FULT - Fulton Financial Reports Third Quarter Net Income of $62.1 Million or $0.37 Per Diluted Share

October, 22 2019 04:31 PM Fulton Financial Corporation

Fulton Financial Corporation (NASDAQ:FULT) (“Fulton” or the “Corporation”) reported net income of $62.1 million, or $0.37 per diluted share, for the third quarter of 2019, and net income of $178.6 million, or $1.06 per diluted share, for the nine months ended September 30, 2019.

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“Overall, we were pleased with our third quarter results. Our consumer and commercial businesses had strong loan growth during the quarter despite the competitive headwinds in the market. Other positives for the quarter included stable credit conditions, solid fee income growth and essentially flat operating expenses, linked quarter, excluding charter consolidation expenses, prepayment penalties on FHLB advances and FDIC insurance credits,” said E. Philip Wenger, Chairman and CEO. “On the corporate front, we consolidated our last remaining affiliate banks into Fulton Bank in September. Also, in early October the Department of Justice informed us that the Department had completed its fair lending investigation of Fulton without taking any action against the company. These are two important milestones that should help facilitate growth moving forward.”

Net income per diluted share increased 5.7% in comparison to the $0.35 reported for the second quarter of 2019 and remained unchanged from the $0.37 reported for the third quarter of 2018. The increase in net income over the second quarter of 2019 was the result of increases in non-interest income and a decrease in the provision for credit losses, partially offset by a decrease in net interest income and an increase in non-interest expense.

Net Interest Income and Balance Sheet

Net interest income for the third quarter of 2019 was $161.3 million, a $3.3 million decrease from the second quarter of 2019. The decrease resulted from the impact of a 13 basis point decrease in net interest margin, partially offset by balance sheet growth. The decline in net interest margin resulted from a 12 basis point decrease in the yield on interest-earning assets and a one basis point increase in average cost of funds. The declines in asset yields were primarily the result of the 25 basis point decreases in the federal funds target rate in July and in September 2019, which had a more pronounced impact on loan yields than overall funding costs.

Total average assets for the third quarter of 2019 were $21.5 billion, an increase of $400.8 million from the second quarter of 2019, with average loans, net of unearned income, increasing $121.0 million, average other interest-earning assets increasing $100.0 million and the remaining increase occurring mainly in non interest-earning assets.

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



Three Months Ended

Increase/(Decrease)


September 30, 2019

June 30, 2019

in balance


Balance

Yield (1)

Balance

Yield (1)

$

%


(dollars in thousands)




Average Loans and Lease, net of unearned income, by type:












Real estate - commercial mortgage

$
6,489,456

4.57%

$
6,424,213

4.67%

$
65,243


1.0
%
Commercial - industrial, financial and agricultural


4,414,992

4.56%


4,440,860

4.73%


(25,868
)

(0.6
%)
Real estate - residential mortgage


2,512,899

4.06%


2,366,685

4.09%


146,214


6.2
%
Real estate - home equity


1,364,161

5.27%


1,404,141

5.35%


(39,980
)

(2.8
%)
Real estate - construction


905,060

4.68%


943,080

5.29%


(38,020
)

(4.0
%)
Consumer


457,524

4.36%


445,666

4.38%


11,858


2.7
%
Equipment lease financing


277,555

4.41%


279,619

4.45%


(2,064
)

(0.7
%)
Other


14,860

N/A


11,812

N/A


3,048


25.8
%













Total Average Loans and leases, net of unearned income

$
16,436,507

4.55%

$
16,316,076

4.69%

$
120,431


0.7
%













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

Total average liabilities increased $386.4 million, or 2.1%, from the second quarter of 2019, with a $575.2 million, or 3.5%, increase in average deposits being partially offset by a $209.2 million, or 19.9%, decrease in average Federal Home Loan Bank (FHLB) advances and long-term debt. Average deposits and interest rates, by type, for the third quarter of 2019 in comparison to the second quarter of 2019 are summarized in the following table:




Three Months Ended

Increase/(Decrease)



September 30, 2019

June 30, 2019

in balance



Balance

Rate

Balance

Rate

$

%



(dollars in thousands)




Average Deposits, by type:













Noninterest-bearing demand

$
4,247,820

- %

$
4,200,810

- %

$
47,010

1.1%

Interest-bearing demand


4,448,112

0.82%


4,186,280

0.78%


261,832

6.3%

Savings and money market deposits


5,026,316

0.87%


4,925,788

0.86%


100,528

2.0%
Total average demand and savings


13,722,248

0.58%


13,312,878

0.56%


409,370

3.1%

Brokered deposits


253,426

2.40%


246,154

2.58%


7,272

3.0%

Time deposits


2,974,993

1.86%


2,816,424

1.74%


158,569

5.6%















Total Average Deposits

$
16,950,667

0.84%

$
16,375,456

0.80%

$
575,211

3.5%

Asset Quality

The provision for credit losses for the third quarter of 2019 was $2.2 million, down from $5.0 million for the second quarter of 2019.

Non-performing assets were $143.7 million, or 0.66% of total assets, at September 30, 2019, compared to $155.0 million, or 0.73% of total assets, at June 30, 2019 and $130.8 million, or 0.64% of total assets, at September 30, 2018.

Annualized net charge-offs for the quarter ended September 30, 2019 were 0.15% of total average loans, compared to net recoveries of 0.04% for the quarter ended June 30, 2019. The allowance for credit losses as a percentage of non-performing loans was 127% at September 30, 2019, compared to 120% at June 30, 2019.

