U.S. Markets closed

Fulton Financial Reports First Quarter Net Income of $56.7 Million, or $0.33 Per Share

LANCASTER, Pa.--(BUSINESS WIRE)--

Fulton Financial Corporation (FULT) (“Fulton” or the “Corporation”) reported net income of $56.7 million, or $0.33 per diluted share, for the first quarter of 2019.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20190416005962/en/

“Overall, I am pleased with our first quarter results as we saw seasonally strong loan growth to start the year with stable credit conditions and a five basis point increase in our net interest margin,” said E. Philip Wenger, Chairman and CEO. “We look forward to building off the first quarter momentum by continuing to execute on our corporate strategies that will allow us to grow earnings and enhance shareholder value.”

Net income per diluted share was unchanged from the $0.33 reported for the fourth quarter of 2018 and increased 17.9% from the first quarter of 2018.

Net Interest Income and Balance Sheet

Net interest income for the first quarter of 2019 was $163.3 million, slightly higher than the fourth quarter of 2018, as the positive impact of a five basis point increase in the net interest margin, to 3.49%, and an increase in average loans, was largely offset by two fewer days of interest accruals during the first quarter of 2019 in comparison to the fourth quarter of 2018. The improvement in the net interest margin resulted from a thirteen basis point increase in the average yield on interest-earning assets which outpaced the nine basis point increase in the average cost of funds.

Total average assets for the first quarter of 2019 were $20.7 billion, an increase of $178.2 million from the fourth quarter of 2018. Average loans, net of unearned income, increased $228.7 million, or 1.4%, in comparison to the fourth quarter of 2018.

Average loans and yields, by type, for the first quarter of 2019 in comparison to the fourth quarter of 2018 are summarized in the following table:

   
Three Months Ended
March 31, 2019   December 31, 2018 Growth
Balance   Yield (1) Balance   Yield (1) $   %
(dollars in thousands)
Average Loans, net of unearned income, by type:
Real estate - commercial mortgage $ 6,378,145 4.69 % $ 6,343,024 4.57 % $ 35,121 0.6 %
Commercial - industrial, financial and agricultural 4,462,609 4.66 % 4,329,937 4.51 % 132,672 3.1 %
Real estate - residential mortgage 2,276,611 4.06 % 2,209,993 4.01 % 66,618 3.0 %
Real estate - home equity 1,433,574 5.33 % 1,459,647 5.19 % (26,073 ) (1.8 %)
Real estate - construction 930,246 4.83 % 931,724 4.63 % (1,478 ) (0.2 %)
Consumer 424,480 4.49 % 406,436 4.57 % 18,044 4.4 %
Leasing 276,949 4.40 % 274,134 4.63 % 2,815 1.0 %
Other   11,761 N/A   10,742 N/A   1,019   9.5 %
 
Total Average Loans, net of unearned income $ 16,194,375 4.65 % $ 15,965,637 4.54 % $ 228,738   1.4 %
 
     

(1)

 

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

 

Total average liabilities increased $194.8 million, or 1.1%, from the fourth quarter of 2018, while average deposits decreased $137.4 million, or 0.8%. Average deposits and interest rates, by type, for the first quarter of 2019 in comparison to the fourth quarter of 2018 are summarized in the following table:

         
Three Months Ended
March 31, 2019 December 31, 2018 Growth
Balance   Rate Balance Rate $ %
(dollars in thousands)
Average Deposits, by type:
Noninterest-bearing demand $ 4,222,875 - % $ 4,321,776 - % $ (98,901 ) (2.3 %)
Interest-bearing demand 4,153,984 0.73 % 4,225,157 0.70 % (71,173 ) (1.7 %)
Savings and money market deposits   4,912,856 0.82 %   4,979,712 0.78 %   (66,856 ) (1.3 %)
Total average demand and savings 13,289,715 0.53 % 13,526,645 0.50 % (236,930 ) (1.8 %)
Brokered deposits 220,115 2.55 % 164,280 2.34 % 55,835 34.0 %
Time deposits   2,765,803 1.59 %   2,722,141 1.46 %   43,662   1.6 %
 
Total Average Deposits $ 16,275,633 0.74 % $ 16,413,066 0.68 % $ (137,433 ) (0.8 %)
 

Asset Quality

The provision for credit losses for the first quarter of 2019 was $5.1 million, compared to $8.2 million for the fourth quarter of 2018.

