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Fulton Financial Reports First Quarter Earnings of $0.20 per Share

LANCASTER, PA--(Marketwired - Apr 16, 2013) - Fulton Financial Corporation ( NASDAQ : FULT )

  • Diluted earnings per share for the first quarter of 2013 was 20 cents, unchanged from the fourth quarter of 2012 and a 5.3 percent increase from the first quarter of 2012.
  • The provision for credit losses was $15.0 million for the first quarter of 2013, a $2.5 million, or 14.3 percent, decrease compared to the fourth quarter of 2012 and a $13.0 million, or 46.4 percent, decrease from the first quarter of 2012. Non-performing loans decreased $2.4 million, or 1.1 percent, in comparison to December 31, 2012 and $75.3 million, or 26.5 percent, in comparison to March 31, 2012.
  • Net interest income for the first quarter of 2013 decreased $2.6 million, or 1.9 percent, compared to the fourth quarter of 2012. Net interest margin decreased 10 basis points, or 2.7 percent, to 3.55 percent.
  • Average interest-earning assets increased $362.9 million, or 2.4 percent, in comparison to the fourth quarter of 2012, with average loans increasing $254.3 million, or 2.1 percent.
  • Non-interest income decreased $12.3 million, or 20.6 percent, in comparison to the fourth quarter of 2012, while non-interest expense decreased $5.6 million, or 4.8 percent.
  • Approximately 4.2 million shares were repurchased during the first quarter of 2013, with approximately 3.8 million shares remaining authorized for repurchase under the current share repurchase plan.

Fulton Financial Corporation ( NASDAQ : FULT ) reported net income of $39.2 million, or 20 cents per diluted share, for the first quarter ended March 31, 2013, compared to $40.2 million, or 20 cents per diluted share, for the fourth quarter of 2012.

"Since growing earning assets is one of our strategic priorities, we were pleased to see a continuation of our solid loan growth in the first quarter," said E. Philip Wenger, Chairman, CEO and President. "Other expenses were down from the fourth quarter, which helped us to reduce the impact of slower residential mortgage activity and correspondingly lower mortgage sales gains. Overall asset quality continued to show improvement, allowing us to again reduce the provision for credit losses. During the quarter, we continued to buy back our stock under the current share repurchase program which expires on June 30 of this year."

Asset Quality
Non-performing assets were $232.5 million, or 1.39 percent of total assets, at March 31, 2013, compared to $237.2 million, or 1.43 percent of total assets, at December 31, 2012 and $317.5 million, or 1.92 percent of total assets, at March 31, 2012. The $4.7 million, or 2.0 percent, decrease in non-performing assets in comparison to the fourth quarter of 2012 was primarily due to a decrease in other real estate owned (OREO) and decreases in non-performing commercial loans, partially offset by increases in non-performing residential mortgages and commercial mortgages.

Annualized net charge-offs for the quarter ended March 31, 2013 were 0.62 percent of average total loans, compared to 0.91 percent for the quarter ended December 31, 2012 and 0.94 percent for the quarter ended March 31, 2012. The allowance for credit losses as a percentage of non-performing loans was 106.2 percent at March 31, 2013, as compared to 106.8 percent at December 31, 2012 and 90.9 percent at March 31, 2012.

Net Interest Income and Margin
Net interest income for the first quarter of 2013 decreased $2.6 million, or 1.9 percent, from the fourth quarter of 2012. The net interest margin decreased 10 basis points, or 2.7 percent, from 3.65 percent in the fourth quarter of 2012 to 3.55 percent in the first quarter of 2013. Average yields on interest-earning assets decreased 15 basis points, while the decline in the average costs of interest-bearing liabilities was 7 basis points.

Average Balance Sheet
Total average assets for the first quarter of 2013 were $16.5 billion, an increase of $346.0 million, or 2.1 percent, from the fourth quarter of 2012.

Average loans, net of unearned income, increased $254.3 million, or 2.1 percent, for the first quarter of 2013 in comparison to the fourth quarter of 2012.