Non-interest Income

Non-interest income in the third quarter of 2019, excluding investment securities gains, was $55.3 million, an increase of $1.2 million, or 2.2%, in comparison to the second quarter of 2019 and an increase of $4.3 million, or 8.4%, compared to the third quarter of 2018.

Consumer banking income increased, driven by growth in card income. Commercial banking income decreased slightly as higher commercial loan interest rate swap fees were offset by declines in merchant and card income and Small Business Administration (SBA) loan sale gains. Other income increased $595,000 mainly due to earnings on additional investments in bank-owned life insurance.

During the third quarter of 2019, Fulton completed a balance sheet restructuring involving the sale of approximately $400 million of investment securities and a corresponding prepayment of FHLB advances. As a result of these transactions, $4.5 million of investment securities gains were realized during the quarter.

Non-interest Expense

Non-interest expense was $146.8 million in the third quarter of 2019, an increase of $2.6 million, or 1.8%, compared to the second quarter of 2019 and an increase of $11.4 million, or 8.4%, compared to the third quarter of 2018.

Expenses incurred in the third quarter of 2019 related to the consolidation of the remaining subsidiary banks were comparable to the prior quarter, totaling approximately $5.2 million, primarily in outside services and other expenses. Increases were realized in other expenses, including approximately $4.3 million of penalties related to the prepayment of certain FHLB advances in conjunction with the previously mentioned balance sheet restructuring. These increases were partially offset by decreases in occupancy costs and FDIC insurance due to the recognition of assessment credits of $2.6 million in the third quarter of 2019.

Income Tax Expense

The effective income tax rate for the third quarter of 2019 was 13.9%, as compared to 14.2% for the second 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 Reports on Form 10-Q for the quarters ended March 31, 2019 and June 30, 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


Sep 30

Jun 30

Mar 31

Dec 31

Sep 30


2019

2019

2019

2018

2018
Ending Balances










Investments

$
2,705,610

$
2,853,358

$
2,748,249

$
2,686,973

$
2,635,413
Loans, net of unearned income


16,686,866


16,368,458


16,262,633


16,165,800


15,925,093
Total assets


21,703,618


21,308,670


20,974,649


20,682,152


20,364,810
Deposits


17,342,717


16,388,895


16,377,978


16,376,159


16,249,014
Shareholders' equity


2,324,016


2,308,798


2,301,019


2,247,573


2,283,014











Average Balances










Investments

$
2,829,672

$
2,790,392

$
2,699,130

$
2,646,266

$
2,596,414
Loans, net of unearned income


16,436,507


16,316,076


16,194,375


15,965,637


15,862,143
Total assets


21,457,800


21,057,030


20,690,365


20,512,130


20,273,232
Deposits


16,950,667


16,375,456


16,275,633


16,413,066


15,967,234
Shareholders' equity


2,315,585


2,301,258


2,265,097


2,281,669


2,269,093











Income Statement










Net interest income

$
161,260

$
164,544

$
163,315

$
162,944

$
160,127
Provision for credit losses


2,170


5,025


5,100


8,200


1,620
Non-interest income


59,813


54,315


46,751


49,523


51,033
Non-interest expense


146,770


144,168


137,824


140,685


135,413
Income before taxes


72,133


69,666


67,142


63,582


74,127
Net income


62,108


59,779


56,663


58,083


65,633
Pre-provision net revenue⁽¹⁾


76,741


76,114


73,775


78,320


77,370











Per Share










Net income (basic)

$
0.38

$
0.36

$
0.33

$
0.33

$
0.37
Net income (diluted)

$
0.37

$
0.35

$
0.33

$
0.33

$
0.37
Cash dividends

$
0.13

$
0.13

$
0.13

$
0.16

$
0.12
Tangible common equity⁽¹⁾


10.91


10.63


10.39


10.08


9.95
Weighted average shares (basic)


165,324


168,343


169,884


174,571


175,942
Weighted average shares (diluted)


166,126


169,168


170,909


175,473


177,128











Asset Quality










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


0.15%


-0.04%


0.10%


0.17%


0.08%
Non-performing loans to total loans


0.81%


0.90%


0.85%


0.86%


0.75%
Non-performing assets to total assets


0.66%


0.73%


0.70%


0.73%


0.64%
Allowance for credit losses to loans outstanding


1.04%


1.08%


1.05%


1.05%


1.05%
Allowance for loan losses to loans outstanding


1.00%


1.04%


1.00%


0.99%


0.99%
Allowance for credit losses to non-performing loans


127%


120%


123%


121%


140%
Allowance for loan losses to non-performing loans


122%


115%


117%


115%


131%
Non-performing assets to tangible shareholders' equity and allowance for credit losses⁽¹⁾


