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Fulton Financial Reports Third Quarter Earnings of $0.21 per Share


October 22, 2013 - Lancaster, PA

Fulton Financial Corporation (NASDAQ: FULT)

  • Diluted earnings per share for the third quarter of 2013 was 21 cents, unchanged from both the second quarter of 2013 and the third quarter of 2012.
  • The provision for credit losses was $9.5 million for the third quarter of 2013, a $4.0 million, or 29.6 percent, decrease from the second quarter of 2013 and a $13.5 million, or 58.7 percent, decrease from the third quarter of 2012. Non-performing loans decreased $20.7 million, or 11.0 percent, in comparison to June 30, 2013 and $44.5 million, or 20.9 percent, in comparison to September 30, 2012.
  • Average loans for the third quarter of 2013 increased $199.6 million, or 1.6 percent, compared to the second quarter of 2013. Average loans for the nine months ended September 30, 2013 increased $549.4 million, or 4.6 percent, in comparison to the same period in 2012.
  • Net interest income for the third quarter of 2013 increased $468,000, or 0.4 percent, compared to the second quarter of 2013, while the net interest margin decreased seven basis points to 3.45 percent.
  • Non-interest income, excluding investment securities gains, decreased $4.7 million, or 9.6 percent, in comparison to the second quarter of 2013, while non-interest expense decreased $525,000, or 0.4 percent.
  • During the third quarter of 2013, the Corporation successfully completed the conversion to its new core processing system, which supports customer relationship management for substantially all deposit and loan customers.
  • During the third quarter of 2013, the Corporation repurchased approximately 1.6 million shares, completing the eight million share repurchase program that expired on September 30, 2013. The Corporation announced that its board of directors approved the repurchase of up to four million shares, or approximately 2.1 percent of the Corporation's outstanding shares, through March 31, 2014.

Fulton Financial Corporation (NASDAQ: FULT) reported net income of $39.9 million, or 21 cents per diluted share, for the third quarter ended September 30, 2013, compared to $40.6 million, or 21 cents per diluted share, for the second quarter of 2013. For the nine months ended September 30, 2013, net income was $119.8 million, or 61 cents per diluted share, a 1.7 percent increase in comparison to the 60 cents per diluted share earned for the same period in 2012.

"We continued to increase our earning assets in the third quarter with solid loan growth, particularly in the commercial mortgage category. As a result of further improvement in our overall asset quality, we again reduced the provision for credit losses," said E. Philip Wenger, Chairman, CEO and President. "However, net interest margin compression and lower non-interest income, due to reduced mortgage sale gains, presented challenges. During the quarter, we completed both our core processing conversion and our previously announced eight million share repurchase program."

Asset Quality
Non-performing assets were $186.5 million, or 1.09 percent of total assets, at September 30, 2013, compared to $210.2 million, or 1.23 percent of total assets, at June 30, 2013 and $242.0 million, or 1.49 percent of total assets, at September 30, 2012. The $23.7 million, or 11.3 percent, decrease in non-performing assets in comparison to the second quarter of 2013 was primarily due to a decrease in non-performing commercial loans, commercial mortgages and construction loans, as well as a decrease in other real estate owned (OREO).

Annualized net charge-offs for the third quarter ended September 30, 2013 were 0.45 percent of average total loans, compared to 0.56 percent for the quarter ended June 30, 2013 and 0.84 percent for the quarter ended September 30, 2012. The allowance for credit losses as a percentage of non-performing loans was 126.5 percent at September 30, 2013, as compared to 115.0 percent at June 30, 2013 and 110.5 percent at September 30, 2012.

Net Interest Income and Margin
Net interest income for the third quarter of 2013 increased $468,000, or 0.4 percent, from the second quarter of 2013. Interest income for the second quarter of 2013 included $1.9 million of interest recoveries and calls on debt securities, compared to $119,000 of interest recoveries for the third quarter of 2013. The net interest margin decreased seven basis points, or 2.0 percent, to 3.45 percent in the third quarter of 2013 from 3.52 percent in the second quarter of 2013. Average yields on interest-earning assets decreased 11 basis points, while the decline in the average costs of interest-bearing liabilities was 4 basis points during the third quarter of 2013 in comparison to the second quarter of 2013.

Average Balance Sheet

Total average assets for the third quarter of 2013 were $17.0 billion, an increase of $191.4 million, or 1.1 percent, from the second quarter of 2013, due primarily to an increase in average loans.