Non-performing assets were $147.7 million, or 0.70% of total assets, at March 31, 2019, compared to $150.2 million, or 0.73% of total assets, at December 31, 2018 and $145.4 million, or 0.73% of total assets, at March 31, 2018.

Annualized net charge-offs for the quarter ended March 31, 2019 were 0.10% of total average loans, compared to 0.17% and 0.10% for the quarters ended December 31, 2018 and March 31, 2018, respectively. The allowance for credit losses as a percentage of non-performing loans was 123% at March 31, 2019, compared to 121% at December 31, 2018 and a 131% at March 31, 2018.

Non-interest Income

Non-interest income in the first quarter of 2019, excluding investment securities gains, was $46.7 million, a decrease of $2.8 million, or 5.7%, in comparison to the fourth quarter of 2018 and an increase of $0.8 million, or 1.8%, compared to the first quarter of 2018. Seasonal decreases occurred in consumer fees, specifically overdraft fees and card income. In addition, commercial fees showed a decrease in Small Business Administration lending income and commercial loan interest rate swap fees.

Non-interest Expense

Non-interest expense was $137.8 million in the first quarter of 2019, a decrease of $2.9 million, or 2.0%, compared to the fourth quarter of 2018 and an increase of $1.2 million, or 0.9%, compared to the first quarter of 2018. The decrease in amortization of tax credit investments resulted from $4.9 million of amortization of a tax credit investment in the fourth quarter of 2018 that generated a corresponding credit to income taxes. Excluding the amortization of this tax credit investment in the fourth quarter, non-interest expense increased $2.0 million, or 1.5%, in the first quarter of 2019, which was driven by increases in salaries and employee benefits, specifically a seasonal increase in payroll taxes, marketing and professional fees. These increases were partially offset by a decrease in other outside services.

In the first quarter of 2019, the Corporation incurred $1.0 million of costs related to the consolidation of eight branches, unchanged from the fourth quarter of 2018. Expenses related to charter consolidation efforts were $1.5 million in the first quarter of 2019, a $600,000 increase from the fourth quarter of 2018.

Income Tax Expense

The effective income tax rate for the first quarter of 2019 was 15.6%, as compared to 8.6% for the fourth quarter of 2018. Excluding the impact of the aforementioned tax credit, the effective income tax rate for the fourth quarter would have been 14.6%.

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, 2018, which has been filed with the Securities and Exchange Commission and is 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
Mar 31     Dec 31     Sep 30     Jun 30     Mar 31
2019 2018 2018 2018 2018

Ending Balances

Investments $ 2,748,249 $ 2,686,973 $ 2,635,413 $ 2,593,283 $ 2,592,823
Loans, net of unearned income 16,262,633 16,165,800 15,925,093 15,792,969 15,696,284
Total assets

20,974,649

20,682,152 20,364,810 20,172,539 19,948,941
Deposits 16,377,978 16,376,159 16,249,014 15,599,799 15,477,103
Shareholders' equity 2,301,019 2,247,573 2,283,014 2,245,785 2,235,493
 

Average Balances

Investments $ 2,699,130 $ 2,646,266 $ 2,596,414 $ 2,601,705 $ 2,556,986
Loans, net of unearned income 16,194,375 15,965,637 15,862,143 15,768,377 15,661,032
Total assets 20,690,365 20,512,130 20,273,232 20,063,375 19,876,093
Deposits 16,275,633 16,413,066 15,967,234 15,517,424 15,420,312
Shareholders' equity 2,265,097 2,281,669 2,269,093 2,246,904 2,224,615
 

Income Statement

Net interest income $ 163,315 $ 162,944 $ 160,127 $ 156,067 $ 151,318
Provision for credit losses 5,100 8,200 1,620 33,117 3,970
Non-interest income 46,751 49,523 51,033 49,094 45,875
Non-interest expense 137,824 140,685 135,413 133,345 136,661
Income before taxes 67,142 63,582 74,127 38,699 56,562
Net income 56,663 58,083 65,633 35,197 49,480
Pre-provision net revenue(1) 73,775 78,320 77,370 73,449 62,150
 

Per Share

Net income (basic) $ 0.33 $ 0.33 $ 0.37 $ 0.20 $ 0.28
Net income (diluted) 0.33 0.33 0.37 0.20 0.28
Cash dividends 0.13 0.16 0.12 0.12 0.12
Tangible common equity(1) 10.39 10.08 9.95 9.75 9.71
Weighted average shares (basic) 169,884 174,571 175,942 175,764 175,303
Weighted average shares (diluted) 170,909 175,473 177,128 176,844 176,568
 

Asset Quality

Net charge-offs to average loans (annualized) 0.10% 0.17% 0.08% 1.01% 0.10%
Non-performing loans to total loans 0.85% 0.86% 0.75% 0.78% 0.86%
Non-performing assets to total assets 0.70% 0.73% 0.64% 0.67% 0.73%
Allowance for credit losses to loans outstanding 1.05% 1.05% 1.05% 1.07% 1.12%
Allowance for loan losses to loans outstanding 1.00% 0.99% 0.99% 0.99% 1.04%
Allowance for credit losses to non-performing loans 123% 121% 140% 137% 131%
Allowance for loan losses to non-performing loans 117% 115% 131% 126% 121%

Non-performing assets to tangible shareholders' equity and allowance for credit losses(1)

7.63% 7.97% 6.81% 7.16% 7.73%
 

Profitability

Return on average assets 1.11% 1.12% 1.28% 0.70% 1.01%
Return on average shareholders' equity 10.15% 10.10% 11.48% 6.28% 9.02%
Return on average shareholders' equity (tangible)(1) 13.28% 13.17% 14.99% 8.23% 11.85%
Net interest margin 3.49% 3.44% 3.42% 3.39% 3.35%
Efficiency ratio(1) 63.9% 62.2% 62.5% 63.3% 67.5%
 

Capital Ratios

Tangible common equity ratio(1) 8.64% 8.52% 8.83% 8.73% 8.78%
Tier 1 leverage ratio(2) 9.00% 9.01% 9.34% 9.20% 9.21%
Common equity Tier 1 capital ratio(2) 10.30% 10.22% 10.80% 10.60% 10.59%
Tier 1 capital ratio(2) 10.30% 10.22% 10.80% 10.60% 10.59%
Total risk-based capital ratio(2) 12.80% 12.75% 13.34% 13.18% 13.22%
 
 

(1)

Please refer to the calculation on the page titled “Reconciliation of Non-GAAP Measures” at the end of this document.

(2)

Regulatory capital ratios as of March 31, 2019 are preliminary and prior periods are actual.

 
 
FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED ENDING BALANCE SHEETS (UNAUDITED)
dollars in thousands
 
                                % Change from
Mar 31 Dec 31 Sep 30 Jun 30 Mar 31 Dec 31     Mar 31
2019     2018     2018     2018     2018     2018     2018
 

ASSETS

 
Cash and due from banks $ 115,884 $ 103,436 $ 90,361 $ 99,742 $ 100,151 12.0 % 15.7 %
Other interest-earning assets 411,037 421,534 388,256 364,802 267,806 (2.5 %) 53.5 %
Loans held for sale 27,768 27,099 27,525 35,898 23,450 2.5 % 18.4 %
Investment securities 2,748,249 2,686,973 2,635,413 2,593,283 2,592,823 2.3 % 6.0 %
Loans, net of unearned income 16,262,633 16,165,800 15,925,093 15,792,969 15,696,284 0.6 % 3.6 %
Allowance for loan losses   (162,109 )       (160,537 )       (157,810 )       (156,050 )       (163,217 ) 1.0 % (0.7 %)
Net loans 16,100,524 16,005,263 15,767,283 15,636,919 15,533,067 0.6 % 3.7 %
Premises and equipment 239,004 234,529 231,236 230,195 230,313 1.9 % 3.8 %
Accrued interest receivable 62,207 58,879 58,584 55,208 53,060 5.7 % 17.2 %
Goodwill and intangible assets 535,356 531,556 531,556 531,556 531,556 0.7 % 0.7 %
Other assets  

734,620

        612,883         634,596         624,936         616,715  

19.9

%

19.1

%
 
Total Assets $

20,974,649

      $ 20,682,152       $ 20,364,810       $ 20,172,539       $ 19,948,941   1.4 %

5.1

%
 

LIABILITIES AND SHAREHOLDERS' EQUITY

 
Deposits $ 16,377,978 $ 16,376,159 $ 16,249,014 $ 15,599,799 $ 15,477,103 0.0 % 5.8 %
Short-term borrowings 829,016 754,777 485,565 983,833 937,852 9.8 % (11.6 %)
Other liabilities

401,324

311,364 355,102 351,174 359,994

28.9

%

11.5

%
FHLB advances and long-term debt   1,065,312         992,279         992,115         991,948         938,499   7.4 % 13.5 %
 
Total Liabilities

18,673,630

18,434,579 18,081,796 17,926,754 17,713,448 1.3 %

5.4

%
 
Shareholders' equity   2,301,019         2,247,573         2,283,014         2,245,785         2,235,493   2.4 % 2.9 %
 
Total Liabilities and Shareholders' Equity $

20,974,649

      $ 20,682,152       $ 20,364,810       $ 20,172,539       $ 19,948,941   1.4 %

5.1

%
 

LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL:

 
Loans, by type:
Real estate - commercial mortgage $ 6,428,688 $ 6,434,285 $ 6,337,984 $ 6,304,475 $ 6,332,508 (0.1 %) 1.5 %
Commercial - industrial, financial and agricultural 4,429,538 4,404,548 4,288,823 4,264,602 4,299,072 0.6 % 3.0 %
Real estate - residential mortgage 2,313,908 2,251,044 2,173,548 2,094,530 1,976,524 2.8 % 17.1 %
Real estate - home equity 1,413,500 1,452,137 1,469,152 1,491,395 1,514,241 (2.7 %) (6.7 %)
Real estate - construction 953,087 916,599 979,857 990,705 976,131 4.0 % (2.4 %)
Consumer 433,545 419,186 390,708 360,315 326,766 3.4 % 32.7 %
Leasing and other   290,367         288,001         285,021         286,947         271,042   0.8 % 7.1 %
 
Total Loans, net of unearned income $ 16,262,633       $ 16,165,800       $ 15,925,093       $ 15,792,969       $ 15,696,284   0.6 % 3.6 %
 
Deposits, by type:
Noninterest-bearing demand $ 4,255,043 $ 4,310,105 $ 4,216,064 $ 4,324,659 $ 4,291,821 (1.3 %) (0.9 %)
Interest-bearing demand 4,207,442 4,240,974 4,289,181 3,854,680 3,984,423 (0.8 %) 5.6 %
Savings and money market accounts   4,907,346         4,926,937         4,878,982         4,597,510         4,487,277   (0.4 %) 9.4 %
Total demand and savings 13,369,831 13,478,016 13,384,227 12,776,849 12,763,521 (0.8 %) 4.8 %
Brokered deposits 251,395 176,239 164,601 161,447 64,195 42.6 % N/M
Time deposits   2,756,752         2,721,904         2,700,186         2,661,503         2,649,387   1.3 % 4.1 %
 
Total Deposits $ 16,377,978       $ 16,376,159       $ 16,249,014       $ 15,599,799       $ 15,477,103   0.0 % 5.8 %
 
Short-term borrowings, by type:
Customer repurchase agreements $

54,440

$

43,499

$ 82,741 $ 152,594 $ 165,186

25.2

%

(67.0

%)

Customer short-term promissory notes 299,576 326,278 267,824 303,239 342,666 (8.2 %) (12.6 %)

Federal funds purchased

-

-

50,000

343,000

395,000

0.0

%

(100.0

%)

Short-term FHLB advances  

475,000

       

385,000

        85,000         185,000         35,000  

23.4

% N/M
 
Total Short-term Borrowings $ 829,016       $ 754,777       $ 485,565       $ 983,833       $ 937,852   9.8 % (11.6 %)
 
N/M - Not meaningful
 
 
FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
dollars in thousands                              
                                     
          Three Months Ended     % Change from
Mar 31 Dec 31 Sep 30 Jun 30 Mar 31 Dec 31 Mar 31
2019 2018 2018 2018 2018 2018 2018
 
Interest Income:
Interest income $ 204,700 $ 200,609 $ 194,048 $ 186,170 $ 177,687 2.0 % 15.2 %
Interest expense   41,385   37,665   33,921   30,103   26,369 9.9 % 56.9 %
 
