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Fulton Financial Reports Second Quarter Net Income of $59.8 Million, or $0.35 Per Diluted Share

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

Fulton Financial Corporation (FULT) (“Fulton” or the “Corporation”) reported net income of $59.8 million, or $0.35 per diluted share, for the second quarter of 2019, and net income of $116.4 million, or $0.68 per diluted share, for the six months ended June 30, 2019.

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“Overall, we were pleased with the second quarter results which were driven by strong fee income and continued growth in our consumer business. Our commercial pipeline continues to build, so we are cautiously optimistic about growth in the second half of the year, despite the competitive headwinds,” said E. Philip Wenger, Chairman and CEO. “On the corporate front, our final BSA/AML order was terminated and we consolidated another one of our affiliate banks, which are two important milestones that should help facilitate growth moving forward.”

Net income per diluted share increased 6.1% in comparison to the $0.33 reported for the first quarter of 2019 and increased 75.0% from the $0.20 reported for the second quarter of 2018. The second quarter of 2018 included a credit loss related to a single, large commercial lending relationship (the “Commercial Relationship”) which equated to $0.16 per diluted share.

Net Interest Income and Balance Sheet

Net interest income for the second quarter of 2019 was $164.5 million, a $1.2 million, or 0.8%, increase from the first quarter of 2019. The increase resulted from balance sheet growth and one additional day in the second quarter, partially offset by the impact of a five basis point decrease in net interest margin. The decline in net interest margin resulted from a six basis point increase in the average cost of funds, which outpaced a two basis point increase in the average yield on interest-earning assets.

Total average assets for the second quarter of 2019 were $21.1 billion, an increase of $366.7 million from the first quarter of 2019, with average loans, net of unearned income, increasing $121.7 million, or 0.8%.

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

Three Months Ended

 

 

 

 

 

 

June 30, 2019

 

March 31, 2019

 

Increase/(Decrease)

 

 

 

 

Balance

 

Yield (1)

 

Balance

 

Yield (1)

 

$

 

%

 

 

 

 

(dollars in thousands)

 

 

 

Average Loans, net of unearned income, by type:
Real estate - commercial mortgage

$

6,424,213

4.67

%

$

6,378,145

4.69

%

$

46,068

 

0.7

%

Commercial - industrial, financial and agricultural

 

4,440,860

4.73

%

 

4,462,609

4.66

%

 

(21,749

)

(0.5

%)

Real estate - residential mortgage

 

2,366,685

4.09

%

 

2,276,611

4.06

%

 

90,074

 

4.0

%

Real estate - home equity

 

1,404,141

5.35

%

 

1,433,574

5.33

%

 

(29,433

)

(2.1

%)

Real estate - construction

 

943,080

5.29

%

 

930,246

4.83

%

 

12,834

 

1.4

%

Consumer

 

445,666

4.38

%

 

424,480

4.49

%

 

21,186

 

5.0

%

Leasing

 

279,619

4.45

%

 

276,949

4.40

%

 

2,670

 

1.0

%

Other

 

11,812

N/A

 

 

11,761

N/A

 

 

51

 

0.4

%

 
Total Average Loans, net of unearned income

$

16,316,076

4.69

%

$

16,194,375

4.65

%

$

121,701

 

0.8

%

(1)

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

Total average liabilities increased $330.5 million, or 1.8%, from the first quarter of 2019, with average deposits increasing $99.8 million, or 0.6%, and short-term borrowings increasing $121.5 million, or 14.8%. Average deposits and interest rates, by type, for the second quarter of 2019 in comparison to the first quarter of 2019 are summarized in the following table:

Three Months Ended

 

 

 

 

 

 

June 30, 2019

 

March 31, 2019

 

Increase/(Decrease)

 

 

 

 

Balance

 

Rate

 

Balance

 

Rate

 

$

 

%

 

 

 

 

(dollars in thousands)

 

 

 

Average Deposits, by type:
Noninterest-bearing demand

$

4,200,810

-

%

$

4,222,875

-

%

$

(22,065

)

(0.5

%)

Interest-bearing demand

 

4,186,280

0.78

%

 

4,153,984

0.73

%

 

32,296

 

0.8

%

Savings and money market deposits

 

4,925,788

0.86

%

 

4,912,856

0.82

%

 

12,932

 

0.3

%

Total average demand and savings

 

13,312,878

0.56

%

 

13,289,715

0.53

%

 

23,163

 

0.2

%

Brokered deposits

 

246,154

2.58

%

 

220,115

2.55

%

 

26,039

 

11.8

%

Time deposits

 

2,816,424

1.74

%

 

2,765,803

1.59

%

 

50,621

 

1.8

%

 
Total Average Deposits

$

16,375,456

0.80

%

$

16,275,633

0.74

%

$

99,823

 

0.6

%

Asset Quality

The provision for credit losses for the second quarter of 2019 was $5.0 million, down slightly from $5.1 million for the first quarter of 2019. During the second quarter of 2018, Fulton recorded a $33.1 million provision for credit losses, mainly related to the Commercial Relationship mentioned above.

Non-performing assets were $155.0 million, or 0.73% of total assets, at June 30, 2019, compared to $147.7 million, or 0.70% of total assets, at March 31, 2019 and $134.9 million, or 0.67% of total assets, at June 30, 2018.

Annualized net recoveries for the quarter ended June 30, 2019 were 0.04% of total average loans, compared to net charge-offs of 0.10% and 1.01% for the quarters ended March 31, 2019 and June 30, 2018, respectively. The allowance for credit losses as a percentage of non-performing loans was 120% at June 30, 2019, compared to 123% at March 31, 2019 and 137% at June 30, 2018.

Non-interest Income

Non-interest income in the second quarter of 2019, excluding investment securities gains, was $54.1 million, an increase of $7.5 million, or 16.0%, in comparison to the first quarter of 2019 and an increase of $5.0 million, or 10.3%, compared to the second quarter of 2018. In the second quarter of 2019 in comparison to the first quarter of 2019, increases were realized in all categories, including mortgage banking income, wealth management fees and consumer banking income. Increases in commercial banking income were realized in commercial loan interest rate swap fees, merchant and card income and Small Business Administration income, which is included in other commercial banking income.

Non-interest Expense

Non-interest expense was $144.2 million in the second quarter of 2019, an increase of $6.3 million, or 4.6%, compared to the first quarter of 2019 and an increase of $10.8 million, or 8.1%, compared to the second quarter of 2018. Expenses incurred in the second quarter of 2019 related to charter consolidation activities were $5.1 million, as compared to $1.5 million in the first quarter of 2019, including $2.5 million in outside services expense, $1.6 million in salaries and benefits and approximately $1.0 million in various other expense categories. Increases were also realized in occupancy expense and marketing. These increases were partially offset by a decrease in professional fees.

Income Tax Expense

The effective income tax rate for the second quarter of 2019 was 14.2%, as compared to 15.6% for the first quarter of 2019.

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 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, which have been filed with the Securities and Exchange Commission and are 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

 

2019

 

2019

 

2018

 

2018

 

2018

Ending Balances
Investments

$

2,853,358

$

2,748,249

$

2,686,973

$

2,635,413

$

2,593,283

Loans, net of unearned income

 

16,368,458

 

16,262,633

 

16,165,800

 

15,925,093

 

15,792,969

Total assets

 

21,308,670

 

20,974,649

 

20,682,152

 

20,364,810

 

20,172,539

Deposits

 

16,388,895

 

16,377,978

 

16,376,159

 

16,249,014

 

15,599,799

Shareholders' equity

 

2,308,798

 

2,301,019

 

2,247,573

 

2,283,014

 

2,245,785

 
Average Balances
Investments

$

2,790,392

$

2,699,130

$

2,646,266

$

2,596,414

$

2,601,705

Loans, net of unearned income

 

16,316,076

 

16,194,375

 

15,965,637

 

15,862,143

 

15,768,377

Total assets

 

21,057,030

 

20,690,365

 

20,512,130

 

20,273,232

 

20,063,375

Deposits

 

16,375,456

 

16,275,633

 

16,413,066

 

15,967,234

 

15,517,424

Shareholders' equity

 

2,301,258

 

2,265,097

 

2,281,669

 

2,269,093

 

2,246,904

 
Income Statement
Net interest income

$

164,544

$

163,315

$

162,944

$

160,127

$

156,067

Provision for credit losses

 

5,025

 

5,100

 

8,200

 

1,620

 

33,117

Non-interest income

 

54,315

 

46,751

 

49,523

 

51,033

 

49,094

Non-interest expense

 

144,168

 

137,824

 

140,685

 

135,413

 

133,345

Income before taxes

 

69,666

 

67,142

 

63,582

 

74,127

 

38,699

Net income

 

59,779

 

56,663

 

58,083

 

65,633

 

35,197

Pre-provision net revenue(1)

 

76,114

 

73,775

 

78,320

 

77,370

 

73,449

 
Per Share
Net income (basic)

$

0.36

$

0.33

$

0.33

$

0.37

$

0.20

Net income (diluted)

$

0.35

$

0.33

$

0.33

$

0.37

$

0.20

Cash dividends

$

0.13

$

0.13

$

0.16

$

0.12

$

0.12

Tangible common equity(1)

 

10.63

 

10.39

 

10.08

 

9.95

 

9.75

Weighted average shares (basic)

 

168,343

 

169,884

 

174,571

 

175,942

 

175,764

Weighted average shares (diluted)

 

169,168

 

170,909

 

175,473

 

177,128

 

176,844

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

 

(0.04%)

 

0.10%

 

0.17%

 

0.08%

 

1.01%

Non-performing loans to total loans

 

0.90%

 

0.85%

 

0.86%

 

0.75%

 

0.78%

Non-performing assets to total assets

 

0.73%

 

0.70%

 

0.73%

 

0.64%

 

0.67%

Allowance for credit losses to loans outstanding

 

1.08%

 

1.05%

 

1.05%

 

1.05%

 

1.07%

Allowance for loan losses to loans outstanding

 

1.04%

 

1.00%

 

0.99%

 

0.99%

 

0.99%

Allowance for credit losses to non-performing loans

 

120%

 

123%

 

121%

 

140%

 

137%

Allowance for loan losses to non-performing loans

 

115%

 

117%

 

115%

 

131%

 

126%

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

 

7.94%

 

7.63%

 

7.97%

 

6.81%

 

7.16%

 
 
Profitability
Return on average assets

 

1.14%

 

1.11%

 

1.12%

 

1.28%

 

0.70%

Return on average shareholders' equity

 

10.42%

 

10.15%

 

10.10%

 

11.48%

 

6.28%

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

 

13.60%

 

13.28%

 

13.17%

 

14.99%

 

8.23%

Net interest margin

 

3.44%

 

3.49%

 

3.44%

 

3.42%

 

3.39%

Efficiency ratio(1)

 

64.2%

 

63.9%

 

62.2%

 

62.5%

 

63.3%

 
Capital Ratios
Tangible common equity ratio(1)

 

8.54%

 

8.64%

 

8.52%

 

8.83%

 

8.73%

Tier 1 leverage ratio(2)

 

8.89%

 

8.92%

 

9.01%

 

9.34%

 

9.20%

Common equity Tier 1 capital ratio(2)

 

9.94%

 

10.16%

 

10.22%

 

10.80%

 

10.60%

Tier 1 capital ratio(2)

 

9.94%

 

10.16%

 

10.22%

 

10.80%

 

10.60%

Total risk-based capital ratio(2)

 

12.42%

 

12.63%

 

12.75%

 

13.34%

 

13.18%

(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 June 30, 2019 are preliminary and prior periods are actual.

 

null
FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED ENDING BALANCE SHEETS (UNAUDITED)
dollars in thousands

 

 

 

 

 

% Change from

 

 

 

Jun 30

Mar 31

Dec 31

Sep 30

Jun 30

Mar 31

Jun 30

 

 

 

2019

2019

2018

2018

2018

2019

2018

 
ASSETS
 
Cash and due from banks

$

107,091

 

$

115,884

 

$

103,436

 

$

90,361

 

$

99,742

 

(7.6

%)

7.4

%

Other interest-earning assets

 

488,968

 

 

411,037

 

 

421,534

 

 

388,256

 

 

364,802

 

19.0

%

34.0

%

Loans held for sale

 

45,754

 

 

27,768

 

 

27,099

 

 

27,525

 

 

35,898

 

64.8

%

27.5

%

Investment securities

 

2,853,358

 

 

2,748,249

 

 

2,686,973

 

 

2,635,413

 

 

2,593,283

 

3.8

%

10.0

%

Loans, net of unearned income

 

16,368,458

 

 

16,262,633

 

 

16,165,800

 

 

15,925,093

 

 

15,792,969

 

0.7

%

3.6

%

Allowance for loan losses

 

(170,233

)

 

(162,109

)

 

(160,537

)

 

(157,810

)

 

(156,050

)

5.0

%

9.1

%

Net loans

 

16,198,225

 

 

16,100,524

 

 

16,005,263

 

 

15,767,283

 

 

15,636,919

 

0.6

%

3.6

%

Premises and equipment

 

243,300

 

 

239,004

 

 

234,529

 

 

231,236

 

 

230,195

 

1.8

%

5.7

%

Accrued interest receivable

 

62,984

 

 

62,207

 

 

58,879

 

 

58,584

 

 

55,208

 

1.2

%

14.1

%

Goodwill and intangible assets

 

535,249

 

 

535,356

 

 

531,556

 

 

531,556

 

 

531,556

 

(0.0

%)

0.7

%

Other assets

 

773,741

 

 

734,620

 

 

612,883

 

 

634,596

 

 

624,936

 

5.3

%

23.8

%

 
Total Assets

$

21,308,670

 

$

20,974,649

 

$

20,682,152

 

$

20,364,810

 

$

20,172,539

 

1.6

%

5.6

%

 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Deposits

$

16,388,895

 

$

16,377,978

 

$

16,376,159

 

$

16,249,014

 

$

15,599,799

 

0.1

%

5.1

%

Short-term borrowings

 

1,188,390

 

 

829,016

 

 

754,777

 

 

485,565

 

 

983,833

 

43.3

%

20.8

%

Other liabilities

 

435,171

 

 

401,324

 

 

311,364

 

 

355,102

 

 

351,174

 

8.4

%

23.9

%

FHLB advances and long-term debt

 

987,416

 

 

1,065,312

 

 

992,279

 

 

992,115

 

 

991,948

 

(7.3

%)

(0.5

%)

 
Total Liabilities

 

18,999,872

 

 

18,673,630

 

 

18,434,579

 

 

18,081,796

 

 

17,926,754

 

1.7

%

6.0

%

 
Shareholders' equity

 

2,308,798

 

 

2,301,019

 

 

2,247,573

 

 

2,283,014

 

 

2,245,785

 

0.3

%

2.8

%

 
Total Liabilities and Shareholders' Equity

$

21,308,670

 

$

20,974,649

 

$

20,682,152

 

$

20,364,810

 

$

20,172,539

 

1.6

%

5.6

%

 
LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL:
 
Loans, by type:
Real estate - commercial mortgage

$

6,497,973

 

$

6,428,688

 

$

6,434,285

 

$

6,337,984

 

$

6,304,475

 

1.1

%

3.1

%

Commercial - industrial, financial and agricultural

 

4,365,248

 

 

4,429,538

 

 

4,404,548

 

 

4,288,823

 

 

4,264,602

 

(1.5

%)

2.4

%

Real estate - residential mortgage

 

2,451,966

 

 

2,313,908

 

 

2,251,044

 

 

2,173,548

 

 

2,094,530

 

6.0

%

17.1

%

Real estate - home equity

 

1,386,974

 

 

1,413,500

 

 

1,452,137

 

 

1,469,152

 

 

1,491,395

 

(1.9

%)

(7.0

%)

Real estate - construction

 

922,547

 

 

953,087

 

 

916,599

 

 

979,857

 

 

990,705

 

(3.2

%)

(6.9

%)

Consumer

 

452,874

 

 

433,545

 

 

419,186

 

 

390,708

 

 

360,315

 

4.5

%

25.7

%

Leasing and other

 

290,876

 

 

290,367

 

 

288,001

 

 

285,021

 

 

286,947

 

0.2

%

1.4

%

 
Total Loans, net of unearned income

$

16,368,458

 

$

16,262,633

 

$

16,165,800

 

$

15,925,093

 

$

15,792,969

 

0.7

%

3.6

%

 
Deposits, by type:
Noninterest-bearing demand

$

4,226,404

 

$

4,255,043

 

$

4,310,105

 

$

4,216,064

 

$

4,324,659

 

(0.7

%)

(2.3

%)

Interest-bearing demand

 

4,083,615

 

 

4,207,442

 

 

4,240,974

 

 

4,289,181

 

 

3,854,680

 

(2.9

%)

5.9

%

Savings and money market accounts

 

4,938,998

 

 

4,907,346

 

 

4,926,937

 

 

4,878,982

 

 

4,597,510

 

0.6

%

7.4

%

Total demand and savings

 

13,249,017

 

 

13,369,831

 

 

13,478,016

 

 

13,384,227

 

 

12,776,849

 

(0.9

%)

3.7

%

Brokered deposits

 

246,116

 

 

251,395

 

 

176,239

 

 

164,601

 

 

161,447

 

(2.1

%)

52.4

%

Time deposits

 

2,893,762

 

 

2,756,752

 

 

2,721,904

 

 

2,700,186

 

 

2,661,503

 

5.0

%

8.7

%