates to the ACL specifically on "Net Loans" and does not include the ACL related to OBS credit exposures.

(2) Includes equipment lease financing, overdraft and net origination fees and costs.

FULTON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(dollars in thousands, except per share)

Three Months Ended

Six months ended

Jun 30

Mar 31

Dec 31

Sep 30

Jun 30

Jun 30

2023

2023

2022

2022

2022

2023

2022

Interest Income:

Interest income

$

314,912

$

289,820

$

267,847

$

233,691

$

190,299

$

604,732

$

363,300

Interest expense

102,060

74,233

41,936

18,109

11,468

176,293

23,159

Net Interest Income

212,852

215,587

225,911

215,582

178,831

428,439

340,141

Provision for credit losses

9,747

24,544

14,513

18,958

1,500

34,291

(5,450

)

Net Interest Income after Provision

203,105

191,043

211,398

196,624

177,331

394,148

345,591

Non-Interest Income:

Wealth management

18,678

18,062

17,531

17,610

18,274

36,740

37,702

Commercial banking:

Merchant and card

7,700

6,834

7,223

7,601

7,355

14,534

13,452

Cash management

5,835

5,515

5,756

6,483

6,062

11,350

11,490

Capital markets

6,092

2,344

2,627

4,060

3,893

8,436

5,569

Other commercial banking

3,518

2,820

2,998

2,664

3,049

6,338

5,856

Total commercial banking

23,145

17,513

18,604

20,808

20,359

40,658

36,367

Consumer banking:

Card

6,592

6,243

6,331

6,278

6,067

12,835

11,863

Overdraft

2,696

2,733

3,364

4,463

3,881

5,429

7,653

Other consumer banking

2,432

2,241

2,380

2,534

2,524

4,673

4,630

Total consumer banking

11,720

11,217

12,075

13,275

12,472

22,937

24,146

Mortgage banking

2,940

1,970

2,140

3,720

3,768

4,910

8,344

Other

4,106

2,968

3,972

3,802

3,510

7,075

7,061

Non-interest income before investment securities gains (losses)

60,589

51,730

54,322

59,215

58,383

112,320

113,620

Investment securities gains (losses), net

(4

)

23

(1

)

(53

)

8

19

27

Total Non-Interest Income

60,585

51,753

54,321

59,162

58,391

112,339

113,647

Non-Interest Expense:

Salaries and employee benefits

94,102

89,283

92,733

94,283

85,404

183,385

169,868

Data processing and software

16,776

15,796

15,448

15,807

14,685

32,571

29,000

Net occupancy

14,374

14,438

14,061

14,025

13,587

28,812

28,109

Other outside services

10,834

10,126

10,860

9,361

8,764

20,960

16,931

FDIC insurance

4,895

4,795

3,219

3,158

2,961

9,690

6,170

Equipment

3,530

3,389

3,640

3,548

3,422

6,920

6,845

Professional fees

1,829

2,392

2,945

2,373

2,013

4,221

3,805

Marketing

1,655

1,886

2,380

1,859

1,326

3,541

2,646

Intangible amortization

1,072

674

688

690

177

1,746

353

Merger-related expenses

—

—

1,894

7,006

1,027

—

1,428

Other

18,951

16,837

20,594

17,448

16,364

35,790

30,553

Total Non-Interest Expense

168,018

159,616

168,462

169,558

149,730

327,636

295,708

Income Before Income Taxes

95,672

83,180

97,257

86,228

85,992

178,851

163,530

Income tax expense

16,065

14,866

15,424

15,357

16,003

30,931

29,253

Net Income

79,607

68,314

81,833

70,871

69,989

147,920

134,277

Preferred stock dividends

(2,562

)

(2,562

)

(2,562

)

(2,562

)

(2,562

)

(5,124

)

(5,124

)

Net Income Available to Common Shareholders

$

77,045

$

65,752

$

79,271

$

68,309

$

67,427

$

142,796

$

129,153

Three Months Ended

Six Months Ended

Jun 30

Mar 31

Dec 31

Sep 30

Jun 30

Jun 30

2023

2023

2022

2022

2022

2023

2022

PER SHARE:

Net income available to common shareholders:

Basic

$

0.46

$

0.39

$

0.47

$

0.41

$

0.42

$

0.86

$

0.80

Diluted

$

0.46

$

0.39

$

0.47

$

0.40

$

0.42

$

0.85

$

0.80

Cash dividends

$

0.16

$

0.15

$

0.21

$

0.15

$

0.15

$

0.31

$

0.30

Weighted average shares (basic)

165,854

166,605

167,504

167,353

160,920

166,227

160,755

Weighted average shares (diluted)

167,191

168,401

169,136

168,781

162,075

167,809

162,015

FULTON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)

(dollars in thousands)

Three months ended

June 30, 2023

March 31, 2023

June 30, 2022

Average

Yield/

Average

Yield/

Average

Yield/

Balance

Interest(1)

Rate

Balance

Interest(1)

Rate

Balance

Interest(1)

Rate

ASSETS

Interest-earning assets:

Net loans

$

20,866,235

$

287,154

5.52

%

$

20,463,096

$

263,065

5.21

%

$

18,637,175

$

165,682

3.56

%

Investment securities(2)

4,234,096

27,303

2.57

%

4,289,643

27,522

2.60

%

4,398,424

26,061

2.37

%

Other interest-earning assets

529,582

4,860

3.68

%

493,130

3,648

3.00

%

951,504

1,983

0.83

%

Total Interest-Earning Assets

25,629,913

319,317

4.99

%

25,245,869

294,235

4.73

%

23,987,103

193,726

3.24

%

Noninterest-Earning assets:

Cash and due from banks

129,682

141,254

160,240

Premises and equipment

216,847

223,025

216,798

Other assets

1,541,657

1,563,806

1,463,332

Less: ACL - loans(3)

(282,532

)

(273,301

)

(249,041

)

Total Assets

$

27,235,567

$

26,900,653

$

25,578,432

LIABILITIES AND SHAREHOLDERS' EQUITY

Interest-Bearing liabilities:

Demand deposits

$

5,535,669

$

14,612

1.06

%

$

5,326,566

$

8,455

0.64

%

$

5,597,975

$

797

0.06

%

Savings deposits

6,632,572

29,289

1.77

%

6,469,468

20,535

1.29

%

6,425,634

1,125

0.07

%

Brokered deposits

954,773

12,135

5.10

%

439,670

5,173

4.77

%

244,200

619

1.02

%

Time deposits

2,063,038

13,763

2.68

%

1,696,878

7,458

1.78

%

1,608,286

3,255

0.81

%

Total Interest-Bearing Deposits

15,186,052

69,799

1.84

%

13,932,582

41,621

1.21

%

13,876,095

5,796

0.17

%

Borrowings and other interest-bearing liabilities

2,790,860

32,261

4.60

%

3,058,684

32,613

4.32

%

1,003,830

5,672

2.27

%

Total Interest-Bearing Liabilities

17,976,912

102,060

2.27

%

16,991,266

74,234

1.78

%

14,879,925

11,468

0.31

%

Noninterest-Bearing liabilities:

Demand deposits

6,021,091

6,641,741

7,647,618

Other noninterest-bearing liabilities

590,100

654,330

519,543

Total Liabilities

24,588,103

24,287,337

23,047,086

Total Deposits/Cost of Deposits

21,207,143

1.32

%

20,574,323

0.82

%

21,523,713

0.11

%

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

23,998,003

1.70

%

23,633,007

1.27

%

22,527,543

0.20

%

Shareholders' equity

2,647,464

2,613,316

2,531,346

Total Liabilities and Shareholders' Equity

$

27,235,567

$

26,900,653

$

25,578,432

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

217,257

3.40

%

220,001

3.53

%

182,258

3.04

%

Tax equivalent adjustment

(4,405

)

(4,414

)

(3,427

)

Net Interest Income

$

212,852

$

215,587

$

178,831

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

(2) Balances include amortized historical cost for available for sale ("AFS") securities. The related unrealized holding gains (losses) are included in other assets.

(3) "ACL - loans" relates to the ACL specifically on "Net Loans" and does not include the ACL related to OBS credit exposures.

FULTON FINANCIAL CORPORATION

AVERAGE LOANS, DEPOSITS AND BORROWINGS DETAIL (UNAUDITED):

(dollars in thousands)

Three months ended

Jun 30

Mar 31

Dec 31

Sep 30

Jun 30

2023

2023

2022

2022

2022

Loans, by type:

Real estate - commercial mortgage

$

7,775,436

$

7,720,975

$

7,696,997

$

7,566,259

$

7,340,417

Commercial and industrial

4,629,919

4,565,923

4,372,935

4,250,573

4,155,436

Real estate - residential mortgage

5,008,295

4,790,868

4,643,784

4,485,649

4,052,666

Real estate - home equity

1,066,615

1,086,032

1,106,325

1,099,487

1,118,494

Real estate - construction

1,306,286

1,276,145

1,209,998

1,268,590

1,188,932

Consumer

763,407

721,248

679,108

604,634

485,095

Leases and other loans(1)

316,277

301,905

295,366

288,633

296,135

Total Net Loans

$

20,866,235

$

20,463,096

$

20,004,513

$

19,563,825

$

18,637,175

Deposits, by type:

Noninterest-bearing demand

$

6,021,091

$

6,641,741

$

7,310,824

$

7,535,791

$

7,647,618

Interest-bearing demand

5,535,669

5,326,566

5,479,443

5,708,059

5,597,975

Savings

6,632,572

6,469,468

6,466,775

6,681,713

6,425,634

Total demand and savings

18,189,332

18,437,775

19,257,042

19,925,563

19,671,227

Brokered

954,773

439,670

215,729

247,105

244,200

Time

2,063,038

1,696,878

1,554,885

1,615,384

1,608,286

Total Deposits

$

21,207,143

$

20,574,323

$

21,027,656

$

21,788,052

$

21,523,713

Borrowings, by type:

Federal funds purchased

$

679,401

$

505,142

$

261,737

$

96,965

$

2,857

Federal Home Loan Bank advances

880,811

1,261,589

564,692

206,152

—

Senior debt and subordinated debt

539,906

539,726

539,550

554,735

555,701

Other borrowings and other interest-bearing liabilities

690,742

752,227

659,543

501,496

445,261

Total Borrowings

$

2,790,860

$

3,058,684

$

2,025,522

$

1,359,348

$

1,003,819

(1) Includes equipment lease financing, overdraft and net origination fees and costs.

FULTON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)

(dollars in thousands)

Six months ended June 30

2023

2022

Average

Yield/

Average

Yield/

Balance

Interest(1)

Rate

Balance

Interest(1)

Rate

ASSETS

Interest-earning assets:

Net loans

$

20,665,779

$

550,219

5.36

%

$

18,510,845

$

316,809

3.44

%

Investment securities(2)

4,261,718

54,824

2.57

%

4,312,867

50,312

2.33

%

Other interest-earning assets

511,456

8,508

3.34

%

1,118,188

2,895

0.52

%

Total Interest-Earning Assets

25,438,953

613,551

4.85

%

23,941,900

370,016

3.11

%

Noninterest-Earning assets:

Cash and due from banks

135,436

161,274

Premises and equipment

219,920

218,357

Other assets

1,552,669

1,528,820

Less: ACL - loans(3)

(277,942

)

(250,026

)

Total Assets

$

27,069,036

$

25,600,325

LIABILITIES AND SHAREHOLDERS' EQUITY

Interest-Bearing liabilities:

Demand deposits

$

5,431,696

$

23,067

0.86

%

$

5,631,296

$

1,525

0.06

%

Savings deposits

6,551,470

49,824

1.53

%

6,431,060

2,146

0.07

%

Brokered deposits

698,644

17,308

5.00

%

247,258

835

0.68

%

Time deposits

1,880,970

21,221

2.28

%

1,652,430

6,895

0.84

%

Total Interest-Bearing Deposits

14,562,780

111,420

1.54

%

13,962,044

11,401

0.16

%

Borrowings and other interest-bearing liabilities

2,928,819

64,873

4.43

%

1,018,740

11,758

2.31

%

Total Interest-Bearing Liabilities

17,491,599

176,293

2.03

%

14,980,784

23,159

0.31

%

Noninterest-Bearing liabilities:

Demand deposits

6,329,701

7,540,025

Other

617,252

469,861

Total Liabilities

24,438,552

22,990,670

Total Deposits/Cost of Deposits

20,892,481

1.08

%

21,502,069

0.11

%

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

23,821,300

1.49

%

22,520,809

0.21

%

Shareholders' equity

2,630,484

2,609,655

Total Liabilities and Shareholders' Equity

$

27,069,036

$

25,600,325

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

437,258

3.46

%

346,857

2.91

%

Tax equivalent adjustment

(8,819

)

(6,716

)

Net Interest Income

$

428,439

$

340,141

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

(2) Balances include amortized historical cost for AFS. The related unrealized holding gains (losses) are included in other assets.

(3) "ACL - loans" relates to the ACL specifically on "Net Loans" and does not include the ACL related to OBS credit exposures.

FULTON FINANCIAL CORPORATION

AVERAGE LOANS, DEPOSITS AND BORROWINGS DETAIL (UNAUDITED):

(dollars in thousands)

Six months ended June 30

2023

2022

Loans, by type:

Real estate - commercial mortgage

$

7,748,356

$

7,318,422

Commercial and industrial

4,598,097

4,185,883

Real estate - residential mortgage

4,900,182

3,970,877

Real estate - home equity

1,076,270

1,125,257

Real estate - construction

1,291,299

1,164,785

Consumer

742,445

461,159

Leases and other loans(1)

309,130

284,462

Total Net Loans

$

20,665,779

$

18,510,845

Deposits, by type:

Noninterest-bearing demand

$

6,329,701

$

7,540,025

Interest-bearing demand

5,431,696

5,631,296

Savings

6,551,470

6,431,060

Total demand and savings

18,312,867

19,602,381

Brokered

698,644

247,258

Time

1,880,970

1,652,430

Total Deposits

$

20,892,481

$

21,502,069

Borrowings, by type:

Federal funds purchased

$

592,753

$

1,436

Federal Home Loan Bank advances

1,070,148

6

Senior debt and subordinated debt

539,817

582,184

Other borrowings

726,101

435,114

Total Borrowings

$

2,928,819

$

1,018,740

N/M - Not meaningful

(1) Includes equipment lease financing, overdraft and net origination fees and costs.

FULTON FINANCIAL CORPORATION

ASSET QUALITY INFORMATION (UNAUDITED)

(dollars in thousands)

Three months ended

Six Months Ended

Jun 30

Mar 31

Dec 31

Sep 30

Jun 30

Jun 30

Jun 30

2023

2023

2022

2022

2022

2023

2022

Allowance for credit losses related to net loans:

Balance at beginning of period

$

278,695

$

269,366

$

266,838

$

248,564

$

243,705

$

269,366

$

249,001

CECL Day 1 provision expense

—

—

—

7,954

—

—

—

Initial purchased credit deteriorated loans

—

—

—

1,135

—

—

—

Loans charged off:

Real estate - commercial mortgage

(230

)

(13,362

)

(12,235

)

(86

)

—

(13,592

)

(152

)

Commercial and industrial

(2,017

)

(612

)

(179

)

(1,783

)

(201

)

(2,629

)

(428

)

Real estate - residential mortgage

(62

)

—

—

—

(66

)

(62

)

(66

)

Consumer and home equity

(1,313

)

(2,206

)

(1,311

)

(1,172

)

(877

)

(3,519

)

(1,929

)

Real estate - construction

—

—

—

—

—

—

—

Leases and other loans(1)

(1,165

)

(723

)

(505

)

(683

)

(474

)

(1,888

)

(943

)

Total loans charged off

(4,787

)

(16,903

)

(14,230

)

(3,724

)

(1,618

)

(21,690

)

(3,518

)

Recoveries of loans previously charged off:

Real estate - commercial mortgage

29

786

183

29

3,536

815

3,648

Commercial and industrial

988

1,086

961

2,213

739

2,074

2,719

Real estate - residential mortgage

58

48

10

101

92

106

314

Consumer and home equity

959

661

683

682

762

1,620

1,216

Real estate - construction

569

202

530

—

12

771

44

Leases and other loans(1)

213

116

132

247

226

329

380

Recoveries of loans previously charged off

2,816

2,899

2,499

3,272

5,367

5,715

8,321

Net loans recovered (charged off)

(1,971

)

(14,004

)

(11,731

)

(452

)

3,749

(15,975

)

4,803

Provision for credit losses

10,718

23,333

14,259

9,637

1,110

34,051

(5,240

)

Balance at end of period

$

287,442

$

278,695

$

269,366

$

266,838

$

248,564

$

287,442

$

248,564

Net (recoveries) charge-offs to average loans

0.04

%

0.27

%

0.23

%

0.01

%

(0.08

)%

0.15

%

(0.05

)%

Provision for credit losses related to OBS Credit Exposures

Provision for credit losses

$

(971

)

$

1,211

$

254

$

1,367

$

390

NON-PERFORMING ASSETS:

Non-accrual loans

$

123,280

$

134,303

$

144,443

$

178,204

$

162,530

Loans 90 days past due and accruing

24,415

30,336

27,463

14,559

11,016

Total non-performing loans

147,695

164,639

171,906

192,763

173,546

Other real estate owned

3,881

3,304

5,790

5,877

4,786

Total non-performing assets

$

151,576

$

167,943

$

177,696

$

198,640

$

178,332

NON-PERFORMING LOANS, BY TYPE:

Real estate - commercial mortgage

$

55,048

$

61,322

$

72,634

$

96,281

$

59,940

Commercial and industrial

30,588

33,555

28,288

29,831

44,713

Real estate - residential mortgage

39,157

46,576

46,509

41,597

42,922

Consumer and home equity

10,469

8,983

9,800

10,016

10,552

Real estate - construction

1,099

1,509

1,368

1,456

1,357

Leases and other loans(1)

11,334

12,694

13,307

13,582

14,062

Total non-performing loans

$

147,695

$

164,639

$

171,906

$

192,763

$

173,546

(1) Includes equipment lease financing, overdraft and net origination fees and costs.

FULTON FINANCIAL CORPORATION

RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED)

(dollars in thousands, except per share data)

Explanatory note:

This press release contains supplemental financial information, as detailed below, that 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

2023

2023

2022

2022

2022

Operating net income available to common shareholders

Net income available to common shareholders

$

77,045

$

65,752

$

79,271

$

68,309

$

67,427

Plus: Core deposit intangible amortization

912

514

514

514

—

Plus: Merger-related expenses

—

—

1,894

7,006

1,027

Plus: CECL Day 1 Provision expense

—

—

—

7,954

—

Less: Tax impact of adjustments

(192

)

(108

)

(506

)

(3,250

)

(216

)

Operating net income available to common shareholders (numerator)

$

77,765

$

66,158

$

81,173

$

80,533

$

68,238

Weighted average shares (diluted) (denominator)

167,191

168,401

169,136

168,781

162,075

Operating net income available to common shareholders, per share (diluted)

$

0.47

$

0.39

$

0.48

$

0.48

$

0.42

Common shareholders' equity (tangible), per share

Shareholders' equity

$

2,642,152

$

2,618,998

$

2,579,757

$

2,471,159

$

2,471,093

Less: Preferred stock

(192,878

)

(192,878

)

(192,878

)

(192,878

)

(192,878

)

Less: Goodwill and intangible assets

(561,885

)

(563,502

)

(560,824

)

(561,495

)

(537,700

)

Tangible common shareholders' equity (numerator)

$

1,887,389

$

1,862,618

$

1,826,055

$

1,716,786

$

1,740,515

Shares outstanding, end of period (denominator)

166,097

165,396

167,599

167,399

161,057

Common shareholders' equity (tangible), per share

$

11.36

$

11.26

$

10.90

$

10.26

$

10.81

Operating return on average assets

Net income

$

79,607

$

68,314

$

81,833

$

70,871

$

69,989

Plus: Core deposit intangible amortization

912

514

514

514

—

Plus: Merger-related expenses

—

—

1,894

7,006

1,027

Plus: CECL Day 1 Provision expense

—

—

—

7,954

—

Less: Tax impact of adjustments

(192

)

(108

)

(506

)

(3,250

)

(216

)

Operating net income (numerator)

$

80,327

$

68,720

$

83,735

$

83,095

$

70,800

Total average assets (denominator)

$

27,235,567

$

26,900,653

$

26,386,355

$

26,357,095

$

25,578,432

Operating return on average assets

1.18

%

1.04

%

1.26

%

1.25

%

1.11

%

Return on average common shareholders' equity (tangible)

Net income available to common shareholders

$

77,045

$

65,752

$

79,271

$

68,309

$

67,427

Plus: Intangible amortization

1,072

674

688

690

177

Plus: Merger-related expenses

—

—

1,894

7,006

1,027

Plus: CECL Day 1 Provision expense

—

—

—

7,954

—

Less: Tax impact of adjustments

(225

)

(142

)

(542

)

(3,287

)

(253

)

Operating net income available to common shareholders (numerator)

$

77,892

$

66,284

$

81,311

$

80,672

$

68,378

Average shareholders' equity

$

2,647,464

$

2,613,316

$

2,489,148

$

2,604,057

$

2,531,346

Less: Average preferred stock

(192,878

)

(192,878

)

(192,878

)

(192,878

)

(192,878

)

Less: Average goodwill and intangible assets

(563,146

)

(561,744

)

(561,219

)

(562,285

)

(537,786

)

Average tangible common shareholders' equity (denominator)

$

1,891,440

$

1,858,694

$

1,735,051

$

1,848,894

$

1,800,682

Return on average common shareholders' equity (tangible)

16.52

%

14.46

%

18.59

%

17.31

%

15.23

%

Three months ended

Jun 30

Mar 31

Dec 31

Sep 30

Jun 30

2023

2023

2022

2022

2022

Tangible common equity to tangible assets (TCE Ratio)

Shareholders' equity

$

2,642,152

$

2,618,998

$

2,579,757

$

2,471,159

$

2,471,093

Less: Preferred stock

(192,878

)

(192,878

)

(192,878

)

(192,878

)

(192,878

)

Less: Goodwill and intangible assets

(561,885

)

(563,502

)

(560,824

)

(561,495

)

(537,700

)

Tangible common shareholders' equity (numerator)

$

1,887,389

$

1,862,618

$

1,826,055

$

1,716,786

$

1,740,515

Total assets

$

27,403,163

$

27,112,176

$

26,931,702

$

26,146,042

$

25,252,686

Less: Goodwill and intangible assets

(561,885

)

(563,502

)

(560,824

)

(561,495

)

(537,700

)

Total tangible assets (denominator)

$

26,841,278

$

26,548,674

$

26,370,878

$

25,584,547

$

24,714,986

Tangible common equity to tangible assets

7.03

%

7.02

%

6.92

%

6.71

%

7.04

%

Tangible common equity to tangible assets (TCE Ratio) excluding AOCI

Shareholders' equity

$

2,642,152

$

2,618,998

$

2,579,757

$

2,471,159

$

2,471,093

Less: Preferred stock

(192,878

)

(192,878

)

(192,878

)

(192,878

)

(192,878

)

Less: Accumulated other comprehensive (income) loss

379,286

350,992

385,476

442,947

304,210

Less: Goodwill and intangible assets

(561,885

)

(563,502

)

(560,824

)

(561,495

)

(537,700

)

Tangible common shareholders' equity (numerator)

$

2,266,675

$

2,213,610

$

2,211,531

$

2,159,733

$

2,044,725

Total assets

$

27,403,163

$

27,112,176

$

26,931,702

$

26,146,042

$

25,252,686

Less: Goodwill and intangible assets

(561,885

)

(563,502

)

(560,824

)

(561,495

)

(537,700

)

Plus: AOCI - unrealized losses/(gains) on AFS investments securities

311,813

282,092

632,456

368,196

249,424

Total tangible assets (denominator)

$

27,153,091

$

26,830,766

$

27,003,334

$

25,952,743

$

24,964,410

Tangible common equity to tangible assets, excluding AOCI

8.35

%

8.25

%

8.19

%

8.32

%

8.19

%

Efficiency ratio

Non-interest expense

$

168,018

$

159,616

$

168,462

$

169,558

$

149,730

Less: Amortization of tax credit investments

—

—

(696

)

(696

)

(696

)

Less: Merger-related expenses

—

—

(1,894

)

(7,006

)

(1,027

)

Less: Intangible amortization

(1,072

)

(674

)

(688

)

(690

)

(177

)

Non-interest expense (numerator)

$

166,946

$

158,942

$

165,184

$

161,166

$

147,830

Net interest income

$

212,852

$

215,587

$

225,911

$

215,582

$

178,831

Tax equivalent adjustment

4,405

4,414

4,310

3,970

3,427

Plus: Total non-interest income

60,585

51,753

54,321

59,162

58,391

Less: Investment securities (gains) losses, net

4

(23

)

1

53

(8

)

Total revenue (denominator)

$

277,846

$

271,731

$

284,543

$

278,767

$

240,641

Efficiency ratio

60.1

%

58.5

%

58.1

%

57.8

%

61.4

%

Operating non-interest expenses to total average assets

Non-interest expense

$

168,018

$

159,616

$

168,462

$

169,558

$

149,730

Less: Amortization of tax credit investments

—

—

(696

)

(696

)

(696

)

Less: Intangible amortization

(1,072

)

(674

)

(688

)

(690

)

(177

)

Less: Merger-related expenses

—

—

(1,894

)

(7,006

)

(1,027

)

Non-interest expense (numerator)

$

166,946

$

158,942

$

165,184

$

161,166

$

147,830

Total average assets (denominator)

$

27,235,567

$

26,900,653

$

26,386,355

$

26,357,095

$

25,578,432

Operating non-interest expenses to total average assets

2.46

%

2.40

%

2.48

%

2.43

%

2.32

%

Three months ended

Jun 30

Mar 31

Dec 31

Sep 30

Jun 30

2023

2023

2022

2022

2022

Pre-provision net revenue

Net interest income

$

212,852

$

215,587

$

225,911

$

215,582

$

178,831

Non-interest income

60,585

51,753

54,321

59,162

58,391

Less: Investment securities (gains) losses, net

4

(23

)

1

53

(8

)

Total revenue

$

273,441

$

267,317

$

280,233

$

274,797

$

237,214

Non-interest expense

$

168,018

$

159,616

$

168,462

$

169,558

$

149,730

Less: Amortization on tax credit investments

—

—

(696

)

(696

)

(696

)

Less: Merger-related expenses

—

—

(1,894

)

(7,006

)

(1,027

)

Less: Intangible amortization

(1,072

)

(674

)

(688

)

(690

)

(177

)

Total non-interest expense

$

166,946

$

158,942

$

165,184

$

161,166

$

147,830

Pre-provision net revenue

$

106,495

$

108,375

$

115,049

$

113,631

$

89,384

Six months ended June 30,

2023

2022

Operating net income available to common shareholders

Net income available to common shareholders

$

142,796

$

129,153

Plus: Core deposit intangible amortization

1,426

—

Plus: Merger-related expenses

—

1,428

Plus: CECL Day 1 Provision expense

—

—

Less: Tax impact of adjustments

(299

)

(300

)

Operating net income available to common shareholders (numerator)

$

143,923

$

130,281

Weighted average shares (diluted) (denominator)

167,809

162,015

Operating net income available to common shareholders, per share (diluted)

$

0.86

$

0.80

Note: numbers in this report may not sum due to rounding.

Category: Earnings

View source version on businesswire.com: https://www.businesswire.com/news/home/20230718487757/en/

Contacts

Media: Lacey Dean (717) 735-8688
Investors: Matt Jozwiak (717) 327-2657

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