Fulton Financial Corporation (NASDAQ: FULT)
earned $25.7 million for the second quarter ended June 30, 2008, a 35.6
percent decrease from the same period in 2007. Diluted net income per share
for the quarter was 15 cents, a 34.8 percent decrease from the 23 cents
reported in the same period in 2007. Diluted net income per share for the
quarter decreased 37.5 percent from the 24 cents reported in the first
quarter of 2008.
During the second quarter, three items significantly impacted earnings.
First, the Corporation recorded a $24.7 million pre-tax charge for
other-than-temporary impairment of bank stocks. Second, the Corporation
recognized a $13.9 million pre-tax gain on the sale of its approximately
$87 million credit card portfolio. Third, the Corporation recorded a $13.2
million reserve related to auction rate certificates (ARCs) held in certain
customer accounts of the Corporation's trust company subsidiary, Fulton
Financial Advisors, N.A. The credit card sale and the ARC loss were
previously disclosed in filings with the Securities and Exchange
Commission.
These three items decreased net income by approximately $15.6 million, or 9
cents per diluted share, net of tax. Excluding these items, diluted net
income per share for the second quarter of 2008 would have been 24 cents.
Net income was $67.2 million for the six months ended June 30, 2008, a 17.0
percent decrease from the same period in 2007. Diluted net income per share
for the first half of 2008 was 39 cents, a 15.2 percent decrease from the
46 cents reported in 2007. Total assets at June 30, 2008 were approximately
$16.1 billion.
"Second quarter earnings were negatively impacted by a significant
write-down in the bank stock portion of our securities portfolio as well as
increased levels of non-performing loans, net charge-offs and an increase
in our provision for loan losses. Because our capital position remains
relatively strong, our third quarter cash dividend will remain at its
current level," said R. Scott Smith, Jr., chairman, chief executive officer
and president. "We have been and will continue to closely monitor our asset
quality. Weakening economic conditions continue to place stress on
businesses and consumers and our loan loss reserve levels will continue to
reflect the uncertain economic environment. During the quarter, we saw good
growth in net interest income due to increased loan demand and improvement
in our net interest margin. Marketing and promotional activity throughout
the company has been increased to address our need for retail funding.
Continued emphasis on revenue-creating initiatives produced growth in other
income while core operating expenses remained well-controlled."
Loans, net of unearned income, increased $863.7 million, or 8.1 percent, to
$11.6 billion at June 30, 2008, compared to $10.7 billion at June 30, 2007.
The increase was primarily due to a $460.7 million, or 13.8 percent,
increase in commercial mortgages, a $285.0 million, or 8.8 percent,
increase in commercial loans, a $197.3 million, or 27.0 percent, increase
in residential mortgages, and a $146.7 million, or 10.1 percent, increase
in home equity loans. These increases were partially offset by a $142.8
million, or 28.3 percent, decrease in consumer loans, largely due to the
aforementioned sale of the credit card portfolio. In comparison to the
first quarter of 2008, loans, net of unearned income, increased $188.8
million, or 1.7 percent, which was mainly due to growth in commercial
mortgages of $172.9 million, or 4.8 percent, an increase in home equity
loans of $46.5 million, or 3.0 percent, and an increase in residential
mortgages of $46.3 million, or 5.2 percent. These increases were partially
offset by an $88.5 million, or 19.6 percent, decrease in consumer loans.
Non-performing assets were $164.5 million, or 1.02 percent of total assets,
at June 30, 2008, compared to $74.1 million, or 0.49 percent, at June 30,
2007 and $144.7 million, or 0.90 percent, at March 31, 2008. The $90.4
million, or 121.9 percent, increase in non-performing assets since June 30,
2007 was primarily due to deteriorating general economic conditions and
partially due to the repurchase of previously sold residential mortgages
from investors during the second half of 2007.
Annualized net charge-offs for the quarter ended June 30, 2008 were 0.33
percent of average total loans, compared to 0.14 percent for the quarter
ended June 30, 2007 and 0.15 percent for the quarter ended March 31, 2008.
Net loans charged off increased $5.8 million, or 157.7 percent for the
quarter ended June 30, 2008 in comparison to the same period in 2007. The
increase in charge-offs was across all loan types. For the six months ended
June 30, 2008, annualized net charge-offs were 0.24 percent of average
total loans, compared to 0.07 percent for the same period in 2007. The
provision for loan losses increased $14.0 million for the second quarter of
2008, as compared to the same period in 2007, and increased $5.5 million
from the first quarter of 2008. For the first half of 2008, the provision
for loan losses was $27.9 million, a 663.6 percent increase from the $3.7
million recorded during the same period in 2007. The increase in the
provision for loan losses was due mainly to the increase in the level of
non-performing assets, which required additional allocations to the
allowance for credit losses.