Quarter Ended
-------------------------- Increase (decrease)
Sep 30 Jun 30 -------------------
2013 2013 $ %
------------ ------------ ---------- ------
(dollars in thousands)
Loans, by type:
Real estate -
commercial mortgage $ 4,961,871 $ 4,758,060 $ 203,811 4.3%
Commercial -
industrial, financial
and agricultural 3,706,113 3,714,683 (8,570) (0.2%)
Real estate - home
equity 1,767,095 1,732,704 34,391 2.0%
Real estate -
residential mortgage 1,323,972 1,308,713 15,259 1.2%
Real estate -
construction 576,222 617,577 (41,355) (6.7%)
Consumer 299,057 304,918 (5,861) (1.9%)
Leasing and other 93,832 91,907 1,925 2.1%
------------ ------------ ---------- ------

Total Loans, net of
unearned income $ 12,728,162 $ 12,528,562 $ 199,600 1.6%
============ ============ ========== ======

Total average liabilities increased $224.8 million, or 1.5 percent, from the second quarter of 2013, including a $186.2 million, or 1.5 percent, increase in average deposits.

 Quarter Ended -------------------------- Increase (decrease) Sep 30 Jun 30 ------------------- 2013 2013 $ % ------------ ------------ ---------- ------ (dollars in thousands)Deposits, by type: Noninterest-bearing demand $ 3,221,648 $ 3,116,940 $ 104,708 3.4% Interest-bearing demand 2,895,156 2,718,679 176,477 6.5% Savings deposits 3,359,795 3,350,856 8,939 0.3% ------------ ------------ ---------- ------Total demand and savings 9,476,599 9,186,475 290,124 3.2% Time deposits 3,065,210 3,169,141 (103,931) (3.3%) ------------ ------------ ---------- ------ Total Deposits $ 12,541,809 $ 12,355,616 $ 186,193 1.5% ============ ============ ========== ====== 

Non-interest Income
Non-interest income, excluding investment securities gains, decreased $4.7 million, or 9.6 percent, in comparison to the second quarter of 2013. Mortgage banking income decreased $3.9 million due to a $4.2 million decrease in gains on sales of loans, as both volumes and spreads decreased. Mortgage banking income benefited from a $1.7 million reduction to the valuation allowance for mortgage servicing rights during the third quarter of 2013. This compares to a $2.0 million decrease in the allowance recognized in the second quarter of 2013. Service charges on deposit accounts decreased $713,000, or 4.9 percent, including a $432,000 decrease in overdraft fees and a $312,000 decrease in other service charges on deposits. Investment management and trust services revenue decreased $181,000, or 1.7 percent.

Non-interest Expense
Non-interest expense decreased $525,000, or 0.4 percent, in the third quarter of 2013 compared to the second quarter of 2013. OREO and repossession expenses decreased $488,000, due to both a decrease in holding costs and a net decrease in losses on foreclosed properties. Other outside services decreased $267,000 due to a decrease in consulting costs associated with regulatory compliance and risk management. Operating risk loss increased $1.4 million due to an increase in provisions for losses associated with previously sold residential mortgages.

During the second quarter of 2013, three of the Corporation's six affiliate banks converted to a new core processing system. During the third quarter of 2013, the Corporation's three remaining affiliate banks converted to the new core processing system. Total implementation costs specifically associated with these conversions were approximately $1.6 million in the third quarter of 2013, compared to $1.2 million in the second quarter of 2013. Total implementation costs associated with these conversions were $3.1 million for the nine months ended September 30, 2013.

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, headquartered as indicated: 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.

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, 2012, and the Quarterly Reports on Form 10-Q for the quarters ended June 30, 2013 and March 31, 2013, 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). 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.