                 
    Quarter Ended            
    Mar 31   Dec 31   Increase (decrease)  
    2013   2012   $     %  
    (dollars in thousands)  
Loans, by type:                          
  Real estate - commercial mortgage   $ 4,666,494   $ 4,623,158   $ 43,336     0.9 %
  Commercial - industrial, financial and agricultural     3,662,566     3,559,171     103,395     2.9 %
  Real estate - home equity     1,662,173     1,611,868     50,305     3.1 %
  Real estate - residential mortgage     1,283,168     1,223,962     59,206     4.8 %
  Real estate - construction     591,338     593,351     (2,013 )   (0.3 %)
  Consumer     305,480     306,350     (870 )   (0.3 %)
  Leasing and other     86,061     85,084     977     1.1 %
                             
  Total Loans, net of unearned income   $ 12,257,280   $ 12,002,944   $ 254,336     2.1 %
                           

Total average liabilities increased $351.8 million, or 2.5 percent, from the fourth quarter of 2012, due primarily to a $543.8 million, or 111.4 percent, increase in short-term borrowings, partially offset by a $181.2 million, or 1.4 percent, decrease in average deposits.

                 
    Quarter Ended            
    Mar 31   Dec 31   Increase (decrease)  
    2013   2012   $     %  
    (dollars in thousands)        
Deposits, by type:                          
  Noninterest-bearing demand   $ 2,968,777   $ 2,955,208   $ 13,569     0.5 %
  Interest-bearing demand     2,705,835     2,684,063     21,772     0.8 %
  Savings deposits     3,334,305     3,399,423     (65,118 )   (1.9 %)
Total demand and savings     9,008,917     9,038,694     (29,777 )   (0.3 %)
  Time deposits     3,321,309     3,472,692     (151,383 )   (4.4 %)
                           
  Total Deposits   $ 12,330,226   $ 12,511,386   $ (181,160 )   (1.4 %)
                           

Non-interest Income
Non-interest income, excluding investment securities gains, decreased $14.5 million, or 24.5 percent, in comparison to the fourth quarter of 2012. In December 2012, the Corporation's wholly owned subsidiary, Fulton Bank, N.A., sold its Global Exchange Group division (Global Exchange) for a gain of $6.2 million. Global Exchange provided international payment solutions. As a result of this sale, foreign currency processing revenue, included as a component of other service charges and fees on the condensed consolidated statements of income, decreased $2.3 million, or 86.4 percent, in the first quarter of 2013. Also contributing to the decrease in non-interest income was a $4.6 million decrease in mortgage banking income due to a decrease in new loan commitments and pricing spreads and a $1.5 million decrease in service charges on deposit accounts.

Non-interest Expense
Non-interest expense decreased $5.6 million, or 4.8 percent, in the first quarter of 2013 compared to the fourth quarter of 2012. During the fourth quarter of 2012, the Corporation prepaid approximately $20 million of Federal Home Loan Bank (FHLB) advances, incurring a $3.0 million prepayment penalty. Also contributing to the decrease in non-interest expense was a $1.3 million decrease in other outside services.

About Fulton Financial
Fulton Financial Corporation is a Lancaster, Pennsylvania-based financial holding company which has banking offices in Pennsylvania, Maryland, Delaware, New Jersey and Virginia through the following affiliates: Fulton Bank, N.A., Lancaster, PA; Swineford National Bank, Middleburg, PA; Lafayette Ambassador Bank, Easton, PA; FNB Bank, N.A., Danville, PA; Fulton Bank of New Jersey, Mt. Laurel, NJ; and The Columbia Bank, Columbia, MD.

The Corporation's investment management and trust services are offered at all banks through Fulton Financial Advisors, a division of Fulton Bank, N.A. Residential mortgage lending is offered by all banks under the Fulton Mortgage Company brand.

Additional information on Fulton Financial Corporation 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" and similar expressions which are intended to identify forward-looking statements.