7.32%


7.94%


7.63%


7.97%


6.81%






















Profitability










Return on average assets


1.15%


1.14%


1.11%


1.12%


1.28%
Return on average shareholders' equity


10.64%


10.42%


10.15%


10.10%


11.48%
Return on average shareholders' equity (tangible)⁽¹⁾


14.03%


13.60%


13.28%


13.17%


14.99%
Net interest margin


3.31%


3.44%


3.49%


3.44%


3.42%
Efficiency ratio⁽¹⁾


63.6%


64.2%


63.9%


62.2%


62.5%











Capital Ratios










Tangible common equity ratio⁽¹⁾


8.45%


8.54%


8.64%


8.52%


8.83%
Tier 1 leverage ratio⁽²⁾


8.47%


8.68%


8.92%


9.01%


9.34%
Common equity Tier 1 capital ratio⁽²⁾


9.64%


9.96%


10.16%


10.22%


10.80%
Tier 1 capital ratio⁽²⁾


9.64%


9.96%


10.16%


10.22%


10.80%
Total risk-based capital ratio⁽²⁾


12.02%


12.44%


12.63%


12.75%


13.34%






















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

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












% Change from


Sep 30

Jun 30

Mar 31

Dec 31

Sep 30

Jun 30

Sep 30


2019

2019

2019

2018

2018

2019

2018















ASSETS





























Cash and due from banks

$
120,671


$
107,091


$
115,884


$
103,436


$
90,361


12.7
%

33.5
%
Other interest-earning assets


572,499



488,968



411,037



421,534



388,256


17.1
%

47.5
%
Loans held for sale


33,945



45,754



27,768



27,099



27,525


(25.8
%)

23.3
%
Investment securities


2,705,610



2,853,358



2,748,249



2,686,973



2,635,413


(5.2
%)

2.7
%
Loans, net of unearned income


16,686,866



16,368,458



16,262,633



16,165,800



15,925,093


1.9
%

4.8
%
Allowance for loan losses


(166,135
)


(170,233
)


(162,109
)


(160,537
)


(157,810
)

(2.4
%)

5.3
%
Net loans


16,520,731



16,198,225



16,100,524



16,005,263



15,767,283


2.0
%

4.8
%
Premises and equipment


237,344



243,300



239,004



234,529



231,236


(2.4
%)

2.6
%
Accrued interest receivable


60,447



62,984



62,207



58,879



58,584


(4.0
%)

3.2
%
Goodwill and intangible assets


534,178



535,249



535,356



531,556



531,556


(0.2
%)

0.5
%
Other assets


918,193



773,741



734,620



612,883



634,596


18.7
%

44.7
%















Total Assets

$
21,703,618


$
21,308,670


$
20,974,649


$
20,682,152


$
20,364,810


1.9
%

6.6
%















LIABILITIES AND SHAREHOLDERS' EQUITY





























Deposits

$
17,342,717


$
16,388,895


$
16,377,978


$
16,376,159


$
16,249,014


5.8
%

6.7
%
Short-term borrowings


832,860



1,188,390



829,016



754,777



485,565


(29.9
%)

71.5
%
Other liabilities


477,311



435,171



401,324



311,364



355,102


9.7
%

34.4
%
FHLB advances and long-term debt


726,714



987,416



1,065,312



992,279



992,115


(26.4
%)

(26.8
%)















Total Liabilities


19,379,602



18,999,872



18,673,630



18,434,579



18,081,796


2.0
%

7.2
%















Shareholders' equity


2,324,016



2,308,798



2,301,019



2,247,573



2,283,014


0.7
%

1.8
%















Total Liabilities and Shareholders' Equity

$
21,703,618


$
21,308,670


$
20,974,649


$
20,682,152


$
20,364,810


1.9
%

6.6
%















LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL:

























Loans, by type:














Real estate - commercial mortgage

$
6,604,634


$
6,497,973


$
6,428,688


$
6,434,285


$
6,337,984


1.6
%

4.2
%
Commercial - industrial, financial and agricultural


4,494,496



4,365,248



4,429,538



4,404,548



4,288,823


3.0
%

4.8
%
Real estate - residential mortgage


2,570,793



2,451,966



2,313,908



2,251,044



2,173,548


4.8
%

18.3
%
Real estate - home equity


1,346,115



1,386,974



1,413,500



1,452,137



1,469,152


(2.9
%)

(8.4
%)
Real estate - construction


913,644



922,547



953,087



916,599



979,857


(1.0
%)

(6.8
%)
Consumer


464,213



452,874



433,545



419,186



390,708


2.5
%

18.8
%
Leasing and other


292,971



290,876



290,367



288,001



285,021


0.7
%

2.8
%















Total Loans, net of unearned income

$
16,686,866


$
16,368,458


$
16,262,633


$
16,165,800


$
15,925,093


1.9
%

4.8
%















Deposits, by type:














Noninterest-bearing demand

$
4,240,478


$
4,226,404


$
4,255,043


$
4,310,105


$
4,216,064


0.3
%

0.6
%
Interest-bearing demand


4,771,109



4,083,615



4,207,442



4,240,974



4,289,181


16.8
%

11.2
%
Savings and money market accounts


5,094,387



4,938,998



4,907,346



4,926,937



4,878,982


3.1
%

4.4
%
Total demand and savings


14,105,974



13,249,017



13,369,831



13,478,016



13,384,227


6.5
%

5.4
%
Brokered deposits


256,870



246,116



251,395



176,239



164,601


4.4
%

56.1
%
Time deposits


2,979,873



2,893,762



2,756,752



2,721,904



2,700,186


3.0
%

10.4
%















Total Deposits

$
17,342,717


$
16,388,895


$
16,377,978


$
16,376,159


$
16,249,014


5.8
%

6.7
%















Short-term borrowings, by type:














Customer repurchase agreements

$
58,853


$
56,496


$
54,440


$
43,499


$
82,741


4.2
%

(28.9
%)
Customer short-term promissory notes


279,007



281,894



299,576



326,278



267,824


(1.0
%)