Total deposits decreased $380.0 million, or 3.7 percent, to $9.9 billion at
June 30, 2008 compared to $10.3 billion at June 30, 2007. The decrease was
due to a $270.0 million, or 5.9 percent, decrease in time deposits and a
$110.0 million, or 1.9 percent, decrease in demand and savings deposits. In
comparison to the first quarter of 2008, total deposits decreased $110.7
million, or 1.1 percent, due to a $171.4 million, or 3.9 percent, decrease
in time deposits, offset by a $60.7 million, or 1.1 percent, increase in
demand and savings deposits.
Net interest income for the second quarter of 2008 increased $11.0 million,
or 9.1 percent, compared to the same period in 2007 and increased $6.0
million, or 4.8 percent, from the first quarter of 2008. The Corporation's
net interest margin was 3.75 percent for the second quarter of 2008, 3.70
percent for the second quarter of 2007 and 3.58 percent for first quarter
of 2008. The improvement in net interest margin was mainly due to the
impact of decreasing short-term rates as deposits and borrowings have
repriced to lower rates more quickly than assets.
Other income, excluding investment securities (losses) gains and the gain
on the sale of the credit card portfolio, increased $3.5 million, or 9.7
percent, in the second quarter of 2008 compared to the same period in 2007.
Fee income on deposit accounts increased $4.1 million, fees on non-deposit
services increased $1.3 million and fees earned under an ongoing marketing
agreement with the purchaser of the credit card portfolio were $1.1
million. These increases were offset by a $1.9 million decrease in
investment management and trust services income and a $1.5 million decrease
in gains on sale of mortgage loans, due mainly to lower volumes. Compared
to the first quarter of 2008, other income, excluding securities (losses)
gains and the gain on the sale of the credit card portfolio, increased $3.5
million, or 9.5 percent. The increase was due primarily to credit card fee
income earned under the marketing agreement and a $1.4 million increase in
service charges on deposit accounts.
Investment securities losses in the second quarter of 2008 were $21.6
million compared to gains of $629,000 in the second quarter of 2007. The
second quarter loss resulted from the aforementioned $24.7 million
other-than-temporary impairment charge on bank stocks. As of June 30, 2008,
the bank stock portfolio has a carrying value of $62 million and a fair
value of $53 million. This loss was partially offset by $2.5 million in net
gains on the sale of debt securities. In the first quarter of 2008,
investment securities gains were $1.2 million, the net of $4.8 million in
gains primarily related to the initial public offering of Visa, Inc. and
the sale of MasterCard, Inc. shares, offset by a $3.6 million charge for
other-than-temporary impairment of bank stocks.
Other expenses increased $11.6 million, or 11.9 percent, compared to the
same period in 2007, to $109.7 million. The increase was due primarily to
the aforementioned $13.2 million loss related to ARCs and a $1.3 million
increase in costs associated with the disposition and maintenance of
foreclosed real estate. These increases were offset by a $2.7 million
reduction in contingent losses related to the Corporation's potential
repurchase of previously sold residential mortgage loans and home equity
loans and a $1.3 million decrease in salaries and employee benefits as a
result of a decrease in the number of employees. Compared to the first
quarter of 2008, other expenses increased $13.1 million, or 13.5 percent,
due primarily to the ARC loss.
Income tax expense was $11.9 million for the second quarter of 2008, in
comparison to $17.3 million for the same period in 2007 and $14.2 million
for the first quarter of 2008. During the second quarter of 2008, the
Corporation recorded $1.8 million in additional income tax expense related
to its accounting for certain tax credits. During the first quarter of
2008, the Corporation recorded a $2.0 million reduction of income tax
expense related to the reversal of its reserves for unrecognized income tax
positions associated with certain tax-exempt municipal securities.
Fulton Financial Corporation is a Lancaster, Pennsylvania-based financial
holding company which has over 3,900 employees and operates more than 265
banking offices in Pennsylvania, Maryland, Delaware, New Jersey and
Virginia through the following affiliates: Fulton Bank, Lancaster, PA;
Swineford National Bank, Middleburg, PA; Lafayette Ambassador Bank, Easton,
PA; FNB Bank, N.A., Danville, PA; Hagerstown Trust, Hagerstown, MD;
Delaware National Bank, Georgetown, DE; The Bank, Woodbury, NJ; The Peoples
Bank of Elkton, Elkton, MD; Skylands Community Bank, Hackettstown, NJ and
The Columbia Bank, Columbia, MD.
The Corporation's financial services affiliates include Fulton Financial
Advisors, N.A., Lancaster, PA; Fulton Insurance Services Group, Inc.,
Lancaster, PA; and Dearden, Maguire, Weaver and Barrett, LLC, West
Conshohocken, PA. Residential mortgage lending is offered by all banks
through Fulton Mortgage Company.
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
our financial condition, results of operations and business.
Forward-looking statements are encouraged by the Private Securities
Litigation Reform Act of 1995. When words such as "believes," "expects,"
"anticipates" or similar expressions are used in this release, the
Corporation is making forward-looking statements.
Such forward-looking statements reflect the Corporation's current views and
expectations based largely on information currently available to its
management, and on its current expectations, assumptions, plan, estimates,
judgments, and projections about its business and its industry, and they
involve inherent risks, contingencies, uncertainties and other factors.
Although the Corporation believes that these forward-looking statements are
based on reasonable estimates and assumptions, the Corporation is unable to
provide any assurance that its expectations will, in fact, occur or that
its estimates or assumptions will be correct and actual results could
differ materially from those expressed or implied by such forward-looking
statements and such statements are not guarantees of future performance.
The Corporation undertakes no obligation to update or revise any
forward-looking statements. Accordingly, investors and others are cautioned
not to place undue reliance on such forward-looking statements.
Many factors could affect future financial results including, without
limitation, acquisition and growth strategies, market risk, changes or
adverse developments in economic, political or regulatory conditions, a
continuation or worsening of the current disruption in credit and other
markets, including the lack of or reduced access to, and the abnormal
functioning of, markets for mortgage and other asset-backed securities and
for commercial paper and other short-term corporate borrowings, the effect
of competition and interest rates on net interest margin and net interest
income, investment strategy and income growth, investment securities gains,
impairment of investment securities, changes in rates of deposit and loan
growth, asset quality and the impact on assets from adverse changes in the
economy and in credit and other markets and resulting effects on credit
risk and asset values, balances of risk-sensitive assets to risk-sensitive
liabilities, employee benefits and other expenses, amortization of
intangible assets, goodwill impairment, capital and liquidity strategies
and other financial and business matters for future periods.
For a more complete discussion of certain risks and uncertainties affecting
the Corporation, please see the sections entitled "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" set forth in the Corporation's filings with the Securities and
Exchange Commission.
FULTON FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (UNAUDITED)
dollars in thousands, except per-share data
June 30
-------------------------
BALANCE SHEET DATA 2008 2007 % Change
------------ ------------ ---------
Total assets $ 16,058,125 $ 15,078,415 6.5%
Loans, net of unearned income 11,577,495 10,713,819 8.1%
Investment securities 2,706,949 2,750,394 (1.6%)
Deposits 9,938,194 10,318,239 (3.7%)
Shareholders' equity 1,593,478 1,531,660 4.0%
Quarter Ended Six Months Ended
June 30 June 30
------------------ ------------------
INCOME SUMMARY 2008 2007 % Change 2008 2007 % Change
-------- -------- -------- -------- -------- --------
Interest
income $215,392 $230,112 (6.4%) $444,612 $460,768 (3.5%)
Interest
expense (83,502) (109,204) (23.5%) (186,823) (218,085) (14.3%)
-------- -------- -------- --------
Net interest
income 131,890 120,908 9.1% 257,789 242,683 6.2%
Provision for
loan losses (16,706) (2,700) 518.7% (27,926) (3,657) 663.6%
Investment
securities
(losses) gains (21,647) 629 (3,541.5%) (20,401) 2,411 (946.2%)
Gain on sale of
credit card
portfolio 13,910 - N/A 13,910 - N/A
Other income 39,887 36,376 9.7% 76,321 73,659 3.6%
Other expenses (109,736) (98,107) 11.9% (206,396) (199,012) 3.7%
-------- -------- -------- --------
Income before
income taxes 37,598 57,106 (34.2%) 93,297 116,084 (19.6%)
Income taxes (11,920) (17,261) (30.9%) (26,123) (35,111) (25.6%)
-------- -------- -------- --------
Net income $ 25,678 $ 39,845 (35.6%) $ 67,174 $ 80,973 (17.0%)
======== ======== ======== ========
PER-SHARE DATA:
Net income:
Basic $ 0.15 $ 0.23 (34.8%) $ 0.39 $ 0.47 (17.0%)
Diluted 0.15 0.23 (34.8%) 0.39 0.46 (15.2%)
Cash
dividends 0.1500 0.1500 - 0.300 0.298 0.7%
Shareholders'
equity 9.15 8.84 3.5%
Shareholders'
equity
(tangible) 5.41 5.03 7.6%
SELECTED FINANCIAL
RATIOS:
Return on average
assets 0.65% 1.08% 0.85% 1.10%
Return on average
shareholders'
equity 6.33% 10.52% 8.40% 10.79%
Return on average
shareholders'
equity
(tangible) 11.03% 19.30% 14.65% 19.81%
Net interest
margin 3.75% 3.70% 3.67% 3.72%
Efficiency ratio 56.93% 59.72% 56.97% 60.35%
Non-performing
assets to
total assets 1.02% 0.49%
N/A - Not applicable
FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED ENDING BALANCE SHEETS (UNAUDITED)
dollars in thousands
% Change from
----------------
June 30 June 30 March 31 June 30 March 31
2008 2007 2008 2007 2008
----------- ----------- ----------- ------- -------
ASSETS
Cash and due from
banks $ 420,273 $ 381,714 $ 406,601 10.1% 3.4%
Loans held for sale 116,351 185,471 95,144 (37.3%) 22.3%
Other interest-earning
assets 10,234 14,367 13,240 (28.8%) (22.7%)
Investment
securities 2,706,949 2,750,394 3,104,827 (1.6%) (12.8%)
Loans, net of
unearned income 11,577,495 10,713,819 11,388,653 8.1% 1.7%
Allowance for loan
losses (122,340) (106,892) (115,257) 14.4% 6.1%
----------- ----------- -----------
Net Loans 11,455,155 10,606,927 11,273,396 8.0% 1.6%
Premises and
equipment 196,934 188,893 197,424 4.3% (0.2%)
Accrued interest
receivable 61,366 71,785 65,865 (14.5%) (6.8%)
Goodwill and
intangible assets 651,324 659,739 653,038 (1.3%) (0.3%)
Other assets 439,539 219,125 243,332 100.6% 80.6%
----------- ----------- -----------
Total Assets $16,058,125 $15,078,415 $16,052,867 6.5% -
=========== =========== ===========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits $ 9,938,194 $10,318,239 $10,048,928 (3.7%) (1.1%)
Short-term
borrowings 2,497,387 1,496,407 2,229,127 66.9% 12.0%
Federal Home Loan
Bank advances and
long-term debt 1,819,428 1,555,351 1,890,969 17.0% (3.8%)
Other liabilities 209,638 176,758 272,123 18.6% (23.0%)
----------- ----------- -----------
Total
Liabilities 14,464,647 13,546,755 14,441,147 6.8% 0.2%
Shareholders' equity 1,593,478 1,531,660 1,611,720 4.0% (1.1%)
----------- ----------- -----------
Total Liabilities
and Shareholders'
Equity $16,058,125 $15,078,415 $16,052,867 6.5% -
=========== =========== ===========
LOANS, DEPOSITS AND
SHORT-TERM
BORROWINGS DETAIL:
Loans, by type:
Commercial -
industrial,
financial and
agricultural $ 3,518,483 $ 3,233,530 $ 3,493,352 8.8% 0.7%
Real estate -
commercial mortgage 3,792,326 3,331,676 3,619,391 13.8% 4.8%
Real estate -
residential
mortgage 929,252 731,966 882,977 27.0% 5.2%
Real estate - home
equity 1,593,775 1,447,058 1,547,323 10.1% 3.0%
Real estate -
construction 1,296,400 1,379,449 1,303,232 (6.0%) (0.5%)
Consumer 362,555 505,365 451,037 (28.3%) (19.6%)
Leasing and other 84,704 84,775 91,341 (0.1%) (7.3%)
----------- ----------- -----------
Total Loans, net of
unearned income $11,577,495 $10,713,819 $11,388,653 8.1% 1.7%
=========== =========== ===========
Deposits, by type:
Noninterest-bearing
demand $ 1,789,150 $ 1,818,862 $ 1,737,442 (1.6%) 3.0%
Interest-bearing
demand 1,671,769 1,667,455 1,712,601 0.3% (2.4%)
Savings deposits 2,207,617 2,292,257 2,157,749 (3.7%) 2.3%
Time deposits 4,269,658 4,539,665 4,441,136 (5.9%) (3.9%)
----------- ----------- -----------
Total Deposits $ 9,938,194 $10,318,239 $10,048,928 (3.7%) (1.1%)
=========== =========== ===========
Short-term
borrowings, by type:
Federal funds
purchased $ 1,531,568 $ 830,327 $ 1,103,804 84.5% 38.8%
Short-term
promissory notes 480,489 399,317 496,706 20.3% (3.3%)
Customer repurchase
agreements 219,716 261,568 223,649 (16.0%) (1.8%)
Other 265,614 5,195 404,968 5,012.9% (34.4%)
----------- ----------- -----------
Total Short-term
borrowings $ 2,497,387 $ 1,496,407 $ 2,229,127 66.9% 12.0%
=========== =========== ===========
FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
dollars in thousands, except per-share data
Quarter Ended % Change from
---------------------------------- --------------------
June 30 June 30 March 31 June 30 March 31
2008 2007 2008 2007 2008
---------- ---------- ---------- -------- --------
Interest
Income:
Interest
Income $ 215,392 $ 230,112 $ 229,220 (6.4%) (6.0%)
Interest
Expense 83,502 109,204 103,321 (23.5%) (19.2%)
---------- ---------- ----------
Net Interest
Income 131,890 120,908 125,899 9.1% 4.8%
Provision for
Loan Losses 16,706 2,700 11,220 518.7% 48.9%
---------- ---------- ----------
Net Interest
Income after
Provision 115,184 118,208 114,679 (2.6%) 0.4%
Other Income:
Service charges
on deposit
accounts 15,319 11,225 13,967 36.5% 9.7%
Gain on sale
of credit card
portfolio 13,910 - - N/A N/A
Investment
management and
trust services 8,389 10,273 8,759 (18.3%) (4.2%)
Other service
charges and
fees 9,131 7,841 8,591 16.5% 6.3%
Gains on sale
of mortgage
loans 2,670 4,188 2,311 (36.2%) 15.5%
Investment
securities
(losses)
gains (21,647) 629 1,246 (3,541.5%) (1,837.3%)
Other 4,378 2,849 2,806 53.7% 56.0%
---------- ---------- ----------
Total Other
Income 32,150 37,005 37,680 (13.1%) (14.7%)
Other Expenses:
Salaries and
employee
benefits 54,281 55,555 55,195 (2.3%) (1.7%)
Operating
risk loss 14,385 4,202 1,243 242.3% 1,057.3%
Net occupancy
expense 10,238 9,954 10,524 2.9% (2.7%)
Equipment
expense 3,398 3,436 3,448 (1.1%) (1.5%)
Data processing 3,116 3,217 3,246 (3.1%) (4.0%)
Advertising 3,519 2,990 2,905 17.7% 21.1%
Intangible
amortization 1,799 2,198 1,857 (18.2%) (3.1%)
Other 19,000 16,555 18,242 14.8% 4.2%
---------- ---------- ----------
Total Other
Expenses 109,736 98,107 96,660 11.9% 13.5%
---------- ---------- ----------
Income Before
Income Taxes 37,598 57,106 55,699 (34.2%) (32.5%)
Income Taxes 11,920 17,261 14,203 (30.9%) (16.1%)
---------- ---------- ----------
Net Income $ 25,678 $ 39,845 $ 41,496 (35.6%) (38.1%)
========== ========== ==========
SHARE AND PER-SHARE
INFORMATION:
Net income:
Basic $ 0.15 $ 0.23 $ 0.24 (34.8%) (37.5%)
Diluted 0.15 0.23 0.24 (34.8%) (37.5%)
Cash
dividends $ 0.1500 $ 0.1500 $ 0.1500 - -
Weighted average
shares (basic) 173,959 173,184 173,624 0.4% 0.2%
Weighted average
Shares
(diluted) 174,528 174,417 174,209 0.1% 0.2%
SELECTED FINANCIAL
RATIOS:
Return on
average assets 0.65% 1.08% 1.05%
Return on
average
shareholders'
equity 6.33% 10.52% 10.53%
Return on average
shareholders'
equity
(tangible) 11.03% 19.30% 18.45%
Net interest
margin 3.75% 3.70% 3.58%
Efficiency
ratio 56.93% 59.72% 57.10%
Six Months Ended June 30
----------------------
2008 2007 % Change
---------- ---------- ---------
Interest
Income:
Interest
Income $ 444,612 $ 460,768 (3.5%)
Interest
Expense 186,823 218,085 (14.3%)
---------- ----------
Net Interest
Income 257,789 242,683 6.2%
Provision
for Loan
Losses 27,926 3,657 663.6%
---------- ----------
Net Interest
Income
after
Provision 229,863 239,026 (3.8%)
Other Income:
Service
charges on
deposit
accounts 29,286 21,852 34.0%
Gain on sale
of credit
card portfolio 13,910 - N/A
Investment
management and
trust services 17,148 20,083 (14.6%)
Other service
charges and
fees 17,722 15,216 16.5%
Gains on sale
of mortgage
loans 4,981 9,581 (48.0%)
Investment
securities
(losses)
gains (20,401) 2,411 (946.2%)
Other 7,184 6,927 3.7%
---------- ----------
Total Other
Income 69,830 76,070 (8.2%)
Other Expenses:
Salaries and
employee
benefits 109,476 111,848 (2.1%)
Operating
risk loss 15,628 10,117 54.5%
Net occupancy
expense 20,762 20,150 3.0%
Equipment
expense 6,846 7,151 (4.3%)
Data processing 6,362 6,419 (0.9%)
Advertising 6,424 5,399 19.0%
Intangible
amortization 3,656 4,181 (12.6%)
Other 37,242 33,747 10.4%
---------- ----------
Total Other
Expenses 206,396 199,012 3.7%
---------- ----------
Income Before
Income
Taxes 93,297 116,084 (19.6%)
Income Taxes 26,123 35,111 (25.6%)
---------- ----------
Net Income $ 67,174 $ 80,973 (17.0%)
========== ==========
SHARE AND PER-SHARE
INFORMATION:
Net income:
Basic $ 0.39 $ 0.47 (17.0%)
Diluted 0.39 0.46 (15.2%)
Cash
dividends $ 0.300 $ 0.298 0.7%
Weighted average
shares (basic) 173,791 173,228 0.3%
Weighted average
shares
(diluted) 174,360 174,595 (0.1%)
SELECTED FINANCIAL
RATIOS:
Return on
average assets 0.85% 1.10%
Return on
average
shareholders'
equity 8.40% 10.79%
Return on
average
shareholders'
equity
(tangible) 14.65% 19.81%
Net interest
margin 3.67% 3.72%
Efficiency ratio 56.97% 60.35%
N/A - Not applicable
FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)
dollars in thousands
Quarter Ended
----------------------------------------
June 30, 2008
----------------------------------------
Average Yield/
Balance Interest (1) Rate
------------ ------------ ------------
ASSETS
Interest-earning assets:
Loans, net of unearned income $ 11,423,409 $ 180,433 6.35%
Taxable investment securities 2,304,391 28,528 4.90%
Tax-exempt investment
securities 509,784 6,911 5.42%
Equity securities 196,981 1,729 3.52%
------------ ------------ ------------
Total Investment Securities 3,011,156 37,168 4.90%
Loans held for sale 108,478 1,610 5.94%
Other interest-earning assets 16,325 102 2.50%
------------ ------------ ------------
Total Interest-earning Assets 14,559,368 219,313 6.05%
Noninterest-earning assets:
Cash and due from banks 323,223
Premises and equipment 196,990
Other assets 984,000
Less: allowance for loan
losses (115,936)
------------
Total Assets $ 15,947,645
============
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing liabilities:
Demand deposits $ 1,708,050 $ 2,967 0.70%
Savings deposits 2,207,699 6,600 1.20%
Time deposits 4,361,280 41,562 3.83%
------------ ------------ ------------
Total Interest-bearing
Deposits 8,277,029 51,129 2.48%
Short-term borrowings 2,314,845 12,388 2.13%
Federal Home Loan Bank
advances and long-term debt 1,871,649 19,985 4.29%
------------ ------------ ------------
Total Interest-bearing
Liabilities 12,463,523 83,502 2.69%
Noninterest-bearing liabilities:
Demand deposits 1,662,266
Other 190,963
------------
Total Liabilities 14,316,752
Shareholders' equity 1,630,893
------------
Total Liabilities and
Shareholders' Equity $ 15,947,645
============
Net interest income/net
interest margin (fully
taxable equivalent) 135,811 3.75%
============
Tax equivalent adjustment (3,921)
------------
Net interest income $ 131,890
============
----------------------------------------
June 30, 2007
----------------------------------------
Average Yield/
Balance Interest (1) Rate
------------ ------------ ------------
ASSETS
Interest-earning assets:
Loans, net of unearned income $ 10,582,300 $ 199,085 7.54%
Taxable investment securities 1,973,214 21,999 4.46%
Tax-exempt investment
securities 500,341 6,405 5.12%
Equity securities 188,558 2,230 4.74%
------------ ------------ ------------
Total Investment Securities 2,662,113 30,634 4.60%
Loans held for sale 197,852 3,393 6.86%
Other interest-earning assets 25,311 311 4.90%
------------ ------------ ------------
Total Interest-earning Assets 13,467,576 233,423 6.95%
Noninterest-earning assets:
Cash and due from banks 340,752
Premises and equipment 189,975
Other assets 899,160
Less: allowance for loan
losses (108,952)
------------
Total Assets $ 14,788,511
============
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing liabilities:
Demand deposits $ 1,676,528 $ 7,198 1.72%
Savings deposits 2,298,910 13,776 2.40%
Time deposits 4,526,107 52,825 4.68%
------------ ------------ ------------
Total Interest-bearing
Deposits 8,501,545 73,799 3.48%
Short-term borrowings 1,243,370 14,894 4.77%
Federal Home Loan Bank
advances and long-term debt 1,585,125 20,511 5.19%
------------ ------------ ------------
Total Interest-bearing
Liabilities 11,330,040 109,204 3.86%
Noninterest-bearing liabilities:
Demand deposits 1,756,271
Other 183,449
------------
Total Liabilities 13,269,760
Shareholders' equity 1,518,751
------------
Total Liabilities and
Shareholders' Equity $ 14,788,511
============
Net interest income/net
interest margin (fully
taxable equivalent) 124,219 3.70%
============
Tax equivalent adjustment (3,311)
------------
Net interest income $ 120,908
============
----------------------------------------
March 31, 2008
----------------------------------------
Average Yield/
Balance Interest (1) Rate
------------ ------------ ------------
ASSETS
Interest-earning assets:
Loans, net of unearned income $ 11,295,531 $ 192,422 6.85%
Taxable investment securities 2,407,189 29,561 4.91%
Tax-exempt investment
securities 515,856 6,761 5.24%
Equity securities 213,004 2,380 4.48%
------------ ------------ ------------
Total Investment Securities 3,136,049 38,702 4.94%
Loans held for sale 98,676 1,577 6.39%
Other interest-earning assets 26,784 218 3.25%
------------ ------------ ------------
Total Interest-earning Assets 14,557,040 232,919 6.43%
Noninterest-earning assets:
Cash and due from banks 310,719
Premises and equipment 196,037
Other assets 927,260
Less: allowance for loan
losses (109,914)
------------
Total Assets $ 15,881,142
============
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing liabilities:
Demand deposits $ 1,685,620 $ 4,405 1.05%
Savings deposits 2,137,704 9,163 1.72%
Time deposits 4,520,004 49,918 4.44%
------------ ------------ ------------
Total Interest-bearing
Deposits 8,343,328 63,486 3.06%
Short-term borrowings 2,347,463 18,828 3.19%
Federal Home Loan Bank
advances and long-term debt 1,798,508 21,007 4.69%
------------ ------------ ------------
Total Interest-bearing
Liabilities 12,489,299 103,321 3.32%
Noninterest-bearing liabilities:
Demand deposits 1,616,283
Other 190,496
------------
Total Liabilities 14,296,078
Shareholders' equity 1,585,064
------------
Total Liabilities and
Shareholders' Equity $ 15,881,142
============
Net interest income/net
interest margin (fully
taxable equivalent) 129,598 3.58%
============
Tax equivalent adjustment (3,699)
------------
Net interest income $ 125,899
============
(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:
Quarter Ended % Change from
----------------------------------- ----------------
June 30 June 30 March 31 June 30 March 31
2008 2007 2008 2007 2008
----------- ----------- ----------- ------- -------
Loans, by type:
Commercial -
industrial,
financial and
agricultural $ 3,510,150 $ 3,172,233 $ 3,472,443 10.7% 1.1%
Real estate -
commercial mortgage 3,697,650 3,287,308 3,547,507 12.5% 4.2%
Real estate -
residential
mortgage 894,652 710,433 861,054 25.9% 3.9%
Real estate - home
equity 1,568,173 1,435,467 1,526,475 9.2% 2.7%
Real estate -
construction 1,291,064 1,381,552 1,328,718 (6.5%) (2.8%)
Consumer 376,537 506,965 473,245 (25.7%) (20.4%)
Leasing and other 85,183 88,342 86,089 (3.6%) (1.1%)
----------- ----------- -----------
Total Loans, net
of unearned
income $11,423,409 $10,582,300 $11,295,531 7.9% 1.1%
=========== =========== ===========
Deposits, by type:
Noninterest-bearing
demand $ 1,662,266 $ 1,756,271 $ 1,616,283 (5.4%) 2.8%
Interest-bearing
demand 1,708,050 1,676,528 1,685,620 1.9% 1.3%
Savings deposits 2,207,699 2,298,910 2,137,704 (4.0%) 3.3%
Time deposits 4,361,280 4,526,107 4,520,004 (3.6%) (3.5%)
----------- ----------- -----------
Total Deposits $ 9,939,295 $10,257,816 $ 9,959,611 (3.1%) (0.2%)
=========== =========== ===========
Short-term borrowings,
by type:
Federal funds
purchased $ 1,303,590 $ 586,007 $ 1,184,370 122.5% 10.1%
Short-term
promissory notes 468,802 376,149 471,470 24.6% (0.6%)
Customer repurchase
agreements 223,092 255,685 226,921 (12.7%) (1.7%)
Other 319,361 25,529 464,702 1,151.0% (31.3%)
----------- ----------- -----------
Total Short-term
borrowings $ 2,314,845 $ 1,243,370 $ 2,347,463 86.2% (1.4%)
=========== =========== ===========
FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)
dollars in thousands
Six Months Ended June 30
----------------------------------------------------------
2008 2007
---------------------------- ----------------------------
Average Interest Yield Average Interest Yield
Balance (1) /Rate Balance (1) /Rate
----------- -------- ----- ----------- -------- -----
ASSETS
Interest-earning
assets:
Loans, net of
unearned
income $11,359,470 $372,875 6.60% $10,498,962 $395,643 7.59%
Taxable
investment
securities 2,355,791 58,089 4.91% 2,081,123 46,618 4.48%
Tax-exempt
investment
securities 512,820 13,887 5.42% 496,546 12,633 5.09%
Equity securities 204,993 4,109 4.02% 183,550 4,359 4.76%
----------- -------- ----- ----------- -------- -----
Total Investment
Securities 3,073,604 76,085 4.93% 2,761,219 63,610 4.61%
Loans held
for sale 103,577 3,187 6.16% 202,826 7,077 6.98%
Other interest-
earning
assets 21,555 320 2.96% 36,756 907 4.94%
----------- -------- ----- ----------- -------- -----
Total Interest-
earning
Assets 14,558,206 452,467 6.24% 13,499,763 467,237 6.97%
Noninterest-
earning assets:
Cash and due
from banks 316,971 328,429
Premises and
equipment 196,512 190,984
Other assets 955,629 899,499
Less: allowance
for loan
losses (112,925) (108,321)
----------- -----------
Total Assets $15,914,393 $14,810,354
=========== ===========
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Interest-bearing
liabilities:
Demand
deposits $ 1,696,835 $ 7,372 0.87% $ 1,667,173 $ 14,103 1.71%
Savings
deposits 2,172,702 15,763 1.46% 2,297,374 27,586 2.42%
Time deposits 4,440,641 91,480 4.14% 4,491,926 103,318 4.64%
----------- -------- ----- ----------- -------- -----
Total
Interest-
bearing
Deposits 8,310,178 114,615 2.77% 8,456,473 145,007 3.46%
Short-term
borrowings 2,331,153 31,216 2.66% 1,397,080 33,948 4.86%
Federal Home
Loan Bank
advances and
long-term
debt 1,835,079 40,992 4.49% 1,517,944 39,130 5.19%
----------- -------- ----- ----------- -------- -----
Total Interest-
bearing
Liabilities 12,476,410 186,823 3.00% 11,371,497 218,085 3.86%
Noninterest-
bearing
liabilities:
Demand deposits 1,639,275 1,738,799
Other 190,730 186,355
----------- -----------
Total
Liabilities 14,306,415 13,296,651
Shareholders'
equity 1,607,978 1,513,703
----------- -----------
Total
Liabilities
and
Shareholders'
Equity $15,914,393 $14,810,354
=========== ===========
Net interest
income/net
interest
margin
(fully
taxable
equivalent) 265,644 3.67% 249,152 3.72%
===== =====
Tax equivalent
adjustment (7,855) (6,469)
-------- --------
Net interest
income $257,789 $242,683
======== ========
(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:
Six Months Ended
June 30
-------------------------
2008 2007 % Change
------------ ------------ ----------
Loans, by type:
Commercial - industrial, financial
and agricultural $ 3,491,296 $ 3,102,127 12.5%
Real estate - commercial mortgage 3,622,577 3,263,376 11.0%
Real estate - residential mortgage 877,853 706,199 24.3%
Real estate - home equity 1,547,324 1,438,586 7.6%
Real estate - construction 1,309,891 1,388,998 (5.7%)
Consumer 424,891 511,625 (17.0%)
Leasing and other 85,638 88,051 (2.7%)
------------ ------------
Total Loans, net of unearned
income $ 11,359,470 $ 10,498,962 8.2%
============ ============
Deposits, by type:
Noninterest-bearing demand $ 1,639,275 $ 1,738,799 (5.7%)
Interest-bearing demand 1,696,835 1,667,173 1.8%
Savings deposits 2,172,702 2,297,374 (5.4%)
Time deposits 4,440,641 4,491,926 (1.1%)
------------ ------------
Total Deposits $ 9,949,453 $ 10,195,272 (2.4%)
============ ============
Short-term borrowings, by type:
Federal funds purchased $ 1,243,980 $ 749,715 65.9%
Short-term promissory notes 470,136 345,999 35.9%
Customer repurchase agreements 225,006 256,170 (12.2%)
Other 392,031 45,196 767.4%
------------ ------------
Total Short-term borrowings $ 2,331,153 $ 1,397,080 66.9%
============ ============
FULTON FINANCIAL CORPORATION
ASSET QUALITY INFORMATION (UNAUDITED)
dollars in thousands
Quarter Ended Six Months Ended
------------------------------- June 30
June 30 June 30 March 31 --------------------
2008 2007 2008 2008 2007
--------- --------- --------- --------- ---------
ALLOWANCE FOR CREDIT
LOSSES:
Balance at
beginning of
period $ 119,069 $ 107,899 $ 112,209 $ 112,209 $ 106,884
Loans charged off (10,196) (4,506) (5,626) (15,822) (5,866)
Recoveries of
loans previously
charged off 644 799 1,266 1,910 2,217
--------- --------- --------- --------- ---------
Net loans charged
off (9,552) (3,707) (4,360) (13,912) (3,649)
Provision for loan
losses 16,706 2,700 11,220 27,926 3,657
--------- --------- --------- --------- ---------
Balance at end of
period $ 126,223 $ 106,892 $ 119,069 $ 126,223 $ 106,892
========= ========= ========= ========= =========
Net charge-offs to
average loans
(annualized) 0.33% 0.14% 0.15% 0.24% 0.07%
========= ========= ========= ========= =========
COMPONENTS OF ALLOWANCE
FOR CREDIT LOSSES:
Allowance for loan
losses $ 122,340 $ 106,892 $ 115,257
Reserve for
unfunded lending
commitments (1) 3,883 - 3,812
--------- --------- ---------
Allowance for
credit losses $ 126,223 $ 106,892 $ 119,069
========= ========= =========
(1) Reserve for unfunded commitments transferred to other liabilities
as of December 31, 2007. Prior periods were not reclassified.
NON-PERFORMING
ASSETS:
Non-accrual loans $ 108,699 $ 46,683 $ 96,588
Accruing loans 90+
days overdue 35,656 21,559 29,733
Other real estate
owned 20,156 5,899 18,333
--------- --------- ---------
Total
non-performing
assets $ 164,511 $ 74,141 $ 144,654
========= ========= =========
ASSET QUALITY
RATIOS:
Non-accrual loans
to total loans 0.94% 0.44% 0.85%
Non-performing
assets to total
loans and OREO 1.42% 0.69% 1.27%
Non-performing
assets to total
assets 1.02% 0.49% 0.90%
Allowance for
credit losses to
loans outstanding 1.09% 1.00% 1.05%
Allowance for loan
losses to loans
outstanding 1.06% 1.00% 1.01%
Allowance for
credit losses to
non-performing
loans 87% 158% 94%
Media Contact:
Laura J. Wakeley
717-291-2616