These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, some of which are beyond the Corporation's control and ability to predict, that could cause actual results to differ materially from those expressed in the forward-looking statements. 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. Many factors could affect future financial results including, without limitation:

  • the impact of adverse changes in the economy and real estate markets, including protracted periods of low-growth and sluggish loan demand;
  • the effect of market interest rates, particularly a continuing period of low market interest rates, and relative balances of rate-sensitive assets to rate-sensitive liabilities, on net interest margin and net interest income;
  • the effect of competition on rates of deposit and loan growth and net interest margin;
  • increases in non-performing assets, which may require the Corporation to increase the allowance for credit losses, charge-off loans and incur elevated collection and carrying costs related to such non-performing assets;
  • non-interest income growth, including the impact of potential regulatory changes;
  • investment securities gains and losses, including other-than-temporary declines in the value of securities which may result in charges to earnings;
  • the level of non-interest expenses, including salaries and employee benefits expenses, operating risk losses, amortization of intangible assets and goodwill impairment;
  • the impact of increased regulatory scrutiny of the banking industry;
  • the increasing time and expense associated with regulatory compliance and risk management;
  • the uncertainty and lack of clear regulatory guidance associated with the delay in implementing many of the regulations mandated by the Dodd-Frank Act;
  • capital and liquidity strategies, including the expected impact of the capital and liquidity requirements proposed by the Basel III standards;
  • operational risk, i.e. the risk of loss resulting from human error, inadequate or failed internal processes and systems, outsourcing arrangements, compliance and legal risk and external events; and
  • acquisition and growth strategies, including the impact of a less robust merger and acquisition environment in the banking industry and increased regulatory scrutiny.

For a more complete discussion of certain risks and uncertainties affecting the Corporation, please see the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" set forth in the Corporation's filings with the Securities and Exchange Commission.

               
               
FULTON FINANCIAL CORPORATION              
CONDENSED CONSOLIDATED ENDING BALANCE SHEETS (UNAUDITED)              
dollars in thousands              
                      % Change from  
    March 31     March 31     December 31     March 31     December 31  
    2013     2012     2012     2012     2012  
                                     
ASSETS                                    
                                     
  Cash and due from banks   $ 174,479     $ 286,875     $ 256,300     (39.2% )   (31.9% )
  Other interest-earning assets     97,202       106,227       173,257     (8.5% )   (43.9% )
  Loans held for sale     63,045       70,128       67,899     (10.1% )   (7.1% )
  Investment securities     2,812,104       3,089,407       2,794,017     (9.0% )   0.6%  
  Loans, net of unearned income     12,377,288       11,960,004       12,146,971     3.5%     1.9%  
  Allowance for loan losses     (220,041 )     (256,496 )     (223,903 )   (14.2% )   (1.7% )
    Net loans     12,157,247       11,703,508       11,923,068     3.9%     2.0%  
  Premises and equipment     226,754       215,756       227,723     5.1%     (0.4% )
  Accrued interest receivable     47,485       51,247       45,786     (7.3% )   3.7%  
  Goodwill and intangible assets     534,987       543,383       535,563     (1.5% )   (0.1% )
  Other assets     569,434       474,128       509,484     20.1%     11.8%  
                                       
      Total Assets   $ 16,682,737     $ 16,540,659     $ 16,533,097     0.9%     0.9%  
                                     
LIABILITIES AND SHAREHOLDERS' EQUITY                                    
                                     
  Deposits   $ 12,388,460     $ 12,352,337     $ 12,484,163     0.3%     (0.8% )
  Short-term borrowings     1,126,966       964,550       868,399     16.8%     29.8%  
  Other liabilities     216,337       266,928       204,626     (19.0% )   5.7%  
  FHLB advances and long-term debt     889,211       933,981       894,253     (4.8% )   (0.6% )
                                       
    Total Liabilities     14,620,974       14,517,796       14,451,441     0.7%     1.2%  
                                       