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 CORPORATIONCONDENSED CONSOLIDATED ENDING BALANCE SHEETS (UNAUDITED)dollars in thousands % Change from ------------------- September September September 30 30 June 30 30 June 30 2013 2012 2013 2012 2013 ----------- ----------- ----------- --------- ------- ASSETS Cash and due from banks $ 262,938 $ 217,207 $ 219,944 21.1% 19.5% Other interest- earning assets 221,064 202,305 130,065 9.3% 70.0% Loans held for sale 39,273 85,477 60,909 (54.1%) (35.5%) Investment securities 2,686,649 2,790,138 2,915,879 (3.7%) (7.9%) Loans, net of unearned income 12,798,865 11,935,260 12,645,418 7.2% 1.2% Allowance for loan losses (210,486) (233,864) (216,431) (10.0%) (2.7%) ----------- ----------- ----------- Net loans 12,588,379 11,701,396 12,428,987 7.6% 1.3% Premises and equipment 227,299 225,771 224,418 0.7% 1.3% Accrued interest receivable 44,715 49,784 45,713 (10.2%) (2.2%) Goodwill and intangible assets 533,918 541,845 534,452 (1.5%) (0.1%) Other assets 464,502 463,420 462,043 0.2% 0.5% ----------- ----------- ----------- Total Assets $17,068,737 $16,277,343 $17,022,410 4.9% 0.3% =========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits $12,721,121 $12,610,359 $12,257,809 0.9% 3.8% Short-term borrowings 1,198,577 486,971 1,620,318 146.1% (26.0%) Other liabilities 230,953 210,707 226,384 9.6% 2.0% FHLB advances and long-term debt 889,122 908,623 889,167 (2.1%) - ----------- ----------- ----------- Total Liabilities 15,039,773 14,216,660 14,993,678 5.8% 0.3% Shareholders' equity 2,028,964 2,060,683 2,028,732 (1.5%) - ----------- ----------- ----------- Total Liabilities and Shareholders' Equity $17,068,737 $16,277,343 $17,022,410 4.9% 0.3% =========== =========== =========== LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL: Loans, by type: Real estate - commercial mortgage $ 5,063,373 $ 4,632,509 $ 4,856,916 9.3% 4.3% Commercial - industrial, financial and agricultural 3,645,270 3,507,846 3,712,974 3.9% (1.8%) Real estate - home equity 1,773,554 1,603,456 1,760,268 10.6% 0.8% Real estate - residential mortgage 1,327,469 1,214,322 1,313,345 9.3% 1.1% Real estate - construction 577,342 597,358 610,280 (3.4%) (5.4%) Consumer 296,142 301,717 300,233 (1.8%) (1.4%) Leasing and other 115,715 78,052 91,402 48.3% 26.6% ----------- ----------- ----------- Total Loans, net of unearned income $12,798,865 $11,935,260 $12,645,418 7.2% 1.2% =========== =========== =========== Deposits, by type: Noninterest- bearing demand $ 3,338,075 $ 2,904,844 $ 3,168,781 14.9% 5.3% Interest-bearing demand 2,986,549 2,702,710 2,714,545 10.5% 10.0% Savings deposits 3,371,923 3,423,807 3,272,557 (1.5%) 3.0% Time deposits 3,024,574 3,578,998 3,101,926 (15.5%) (2.5%) ----------- ----------- ----------- Total Deposits $12,721,121 $12,610,359 $12,257,809 0.9% 3.8% =========== =========== =========== Short-term borrowings, by type: Customer repurchase agreements $ 209,800 $ 192,082 $ 196,188 9.2% 6.9% Customer short- term promissory notes 95,503 124,628 93,671 (23.4%) 2.0% Federal funds purchased 493,274 170,261 780,459 189.7% (36.8%) Short-term FHLB advances 400,000 - 550,000 N/M (27.3%) ----------- ----------- ----------- Total Short-term Borrowings $ 1,198,577 $ 486,971 $ 1,620,318 146.1% (26.0%) =========== =========== =========== N/M - Not meaningful FULTON FINANCIAL CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)in thousands, except per-share data and percentages Quarter Ended % Change from ---------------------------- --------------- Sep 30 Sep 30 Jun 30 Sep 30 Jun 30 2013 2012 2013 2012 2013 -------- -------- -------- ------ ------ Interest Income: Interest income $152,832 $161,060 $153,078 (5.1%) (0.2%) Interest expense 20,299 25,179 21,013 (19.4%) (3.4%) -------- -------- -------- Net Interest Income 132,533 135,881 132,065 (2.5%) 0.4% Provision for credit losses 9,500 23,000 13,500 (58.7%) (29.6%) -------- -------- -------- Net Interest Income after Provision 123,033 112,881 118,565 9.0% 3.8% Non-Interest Income: Service charges on deposit accounts 13,938 15,651 14,651 (10.9%) (4.9%) Investment management and trust services 10,420 9,429 10,601 10.5% (1.7%) Other service charges and fees 9,518 11,119 9,508 (14.4%) 0.1% Mortgage banking income 7,123 10,594 10,997 (32.8%) (35.2%) Investment securities gains 2,633 42 2,865 N/M (8.1%) Other 3,725 5,108 3,694 (27.1%) 0.8% -------- -------- -------- Total Non-Interest Income 47,357 51,943 52,316 (8.8%) (9.5%) Non-Interest Expense: Salaries and employee benefits 63,344 62,161 63,490 1.9% (0.2%) Net occupancy expense 11,519 11,161 11,447 3.2% 0.6% Other outside services 5,048 5,600 5,315 (9.9%) (5.0%) Data processing 4,757 3,776 4,509 26.0% 5.5% Equipment expense 3,646 3,816 3,893 (4.5%) (6.3%) Professional fees 3,329 2,728 3,395 22.0% (1.9%) Operating risk loss 3,297 1,404 1,860 134.8% 77.3% Software 3,268 2,511 3,094 30.1% 5.6% FDIC insurance expense 2,918 3,029 3,001 (3.7%) (2.8%) Marketing 2,251 648 1,922 247.4% 17.1% OREO and repossession expense 1,453 2,249 1,941 (35.4%) (25.1%) Intangible amortization 534 756 535 (29.4%) (0.2%) Other 11,241 10,143 12,728 10.8% (11.7%) -------- -------- -------- Total Non-Interest Expense 116,605 109,982 117,130 6.0% (0.4%) -------- -------- -------- Income Before Income Taxes 53,785 54,842 53,751 (1.9%) 0.1% Income tax expense 13,837 13,260 13,169 4.4% 5.1% -------- -------- -------- Net Income $ 39,948 $ 41,582 $ 40,582 (3.9%) (1.6%) ======== ======== ======== PER SHARE: Net income: Basic $ 0.21 $ 0.21 $ 0.21 - - Diluted 0.21 0.21 0.21 - - Cash dividends $ 0.08 $ 0.08 $ 0.08 - - Shareholders' equity 10.55 10.36 10.48 1.8% 0.7% Shareholders' equity (tangible) 7.77 7.63 7.72 1.8% 0.6% Weighted average shares (basic) 192,251 198,956 193,273 (3.4%) (0.5%) Weighted average shares (diluted) 193,259 199,808 194,346 (3.3%) (0.6%) Shares outstanding, end of period 192,332 198,975 193,658 (3.3%) (0.7%) SELECTED FINANCIAL RATIOS: Return on average assets 0.93% 1.02% 0.97% Return on average shareholders' equity 7.81% 8.03% 7.89% Return on average shareholders' equity (tangible) 10.69% 11.02% 10.75% Net interest margin 3.45% 3.74% 3.52% Efficiency ratio 63.92% 56.90% 62.73% Nine Months Ended Sep 30 ------------------ % 2013 2012 Change -------- -------- ------ Interest Income: Interest income $457,232 $491,936 (7.1%) Interest expense 62,990 79,830 (21.1%) -------- -------- Net Interest Income 394,242 412,106 (4.3%) Provision for credit losses 38,000 76,500 (50.3%) -------- -------- Net Interest Income after Provision 356,242 335,606 6.1% Non-Interest Income: Service charges on deposit accounts 42,700 45,860 (6.9%) Investment management and trust services 31,117 28,628 8.7% Other service charges and fees 27,536 33,181 (17.0%) Mortgage banking income 26,293 31,787 (17.3%) Investment securities gains 7,971 2,831 181.6% Other 11,315 14,602 (22.5%) -------- -------- Total Non-Interest Income 146,932 156,889 (6.3%) Non-Interest Expense: Salaries and employee benefits 188,046 182,612 3.0% Net occupancy expense 34,810 33,301 4.5% Other outside services 13,223 13,614 (2.9%) Data processing 13,169 11,223 17.3% Equipment expense 11,447 10,370 10.4% Professional fees 9,771 8,294 17.8% Operating risk loss 6,923 6,827 1.4% Software 9,110 6,958 30.9% FDIC insurance expense 8,766 9,052 (3.2%) Marketing 6,045 5,703 6.0% OREO and repossession expense 6,248 8,709 (28.3%) Intangible amortization 1,603 2,318 (30.8%) Other 35,510 33,757 5.2% -------- -------- Total Non-Interest Expense 344,671 332,738 3.6% -------- -------- Income Before Income Taxes 158,503 159,757 (0.8%) Income tax expense 38,746 40,152 (3.5%) -------- -------- Net Income $119,757 $119,605 0.1% ======== ======== PER SHARE: Net income: Basic $ 0.62 $ 0.60 3.3% Diluted 0.61 0.60 1.7% Cash dividends $ 0.24 $ 0.22 9.1% Shareholders' equity 10.54 10.36 1.7% Shareholders' equity (tangible) 7.77 7.63 1.8% Weighted average shares (basic) 193,926 199,371 (2.7%) Weighted average shares (diluted) 194,926 200,321 (2.7%) Shares outstanding, end of period 192,332 198,975 (3.3%) SELECTED FINANCIAL RATIOS: Return on average assets 0.95% 0.98% Return on average shareholders' equity 7.79% 7.83% Return on average shareholders' equity (tangible) 10.62% 10.80% Net interest margin 3.51% 3.79% Efficiency ratio 62.81% 57.09% N/M - Not meaningful FULTON FINANCIAL CORPORATIONCONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)dollars in thousands Quarter Ended ----------------------------------------------------------- September 30, 2013 September 30, 2012 ---------------------------- ---------------------------- Average Interest Yield/ Average Interest Yield/ Balance (1) Rate Balance (1) Rate ----------- -------- ------ ----------- -------- ------ASSETS Interest-earning assets: Loans, net of unearned income $12,728,162 $139,141 4.34% $11,922,417 $143,211 4.78% Taxable investment securities 2,446,583 12,977 2.12% 2,392,043 16,658 2.78% Tax-exempt investment securities 284,372 3,581 5.04% 286,225 3,936 5.50% Equity securities 133,200 1,056 3.16% 109,884 820 2.98% ----------- -------- ------ ----------- -------- ------ Total Investment Securities 2,864,155 17,614 2.46% 2,788,152 21,414 3.07% Loans held for sale 36,450 382 4.19% 61,001 578 3.79% Other interest- earning assets 140,338 38 0.11% 147,818 35 0.09% ----------- -------- ------ ----------- -------- ------ Total Interest- earning Assets 15,769,105 157,175 3.96% 14,919,388 165,238 4.41% Noninterest- earning assets: Cash and due from banks 210,525 221,561 Premises and equipment 224,837 222,544 Other assets 1,007,808 1,098,748 Less: allowance for loan losses (220,342) (239,931) ----------- ----------- Total Assets $16,991,933 $16,222,310 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities: Demand deposits $ 2,895,156 $ 938 0.13% $ 2,608,202 $ 1,071 0.16% Savings deposits 3,359,795 1,015 0.12% 3,372,278 1,431 0.17% Time deposits 3,065,210 6,790 0.88% 3,657,616 11,346 1.23% ----------- -------- ------ ----------- -------- ------ Total Interest- bearing Deposits 9,320,161 8,743 0.37% 9,638,096 13,848 0.57% Short-term borrowings 1,337,742 691 0.20% 588,568 220 0.15% FHLB advances and long-term debt 889,141 10,865 4.87% 908,767 11,111 4.88% ----------- -------- ------ ----------- -------- ------ Total Interest- bearing Liabilities 11,547,044 20,299 0.70% 11,135,431 25,179 0.90% Noninterest- bearing liabilities: Demand deposits 3,221,648 2,837,539 Other 194,163 188,065 ----------- ----------- Total Liabilities 14,962,855 14,161,035 Shareholders' equity 2,029,078 2,061,275 ----------- ----------- Total Liabilities and Shareholders' Equity $16,991,933 $16,222,310 =========== =========== Net interest income/net interest margin (fully taxable equivalent) 136,876 3.45% 140,059 3.74% ====== ====== Tax equivalent adjustment (4,343) (4,178) -------- -------- Net interest income $132,533 $135,881 ======== ======== Quarter Ended ------------------------------- June 30, 2013 ------------------------------- Average Interest Yield/ Balance (1) Rate ------------- -------- ------ASSETS Interest-earning assets: Loans, net of unearned income $12,528,562 $138,002 4.42% Taxable investment securities 2,410,004 14,516 2.41% Tax-exempt investment securities 280,508 3,608 5.15% Equity securities 123,848 875 2.83% ------------- -------- ------ Total Investment Securities 2,814,360 18,999 2.70% Loans held for sale 42,158 384 3.64% Other interest- earning assets 144,945 35 0.10% ------------- -------- ------ Total Interest- earning Assets 15,530,025 157,420 4.07% Noninterest- earning assets: Cash and due from banks 206,090 Premises and equipment 225,915 Other assets 1,060,095 Less: allowance for loan losses (221,541) ------------- Total Assets $16,800,584 ============= LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities: Demand deposits $ 2,718,679 $ 872 0.13% Savings deposits 3,350,856 1,016 0.12% Time deposits 3,169,141 7,610 0.96% ------------- -------- ------ Total Interest- bearing Deposits 9,238,676 9,498 0.41% Short-term borrowings 1,313,424 700 0.21% FHLB advances and long-term debt 889,186 10,815 4.87% ------------- -------- ------ Total Interest- bearing Liabilities 11,441,286 21,013 0.74% Noninterest- bearing liabilities: Demand deposits 3,116,940 Other 179,875 ------------- Total Liabilities 14,738,101 Shareholders' equity 2,062,483 ------------- Total Liabilities and Shareholders' Equity $16,800,584 ============= Net interest income/net interest margin (fully taxable equivalent) 136,407 3.52% ====== Tax equivalent adjustment (4,342) -------- Net interest income $132,065 ======== (1) Presented on a tax-equivalent basis using a 35% Federal tax rate andstatutory interest expense disallowances. AVERAGE LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL: Quarter Ended % Change from ----------------------------------- ----------------- September September September June 30 30 June 30 30 30 2013 2012 2013 2012 2013 ----------- ----------- ----------- --------- ----- Loans, by type: Real estate - commercial mortgage $ 4,961,871 $ 4,603,388 $ 4,758,060 7.8% 4.3% Commercial - industrial, financial and agricultural 3,706,113 3,529,733 3,714,683 5.0% (0.2%) Real estate - home equity 1,767,095 1,597,230 1,732,704 10.6% 2.0% Real estate - residential mortgage 1,323,972 1,201,179 1,308,713 10.2% 1.2% Real estate - construction 576,222 605,910 617,577 (4.9%) (6.7%) Consumer 299,057 304,800 304,918 (1.9%) (1.9%) Leasing and other 93,832 80,177 91,907 17.0% 2.1% ----------- ----------- ----------- Total Loans, net of unearned income $12,728,162 $11,922,417 $12,528,562 6.8% 1.6% =========== =========== =========== Deposits, by type: Noninterest- bearing demand $ 3,221,648 $ 2,837,539 $ 3,116,940 13.5% 3.4% Interest-bearing demand 2,895,156 2,608,202 2,718,679 11.0% 6.5% Savings deposits 3,359,795 3,372,278 3,350,856 (0.4%) 0.3% Time deposits 3,065,210 3,657,616 3,169,141 (16.2%) (3.3%) ----------- ----------- ----------- Total Deposits $12,541,809 $12,475,635 $12,355,616 0.5% 1.5% =========== =========== =========== Short-term borrowings, by type: Customer repurchase agreements $ 196,503 $ 210,830 $ 188,339 (6.8%) 4.3% Customer short- term promissory notes 91,573 127,479 98,207 (28.2%) (6.8%) Federal funds purchased 559,992 244,214 776,603 129.3% (27.9%) Short-term FHLB advances 489,674 6,045 250,275 N/M 95.7% ----------- ----------- ----------- Total Short-term Borrowings $ 1,337,742 $ 588,568 $ 1,313,424 127.3% 1.9% =========== =========== =========== N/M - Not meaningful FULTON FINANCIAL CORPORATIONCONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)dollars in thousands Nine Months ended September 30 ---------------------------------------------------------- 2013 2012 ---------------------------- ---------------------------- Average Interest Yield Average Interest Yield Balance (1) /Rate Balance (1) /Rate ----------- -------- ----- ----------- -------- -----ASSETS Interest-earning assets: Loans, net of unearned income $12,506,393 $414,091 4.43% $11,957,025 $434,520 4.85% Taxable investment securities 2,426,015 40,890 2.25% 2,442,237 53,943 2.95% Tax-exempt investment securities 285,638 11,003 5.14% 288,221 12,085 5.59% Equity securities 125,193 2,848 3.04% 110,807 2,307 2.78% ----------- -------- ----- ----------- -------- ----- Total Investment Securities 2,836,846 54,741 2.57% 2,841,265 68,335 3.21% Loans held for sale 42,122 1,261 3.99% 52,462 1,547 3.93% Other interest- earning assets 134,460 95 0.09% 126,556 133 0.14% ----------- -------- ----- ----------- -------- ----- Total Interest- earning Assets 15,519,821 470,188 4.05% 14,977,308 504,535 4.50% Noninterest- earning assets: Cash and due from banks 206,403 239,050 Premises and equipment 225,733 217,351 Other assets 1,045,796 1,105,238 Less: allowance for loan losses (223,220) (255,061) ----------- ----------- Total Assets $16,774,533 $16,283,886 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities: Demand deposits $ 2,773,917 $ 2,687 0.13% $ 2,519,454 $ 3,132 0.17% Savings deposits 3,348,413 3,054 0.12% 3,341,512 4,751 0.19% Time deposits 3,184,281 22,901 0.96% 3,799,774 36,958 1.30% ----------- -------- ----- ----------- -------- ----- Total Interest- bearing Deposits 9,306,611 28,642 0.41% 9,660,740 44,841 0.62% Short-term borrowings 1,228,882 1,900 0.20% 758,899 912 0.16% Federal Home Loan Bank advances and long-term debt 889,826 32,448 4.87% 940,348 34,077 4.84% ----------- -------- ----- ----------- -------- ----- Total Interest- bearing Liabilities 11,425,319 62,990 0.74% 11,359,987 79,830 0.94% Noninterest- bearing liabilities: Demand deposits 3,103,381 2,691,949 Other 190,976 190,476 ----------- ----------- Total Liabilities 14,719,676 14,242,412 Shareholders' equity 2,054,857 2,041,474 ----------- ----------- Total Liabilities and Shareholders' Equity $16,774,533 $16,283,886 =========== =========== Net interest income/net interest margin (fully taxable equivalent) 407,198 3.51% 424,705 3.79% ===== ===== Tax equivalent adjustment (12,956) (12,599) -------- -------- Net interest income $394,242 $412,106 ======== ======== (1) Presented on a tax-equivalent basis using a 35% Federal tax rate and statutory interest expense disallowances. AVERAGE LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL: Nine Months Ended September 30 ----------------------- 2013 2012 % Change ----------- ----------- ---------- Loans, by type: Real estate - commercial mortgage $ 4,796,557 $ 4,618,389 3.9% Commercial - industrial, financial and agricultural 3,694,612 3,548,332 4.1% Real estate - home equity 1,721,041 1,602,812 7.4% Real estate - residential mortgage 1,305,434 1,173,158 11.3% Real estate - construction 594,991 629,170 (5.4%) Consumer 303,127 308,215 (1.7%) Leasing and other 90,631 76,949 17.8% ----------- ----------- Total Loans, net of unearned income $12,506,393 $11,957,025 4.6% =========== =========== Deposits, by type: Noninterest-bearing demand $ 3,103,381 $ 2,691,949 15.3% Interest-bearing demand 2,773,917 2,519,454 10.1% Savings deposits 3,348,413 3,341,512 0.2% Time deposits 3,184,281 3,799,774 (16.2%) ----------- ----------- Total Deposits $12,409,992 $12,352,689 0.5% =========== =========== Short-term borrowings, by type: Customer repurchase agreements $ 183,432 $ 212,523 (13.7%) Customer short-term promissory notes 100,532 142,896 (29.6%) Federal funds purchased 681,576 390,319 74.6% Short-term FHLB advances 263,342 13,161 N/M ----------- ----------- Total Short-term Borrowings $ 1,228,882 $ 758,899 61.9% =========== =========== N/M - Not meaningful FULTON FINANCIAL CORPORATIONASSET QUALITY INFORMATION (UNAUDITED)dollars in thousands Quarter Ended ------------------------------- Nine Months Ended Sep 30 Sep 30 Jun 30 Sep 30 -------------------- 2013 2012 2013 2013 2012 --------- --------- --------- --------- ---------ALLOWANCE FOR CREDIT LOSSES: Balance at beginning of period $ 217,626 $ 237,316 $ 221,527 $ 225,439 $ 258,177 Loans charged off: Commercial - industrial, financial and agricultural (9,394) (10,471) (5,960) (24,856) (29,157) Real estate - commercial mortgage (3,724) (7,463) (5,193) (13,050) (43,053) Real estate - home equity (2,365) (1,688) (1,966) (6,735) (6,683) Real estate - residential mortgage (767) (670) (4,465) (8,282) (3,009) Real estate - construction (598) (8,364) (2,597) (5,181) (25,377) Consumer (473) (685) (433) (1,456) (1,790) Leasing and other (787) (625) (769) (2,037) (1,696) --------- --------- --------- --------- --------- Total loans charged off (18,108) (29,966) (21,383) (61,597) (110,765) Recoveries of loans previously charged off: Commercial - industrial, financial and agricultural 2,295 1,693 756 3,430 3,046 Real estate - commercial mortgage 185 1,317 1,505 2,754 3,286 Real estate - home equity 198 343 192 721 641 Real estate - residential mortgage 245 25 116 442 169 Real estate - construction 379 1,040 744 1,794 2,643 Consumer 294 202 406 1,206 833 Leasing and other 224 298 263 649 738 --------- --------- --------- --------- --------- Recoveries of loans previously charged off 3,820 4,918 3,982 10,996 11,356 --------- --------- --------- --------- --------- Net loans charged off (14,288) (25,048) (17,401) (50,601) (99,409) Provision for credit losses 9,500 23,000 13,500 38,000 76,500 --------- --------- --------- --------- --------- Balance at end of period $ 212,838 $ 235,268 $ 217,626 $ 212,838 $ 235,268 ========= ========= ========= ========= ========= Net charge-offs to average loans (annualized) 0.45% 0.84% 0.56% 0.54% 1.11% ========= ========= ========= ========= ========= NON-PERFORMING ASSETS: Non-accrual loans $ 143,012 $ 185,791 $ 164,039 Loans 90 days past due and accruing 25,271 27,035 25,159 --------- --------- --------- Total non- performing loans 168,283 212,826 189,198 Other real estate owned 18,173 29,217 20,984 --------- --------- --------- Total non- performing assets $ 186,456 $ 242,043 $ 210,182 ========= ========= ========= NON-PERFORMING LOANS, BY TYPE: Commercial - industrial, financial and agricultural $ 45,184 $ 73,879 $ 57,219 Real estate - commercial mortgage 42,623 64,609 49,429 Real estate - residential mortgage 34,309 24,910 30,660 Real estate - construction 24,396 32,742 29,964 Real estate - home equity 18,691 12,644 19,046 Consumer 3,013 3,942 2,780 Leasing 67 100 100 --------- --------- --------- Total non-performing loans $ 168,283 $ 212,826 $ 189,198 ========= ========= ========= TROUBLED DEBT RESTRUCTURINGS (TDRs), BY TYPE: Real-estate - residential mortgage $ 27,820 $ 36,946 $ 28,948 Real-estate - commercial mortgage 22,644 32,198 24,828 Real estate - construction 9,841 10,525 10,599 Commercial - industrial, financial and agricultural 8,184 4,795 8,394 Real estate - home equity 1,667 755 1,549 Consumer 11 - 13 --------- --------- --------- Total accruing TDRs 70,167 85,219 74,331 Non-accrual TDRs (1) 30,501 21,167 30,377 --------- --------- --------- Total TDRs $ 100,668 $ 106,386 $ 104,708 ========= ========= ========= (1) Included within non-accrual loans above. DELINQUENCY RATES, BY TYPE: September 30, 2013 September 30, 2012 June 30, 2013 ------------------ ------------------ ------------------ ≥90 ≥90 ≥90 31-89 Days 31-89 Days 31-89 Days Days (2) Total Days (2) Total Days (2) Total ----- ---- ----- ----- ---- ----- ----- ---- ----- Real estate - commercial mortgage 0.40% 0.84% 1.24% 0.46% 1.39% 1.85% 0.47% 1.01% 1.48% Commercial - industrial, financial and agricultural 0.32% 1.24% 1.56% 0.45% 2.11% 2.56% 0.41% 1.54% 1.95% Real estate - construction 0.40% 4.22% 4.62% 0.95% 5.48% 6.43% 0.42% 4.91% 5.33% Real estate - residential mortgage 1.82% 2.58% 4.40% 2.66% 2.05% 4.71% 2.12% 2.33% 4.45% Real estate - home equity 1.03% 1.05% 2.08% 0.85% 0.78% 1.63% 0.68% 1.08% 1.76% Consumer, leasing and other 1.83% 0.75% 2.58% 1.84% 1.06% 2.90% 1.47% 0.74% 2.21% ----- ---- ----- ----- ---- ----- ----- ---- ----- Total 0.66% 1.31% 1.97% 0.80% 1.78% 2.58% 0.68% 1.50% 2.18% ===== ==== ===== ===== ==== ===== ===== ==== ===== (2) Includes non-accrual loans ASSET QUALITY RATIOS: Sep 30 Sep 30 Jun 30 2013 2012 2013 ------ ------ ------ Non-accrual loans to total loans 1.12% 1.56% 1.30% Non-performing assets to total loans and OREO 1.45% 2.02% 1.66% Non-performing assets to total assets 1.09% 1.49% 1.23% Allowance for credit losses to loans outstanding 1.66% 1.97% 1.72% Allowance for credit losses to non- performing loans 126.48% 110.54% 115.03% Non-performing assets to tangible common shareholders' equity and allowance for credit losses 10.92% 13.80% 12.28% FULTON FINANCIAL CORPORATIONRECONCILIATION OF GAAP TO NON-GAAP MEASURES (UNAUDITED)in thousands, except per share data and percentages Explanatory note: This press release contains certain 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 quarterly 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: Quarter Ended ---------------------------------- September September Nine Months Ended 30 30 June 30 September 30 ---------------------- 2013 2012 2013 2013 2012 ---------- ---------- ---------- ---------- ---------- Shareholders' equity (tangible), per share Shareholders' equity $2,028,964 $2,060,683 $2,028,732 Less: Goodwill and intangible assets (533,918) (541,845) (534,452) ---------- ---------- ---------- Tangible shareholders' equity (numerator) $1,495,046 $1,518,838 $1,494,280 ========== ========== ========== Shares outstanding, end of period (denominator) 192,332 198,975 193,658 ========== ========== ========== Shareholders' equity (tangible), per share $ 7.77 $ 7.63 $ 7.72 ========== ========== ========== Return on average common shareholders' equity (tangible) Net income $ 39,948 $ 41,582 $ 40,582 $ 119,757 $ 119,605 Plus: Intangible amortization, net of tax 347 491 348 1,042 1,507 ---------- ---------- ---------- ---------- ---------- Net income, less intangible amortization, net of tax (numerator) $ 40,295 $ 42,073 $ 40,930 $ 120,799 $ 121,112 ========== ========== ========== ========== ========== Average shareholders' equity $2,029,078 $2,061,275 2,062,483 $2,054,857 $2,041,474 Less: Average goodwill and intangible assets (534,179) (542,225) (534,713) (534,712) (542,997) ---------- ---------- ---------- ---------- ---------- Average tangible shareholders' equity (denominator) $1,494,899 $1,519,050 $1,527,770 $1,520,145 $1,498,477 ========== ========== ========== ========== ========== Return on average common shareholders' equity (tangible), annualized 10.69% 11.02% 10.75% 10.62% 10.80% ========== ========== ========== ========== ========== Efficiency ratio Non-interest expense $ 116,605 $ 109,982 $ 117,130 $ 344,671 $ 332,738 Less: Intangible amortization (534) (756) (535) (1,603) (2,318) ---------- ---------- ---------- ---------- ---------- Numerator $ 116,071 $ 109,226 $ 116,595 $ 343,068 $ 330,420 ========== ========== ========== ========== ========== Net interest income (fully taxable equivalent) $ 136,876 $ 140,059 $ 136,407 $ 407,198 $ 424,705 Plus: Total Non-interest income 47,357 51,943 52,316 146,932 156,889 Less: Investment securities gains (2,633) (42) (2,865) (7,971) (2,831) ---------- ---------- ---------- ---------- ---------- Denominator $ 181,600 $ 191,960 $ 185,858 $ 546,159 $ 578,763 ========== ========== ========== ========== ========== Efficiency ratio 63.92% 56.90% 62.73% 62.81% 57.09% ========== ========== ========== ========== ========== Non-performing assets to tangible common shareholders' equity and allowance for credit losses Non-performing assets (numerator) $ 186,456 $ 242,043 $ 210,182 ========== ========== ========== Tangible shareholders' equity $1,495,046 $1,518,838 $1,494,280 Plus: Allowance for credit losses 212,838 235,268 217,626 ---------- ---------- ---------- Tangible shareholders' equity and allowance for credit losses (denominator) $1,707,884 $1,754,106 $1,711,906 ========== ========== ========== Non-performing assets to tangible common shareholders' equity and allowance for credit losses 10.92% 13.80% 12.28% ========== ========== ========== 

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