4.2
%
Short-term FHLB advances


475,000



650,000



475,000



385,000



85,000


(26.9
%)

N/M
Federal funds purchased


20,000



200,000



-



-



50,000


(90.0
%)

(60.0
%)















Total Short-term Borrowings

$
832,860


$
1,188,390


$
829,016


$
754,777


$
485,565


(29.9
%)

71.5
%



























N/M - Not meaningful

FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
dollars in thousands



Three Months Ended

% Change from









Sep 30

Jun 30

Mar 31

Dec 31

Sep 30

Jun 30

Sep 30



Nine Months Ended Sep 30





2019

2019

2019

2018

2018

2019

2018



2019

2018

% Change
























Interest Income:























Interest income

$
208,413

$
210,034

$
204,700

$
200,609

$
194,048

(0.8
%)

7.4
%



$
623,147

$
557,905

11.7
%

Interest expense


47,153


45,490


41,385


37,665


33,921

3.7
%

39.0
%




134,028


90,393

48.3
%

























Net Interest Income


161,260


164,544


163,315


162,944


160,127

(2.0
%)

0.7
%




489,119


467,512

4.6
%

Provision for credit losses


2,170


5,025


5,100


8,200


1,620

(56.8
%)

34.0
%




12,295


38,707

(68.2
%)

























Net Interest Income after Provision


159,090


159,519


158,215


154,744


158,507

(0.3
%)

0.4
%




476,824


428,805

11.2
%
























Non-Interest Income:























Wealth management fees


13,867


14,153


13,239


13,408


13,066

(2.0
%)

6.1
%




41,259


38,740

6.5
%

Mortgage banking income


6,658


6,593


4,772


4,774


4,896

1.0
%

36.0
%




18,023


14,252

26.5
%

Consumer banking income:























Card income


5,791


5,047


4,686


4,966


5,382

14.7
%

7.6
%




15,524


14,531

6.8
%

Overdraft fees


4,682


4,413


4,104


4,653


4,443

6.1
%

5.4
%




13,199


12,952

1.9
%

Other consumer banking income


2,860


2,907


2,587


2,799


2,840

(1.6
%)

0.7
%




8,354


8,522

(2.0
%)

Total consumer banking income


13,333


12,367


11,377


12,418


12,665

7.8
%

5.3
%




37,077


36,005

3.0
%

Commercial banking income:























Merchant and card income


6,166


6,512


5,558


5,656


6,307

(5.3
%)

(2.2
%)




18,236


17,770

2.6
%

Cash management fees


4,696


4,638


4,361


4,340


4,472

1.3
%

5.0
%




13,695


13,242

3.4
%

Commercial loan interest rate swap fees


3,944


3,477


2,028


2,540


3,607

13.4
%

9.3
%




9,449


7,291

29.6
%

Other commercial banking income


3,478


3,815


2,816


3,466


3,154

(8.8
%)

10.3
%




10,109


9,625

5.0
%

Total commercial banking income


18,284


18,442


14,763


16,002


17,540

(0.9
%)

4.2
%




51,489


47,928

7.4
%

Other income


3,179


2,584


2,535


2,921


2,852

23.0
%

11.5
%




8,298


9,040

(8.2
%)

Non-Interest Income before Investment Securities Gains


55,321


54,139


46,686


49,523


51,019

2.2
%

8.4
%




156,146


145,965

7.0
%

Investment securities gains, net


4,492


176


65


-


14

N/M

N/M




4,733


37

N/M

























Total Non-Interest Income


59,813


54,315


46,751


49,523


51,033

10.1
%

17.2
%




160,879


146,002

10.2
%
























Non-Interest Expense:























Salaries and employee benefits


78,211


78,991


77,757


75,745


76,770

(1.0
%)

1.9
%




234,959


227,457

3.3
%

Net occupancy


12,368


14,469


12,909


12,708


12,578

(14.5
%)

(1.7
%)




39,746


38,970

2.0
%

Other outside services


12,163


11,259


8,352


8,944


9,122

8.0
%

33.3
%




31,774


24,814

28.0
%

Data processing and software


11,590


11,268


10,353


10,203


10,157

2.9
%

14.1
%




33,211


31,083

6.8
%

Equipment


3,459


3,299


3,342


3,275


3,000

4.8
%

15.3
%




10,100


9,968

1.3
%

Professional fees


3,331


2,970


3,960


3,546


3,427

12.2
%

(2.8
%)




10,261


10,615

(3.3
%)

Marketing


3,322


2,863


2,160


1,577


2,692

16.0
%

23.4
%




8,345


7,277

14.7
%

Amortization of tax credit investments


1,533


1,492


1,491


6,538


1,637

2.7
%

(6.4
%)




4,516


4,911

(8.0
%)

FDIC insurance


239


2,755


2,609


2,563


2,814

(91.3
%)

(91.5
%)




5,603


8,430

(33.5
%)

Intangible amortization


1,071


107


107


-


-

N/M

100.0
%




1,285


-

100.0
%

Other


19,483


14,695


14,784


15,586


13,216

32.6
%

47.4
%




48,962


41,894

16.9
%

























Total Non-Interest Expense


146,770


144,168


137,824


140,685


135,413

1.8
%

8.4
%




428,762


405,419

5.8
%

























Income before Income Taxes


72,133


69,666


67,142


63,582


74,127

3.5
%

(2.7
%)




208,941


169,388

23.4
%

Income tax expense


10,025


9,887


10,479


5,499


8,494

1.4
%

18.0
%




30,391


19,078

59.3
%

























Net Income

$
62,108

$
59,779

$
56,663

$
58,083

$
65,633

3.9
%

(5.4
%)



$
178,550

$
150,310

18.8
%
























PER SHARE:















































Net income:























Basic

$
0.38

$
0.36

$
0.33

$
0.33

$
0.37

5.6
%

2.7
%



$
1.06

$
0.86

23.3
%

Diluted


0.37


0.35


0.33


0.33


0.37

5.7
%

-





1.06


0.85

24.7
%

Cash dividends


0.13


0.13


0.13


0.16


0.12

-


8.3
%




0.39


0.36

8.3
%

























Weighted average shares (basic)


165,324


168,343


169,884


174,571


175,942

(1.8
%)

(6.0
%)




167,834


175,672

(4.5
%)

Weighted average shares (diluted)


166,126


169,168


170,909


175,473


177,128

(1.8
%)

(6.2
%)




168,722


176,848

(4.6
%)

























N/M - not meaningful

FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)
dollars in thousands


Three Months Ended


September 30, 2019

June 30, 2019

September 30, 2018


Average



Yield/

Average



Yield/

Average



Yield/


Balance

Interest (1)

Rate

Balance

Interest (1)

Rate

Balance

Interest (1)

Rate
ASSETS





































Interest-earning assets:


















Loans, net of unearned income

$
16,436,507


$
188,280


4.55
%

$
16,316,076


$
190,693


4.69
%

$
15,862,143


$
177,329


4.44
%



















Taxable investment securities


2,282,292



15,565


2.73
%


2,348,443



15,935


2.71
%


2,239,837



13,956


2.49
%
Tax-exempt investment securities


516,907



4,650


3.57
%


444,227



4,140


3.70
%


415,908



3,841


3.67
%



















Total Investment Securities


2,799,199



20,215


2.88
%


2,792,670



20,075


2.87
%


2,655,745



17,797


2.68
%



















Loans held for sale


31,898



466


5.83
%


24,568



350


5.71
%


27,195



388


5.71
%
Other interest-earning assets


509,579



2,709


2.12
%


409,617



2,168


2.12
%


416,129



1,601


1.53
%



















Total Interest-earning Assets


19,777,183



211,670


4.25
%


19,542,931



213,286


4.37
%


18,961,212



197,115


4.13
%



















Noninterest-earning assets:


















Cash and due from banks


120,967







116,285







100,568





Premises and equipment


240,383







240,666







231,280





Other assets


1,491,115







1,321,057







1,137,293





Less: allowance for loan losses


(171,848
)






(163,909
)






(157,121
)























Total Assets

$
21,457,800






$
21,057,030






$
20,273,232











































LIABILITIES AND SHAREHOLDERS' EQUITY





































Interest-bearing liabilities:


















Demand deposits

$
4,448,112


$
9,163


0.82
%

$
4,186,280


$
8,172


0.78
%

$
4,116,051


$
6,378


0.61
%
Savings deposits


5,026,316



11,059


0.87
%


4,925,788



10,549


0.86
%


4,718,148



7,569


0.64
%
Brokered deposits


253,426



1,536


2.40
%


246,154



1,582


2.58
%


162,467



840


2.05
%
Time deposits


2,974,993



13,979


1.86
%


2,816,424



12,247


1.74
%


2,672,548



9,032


1.34
%



















Total Interest-bearing Deposits


12,702,847



35,737


1.12
%


12,174,646



32,550


1.07
%


11,669,214



23,819


0.81
%



















Short-term borrowings


919,697



4,156


1.78
%


941,504



4,462


1.89
%


724,132



2,002


1.09
%
FHLB advances and long-term debt


842,706



7,260


3.44
%


1,051,919



8,480


3.23
%


988,748



8,100


3.26
%



















Total Interest-bearing Liabilities


14,465,250



47,153


1.29
%


14,168,069



45,492


1.29
%


13,382,094



33,921


1.01
%



















Noninterest-bearing liabilities:


















Demand deposits


4,247,820







4,200,810







4,298,020





Other


429,145







386,893







324,025
























Total Liabilities


19,142,215







18,755,772







18,004,139
























Shareholders' equity


2,315,585







2,301,258







2,269,093
























Total Liabilities and Shareholders' Equity

$
21,457,800






$
21,057,030






$
20,273,232
























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




164,517


3.31
%




167,794


3.44
%




163,194


3.42
%
Tax equivalent adjustment




(3,257
)






(3,250
)






(3,067
)





















Net interest income



$
161,260






$
164,544






$
160,127

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

Note: The weighted average interest rate on total average interest-bearing liabilities and average non-interest bearing demand deposits (“cost of funds”) was 1.00%, 0.99% and 0.76% for the three months ended September 30, 2019, June 30, 2019 and September 30, 2018, respectively.