  Shareholders' equity     2,061,763       2,022,863       2,081,656     1.9%     (1.0% )
                                       
      Total Liabilities and Shareholders' Equity   $ 16,682,737     $ 16,540,659     $ 16,533,097     0.9%     0.9%  
                                     
LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL:                                    
                                     
Loans, by type:                                    
  Real estate - commercial mortgage   $ 4,729,930     $ 4,634,428     $ 4,664,426     2.1%     1.4%  
  Commercial - industrial, financial and agricultural     3,658,483       3,518,228       3,612,065     4.0%     1.3%  
  Real estate - home equity     1,689,446       1,601,880       1,632,390     5.5%     3.5%  
  Real estate - residential mortgage     1,303,454       1,177,474       1,257,432     10.7%     3.7%  
  Real estate - construction     597,597       647,700       584,118     (7.7% )   2.3%  
  Consumer     309,138       309,168       309,864     -     (0.2% )
  Leasing and other     89,240       71,126       86,676     25.5%     3.0%  
                                       
  Total Loans, net of unearned income   $ 12,377,288     $ 11,960,004     $ 12,146,971     3.5%     1.9%  
                                     
Deposits, by type:                                    
  Noninterest-bearing demand   $ 3,075,511     $ 2,683,496     $ 3,009,966     14.6%     2.2%  
  Interest-bearing demand     2,698,811       2,486,382       2,755,603     8.5%     (2.1% )
  Savings deposits     3,345,842       3,305,888       3,335,256     1.2%     0.3%  
  Time deposits     3,268,296       3,876,571       3,383,338     (15.7% )   (3.4% )
                                       
  Total Deposits   $ 12,388,460     $ 12,352,337     $ 12,484,163     0.3%     (0.8% )
                                     
Short-term borrowings, by type:                                    
  Customer repurchase agreements   $ 158,214     $ 204,627     $ 156,238     (22.7% )   1.3%  
  Customer short-term promissory notes     114,231       149,376       119,691     (23.5% )   (4.6% )
  Federal funds purchased and other     854,521       610,547       592,470     40.0%     44.2%  
                                       
  Total Short-term Borrowings   $ 1,126,966     $ 964,550     $ 868,399     16.8%     29.8%  
                                     
                                     
                                     
   
FULTON FINANCIAL CORPORATION  
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)  
in thousands, except per-share data and percentages  
   
    Quarter Ended   % Change from  
    Mar 31   Mar 31   Dec 31   Mar 31     Dec 31  
    2013   2012   2012   2012     2012  
                               
Interest Income:                              
  Interest income   $ 151,322   $ 166,891   $ 155,560   (9.3% )   (2.7% )
  Interest expense     21,678     28,196     23,338   (23.1% )   (7.1% )
                                 
    Net Interest Income     129,644     138,695     132,222   (6.5% )   (1.9% )
  Provision for credit losses     15,000     28,000     17,500   (46.4% )   (14.3% )
                                 
    Net Interest Income after Provision     114,644     110,695     114,722   3.6%     (0.1% )
                                 
Non-Interest Income:                              
  Service charges on deposit accounts     14,111     14,842     15,642   (4.9% )   (9.8% )
  Investment management and trust services     10,096     9,377     9,611   7.7%     5.0%  
  Other service charges and fees     8,510     10,555     11,164   (19.4% )   (23.8% )
  Mortgage banking income     8,173     10,050     12,813   (18.7% )   (36.2% )
  Investment securities gains     2,473     1,251     195   97.7%     N/M  
  Gain on sale of Global Exchange     -     -     6,215   N/M     (100.0% )
  Other     3,896     5,563     3,883   (30.0% )   0.3%  
                                 
    Total Non-Interest Income     47,259     51,638     59,523   (8.5% )   (20.6% )
                                 