Net Interest Income 163,315 162,944 160,127 156,067 151,318 0.2 % 7.9 %
Provision for credit losses   5,100   8,200   1,620   33,117   3,970 (37.8 %) 28.5 %
 
Net Interest Income after Provision 158,215 154,744 158,507 122,950 147,348 2.2 % 7.4 %
 
Non-Interest Income:
Wealth management fees 13,239 13,408 13,066 12,803 12,871 (1.3 %) 2.9 %
Mortgage banking income 4,772 4,774 4,896 5,163 4,193 (0.0 %) 13.8 %

Consumer banking income:

Card income 4,686 4,966 5,382 4,708 4,441 (5.6 %) 5.5 %
Overdraft fees 4,104 4,653 4,443 4,268 4,241 (11.8 %) (3.2 %)
Other consumer banking income   2,587   2,799   2,840   2,955   2,726 (7.6 %) (5.1 %)
Total consumer banking income 11,377 12,418 12,665 11,931 11,408 (8.4 %) (0.3 %)
Commercial banking income:
Merchant and card income 5,558 5,656 6,307 6,155 5,308 (1.7 %) 4.7 %
Cash management fees 4,361 4,340 4,472 4,452 4,317 0.5 % 1.0 %
Commercial loan interest rate swap fees 2,028 2,540 3,607 2,393 1,291 (20.2 %) 57.1 %
Other commercial banking income   2,816   3,466   3,154   3,431   3,040 (18.8 %) (7.4 %)
Total commercial banking income 14,763 16,002 17,540 16,431 13,956 (7.7 %) 5.8 %

Other income

  2,535   2,921   2,852   2,762   3,428 (13.2 %) (26.1 %)
Non-Interest Income before Investment Securities Gains 46,686 49,523 51,019 49,090 45,856 (5.7 %) 1.8 %
Investment securities gains, net   65   -   14   4   19 N/M N/M
 
Total Non-Interest Income 46,751 49,523 51,033 49,094 45,875 (5.6 %) 1.9 %
 
Non-Interest Expense:

 

Salaries and employee benefits 77,757 75,745 76,770 74,919 75,768 2.7 % 2.6 %
Net occupancy expense 12,909 12,708 12,578 12,760 13,632 1.6 % (5.3 %)
Data processing and software 10,353 10,203 10,157 10,453 10,473 1.5 % (1.1 %)
Other outside services 8,352 8,944 9,122 7,568 8,124 (6.6 %) 2.8 %
Professional fees 3,960 3,546 3,427 2,372 4,816 11.7 % (17.8 %)
Equipment expense 3,342 3,275 3,000 3,434 3,534 2.0 % (5.4 %)
FDIC insurance expense 2,609 2,563 2,814 2,663 2,953 1.8 % (11.6 %)
Marketing 2,160 1,577 2,692 2,335 2,250 37.0 % (4.0 %)
Amortization of tax credit investments 1,491 6,538 1,637 1,637 1,637 (77.2 %) (8.9 %)
Intangible amortization 107 - - - - 100.0 % 100.0 %
Other   14,784   15,586   13,216   15,204   13,474 (5.1 %) 9.7 %
 
Total Non-Interest Expense   137,824   140,685   135,413   133,345   136,661 (2.0 %) 0.9 %
 
Income before Income Taxes 67,142 63,582 74,127 38,699 56,562 5.6 % 18.7 %
Income tax expense   10,479   5,499   8,494   3,502   7,082 90.6 % 48.0 %
 
Net Income $ 56,663 $ 58,083 $ 65,633 $ 35,197 $ 49,480 (2.4 %) 14.5 %
 

PER SHARE:

 
Net income:
Basic $ 0.33 $ 0.33 $ 0.37 $ 0.20 $ 0.28 0.0 % 17.9 %
Diluted 0.33 0.33 0.37 0.20 0.28 0.0 % 17.9 %
Cash dividends 0.13 0.16 0.12 0.12 0.12 (18.8 %) 8.3 %
 
Weighted average shares (basic) 169,884 174,571 175,942 175,764 175,303 (2.7 %) (3.1 %)
Weighted average shares (diluted)     170,909       175,473       177,128       176,844       176,568     (2.6 %)     (3.2 %)
 
N/M - not meaningful
 
...
     
FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)
dollars in thousands
 
      Three Months Ended
March 31, 2019