AVERAGE LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL:

















Three Months Ended

% Change from


Sep 30

Jun 30

Mar 31

Dec 31

Sep 30

Jun 30

Sep 30


2019

2019

2019

2018

2018

2019

2018











Loans, by type:














Real estate - commercial mortgage

$
6,489,456

$
6,424,213

$
6,378,145

$
6,343,024

$
6,309,663

1.0
%

2.8
%
Commercial - industrial, financial and agricultural


4,414,992


4,440,860


4,462,609


4,329,937


4,304,320

(0.6
%)

2.6
%
Real estate - residential mortgage


2,512,899


2,366,685


2,276,611


2,209,993


2,142,977

6.2
%

17.3
%
Real estate - home equity


1,364,161


1,404,141


1,433,574


1,459,647


1,474,011

(2.8
%)

(7.5
%)
Real estate - construction


905,060


943,080


930,246


931,724


969,575

(4.0
%)

(6.7
%)
Consumer


457,524


445,666


424,480


406,436


375,656

2.7
%

21.8
%
Leasing and other


292,415


291,431


288,710


284,876


285,941

0.3
%

2.3
%















Total Loans, net of unearned income

$
16,436,507

$
16,316,076

$
16,194,375

$
15,965,637

$
15,862,143

0.7
%

3.6
%















Deposits, by type:














Noninterest-bearing demand

$
4,247,820

$
4,200,810

$
4,222,875

$
4,321,776

$
4,298,020

1.1
%

(1.2
%)
Interest-bearing demand


4,448,112


4,186,280


4,153,984


4,225,157


4,116,051

6.3
%

8.1
%
Savings and money market accounts


5,026,316


4,925,788


4,912,856


4,979,712


4,718,148

2.0
%

6.5
%
Total demand and savings


13,722,248


13,312,878


13,289,715


13,526,645


13,132,219

3.1
%

4.5
%
Brokered deposits


253,426


246,154


220,115


164,280


162,467

3.0
%

56.0
%
Time deposits


2,974,993


2,816,424


2,765,803


2,722,141


2,672,548

5.6
%

11.3
%















Total Deposits

$
16,950,667

$
16,375,456

$
16,275,633

$
16,413,066

$
15,967,234

3.5
%

6.2
%















Short-term borrowings, by type:














Customer repurchase agreements

$
61,230

$
56,171

$
56,707

$
64,102

$
148,660

9.0
%

(58.8
%)
Customer short-term promissory notes


271,663


288,696


312,092


310,296


298,896

(5.9
%)

(9.1
%)
Federal funds purchased


101,022


181,769


157,122


43


145,793

(44.4
%)

(30.7
%)
Short-term FHLB advances and other borrowings


485,782


414,868


294,133


130,109


130,783

17.1
%

N/M















Total Short-term Borrowings

$
919,697

$
941,504

$
820,054

$
504,550

$
724,132

(2.3
%)

27.0
%















N/M - Not meaningful

FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)
dollars in thousands


Nine Months Ended September 30



2019

2018



Average





Average






Balance

Interest (1)

Yield/Rate

Balance

Interest (1)

Yield/Rate
ASSETS

























Interest-earning assets:












Loans, net of unearned income

$

16,316,540


$

565,095


4.63
%

$

15,764,587


$

509,596


4.32
%
Taxable investment securities


2,305,472



46,935


2.71
%


2,233,972



41,034


2.45
%
Tax-exempt investment securities


468,689



12,940


3.66
%


412,496



11,307


3.64
%
Equity securities


-



-


-



167



5


13.01
%













Total Investment Securities


2,774,161



59,875


2.87
%


2,646,635



52,346


2.63
%













Loans held for sale


24,357



1,056


5.78
%


23,175



888


5.11
%
Other interest-earning assets


428,982



6,879


2.14
%


345,512



4,016


1.55
%













Total Interest-earning Assets


19,544,040



632,905


4.33
%


18,779,909



566,846


4.03
%













Noninterest-earning assets:












Cash and due from banks


116,019







102,352





Premises and equipment


239,402







231,195





Other assets


1,337,482







1,121,267





Less: allowance for loan losses


(165,733
)






(162,368
)

















Total Assets

$

21,071,210






$

20,072,355


















LIABILITIES AND SHAREHOLDERS' EQUITY

























Interest-bearing liabilities:












Demand deposits

$

4,263,869


$

24,854


0.78
%

$

4,009,596


$

15,341


0.51
%
Savings deposits


4,955,403



31,570


0.85
%


4,584,377



17,481


0.51
%
Brokered deposits


240,020



4,500


2.51
%


107,569



1,511


1.88
%
Time deposits


2,853,172



37,050


1.74
%


2,660,008



25,220


1.27
%













Total Interest-bearing Deposits


12,312,464



97,974


1.06
%


11,361,550



59,553


0.70
%













Short-term borrowings


894,116



12,200


1.81
%


880,745



7,079


1.07
%
FHLB advances and long-term debt


965,111



23,854


3.30
%


973,751



23,761


3.26
%













Total Interest-bearing Liabilities


14,171,691



134,028


1.26
%


13,216,046



90,393


0.91
%













Noninterest-bearing liabilities:












Demand deposits


4,223,927







4,275,443





Other


381,427







333,832


















Total Liabilities


18,777,045







17,825,321


















Shareholders' equity


2,294,165







2,247,034


















Total Liabilities and Shareholders' Equity

$

21,071,210






$

20,072,355


















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




498,877


3.41
%




476,453


3.39
%
Tax equivalent adjustment




(9,758
)






(8,941
)















Net interest income



$

489,119






$

467,512

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

Note: The weighted average interest rate on total average interest-bearing liabilities and average non-interest bearing demand deposits (“cost of funds”) was 0.97% and 0.69% for the nine months ended September 30, 2019 and 2018, respectively.

AVERAGE LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL:









Nine Months Ended




September 30




2019

2018

% Change





Loans, by type:






Real estate - commercial mortgage

$
6,431,012

$
6,304,687

2.0
%
Commercial - industrial, financial and agricultural


4,439,314


4,309,408

3.0
%
Real estate - residential mortgage


2,386,264


2,043,223

16.8
%
Real estate - home equity


1,400,371


1,505,069

(7.0
%)
Real estate - construction


926,036


977,327

(5.2
%)
Consumer


442,678


345,937

28.0
%
Leasing and other


290,865


278,936

4.3
%







Total Loans, net of unearned income

$
16,316,540

$
15,764,587

3.5
%







Deposits, by type:






Noninterest-bearing demand

$
4,223,927

$
4,275,443

(1.2
%)
Interest-bearing demand


4,263,869


4,009,596

6.3
%
Savings and money market accounts


4,955,403


4,584,377

8.1
%
Total demand and savings


13,443,199


12,869,416

4.5
%
Brokered deposits


240,020


107,569

N/M
Time deposits


2,853,172


2,660,008

7.3
%







Total Deposits

$
16,536,391

$
15,636,993

5.8
%







Short-term borrowings, by type:






Customer repurchase agreements

$
250,568

$
162,345

54.3
%
Customer short-term promissory notes


290,669


307,854

(5.6
%)
Federal funds purchased


146,432


307,114

(52.3
%)
Short-term FHLB advances and other borrowings


206,447


103,432

99.6
%







Total Short-term Borrowings

$
894,116

$
880,745

1.5
%







N/M - Not meaningful

FULTON FINANCIAL CORPORATION
ASSET QUALITY INFORMATION (UNAUDITED)
dollars in thousands

















Three Months Ended

Nine Months Ended


Sep 30

Jun 30

Mar 31

Dec 31

Sep 30

Sep 30

Sep 30


2019

2019

2019

2018

2018

2019

2018
ALLOWANCE FOR CREDIT LOSSES:





























Balance at beginning of period

$
176,941


$
170,372


$
169,410


$
167,826


$
169,247


$
169,410


$
176,084
















Loans charged off:














Commercial - industrial, financial and agricultural


(7,181
)


(1,895
)


(2,787
)


(6,263
)


(3,541
)


(11,863
)


(46,178
)
Real estate - commercial mortgage


(394
)


(230
)


(1,145
)


(762
)


(650
)


(1,769
)


(1,283
)
Consumer and home equity


(1,375
)


(1,001
)


(902
)


(1,884
)


(1,415
)


(3,278
)


(4,243
)
Real estate - residential mortgage


(533
)


(134
)


(655
)


(446
)


(483
)


(1,322
)


(1,128
)
Real estate - construction


(45
)


(3
)


(95
)


(392
)


(212
)


(143
)


(976
)
Leasing and other


(600
)


(448
)


(785
)


(889
)


(582
)


(1,833
)


(1,632
)
Total loans charged off


(10,128
)


(3,711
)


(6,369
)


(10,636
)


(6,883
)


(20,208
)


(55,440
)
Recoveries of loans previously charged off:














Commercial - industrial, financial and agricultural


2,311



2,680



1,243



2,647



731



6,234



2,347

Real estate - commercial mortgage


444



169



136



94



928



749



1,528

Consumer and home equity


348



802



407



684



607



1,557



1,709

Real estate - residential mortgage


440



211



132



100



317



783



520

Real estate - construction


164



1,245



84



415



664



1,493



1,414

Leasing and other


107



148



229



80



595



484



957

Recoveries of loans previously charged off


3,814



5,255



2,231



4,020



3,842



11,300



8,475

Net loans charged off


(6,314
)


1,544



(4,138
)


(6,616
)


(3,041
)


(8,908
)


(46,965
)
Provision for credit losses


2,170



5,025



5,100



8,200



1,620



12,295



38,707
















Balance at end of period

$
172,797


$
176,941


$
170,372


$
169,410


$
167,826


$
172,797


$
167,826
















Net charge-offs to average loans (annualized)


0.15
%


(0.04
%)


0.10
%


0.17
%


0.08
%


0.07
%


0.40
%















NON-PERFORMING ASSETS:





























Non-accrual loans

$
124,287


$
133,118


$
127,141


$
128,572


$
106,433





Loans 90 days past due and accruing


11,689



14,598



11,540



11,106



13,663





Total non-performing loans


135,976



147,716



138,681



139,678



120,096





Other real estate owned


7,706



7,241



9,012



10,518



10,684




















Total non-performing assets

$
143,682


$
154,957


$
147,693


$
150,196


$
130,780




















NON-PERFORMING LOANS, BY TYPE:





















Commercial - industrial, financial and agricultural

$
37,126


$
47,260


$
50,148


$
51,269


$
43,391





Real estate - commercial mortgage


45,710



43,850



29,817



32,153



37,393





Real estate - residential mortgage


20,150



21,659



22,299



19,101



19,076





Consumer and home equity


11,012



12,378



10,770



10,178



10,362





Real estate - construction


4,312



4,632



7,039



7,390



9,784





Leasing


17,666



17,937



18,608



19,587



90




















Total non-performing loans

$
135,976


$
147,716


$
138,681


$
139,678


$
120,096

FULTON FINANCIAL CORPORATION

RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED)

in thousands, except per share data and percentages

Explanatory note:

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



Sep 30

Jun 30

Mar 31

Dec 31

Sep 30



2019

2019

2019

2018

2018

Shareholders' equity (tangible), per share











Shareholders' equity

$
2,324,016


$
2,308,798


$
2,301,019


$
2,247,573


$
2,283,014


Less: Goodwill and intangible assets


(534,178
)


(535,249
)


(535,356
)


(531,556
)


(531,556
)

Tangible shareholders' equity (numerator)

$
1,789,838


$
1,773,549


$
1,765,663


$
1,716,017


$
1,751,458














Shares outstanding, end of period (denominator)


164,036



166,903



169,923



170,184



176,019














Shareholders' equity (tangible), per share

$
10.91


$
10.63


$
10.39


$
10.08


$
9.95














Return on average shareholders' equity (tangible)











Net income

$
62,108


$
59,779


$
56,663


$
58,083


$
65,633


Plus: Intangible amortization, net of tax


846



85



85



-



-


(Numerator)

$
62,954


$
59,864


$
56,748


$
58,083


$
65,633














Average shareholders' equity

$
2,315,585


$
2,301,258


$
2,265,097


$
2,281,669


$
2,269,093


Less: Average goodwill and intangible assets


(535,184
)


(535,301
)


(531,767
)


(531,556
)


(531,556
)

Average tangible shareholders' equity (denominator)

$
1,780,401


$
1,765,957


$
1,733,330


$
1,750,113


$
1,737,537














Return on average shareholders' equity (tangible), annualized


14.03
%


13.60
%


13.28
%


13.17
%


14.99
%













Tangible Common Equity to Tangible Assets (TCE Ratio)











Shareholders' equity

$
2,324,016


$
2,308,798


$
2,301,019


$
2,247,573


$
2,283,014


Less: Intangible assets


(534,178
)


(535,249
)


(535,356
)


(531,556
)


(531,556
)

Tangible shareholders' equity (numerator)

$
1,789,838


$
1,773,549


$
1,765,663


$
1,716,017


$
1,751,458














Total assets

$
21,703,618


$
21,308,670


$
20,974,649


$
20,682,152


$
20,364,810


Less: Intangible assets


(534,178
)


(535,249
)


(535,356
)


(531,556
)


(531,556
)

Total tangible assets (denominator)

$
21,169,440


$
20,773,421


$
20,439,293


$
20,150,596


$
19,833,254














Tangible Common Equity to Tangible Assets


8.45
%


8.54
%


8.64
%


8.52
%


8.83
%













Efficiency ratio











Non-interest expense

$
146,770


$
144,168


$
137,824


$
140,685


$
135,413


Less: Intangible amortization


(1,071
)


(107
)


(107
)


-



-


Less: Amortization of tax credit investments


(1,533
)


(1,492
)


(1,491
)


(6,538
)


(1,637
)

Less: Loss on redemption of FHLB advances


(4,326
)


-



-



-



-


Non-interest expense (numerator)

$
139,840


$
142,569


$
136,226


$
134,147


$
133,776














Net interest income (fully taxable equivalent)

$
164,517


$
167,794


$
166,564


$
166,123


$
163,194


Plus: Total Non-interest income


59,813



54,315



46,751



49,523



51,033


Less: Investment securities gains


(4,492
)


(176
)


(65
)


-



(14
)

Net interest income (denominator)

$
219,838


$
221,933


$
213,250


$
215,646


$
214,213














Efficiency ratio


63.6
%


64.2
%


63.9
%


62.2
%


62.5
%













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











Non-performing assets (numerator)

$
143,682


$
154,957


$
147,693


$
150,196


$
130,780














Tangible shareholders' equity

$
1,789,838


$
1,773,549


$
1,765,663


$
1,716,017


$
1,751,458


Plus: Allowance for credit losses


172,797



176,941



170,372



169,410



167,826


Tangible shareholders' equity and allowance for credit losses (denominator)

$
1,962,635


$
1,950,490


$
1,936,035


$
1,885,427


$
1,919,284














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


7.32
%


7.94
%


7.63
%


7.97
%


6.81
%













Pre-provision net revenue











Net interest income

$
161,260


$
164,544


$
163,315


$
162,944


$
160,127


Non-interest income


59,813



54,315



46,751



49,523



51,033


Less: Investment securities gains


(4,492
)


(176
)


(65
)


-



(14
)

Total revenue

$
216,581


$
218,683


$
210,001


$
212,467


$
211,146














Non-interest expense

$
146,770


$
144,168


$
137,824


$
140,685


$
135,413


Less: Loss on redemption of FHLB advances


(4,326
)


-



-



-



-


Less: Amortization of tax credit investments


(1,533
)


(1,492
)


(1,491
)


(6,538
)


(1,637
)

Less: Intangible amortization


(1,071
)


(107
)


(107
)


-



-


Total non-interest expense

$
139,840


$
142,569


$
136,226


$
134,147


$
133,776














Pre-provision net revenue

$
76,741


$
76,114


$
73,775


$
78,320


$
77,370

View source version on businesswire.com: https://www.businesswire.com/news/home/20191022006151/en/

Media Contact: Laura Wakeley (717) 291-2616
Investor Contact: Jason Weber (717) 327-2394

Company Name:	Fulton Financial Corporation
Stock Symbol:	FULT
Market:	NASDAQ
Website:	fultonbank.com

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