Non-Interest Expense:                              
  Salaries and employee benefits     61,212     60,360     61,303   1.4%     (0.1% )
  Net occupancy expense     11,844     10,935     11,362   8.3%     4.2%  
  Equipment expense     3,908     3,369     3,873   16.0%     0.9%  
  Data processing     3,903     3,688     3,713   5.8%     5.1%  
  Professional fees     3,047     2,582     3,228   18.0%     (5.6% )
  Other outside services     2,860     2,913     4,138   (1.8% )   (30.9% )
  OREO and repossession expense     2,854     3,295     2,474   (13.4% )   15.4%  
  FDIC insurance expense     2,847     3,021     2,944   (5.8% )   (3.3% )
  Software     2,748     2,175     2,562   26.3%     7.3%  
  Marketing     1,872     2,472     2,537   (24.3% )   (26.2% )
  Operating risk loss     1,766     3,368     2,627   (47.6% )   (32.8% )
  FHLB advances prepayment penalty     -     -     3,007   N/M     (100.0% )
  Other     12,075     12,491     12,788   (3.3% )   (5.6% )
                                 
    Total Non-Interest Expense     110,936     110,669     116,556   0.2%     (4.8% )
                                 
    Income Before Income Taxes     50,967     51,664     57,689   (1.3% )   (11.7% )
  Income tax expense     11,740     13,532     17,449   (13.2% )   (32.7% )
                                 
    Net Income   $ 39,227   $ 38,132   $ 40,240   2.9%     (2.5% )
                               
                               
PER SHARE:                              
                               
  Net income:                              
    Basic   $ 0.20   $ 0.19   $ 0.20   5.3%     -  
    Diluted     0.20     0.19     0.20   5.3%     -  
                                 
  Cash dividends   $ 0.08   $ 0.07   $ 0.08   14.3%     -  
  Shareholders' equity     10.56     10.10     10.45   4.6%     1.1%  
  Shareholders' equity (tangible)     7.82     7.38     7.76   6.0%     0.8%  
                                 
  Weighted average shares (basic)     196,299     199,492     198,161   (1.6% )   (0.9% )
  Weighted average shares (diluted)     197,217     200,344     199,198   (1.6% )   (1.0% )
  Shares outstanding, end of period     195,276     200,354     199,225   (2.5% )   (2.0% )
                                 
SELECTED FINANCIAL RATIOS:                              
                                 
  Return on average assets     0.96%     0.94%     0.99%            
  Return on average common shareholders' equity     7.67%     7.61%     7.70%            
  Return on average common shareholders' equity (tangible)     10.43%     10.56%     10.53%            
  Net interest margin     3.55%     3.85%     3.65%            
  Efficiency ratio     61.78%     56.83%     59.16%            
                               
N/M - Not meaningful                
                               
                               
                               
 
FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)
dollars in thousands
 
...
    Quarter Ended
    March 31, 2013   March 31, 2012   December 31, 2012
    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   $ 12,257,280     $ 136,948     4.53%   $ 11,981,099     $ 147,046     4.93%   $ 12,002,944     $ 141,014     4.68%
  Taxable investment securities     2,421,178       13,397     2.22%     2,402,158       18,661     3.11%     2,279,551       13,406     2.35%
  Tax-exempt investment securities     292,118       3,814     5.22%     294,724       4,157     5.64%     286,400       3,857     5.39%
  Equity securities     118,367       917     3.12%     115,593       780     2.71%     117,333       984     3.35%
                                                               
  Total Investment Securities     2,831,663       18,128     2.56%     2,812,475       23,598     3.36%     2,683,284       18,247     2.72%
                                                               
  Loans held for sale     47,885       495     4.14%     40,478       431     4.26%     59,977       517     3.45%
  Other interest-earning assets     117,850       22     0.07%     101,957       53     0.21%     145,555       45     0.12%
                                                               
  Total Interest-earning Assets     15,254,678       155,593     4.13%     14,936,009       171,128     4.61%     14,891,760       159,823     4.28%
                                                               
Noninterest-earning assets: