Fulton Financial Reports Third Quarter Earnings
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The Corporation's earnings for the third quarter ended September 30, 2008, in comparison to the same period in 2007 and the second quarter of 2008 were impacted by a number of previously disclosed significant items recorded in those prior periods. During the third quarter of 2007, the Corporation recorded a $16.0 million pre-tax charge related to its mortgage banking operations. During the second quarter of 2008, the Corporation recorded a $13.9 million pre-tax gain on the sale of its credit card portfolio, offset by pre-tax charges of $13.2 million related to the establishment of a reserve related to the purchase of auction rate securities (ARCs) held in customer accounts and $24.7 million for other-than-temporary impairment of bank stocks. During the third quarter of 2008, the Corporation recorded an additional $10.8 million of pre-tax charges related to the other-than-temporary impairment of bank stocks and certain debt securities. Excluding these items, the decrease in net income for the third quarter of 2008 in comparison to the same period in 2007 and the second quarter of 2008 was primarily due to an increase in the provision for loan losses.
Net income was $96.3 million for the nine months ended September 30, 2008, a 16.0 percent decrease from the same period in 2007. Diluted net income per share for the nine months ended September 30, 2008 was 55 cents, a 16.7 percent decrease from the 66 cents reported in 2007. Total assets at September 30, 2008 were approximately $16.1 billion.
"Our third quarter performance was negatively impacted by write downs in the investment portfolio and a significant increase in the provision for loan losses due to deteriorating economic conditions," said R. Scott Smith, Jr., chairman, chief executive officer and president. "We do not expect improvement in our asset quality metrics until we begin to see tangible signs of economic recovery. Many households and businesses are currently struggling. We are committed to helping our customers weather these difficult conditions. Overall loan growth remains healthy due to increased market share opportunities and we continue to see steady growth in our net interest income. Retail funding remains a challenge and we will continue to attract customer deposits through ongoing marketing and promotional activity. Core banking non-interest income is strong and expenses are well controlled as a result of our ongoing process improvement initiatives."
Loans, net of unearned income, increased $835.2 million, or 7.6 percent, to $11.8 billion at September 30, 2008, compared to $11.0 billion at September 30, 2007. The increase was primarily due to a $490.0 million, or 14.4 percent, increase in commercial mortgages, a $225.7 million, or 6.8 percent, increase in commercial loans, a $174.9 million, or 11.9 percent, increase in home equity loans and a $170.3 million, or 21.1 percent, increase in residential mortgages. These increases were partially offset by a $112.2 million, or 22.4 percent, decrease in consumer loans, largely due to the aforementioned sale of the credit card portfolio in the second quarter of 2008, and a $111.6 million, or 8.0 percent, decrease in construction loans. In comparison to the second quarter of 2008, loans, net of unearned income, increased $246.0 million, or 2.1 percent, which was mainly due to growth in commercial mortgages of $105.4 million, or 2.8 percent, an increase in home equity loans of $53.5 million, or 3.4 percent, and an increase in residential mortgages of $50.2 million, or 5.4 percent.
Non-performing assets were $186.4 million, or 1.15 percent of total assets, at September 30, 2008, compared to $107.0 million, or 0.69 percent, at September 30, 2007 and $164.5 million, or 1.02 percent, at June 30, 2008. The $79.4 million, or 74.2 percent, increase in non-performing assets since September 30, 2007 was primarily due to deteriorating general economic conditions with increases in non-performing loans across most loan types.
Annualized net charge-offs for the quarter ended September 30, 2008 were 0.38 percent of average total loans, compared to 0.08 percent for the quarter ended September 30, 2007 and 0.33 percent for the quarter ended June 30, 2008. Net loans charged off increased $9.0 million, or 437.8 percent, for the quarter ended September 30, 2008 in comparison to the same period in 2007. The increase in charge-offs was across all loan types. For the nine months ended September 30, 2008, annualized net charge-offs were 0.29 percent of average total loans, compared to 0.07 percent for the same period in 2007. The provision for loan losses increased $22.1 million for the third quarter of 2008, as compared to the same period in 2007, and increased $10.0 million from the second quarter of 2008. For the nine months ended September 30, 2008, the provision for loan losses was $54.6 million, a 561.1 percent increase from the $8.3 million recorded during the same period in 2007. The increase in the provision for loan losses was due to the increase in the level of non-performing assets, which required additional allocations to the allowance for credit losses and reflects the negative impact of weakening economic conditions on borrowers' ability to repay their loans.
