Fulton Financial Corporation (NASDAQ:FULT) (the “Corporation”) reported net income of $34.0 million, or $0.19 per diluted share, for the fourth quarter of 2017, and net income of $171.8 million, or $0.98 per diluted share, for 2017. In the fourth quarter of 2017, a $15.6 million, or $0.09 per diluted share, charge to income tax expense was recorded related to the re-measurement of net deferred tax assets resulting from the new 21% federal corporate income tax rate established by the Tax Cuts and Jobs Act enacted in December 2017.
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"2017 was another solid year of performance for our organization as we generated positive operating leverage, and hit record levels in revenue and net income, excluding the tax charge,” said E. Phillip Wenger, Chairman and CEO. “I’m extremely proud of our team’s hard work this year, and continued focus on driving shareholder value. We look forward to 2018 and believe we are well-positioned for an even better year.”
Net Interest Income and Margin
Net interest income for the fourth quarter of 2017 increased $2.6 million, or 1.8%, from the third quarter of 2017. Net interest margin increased two basis points to 3.29% in the fourth quarter of 2017, from 3.27% in the third quarter of 2017. The average yield on interest-earning assets increased three basis points, while the average cost of interest-bearing liabilities increased one basis point. The three basis point increase in the average yield on interest-earning assets reflects a two basis point increase in loan yields and a six basis point increase in investment yields.
For the year ended December 31, 2017, net interest income increased $54.6 million, or 10.5%, from 2016. Net interest margin increased ten basis points to 3.28%. The average yield on interest-earning assets increased thirteen basis points and the average cost of interest-bearing liabilities increased four basis points from 2016.
Balance Sheet
Total average assets for the fourth quarter of 2017 were $20.1 billion, an increase of $199.9 million from the third quarter of 2017. Average loans, net of unearned income, increased $168.1 million, or 1.1%, in comparison to the third quarter of 2017. Average loans and yields, by type, for the fourth quarter of 2017 in comparison to the third quarter of 2017 are summarized in the following table:
Three Months Ended | Increase (decrease) | ||||||||||||||||||
December 31, 2017 | September 30, 2017 | in Balance | |||||||||||||||||
Balance | Yield (1) | Balance | Yield (1) | $ | % | ||||||||||||||
(dollars in thousands) | |||||||||||||||||||
Average Loans, net of unearned income, by type: | |||||||||||||||||||
Real estate - commercial mortgage | $ | 6,232,674 | 4.09 | % | $ | 6,208,630 | 4.07 | % | $ | 24,044 | 0.4 | % | |||||||
Commercial - industrial, financial and agricultural | 4,263,199 | 4.05 | % | 4,257,075 | 4.08 | % | 6,124 | 0.1 | % | ||||||||||
Real estate - residential mortgage | 1,926,067 | 3.83 | % | 1,841,559 | 3.83 | % | 84,508 | 4.6 | % | ||||||||||
Real estate - home equity | 1,560,713 | 4.52 | % | 1,569,898 | 4.48 | % | (9,185 | ) | (0.6 | %) | |||||||||
Real estate - construction | 1,004,166 | 4.27 | % | 943,029 | 4.05 | % | 61,137 | 6.5 | % | ||||||||||
Consumer | 312,320 | 4.75 | % | 318,546 | 4.94 | % | (6,226 | ) | (2.0 | %) | |||||||||
Leasing and other | 261,046 | 5.36 | % | 253,330 | 4.91 | % | 7,716 | 3.0 | % | ||||||||||
Total Average Loans, net of unearned income | $ | 15,560,185 | 4.14 | % | $ | 15,392,067 | 4.12 | % | $ | 168,118 | 1.1 | % | |||||||
(1) Presented on a fully-taxable equivalent basis using a 35% Federal tax rate and statutory interest expense disallowances. | |||||||||||||||||||
For the year ended December 31, 2017, average loans increased $1.1 billion, or 7.8%, compared to 2016. Loans at December 31, 2017 increased $281.3 million, or 1.8%, compared to September 30, 2017 and $1.1 billion, or 7.3%, compared to December 31, 2016.
Total average liabilities increased $178.2 million, or 1.0%, from the third quarter of 2017, while average deposits increased $181.3 million, or 1.1%. Average deposits and interest rates, by type, for the fourth quarter of 2017 in comparison to the third quarter of 2017 are summarized in the following table:
Three Months Ended | Increase (decrease) | ||||||||||||||||||
December 31, 2017 | September 30, 2017 | in Balance | |||||||||||||||||
Balance | Rate | Balance | Rate | $ | % | ||||||||||||||
(dollars in thousands) | |||||||||||||||||||
Average Deposits, by type: | |||||||||||||||||||
Noninterest-bearing demand | $ | 4,454,456 | - | % | $ | 4,494,897 | - | % | $ | (40,441 | ) | (0.9 | %) | ||||||
Interest-bearing demand | 4,037,879 | 0.40 | % | 3,943,118 | 0.39 | % | 94,761 | 2.4 | % | ||||||||||
Savings and money market deposits | 4,752,337 | 0.38 | % | 4,603,155 | 0.34 | % | 149,182 | 3.2 | % | ||||||||||
Total average demand and savings | 13,244,672 | 0.26 | % | 13,041,170 | 0.24 | % | 203,502 | 1.6 | % | ||||||||||
Brokered deposits | 105,135 | 1.27 | % | 89,767 | 1.23 | % | 15,368 | 17.1 | % | ||||||||||
Time deposits | 2,706,982 | 1.18 | % | 2,744,532 | 1.15 | % | (37,550 | ) | (1.4 | %) | |||||||||
Total Average Deposits | $ | 16,056,789 | 0.42 | % | $ | 15,875,469 | 0.40 | % | $ | 181,320 | 1.1 | % | |||||||
For the year ended December 31, 2017, average deposits increased $895.7 million, or 6.1%, compared to 2016. Deposits at December 31, 2017 decreased $344.2 million, or 2.1%, compared to September 30, 2017 and increased $784.7 million, or 5.2%, compared to December 31, 2016.
Asset Quality
Non-performing assets were $144.6 million, or 0.72% of total assets, at December 31, 2017, compared to $147.0 million, or 0.73% of total assets, at September 30, 2017 and $144.5 million, or 0.76% of total assets, at December 31, 2016.
Annualized net charge-offs for the quarters ended December 31, 2017 and September 30, 2017 were 0.14% of total average loans. The allowance for credit losses as a percentage of non-performing loans was 131% at December 31, 2017, as compared to 128% at September 30, 2017 and 130% at December 31, 2016.
During the fourth quarter of 2017, the Corporation recorded a $6.7 million provision for credit losses, compared to a $5.1 million provision for credit losses in the third quarter of 2017. For the year ended December 31, 2017, the provision for credit losses was $23.3 million, an increase of $10.1 million from 2016.
Non-interest Income
Non-interest income in the fourth quarter of 2017, excluding investment securities gains, increased $7.6 million, or 16.1%, in comparison to the third quarter of 2017. A $5.1 million net gain was recognized in the fourth quarter of 2017 upon the settlement of litigation. Other service charges and fees increased $1.6 million, or 12.9%, due primarily to increases in commercial loan interest rate swap fees and debit card income. Investment management and trust services income increased $1.0 million, or 8.2%. Also contributing to the increase in non-interest income were higher gains from the sales of Small Business Administration (SBA) loans. Slightly offsetting these increases was a seasonal decline in mortgage banking income.
For the year ended December 31, 2017, non-interest income, excluding investment securities gains, increased $11.3 million, or 6.0%, primarily due to the $5.1 million net gain recognized upon the settlement of litigation in the fourth quarter of 2017 and increases in investment management and trust services income, SBA income, debit and credit card income and merchant fees.
Gains on sales of investment securities for the fourth quarter of 2017 were $1.9 million, a decrease of $2.7 million in comparison to the third quarter of 2017. In the fourth quarter of 2017, the corporation continued to recognize gains on the sales of financial institution common stocks, which totaled $6.4 million. The Corporation also repositioned its investment portfolio through the sale of certain debt securities, which resulted in total pre-tax net losses of approximately $4.5 million that partially offset these gains. For the year ended December 31, 2017, gains on sales of investment securities increased $6.5 million.
Non-interest Expense
Non-interest expense increased $6.3 million, or 4.8%, in the fourth quarter of 2017, compared to the third quarter of 2017. Included in other expenses in the fourth quarter of 2017 was a $3.4 million write-off of certain accumulated capital expenditures related to in-process technology initiatives in commercial banking due to a strategic shift to an alternative solution. Additionally, in the fourth quarter of 2017, the Corporation incurred approximately $1.0 million of costs related to defining requirements for, and selecting, the alternative technology solution, which was recorded in other outside services. Other increases occurred in salaries and employee benefits, net occupancy expense, FDIC insurance expense, and other real estate owned and repossession expense included in other expense.
For the year ended December 31, 2017, non-interest expense increased $36.1 million, or 7.4%, compared to 2016. This increase was primarily due to the amortization of tax credit investments and increases in salaries and employee benefits, other outside services, state taxes, net occupancy expenses, software expenses and the aforementioned $3.4 million write-off.
Income Tax Expense
The effective income tax rate for the fourth quarter of 2017 was 44.4%, as compared to 20.5% for the third quarter of 2017. Excluding the $15.6 million charge related to the re-measurement of net deferred tax assets, the effective tax rate for the fourth quarter of 2017 would have been 18.9%. Based on the new corporate income tax rates effective January 1, 2018, the Corporation’s effective tax rate in 2018 and future years is expected to be substantially lower than in 2017 and in prior years.
The tax charge was estimated by the Corporation as of December 31, 2017 based on an initial analysis of the Act and may be adjusted in future periods following completion of the Corporation’s 2017 federal income tax return and evaluation of the effects, if any, of implementation guidance or regulations that may be issued by the Internal Revenue Service on the Corporation’s initial analysis of the Act.
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, 2016 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2017, June 30, 2017 and September 30, 2017, 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.
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.
(1) | In the fourth quarter of 2017, a $15.6 million charge to income taxes was recorded related to the re-measurement of net deferred tax assets resulting from the new federal tax legislation enacted in December 2017. | |
(2) | Non-GAAP measure; see accompanying tables for reconciliation. | |
FULTON FINANCIAL CORPORATION | ||||||||||||||||||||||||||
CONDENSED CONSOLIDATED ENDING BALANCE SHEETS (UNAUDITED) | ||||||||||||||||||||||||||
dollars in thousands | ||||||||||||||||||||||||||
% Change from | ||||||||||||||||||||||||||
December 31 2017 | September 30 2017 | June 30 2017 | March 31 2017 | December 31 2016 | September 30 2017 | December 31 2016 | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||
Cash and due from banks | $ | 108,291 | $ | 99,803 | $ | 94,938 | $ | 93,844 | $ | 118,763 | 8.5 | % | -8.8 | % | ||||||||||||
Other interest-earning assets | 354,566 | 645,796 | 392,842 | 350,387 | 291,252 | -45.1 | % | 21.7 | % | |||||||||||||||||
Loans held for sale | 31,530 | 23,049 | 62,354 | 24,783 | 28,697 | 36.8 | % | 9.9 | % | |||||||||||||||||
Investment securities | 2,547,956 | 2,561,516 | 2,488,699 | 2,506,017 | 2,559,227 | -0.5 | % | -0.4 | % | |||||||||||||||||
Loans, net of unearned income | 15,768,247 | 15,486,899 | 15,346,617 | 14,963,177 | 14,699,272 | 1.8 | % | 7.3 | % | |||||||||||||||||
Allowance for loan losses | (169,910 | ) | (172,245 | ) | (172,342 | ) | (170,076 | ) | (168,679 | ) | -1.4 | % | 0.7 | % | ||||||||||||
Net loans | 15,598,337 | 15,314,654 | 15,174,275 | 14,793,101 | 14,530,593 | 1.9 | % | 7.3 | % | |||||||||||||||||
Premises and equipment | 222,802 | 221,551 | 217,558 | 216,171 | 217,806 | 0.6 | % | 2.3 | % | |||||||||||||||||
Accrued interest receivable | 52,910 | 50,082 | 47,603 | 46,355 | 46,294 | 5.6 | % | 14.3 | % | |||||||||||||||||
Goodwill and intangible assets | 531,556 | 531,556 | 531,556 | 531,556 | 531,556 | 0.0 | % | 0.0 | % | |||||||||||||||||
Other assets | 588,957 | 614,853 | 637,610 | 616,362 | 620,059 | -4.2 | % | -5.0 | % | |||||||||||||||||
Total Assets | $ | 20,036,905 | $ | 20,062,860 | $ | 19,647,435 | $ | 19,178,576 | $ | 18,944,247 | -0.1 | % | 5.8 | % | ||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||||
Deposits | $ | 15,797,532 | $ | 16,141,780 | $ | 15,357,361 | $ | 15,090,344 | $ | 15,012,864 | -2.1 | % | 5.2 | % | ||||||||||||
Short-term borrowings | 617,524 | 298,751 | 694,859 | 453,317 | 541,317 | 106.7 | % | 14.1 | % | |||||||||||||||||
Other liabilities | 353,646 | 358,384 | 365,484 | 342,323 | 339,548 | -1.3 | % | 4.2 | % | |||||||||||||||||
FHLB advances and long-term debt | 1,038,346 | 1,038,159 | 1,037,961 | 1,137,909 | 929,403 | 0.0 | % | 11.7 | % | |||||||||||||||||
Total Liabilities | 17,807,048 | 17,837,074 | 17,455,665 | 17,023,893 | 16,823,132 | -0.2 | % | 5.8 | % | |||||||||||||||||
Shareholders' equity | 2,229,857 | 2,225,786 | 2,191,770 | 2,154,683 | 2,121,115 | 0.2 | % | 5.1 | % | |||||||||||||||||
Total Liabilities and Shareholders' Equity | $ | 20,036,905 | $ | 20,062,860 | $ | 19,647,435 | $ | 19,178,576 | $ | 18,944,247 | -0.1 | % | 5.8 | % | ||||||||||||
LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL: | ||||||||||||||||||||||||||
Loans, by type: | ||||||||||||||||||||||||||
Real estate - commercial mortgage | $ | 6,364,804 | $ | 6,275,140 | $ | 6,262,008 | $ | 6,118,533 | $ | 6,018,582 | 1.4 | % | 5.8 | % | ||||||||||||
Commercial - industrial, financial and agricultural | 4,300,297 | 4,223,075 | 4,245,849 | 4,167,809 | 4,087,486 | 1.8 | % | 5.2 | % | |||||||||||||||||
Real estate - residential mortgage | 1,954,711 | 1,887,907 | 1,784,712 | 1,665,142 | 1,601,994 | 3.5 | % | 22.0 | % | |||||||||||||||||
Real estate - home equity | 1,559,719 | 1,567,473 | 1,579,739 | 1,595,901 | 1,625,115 | -0.5 | % | -4.0 | % | |||||||||||||||||
Real estate - construction | 1,006,935 | 973,108 | 938,900 | 882,983 | 843,649 | 3.5 | % | 19.4 | % | |||||||||||||||||
Consumer | 313,783 | 302,448 | 283,156 | 288,826 | 291,470 | 3.7 | % | 7.7 | % | |||||||||||||||||
Leasing and other | 267,998 | 257,748 | 252,253 | 243,983 | 230,976 | 4.0 | % | 16.0 | % | |||||||||||||||||
Total Loans, net of unearned income | $ | 15,768,247 | $ | 15,486,899 | $ | 15,346,617 | $ | 14,963,177 | $ | 14,699,272 | 1.8 | % | 7.3 | % | ||||||||||||
Deposits, by type: | ||||||||||||||||||||||||||
Noninterest-bearing demand | $ | 4,437,294 | $ | 4,363,915 | $ | 4,574,619 | $ | 4,417,733 | $ | 4,376,137 | 1.7 | % | 1.4 | % | ||||||||||||
Interest-bearing demand | 4,018,107 | 4,119,419 | 3,650,204 | 3,702,663 | 3,703,712 | -2.5 | % | 8.5 | % | |||||||||||||||||
Savings and money market accounts | 4,586,746 | 4,790,985 | 4,386,128 | 4,251,574 | 4,179,773 | -4.3 | % | 9.7 | % | |||||||||||||||||
Total demand and savings | 13,042,147 | 13,274,319 | 12,610,951 | 12,371,970 | 12,259,622 | -1.7 | % | 6.4 | % | |||||||||||||||||
Brokered deposits | 90,473 | 109,936 | - | - | - | -17.7 | % | 0.0 | % | |||||||||||||||||
Time deposits | 2,664,912 | 2,757,525 | 2,746,410 | 2,718,374 | 2,753,242 | -3.4 | % | -3.2 | % | |||||||||||||||||
Total Deposits | $ | 15,797,532 | $ | 16,141,780 | $ | 15,357,361 | $ | 15,090,344 | $ | 15,012,864 | -2.1 | % | 5.2 | % | ||||||||||||
Short-term borrowings, by type: | ||||||||||||||||||||||||||
Customer repurchase agreements | $ | 172,017 | $ | 185,945 | $ | 174,224 | $ | 181,170 | $ | 195,734 | -7.5 | % | -12.1 | % | ||||||||||||
Customer short-term promissory notes | 225,507 | 106,994 | 74,366 | 87,726 | 67,013 | 110.8 | % | N/M | ||||||||||||||||||
Short-term FHLB advances | - | - | 240,000 | 130,000 | - | 0.0 | % | 0.0 | % | |||||||||||||||||
Federal funds purchased | 220,000 | 5,812 | 206,269 | 54,421 | 278,570 | N/M | -21.0 | % | ||||||||||||||||||
Total Short-term Borrowings | $ | 617,524 | $ | 298,751 | $ | 694,859 | $ | 453,317 | $ | 541,317 | 106.7 | % | 14.1 | % | ||||||||||||
N/M - Not meaningful | ||||||||||||||||||||||||||
FULTON FINANCIAL CORPORATION | |||||||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | |||||||||||||||||||||||||||||||||||||
in thousands, except per-share data and percentages | |||||||||||||||||||||||||||||||||||||
Three Months Ended | % Change from | Year Ended | |||||||||||||||||||||||||||||||||||
Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | Dec 31 | Dec 31 | ||||||||||||||||||||||||||||||
2017 | 2017 | 2017 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | % Change | ||||||||||||||||||||||||||||
Interest Income: | |||||||||||||||||||||||||||||||||||||
Interest income | $ | 174,987 | $ | 171,511 | $ | 163,881 | $ | 158,487 | $ | 153,012 | 2.0 | % | 14.4 | % | $ | 668,866 | $ | 603,100 | 10.9 | % | |||||||||||||||||
Interest expense | 25,574 | 24,702 | 22,318 | 20,908 | 20,775 | 3.5 | % | 23.1 | % | 93,502 | 82,328 | 13.6 | % | ||||||||||||||||||||||||
Net Interest Income | 149,413 | 146,809 | 141,563 | 137,579 | 132,237 | 1.8 | % | 13.0 | % | 575,364 | 520,772 | 10.5 | % | ||||||||||||||||||||||||
Provision for credit losses | 6,730 | 5,075 | 6,700 | 4,800 | 5,000 | 32.6 | % | 34.6 | % | 23,305 | 13,182 | 76.8 | % | ||||||||||||||||||||||||
Net Interest Income after Provision | 142,683 | 141,734 | 134,863 | 132,779 | 127,237 | 0.7 | % | 12.1 | % | 552,059 | 507,590 | 8.8 | % | ||||||||||||||||||||||||
Non-Interest Income: | |||||||||||||||||||||||||||||||||||||
Other service charges and fees | 13,829 | 12,251 | 14,342 | 12,437 | 13,333 | 12.9 | % | 3.7 | % | 52,859 | 51,473 | 2.7 | % | ||||||||||||||||||||||||
Investment management and trust services | 13,152 | 12,157 | 12,132 | 11,808 | 11,610 | 8.2 | % | 13.3 | % | 49,249 | 45,270 | 8.8 | % | ||||||||||||||||||||||||
Service charges on deposit accounts | 12,670 | 13,022 | 12,914 | 12,400 | 12,814 | (2.7 | %) | (1.1 | %) | 51,006 | 51,346 | (0.7 | %) | ||||||||||||||||||||||||
Mortgage banking income | 4,386 | 4,805 | 6,141 | 4,596 | 6,959 | (8.7 | %) | (37.0 | %) | 19,928 | 19,415 | 2.6 | % | ||||||||||||||||||||||||
Other | 10,987 | 5,142 | 5,406 | 4,326 | 6,514 | 113.7 | % | 68.7 | % | 25,861 | 20,124 | 28.5 | % | ||||||||||||||||||||||||
Non-Interest Income before Investment Securities Gains | 55,024 | 47,377 | 50,935 | 45,567 | 51,230 | 16.1 | % | 7.4 | % | 198,903 | 187,628 | 6.0 | % | ||||||||||||||||||||||||
Investment securities gains | 1,932 | 4,597 | 1,436 | 1,106 | 1,525 | (58.0 | %) | 26.7 | % | 9,071 | 2,550 | N/M | |||||||||||||||||||||||||
Total Non-Interest Income | 56,956 | 51,974 | 52,371 | 46,673 | 52,755 | 9.6 | % | 8.0 | % | 207,974 | 190,178 | 9.4 | % | ||||||||||||||||||||||||
Non-Interest Expense: | |||||||||||||||||||||||||||||||||||||
Salaries and employee benefits | 73,504 | 72,894 | 74,496 | 69,236 | 73,256 | 0.8 | % | 0.3 | % | 290,130 | 283,353 | 2.4 | % | ||||||||||||||||||||||||
Net occupancy expense | 12,549 | 12,180 | 12,316 | 12,663 | 11,798 | 3.0 | % | 6.4 | % | 49,708 | 47,611 | 4.4 | % | ||||||||||||||||||||||||
Data processing and software | 10,401 | 10,301 | 9,054 | 8,979 | 9,442 | 1.0 | % | 10.2 | % | 38,735 | 36,919 | 4.9 | % | ||||||||||||||||||||||||
Other outside services | 7,665 | 6,582 | 7,708 | 5,546 | 6,536 | 16.5 | % | 17.3 | % | 27,501 | 23,883 | 15.1 | % | ||||||||||||||||||||||||
Professional fees | 3,632 | 3,388 | 2,931 | 2,737 | 2,783 | 7.2 | % | 30.5 | % | 12,688 | 11,004 | 15.3 | % | ||||||||||||||||||||||||
FDIC insurance expense | 3,618 | 3,007 | 2,366 | 2,058 | 2,067 | 20.3 | % | 75.0 | % | 11,049 | 9,767 | 13.1 | % | ||||||||||||||||||||||||
Amortization of tax credit investments | 3,376 | 3,503 | 3,151 | 998 | - | (3.6 | %) | 100.0 | % | 11,028 | - | 100.0 | % | ||||||||||||||||||||||||
Equipment expense | 3,244 | 3,298 | 3,034 | 3,359 | 3,408 | (1.6 | %) | (4.8 | %) | 12,935 | 12,788 | 1.1 | % | ||||||||||||||||||||||||
Marketing | 1,725 | 2,089 | 2,234 | 1,986 | 1,730 | (17.4 | %) | (0.3 | %) | 8,034 | 7,044 | 14.1 | % | ||||||||||||||||||||||||
Other | 18,738 | 14,915 | 15,405 | 14,713 | 16,601 | 25.6 | % | 12.9 | % | 63,771 | 57,150 | 11.6 | % | ||||||||||||||||||||||||
Total Non-Interest Expense | 138,452 | 132,157 | 132,695 | 122,275 | 127,621 | 4.8 | % | 8.5 | % | 525,579 | 489,519 | 7.4 | % | ||||||||||||||||||||||||
Income before Income Taxes | 61,187 | 61,551 | 54,539 | 57,177 | 52,371 | (0.6 | %) | 16.8 | % | 234,454 | 208,249 | 12.6 | % | ||||||||||||||||||||||||
Income tax expense | 27,186 | 12,646 | 9,072 | 13,797 | 10,221 | 115.0 | % | 166.0 | % | 62,701 | 46,624 | 34.5 | % | ||||||||||||||||||||||||
Net Income | $ | 34,001 | $ | 48,905 | $ | 45,467 | $ | 43,380 | $ | 42,150 | (30.5 | %) | (19.3 | %) | $ | 171,753 | $ | 161,625 | 6.3 | % | |||||||||||||||||
PER SHARE: | |||||||||||||||||||||||||||||||||||||
Net income: | |||||||||||||||||||||||||||||||||||||
Basic | $ | 0.19 | $ | 0.28 | $ | 0.26 | $ | 0.25 | $ | 0.24 | (32.1 | %) | (20.8 | %) | $ | 0.98 | $ | 0.93 | 5.4 | % | |||||||||||||||||
Diluted | 0.19 | 0.28 | 0.26 | 0.25 | 0.24 | (32.1 | %) | (20.8 | %) | 0.98 | 0.93 | 5.4 | % | ||||||||||||||||||||||||
Cash dividends | $ | 0.14 | $ | 0.11 | $ | 0.11 | $ | 0.11 | $ | 0.12 | 27.3 | % | 16.7 | % | $ | 0.47 | $ | 0.41 | 14.6 | % | |||||||||||||||||
Shareholders' equity | 12.74 | 12.71 | 12.54 | 12.36 | 12.19 | 0.2 | % | 4.5 | % | 12.74 | 12.19 | 4.5 | % | ||||||||||||||||||||||||
Shareholders' equity (tangible) | 9.70 | 9.68 | 9.50 | 9.31 | 9.13 | 0.2 | % | 6.2 | % | 9.70 | 9.13 | 6.2 | % | ||||||||||||||||||||||||
Weighted average shares (basic) | 175,132 | 174,991 | 174,597 | 174,150 | 173,554 | 0.1 | % | 0.9 | % | 174,721 | 173,325 | 0.8 | % | ||||||||||||||||||||||||
Weighted average shares (diluted) | 176,374 | 176,216 | 175,532 | 175,577 | 174,874 | 0.1 | % | 0.9 | % | 175,932 | 174,418 | 0.9 | % | ||||||||||||||||||||||||
Shares outstanding, end of period | 175,170 | 175,057 | 174,740 | 174,343 | 174,040 | 0.1 | % | 0.6 | % | 175,170 | 174,040 | 0.6 | % | ||||||||||||||||||||||||
SELECTED FINANCIAL RATIOS: | |||||||||||||||||||||||||||||||||||||
Return on average assets | 0.67 | % | 0.98 | % | 0.94 | % | 0.92 | % | 0.89 | % | 0.88 | % | 0.88 | % | |||||||||||||||||||||||
Return on average shareholders' equity | 6.03 | % | 8.76 | % | 8.36 | % | 8.22 | % | 7.86 | % | 7.83 | % | 7.69 | % | |||||||||||||||||||||||
Return on average shareholders' equity (tangible) | 7.91 | % | 11.52 | % | 11.06 | % | 10.93 | % | 10.47 | % | 10.33 | % | 10.30 | % | |||||||||||||||||||||||
Net interest margin | 3.29 | % | 3.27 | % | 3.29 | % | 3.26 | % | 3.15 | % | 3.28 | % | 3.18 | % | |||||||||||||||||||||||
Efficiency ratio | 64.24 | % | 64.30 | % | 65.33 | % | 64.23 | % | 67.60 | % | 64.52 | % | 67.16 | % | |||||||||||||||||||||||
Financial information, as adjusted (1): | |||||||||||||||||||||||||||||||||||||
Net Income | $ | 49,635 | $ | 187,387 | |||||||||||||||||||||||||||||||||
Net income per share, diluted | $ | 0.28 | $ | 1.07 | |||||||||||||||||||||||||||||||||
Return on average assets | 0.98 | % | 0.96 | % | |||||||||||||||||||||||||||||||||
Return on average shareholders' equity | 8.80 | % | 8.54 | % | |||||||||||||||||||||||||||||||||
Return on average shareholders' equity (tangible) | 11.55 | % | 11.27 | % | |||||||||||||||||||||||||||||||||
N/M - Not meaningful |
(1) Excluding the re-measurement of net deferred tax assets of $15.6 million, which is considered a Non-GAAP based financial measure. Please refer to the calculation and management’s reasons for using this measure on the page titled “Non-GAAP Reconciliation” at the end of this document. |
FULTON FINANCIAL CORPORATION | |||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED) | |||||||||||||||||||||||||||||||||
dollars in thousands | |||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||
December 31, 2017 | September 30, 2017 | December 31, 2016 | |||||||||||||||||||||||||||||||
Average Balance | Interest (1) | Yield/ Rate | Average Balance | Interest (1) | Yield/ Rate | Average Balance | Interest (1) | Yield/ Rate | |||||||||||||||||||||||||
ASSETS | |||||||||||||||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||||||||||||||
Loans, net of unearned income | $ | 15,560,185 | $ | 162,050 | 4.14 | % | $ | 15,392,067 | $ | 159,454 | 4.12 | % | $ | 14,475,816 | $ | 141,826 | 3.90 | % | |||||||||||||||
Taxable investment securities | 2,177,833 | 12,218 | 2.24 | % | 2,115,931 | 11,423 | 2.16 | % | 2,096,086 | 10,941 | 2.09 | % | |||||||||||||||||||||
Tax-exempt investment securities | 411,398 | 4,526 | 4.40 | % | 408,594 | 4,492 | 4.40 | % | 389,047 | 4,234 | 4.35 | % | |||||||||||||||||||||
Equity securities | 2,219 | 33 | 5.91 | % | 8,709 | 143 | 6.52 | % | 13,068 | 181 | 5.52 | % | |||||||||||||||||||||
Total Investment Securities | 2,591,450 | 16,777 | 2.59 | % | 2,533,234 | 16,058 | 2.53 | % | 2,498,201 | 15,356 | 2.46 | % | |||||||||||||||||||||
Loans held for sale | 21,874 | 245 | 4.48 | % | 22,456 | 243 | 4.33 | % | 24,411 | 199 | 3.26 | % | |||||||||||||||||||||
Other interest-earning assets | 571,981 | 1,755 | 1.22 | % | 590,676 | 1,667 | 1.12 | % | 411,369 | 966 | 0.94 | % | |||||||||||||||||||||
Total Interest-earning Assets | 18,745,490 | 180,827 | 3.83 | % | 18,538,433 | 177,422 | 3.80 | % | 17,409,797 | 158,347 | 3.62 | % | |||||||||||||||||||||
Noninterest-earning assets: | |||||||||||||||||||||||||||||||||
Cash and due from banks | 112,958 | 101,643 | 117,741 | ||||||||||||||||||||||||||||||
Premises and equipment | 223,698 | 220,129 | 226,482 | ||||||||||||||||||||||||||||||
Other assets | 1,163,686 | 1,186,622 | 1,171,031 | ||||||||||||||||||||||||||||||
Less: allowance for loan losses | (173,253 | ) | (174,101 | ) | (164,523 | ) | |||||||||||||||||||||||||||
Total Assets | $ | 20,072,579 | $ | 19,872,726 | $ | 18,760,528 | |||||||||||||||||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||
Demand deposits | $ | 4,037,879 | $ | 4,111 | 0.40 | % | $ | 3,943,118 | $ | 3,847 | 0.39 | % | $ | 3,714,391 | $ | 1,927 | 0.21 | % | |||||||||||||||
Savings deposits | 4,752,337 | 4,594 | 0.38 | % | 4,603,155 | 3,962 | 0.34 | % | 4,216,090 | 2,249 | 0.21 | % | |||||||||||||||||||||
Brokered deposits | 105,135 | 336 | 1.27 | % | 89,767 | 277 | 1.23 | % | - | - | 0.00 | % | |||||||||||||||||||||
Time deposits | 2,706,982 | 8,041 | 1.18 | % | 2,744,532 | 7,937 | 1.15 | % | 2,777,203 | 7,593 | 1.09 | % | |||||||||||||||||||||
Total Interest-bearing Deposits | 11,602,333 | 17,082 | 0.58 | % | 11,380,572 | 16,023 | 0.56 | % | 10,707,684 | 11,769 | 0.44 | % | |||||||||||||||||||||
Short-term borrowings | 391,284 | 372 | 0.38 | % | 402,341 | 578 | 0.57 | % | 308,094 | 116 | 0.15 | % | |||||||||||||||||||||
FHLB advances and long-term debt | 1,038,257 | 8,120 | 3.12 | % | 1,038,062 | 8,100 | 3.11 | % | 947,661 | 8,891 | 3.74 | % | |||||||||||||||||||||
Total Interest-bearing Liabilities | 13,031,874 | 25,574 | 0.78 | % | 12,820,975 | 24,701 | 0.77 | % | 11,963,439 | 20,776 | 0.69 | % | |||||||||||||||||||||
Noninterest-bearing liabilities: | |||||||||||||||||||||||||||||||||
Demand deposits | 4,454,456 | 4,494,897 | 4,331,894 | ||||||||||||||||||||||||||||||
Other | 349,218 | 341,465 | 332,540 | ||||||||||||||||||||||||||||||
Total Liabilities | 17,835,548 | 17,657,337 | 16,627,873 | ||||||||||||||||||||||||||||||
Shareholders' equity | 2,237,031 | 2,215,389 | 2,132,655 | ||||||||||||||||||||||||||||||
Total Liabilities and Shareholders' Equity | $ | 20,072,579 | $ | 19,872,726 | $ | 18,760,528 | |||||||||||||||||||||||||||
Net interest income/net interest margin (fully taxable equivalent) | 155,253 | 3.29 | % | 152,721 | 3.27 | % | 137,571 | 3.15 | % | ||||||||||||||||||||||||
Tax equivalent adjustment | (5,840 | ) | (5,912 | ) | (5,334 | ) | |||||||||||||||||||||||||||
Net interest income | $ | 149,413 | $ | 146,809 | $ | 132,237 | |||||||||||||||||||||||||||
(1) Presented on a fully taxable-equivalent basis using a 35% 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 0.58%, 0.57% and 0.51% for the three months ended December 31, 2017, September 30, 2017 and December 31, 2016, respectively. | ||
AVERAGE LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL: | |||||||||||||||||||||
Three Months Ended | % Change from | ||||||||||||||||||||
December 31 2017 | September 30 2017 | June 30 2017 | March 31 2017 | December 31 2016 | September 30 2017 | December 31 2016 | |||||||||||||||
Loans, by type: | |||||||||||||||||||||
Real estate - commercial mortgage | $ | 6,232,674 | $ | 6,208,630 | $ | 6,163,844 | $ | 6,039,140 | $ | 5,828,313 | 0.4 | % | 6.9 | % | |||||||
Commercial - industrial, financial and agricultural | 4,263,199 | 4,257,075 | 4,221,025 | 4,205,072 | 4,081,498 | 0.1 | % | 4.5 | % | ||||||||||||
Real estate - residential mortgage | 1,926,067 | 1,841,559 | 1,707,929 | 1,637,669 | 1,572,895 | 4.6 | % | 22.5 | % | ||||||||||||
Real estate - home equity | 1,560,713 | 1,569,898 | 1,587,680 | 1,613,249 | 1,633,668 | (0.6 | %) | (4.5 | %) | ||||||||||||
Real estate - construction | 1,004,166 | 943,029 | 897,321 | 840,966 | 845,528 | 6.5 | % | 18.8 | % | ||||||||||||
Consumer | 312,320 | 318,546 | 300,967 | 284,352 | 289,864 | (2.0 | %) | 7.7 | % | ||||||||||||
Leasing and other | 261,046 | 253,330 | 248,439 | 237,114 | 224,050 | 3.0 | % | 16.5 | % | ||||||||||||
Total Loans, net of unearned income | $ | 15,560,185 | $ | 15,392,067 | $ | 15,127,205 | $ | 14,857,562 | $ | 14,475,816 | 1.1 | % | 7.5 | % | |||||||
Deposits, by type: | |||||||||||||||||||||
Noninterest-bearing demand | $ | 4,454,456 | $ | 4,494,897 | $ | 4,387,517 | $ | 4,301,727 | $ | 4,331,894 | (0.9 | %) | 2.8 | % | |||||||
Interest-bearing demand | 4,037,879 | 3,943,118 | 3,690,059 | 3,650,931 | 3,714,391 | 2.4 | % | 8.7 | % | ||||||||||||
Savings and money market accounts | 4,752,337 | 4,603,155 | 4,315,495 | 4,194,216 | 4,216,090 | 3.2 | % | 12.7 | % | ||||||||||||
Total demand and savings | 13,244,672 | 13,041,170 | 12,393,071 | 12,146,874 | 12,262,375 | 1.6 | % | 8.0 | % | ||||||||||||
Brokered deposits | 105,135 | 89,767 | - | - | - | 17.1 | % | - | |||||||||||||
Time deposits | 2,706,982 | 2,744,532 | 2,696,033 | 2,739,453 | 2,777,203 | (1.4 | %) | (2.5 | %) | ||||||||||||
Total Deposits | $ | 16,056,789 | $ | 15,875,469 | $ | 15,089,104 | $ | 14,886,327 | $ | 15,039,578 | 1.1 | % | 6.8 | % | |||||||
Short-term borrowings, by type: | |||||||||||||||||||||
Customer repurchase agreements | $ | 179,948 | $ | 176,415 | $ | 199,657 | $ | 199,403 | $ | 200,126 | 2.0 | % | (10.1 | %) | |||||||
Customer short-term promissory notes | 195,951 | 80,147 | 77,554 | 79,985 | 67,355 | 144.5 | % | 190.9 | % | ||||||||||||
Federal funds purchased | 15,374 | 90,453 | 242,375 | 308,220 | 40,613 | (83.0 | %) | (62.1 | %) | ||||||||||||
Short-term FHLB advances and other borrowings | 11 | 55,326 | 113,516 | 124,889 | - | (100.0 | %) | - | |||||||||||||
Total Short-term Borrowings | $ | 391,284 | $ | 402,341 | $ | 633,102 | $ | 712,497 | $ | 308,094 | (2.7 | %) | 27.0 | % | |||||||
N/M - Not meaningful | |||||||||||||||||||||
FULTON FINANCIAL CORPORATION | ||||||||||||||||||||||
CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED) | ||||||||||||||||||||||
dollars in thousands | ||||||||||||||||||||||
Year Ended December 31 | ||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||
Average Balance | Interest (1) | Yield/Rate | Average Balance | Interest (1) | Yield/Rate | |||||||||||||||||
ASSETS | ||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Loans, net of unearned income | $ | 15,236,612 | $ | 620,803 | 4.07 | % | $ | 14,128,064 | $ | 558,472 | 3.95 | % | ||||||||||
Taxable investment securities | 2,132,426 | 47,029 | 2.21 | % | 2,128,497 | 44,975 | 2.11 | % | ||||||||||||||
Tax-exempt investment securities | 407,157 | 17,794 | 4.37 | % | 327,098 | 14,865 | 4.54 | % | ||||||||||||||
Equity securities | 8,331 | 500 | 6.00 | % | 13,969 | 780 | 5.58 | % | ||||||||||||||
Total Investment Securities | 2,547,914 | 65,323 | 2.56 | % | 2,469,564 | 60,620 | 2.45 | % | ||||||||||||||
Loans held for sale | 20,008 | 876 | 4.38 | % | 19,697 | 728 | 3.70 | % | ||||||||||||||
Other interest-earning assets | 451,015 | 5,066 | 1.12 | % | 407,471 | 3,779 | 0.93 | % | ||||||||||||||
Total Interest-earning Assets | 18,255,549 | 692,068 | 3.79 | % | 17,024,796 | 623,599 | 3.66 | % | ||||||||||||||
Noninterest-earning assets: | ||||||||||||||||||||||
Cash and due from banks | 108,523 | 104,772 | ||||||||||||||||||||
Premises and equipment | 219,960 | 227,047 | ||||||||||||||||||||
Other assets | 1,168,759 | 1,179,437 | ||||||||||||||||||||
Less: allowance for loan losses | (172,424 | ) | (164,879 | ) | ||||||||||||||||||
Total Assets | $ | 19,580,367 | $ | 18,371,173 | ||||||||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
Demand deposits | $ | 3,831,865 | $ | 12,976 | 0.34 | % | $ | 3,552,886 | $ | 6,654 | 0.19 | % | ||||||||||
Savings deposits | 4,468,205 | 13,477 | 0.30 | % | 4,054,970 | 7,981 | 0.20 | % | ||||||||||||||
Brokered deposits | 49,126 | 613 | 1.25 | % | - | - | 0.00 | % | ||||||||||||||
Time deposits | 2,721,724 | 30,726 | 1.13 | % | 2,825,722 | 30,058 | 1.06 | % | ||||||||||||||
Total Interest-bearing Deposits | 11,070,920 | 57,792 | 0.52 | % | 10,433,578 | 44,693 | 0.43 | % | ||||||||||||||
Short-term borrowings | 533,564 | 2,779 | 0.52 | % | 395,727 | 855 | 0.21 | % | ||||||||||||||
FHLB advances and long-term debt | 1,034,444 | 32,932 | 3.18 | % | 959,142 | 36,780 | 3.83 | % | ||||||||||||||
Total Interest-bearing Liabilities | 12,638,928 | 93,503 | 0.74 | % | 11,788,447 | 82,328 | 0.70 | % | ||||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||||
Demand deposits | 4,410,301 | 4,151,967 | ||||||||||||||||||||
Other | 337,275 | 330,125 | ||||||||||||||||||||
Total Liabilities | 17,386,504 | 16,270,539 | ||||||||||||||||||||
Shareholders' equity | 2,193,863 | 2,100,634 | ||||||||||||||||||||
Total Liabilities and Shareholders' Equity | $ | 19,580,367 | $ | 18,371,173 | ||||||||||||||||||
Net interest income/net interest margin (fully taxable equivalent) | 598,565 | 3.28 | % | 541,271 | 3.18 | % | ||||||||||||||||
Tax equivalent adjustment | (23,201 | ) | (20,499 | ) | ||||||||||||||||||
Net interest income | $ | 575,364 | $ | 520,772 | ||||||||||||||||||
(1) Presented on a fully taxable-equivalent basis using a 35% 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 0.55% and 0.52% for the years ended December 31, 2017 and 2016, respectively. | ||
AVERAGE LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL: | |||||||||
Year Ended | |||||||||
2017 | 2016 | % Change | |||||||
Loans, by type: | |||||||||
Real estate - commercial mortgage | $ | 6,161,731 | $ | 5,636,696 | 9.3 | % | |||
Commercial - industrial, financial and agricultural | 4,236,810 | 4,080,854 | 3.8 | % | |||||
Real estate - residential mortgage | 1,779,270 | 1,464,744 | 21.5 | % | |||||
Real estate - home equity | 1,582,705 | 1,651,112 | (4.1 | %) | |||||
Real estate - construction | 921,879 | 824,182 | 11.9 | % | |||||
Consumer | 304,162 | 276,792 | 9.9 | % | |||||
Leasing and other | 250,055 | 193,684 | 29.1 | % | |||||
Total Loans, net of unearned income | $ | 15,236,612 | $ | 14,128,064 | 7.8 | % | |||
Deposits, by type: | |||||||||
Noninterest-bearing demand | $ | 4,410,301 | $ | 4,151,967 | 6.2 | % | |||
Interest-bearing demand | 3,831,865 | 3,552,886 | 7.9 | % | |||||
Savings and money market accounts | 4,468,205 | 4,054,970 | 10.2 | % | |||||
Total demand and savings | 12,710,371 | 11,759,823 | 8.1 | % | |||||
Brokered deposits | 49,126 | - | 100.0 | % | |||||
Time deposits | 2,721,724 | 2,825,722 | (3.7 | %) | |||||
Total Deposits | $ | 15,481,221 | $ | 14,585,545 | 6.1 | % | |||
Short-term borrowings, by type: | |||||||||
Customer repurchase agreements | $ | 188,769 | $ | 184,978 | 2.0 | % | |||
Customer short-term promissory notes | 108,649 | 72,224 | 50.4 | % | |||||
Federal funds purchased | 163,102 | 127,604 | 27.8 | % | |||||
Short-term FHLB advances and other borrowings | 73,044 | 10,921 | N/M | ||||||
Total Short-term Borrowings | $ | 533,564 | $ | 395,727 | 34.8 | % | |||
N/M - Not meaningful | |||||||||
FULTON FINANCIAL CORPORATION | ||||||||||||||||||||||||||||
ASSET QUALITY INFORMATION (UNAUDITED) | ||||||||||||||||||||||||||||
dollars in thousands | ||||||||||||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||||||||||
Dec 31 2017 | Sep 30 2017 | Jun 30 2017 | Mar 31 2017 | Dec 31 2016 | Dec 31 2017 | Dec 31 2016 | ||||||||||||||||||||||
ALLOWANCE FOR CREDIT LOSSES: | ||||||||||||||||||||||||||||
Balance at beginning of period | $ | 174,749 | $ | 174,998 | $ | 172,647 | $ | 171,325 | $ | 165,169 | $ | 171,325 | $ | 171,412 | ||||||||||||||
Loans charged off: | ||||||||||||||||||||||||||||
Commercial - industrial, financial and agricultural | (5,473 | ) | (2,714 | ) | (5,353 | ) | (5,527 | ) | (1,319 | ) | (19,067 | ) | (15,276 | ) | ||||||||||||||
Consumer and home equity | (1,071 | ) | (920 | ) | (1,022 | ) | (1,554 | ) | (2,156 | ) | (4,567 | ) | (7,712 | ) | ||||||||||||||
Real estate - commercial mortgage | (220 | ) | (483 | ) | (242 | ) | (1,224 | ) | (174 | ) | (2,169 | ) | (3,580 | ) | ||||||||||||||
Real estate - residential mortgage | (152 | ) | (195 | ) | (124 | ) | (216 | ) | (116 | ) | (687 | ) | (2,326 | ) | ||||||||||||||
Real estate - construction | 0 | (2,744 | ) | (774 | ) | (247 | ) | 0 | (3,765 | ) | (1,218 | ) | ||||||||||||||||
Leasing and other | (457 | ) | (739 | ) | (1,200 | ) | (639 | ) | (589 | ) | (3,035 | ) | (3,815 | ) | ||||||||||||||
Total loans charged off | (7,373 | ) | (7,795 | ) | (8,715 | ) | (9,407 | ) | (4,354 | ) | (33,290 | ) | (33,927 | ) | ||||||||||||||
Recoveries of loans previously charged off: | ||||||||||||||||||||||||||||
Commercial - industrial, financial and agricultural | 941 | 665 | 1,974 | 4,191 | 2,192 | 7,771 | 8,981 | |||||||||||||||||||||
Consumer and home equity | 466 | 445 | 685 | 373 | 580 | 1,969 | 2,466 | |||||||||||||||||||||
Real estate - commercial mortgage | 178 | 106 | 934 | 450 | 885 | 1,668 | 3,373 | |||||||||||||||||||||
Real estate - residential mortgage | 186 | 219 | 151 | 230 | 288 | 786 | 1,072 | |||||||||||||||||||||
Real estate - construction | 32 | 629 | 373 | 548 | 1,080 | 1,582 | 3,924 | |||||||||||||||||||||
Leasing and other | 175 | 407 | 249 | 137 | 485 | 968 | 842 | |||||||||||||||||||||
Recoveries of loans previously charged off | 1,978 | 2,471 | 4,366 | 5,929 | 5,510 | 14,744 | 20,658 | |||||||||||||||||||||
Net loans (charged off) recovered | (5,395 | ) | (5,324 | ) | (4,349 | ) | (3,478 | ) | 1,156 | (18,546 | ) | (13,269 | ) | |||||||||||||||
Provision for credit losses | 6,730 | 5,075 | 6,700 | 4,800 | 5,000 | 23,305 | 13,182 | |||||||||||||||||||||
Balance at end of period | $ | 176,084 | $ | 174,749 | $ | 174,998 | $ | 172,647 | $ | 171,325 | $ | 176,084 | $ | 171,325 | ||||||||||||||
Net charge-offs (recoveries) to average loans (annualized) | 0.14 | % | 0.14 | % | 0.11 | % | 0.09 | % | (0.03 | %) | 0.12 | % | 0.09 | % | ||||||||||||||
NON-PERFORMING ASSETS: | ||||||||||||||||||||||||||||
Non-accrual loans | $ | 124,749 | $ | 123,345 | $ | 122,600 | $ | 117,264 | $ | 120,133 | ||||||||||||||||||
Loans 90 days past due and accruing | 10,010 | 13,124 | 13,143 | 14,268 | 11,505 | |||||||||||||||||||||||
Total non-performing loans | 134,759 | 136,469 | 135,743 | 131,532 | 131,638 | |||||||||||||||||||||||
Other real estate owned | 9,823 | 10,542 | 11,432 | 11,906 | 12,815 | |||||||||||||||||||||||
Total non-performing assets | $ | 144,582 | $ | 147,011 | $ | 147,175 | $ | 143,438 | $ | 144,453 | ||||||||||||||||||
NON-PERFORMING LOANS, BY TYPE: | ||||||||||||||||||||||||||||
Commercial - industrial, financial and agricultural | $ | 54,309 | $ | 54,209 | $ | 51,320 | $ | 43,826 | $ | 43,460 | ||||||||||||||||||
Real estate - commercial mortgage | 35,446 | 34,650 | 32,576 | 36,713 | 39,319 | |||||||||||||||||||||||
Real estate - residential mortgage | 20,972 | 21,643 | 21,846 | 23,597 | 23,655 | |||||||||||||||||||||||
Real estate - construction | 12,197 | 13,415 | 16,564 | 13,550 | 9,842 | |||||||||||||||||||||||
Consumer and home equity | 11,803 | 12,472 | 13,156 | 13,408 | 15,045 | |||||||||||||||||||||||
Leasing | 32 | 80 | 281 | 438 | 317 | |||||||||||||||||||||||
Total non-performing loans | $ | 134,759 | $ | 136,469 | $ | 135,743 | $ | 131,532 | $ | 131,638 | ||||||||||||||||||
TROUBLED DEBT RESTRUCTURINGS (TDRs), BY TYPE: | ||||||||||||||||||||||||||||
Real-estate - residential mortgage | $ | 26,016 | $ | 26,193 | $ | 26,368 | $ | 27,033 | $ | 27,617 | ||||||||||||||||||
Consumer and home equity | 15,584 | 14,822 | 12,064 | 9,638 | 8,633 | |||||||||||||||||||||||
Real-estate - commercial mortgage | 13,959 | 14,439 | 13,772 | 15,237 | 15,957 | |||||||||||||||||||||||
Commercial - industrial, financial and agricultural | 10,820 | 7,512 | 8,086 | 7,441 | 6,627 | |||||||||||||||||||||||
Real estate - construction | - | 169 | 1,475 | 273 | 726 | |||||||||||||||||||||||
Total accruing TDRs | 66,379 | 63,135 | 61,765 | 59,622 | 59,560 | |||||||||||||||||||||||
Non-accrual TDRs (1) | 29,051 | 28,742 | 29,373 | 27,220 | 27,850 | |||||||||||||||||||||||
Total TDRs | $ | 95,430 | $ | 91,877 | $ | 91,138 | $ | 86,842 | $ | 87,410 | ||||||||||||||||||
(1) Included within non-accrual loans above. | ||||||||||||||||||||||||||||
Total Delinquency % | ||||||||||||||||||||||||||||
DELINQUENCY RATES, BY TYPE: | Dec 31 2017 | Sep 30 2017 | Jun 30 2017 | Mar 31 2017 | Dec 31 2016 | |||||||||||||||||||||||
Real estate - commercial mortgage | 0.77 | % | 0.75 | % | 0.66 | % | 0.78 | % | 0.78 | % | ||||||||||||||||||
Commercial - industrial, financial and agricultural | 1.50 | % | 1.54 | % | 1.43 | % | 1.25 | % | 1.31 | % | ||||||||||||||||||
Real estate - construction | 1.32 | % | 1.50 | % | 1.82 | % | 1.99 | % | 1.29 | % | ||||||||||||||||||
Real estate - residential mortgage | 2.04 | % | 2.25 | % | 2.08 | % | 2.44 | % | 2.74 | % | ||||||||||||||||||
Consumer, home equity, leasing and other | 1.37 | % | 1.38 | % | 1.34 | % | 1.22 | % | 1.45 | % | ||||||||||||||||||
Total | 1.24 | % | 1.28 | % | 1.20 | % | 1.23 | % | 1.27 | % | ||||||||||||||||||
ASSET QUALITY RATIOS: | ||||||||||||||||||||||||||||
Dec 31 2017 | Sep 30 2017 | Jun 30 2017 | Mar 31 2017 | Dec 31 2016 | ||||||||||||||||||||||||
Non-accrual loans to total loans | 0.79 | % | 0.80 | % | 0.80 | % | 0.78 | % | 0.82 | % | ||||||||||||||||||
Non-performing loans to total loans | 0.85 | % | 0.88 | % | 0.88 | % | 0.88 | % | 0.90 | % | ||||||||||||||||||
Non-performing assets to total loans and OREO | 0.92 | % | 0.95 | % | 0.96 | % | 0.96 | % | 0.98 | % | ||||||||||||||||||
Non-performing assets to total assets | 0.72 | % | 0.73 | % | 0.75 | % | 0.75 | % | 0.76 | % | ||||||||||||||||||
Allowance for credit losses to loans outstanding | 1.12 | % | 1.13 | % | 1.14 | % | 1.15 | % | 1.17 | % | ||||||||||||||||||
Allowance for credit losses to non-performing loans | 130.67 | % | 128.05 | % | 128.92 | % | 131.26 | % | 130.15 | % | ||||||||||||||||||
Non-performing assets to tangible common shareholders' equity and allowance for credit losses | 7.71 | % | 7.87 | % | 8.02 | % | 7.99 | % | 8.20 | % | ||||||||||||||||||
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 | Year Ended | |||||||||||||||||||||||||||
December 31 2017 | September 30 2017 | June 30 2017 | March 31 2017 | December 31 2016 | December 31 2017 | December 31 2016 | ||||||||||||||||||||||
Shareholders' equity (tangible), per share | ||||||||||||||||||||||||||||
Shareholders' equity | $ | 2,229,857 | $ | 2,225,786 | $ | 2,191,770 | $ | 2,154,683 | $ | 2,121,115 | ||||||||||||||||||
Less: Goodwill and intangible assets | (531,556 | ) | (531,556 | ) | (531,556 | ) | (531,556 | ) | (531,556 | ) | ||||||||||||||||||
Tangible shareholders' equity (numerator) | $ | 1,698,301 | $ | 1,694,230 | $ | 1,660,214 | $ | 1,623,127 | $ | 1,589,559 | ||||||||||||||||||
Shares outstanding, end of period (denominator) | 175,170 | 175,057 | 174,740 | 174,343 | 174,040 | |||||||||||||||||||||||
Shareholders' equity (tangible), per share | $ | 9.70 | $ | 9.68 | $ | 9.50 | $ | 9.31 | $ | 9.13 | ||||||||||||||||||
Return on average shareholders' equity (tangible) | ||||||||||||||||||||||||||||
Net Income - Numerator | $ | 34,001 | $ | 48,905 | $ | 45,467 | $ | 43,380 | $ | 42,150 | $ | 171,753 | $ | 161,625 | ||||||||||||||
Average shareholders' equity | $ | 2,237,031 | $ | 2,215,389 | $ | 2,181,189 | $ | 2,140,547 | $ | 2,132,655 | $ | 2,193,863 | $ | 2,100,634 | ||||||||||||||
Less: Average goodwill and intangible assets | (531,556 | ) | (531,556 | ) | (531,556 | ) | (531,556 | ) | (531,556 | ) | (531,556 | ) | (531,556 | ) | ||||||||||||||
Average tangible shareholders' equity (denominator) | $ | 1,705,475 | $ | 1,683,833 | $ | 1,649,633 | $ | 1,608,991 | $ | 1,601,099 | $ | 1,662,307 | $ | 1,569,078 | ||||||||||||||
Return on average shareholders' equity (tangible), annualized | 7.91 | % | 11.52 | % | 11.06 | % | 10.93 | % | 10.47 | % | 10.33 | % | 10.30 | % | ||||||||||||||
Efficiency ratio | ||||||||||||||||||||||||||||
Non-interest expense | $ | 138,452 | $ | 132,157 | $ | 132,695 | $ | 122,275 | $ | 127,621 | $ | 525,579 | $ | 489,519 | ||||||||||||||
Less: Amortization of tax credit investments (1) | (3,376 | ) | (3,503 | ) | (3,151 | ) | (998 | ) | - | (11,028 | ) | - | ||||||||||||||||
Non-interest expense - Numerator | $ | 135,076 | $ | 128,654 | $ | 129,544 | $ | 121,277 | $ | 127,621 | $ | 514,551 | $ | 489,519 | ||||||||||||||
Net interest income (fully taxable equivalent) | $ | 155,253 | $ | 152,721 | $ | 147,349 | $ | 143,243 | $ | 137,571 | $ | 598,565 | $ | 541,271 | ||||||||||||||
Plus: Total Non-interest income | 56,956 | 51,974 | 52,371 | 46,673 | 52,755 | 207,974 | 190,178 | |||||||||||||||||||||
Less: Investment securities gains | (1,932 | ) | (4,597 | ) | (1,436 | ) | (1,106 | ) | (1,525 | ) | (9,071 | ) | (2,550 | ) | ||||||||||||||
Denominator | $ | 210,277 | $ | 200,098 | $ | 198,284 | $ | 188,810 | $ | 188,801 | $ | 797,468 | $ | 728,899 | ||||||||||||||
Efficiency ratio | 64.24 | % | 64.30 | % | 65.33 | % | 64.23 | % | 67.60 | % | 64.52 | % | 67.16 | % | ||||||||||||||
Non-performing assets to tangible shareholders' equity and allowance for credit losses | ||||||||||||||||||||||||||||
Non-performing assets (numerator) | $ | 144,582 | $ | 147,011 | $ | 147,175 | $ | 143,438 | $ | 144,453 | ||||||||||||||||||
Tangible shareholders' equity | $ | 1,698,301 | $ | 1,694,230 | $ | 1,660,214 | $ | 1,623,127 | $ | 1,589,559 | ||||||||||||||||||
Plus: Allowance for credit losses | 176,084 | 174,749 | 174,998 | 172,647 | 171,325 | |||||||||||||||||||||||
Tangible shareholders' equity and allowance for credit losses (denominator) | $ | 1,874,385 | $ | 1,868,979 | $ | 1,835,212 | $ | 1,795,774 | $ | 1,760,884 | ||||||||||||||||||
Non-performing assets to tangible shareholders' equity and allowance for credit losses | 7.71 | % | 7.87 | % | 8.02 | % | 7.99 | % | 8.20 | % | ||||||||||||||||||
Pre-provision net revenue | ||||||||||||||||||||||||||||
Net interest income | $ | 149,413 | $ | 146,809 | $ | 141,563 | $ | 137,579 | $ | 132,237 | $ | 575,364 | $ | 520,772 | ||||||||||||||
Non-interest income | 56,956 | 51,974 | 52,371 | 46,673 | 52,755 | 207,974 | 190,178 | |||||||||||||||||||||
Less: Investment securities gains | (1,932 | ) | (4,597 | ) | (1,436 | ) | (1,106 | ) | (1,525 | ) | (9,071 | ) | (2,550 | ) | ||||||||||||||
Total revenue | $ | 204,437 | $ | 194,186 | $ | 192,498 | $ | 183,146 | $ | 183,467 | $ | 774,267 | $ | 708,400 | ||||||||||||||
Non-interest expense | $ | 138,452 | $ | 132,157 | $ | 132,695 | $ | 122,275 | $ | 127,621 | $ | 525,579 | $ | 489,519 | ||||||||||||||
Less: Amortization of tax credit investments (1) | (3,376 | ) | (3,503 | ) | (3,151 | ) | (998 | ) | - | (11,028 | ) | - | ||||||||||||||||
Total non-interest expense | $ | 135,076 | $ | 128,654 | $ | 129,544 | $ | 121,277 | $ | 127,621 | $ | 514,551 | $ | 489,519 | ||||||||||||||
Pre-provision net revenue | $ | 69,361 | $ | 65,532 | $ | 62,954 | $ | 61,869 | $ | 55,846 | $ | 259,716 | $ | 218,881 | ||||||||||||||
Reconciliation of Net Income; Net Income per share, diluted; and Selected Financial Ratios, adjusted to exclude the charge recognized in the fourth quarter of 2017 related to the re-measurement of net deferred tax assets: | ||||||||||||||||||||||||||||
Diluted earnings per share | ||||||||||||||||||||||||||||
Net income | $ | 34,001 | $ | 171,753 | ||||||||||||||||||||||||
Plus: Re-measurement of net deferred tax assets | 15,634 | 15,634 | ||||||||||||||||||||||||||
Net Income, adjusted (numerator) | $ | 49,635 | $ | 187,387 | ||||||||||||||||||||||||
Weighted average shares (diluted) (denominator) | 176,374 | 175,932 | ||||||||||||||||||||||||||
Net income per share, diluted | $ | 0.28 | $ | 1.07 | ||||||||||||||||||||||||
Return on average assets | ||||||||||||||||||||||||||||
Net income | $ | 34,001 | $ | 171,753 | ||||||||||||||||||||||||
Plus: Re-measurement of net deferred tax assets | 15,634 | 15,634 | ||||||||||||||||||||||||||
Net Income, adjusted (numerator) | $ | 49,635 | $ | 187,387 | ||||||||||||||||||||||||
Average assets (denominator) | $ | 20,072,579 | $ | 19,580,367 | ||||||||||||||||||||||||
Return on average assets, annualized | 0.98 | % | 0.96 | % | ||||||||||||||||||||||||
Return on average shareholders' equity | ||||||||||||||||||||||||||||
Net income | $ | 34,001 | $ | 171,753 | ||||||||||||||||||||||||
Plus: Re-measurement of net deferred tax assets | 15,634 | 15,634 | ||||||||||||||||||||||||||
Net Income, adjusted (numerator) | $ | 49,635 | $ | 187,387 | ||||||||||||||||||||||||
Average shareholders' equity (denominator) | $ | 2,237,031 | $ | 2,193,863 | ||||||||||||||||||||||||
Return on average shareholders' equity, annualized | 8.80 | % | 8.54 | % | ||||||||||||||||||||||||
Return on average shareholders' equity (tangible) | ||||||||||||||||||||||||||||
Net Income, as reported | $ | 34,001 | $ | 171,753 | ||||||||||||||||||||||||
Plus: Re-measurement of net deferred tax assets | 15,634 | 15,634 | ||||||||||||||||||||||||||
Net Income, adjusted (numerator) | $ | 49,635 | $ | 187,387 | ||||||||||||||||||||||||
Average shareholders' equity | $ | 2,237,031 | $ | 2,193,863 | ||||||||||||||||||||||||
Less: Average goodwill and intangible assets | (531,556 | ) | (531,556 | ) | ||||||||||||||||||||||||
Average tangible shareholders' equity (denominator) | $ | 1,705,475 | $ | 1,662,307 | ||||||||||||||||||||||||
Return on average shareholders' equity (tangible), annualized | 11.55 | % | 11.27 | % | ||||||||||||||||||||||||
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