Total deposits decreased $374.6 million, or 3.6 percent, to $9.9 billion at September 30, 2008 compared to $10.3 billion at September 30, 2007. The decrease was due to a $291.6 million, or 6.3 percent, decrease in time deposits and an $83.0 million, or 1.5 percent, decrease in demand and savings deposits. In comparison to the second quarter of 2008, total deposits decreased $21.6 million, or 0.2 percent, due to a $120.7 million, or 2.1 percent, decrease in demand and savings deposits, offset by a $99.1 million, or 2.3 percent, increase in time deposits.
Net interest income for the third quarter of 2008 increased $11.6 million, or 9.5 percent, compared to the same period in 2007 and increased $2.1 million, or 1.6 percent, from the second quarter of 2008. The Corporation's net interest margin was 3.74 percent for the third quarter of 2008, 3.62 percent for the third quarter of 2007 and 3.75 percent for the second quarter of 2008. The improvement in net interest income in comparison to the same period in 2007 was mainly due to the Corporation's increased use of lower cost short-term borrowings, rather than higher cost interest-bearing deposit accounts, to fund asset growth.
Other income, excluding investment securities (losses) gains, increased $3.2 million, or 8.8 percent, in the third quarter of 2008 compared to the same period in 2007. The increase was due to an increase in fee income on deposit accounts of $4.9 million, an increase due to fees earned in 2008 under an ongoing marketing agreement with the purchaser of the credit card portfolio of $1.3 million and an increase in fees on non-deposit services of $1.1 million. These increases in comparison to the same period in 2007 were partially offset by a $2.1 million gain from the sale of certain mortgage-related assets and the settlement of related lawsuits recorded during the third quarter of 2007 and a $1.2 million decrease in investment management and trust services income. Compared to the second quarter of 2008, other income, excluding securities (losses) gains and the gain on the sale of the credit card portfolio, was essentially unchanged.
Investment securities losses in the third quarter of 2008 were $9.5 million compared to $134,000 in the third quarter of 2007. The third quarter loss resulted from $2.1 million other-than-temporary impairment charges on bank stocks and $8.7 million of other-than-temporary impairment charges on other securities. These losses were partially offset by $1.3 million in net gains on the sale of equity and debt securities. During the second quarter of 2008, the Corporation recorded the aforementioned $24.7 million of other-than-temporary impairment charge on bank stocks. As of September 30, 2008, the bank stock portfolio has a carrying value of $55.2 million and a fair value of $54.3 million.
Other expenses decreased $8.8 million, or 8.2 percent, compared to the same period in 2007, to $99.2 million. The decrease was primarily due to the aforementioned $16.0 million pre-tax charge in 2007 related to the Corporation's potential repurchase of previously sold residential mortgage loans and home equity loans, partially offset by a $2.8 million increase in salaries and employee benefits and an additional $2.7 million loss in 2008 due to a decrease in the estimated fair value of ARCs still held in customer accounts. Compared to the second quarter of 2008, other expenses decreased $10.6 million, or 9.6 percent, due primarily to the aforementioned $13.2 million loss recorded in the second quarter of 2008 related to ARCs.
Fulton Financial Corporation is a Lancaster, Pennsylvania-based financial holding company which has nearly 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 Company, 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 borrowings; the effect of competition and interest rates on net interest margin and net interest income; investment strategy and income growth; investment securities gains; declines in the value of securities which may result in charges to earnings; 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; salaries and 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.
2008
FULTON FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (UNAUDITED)
dollars in thousands, except per-share data
September 30
-------------------------
BALANCE SHEET DATA 2008 2007 % Change
------------ ------------ -----------
Total assets $ 16,136,145 $ 15,438,177 4.5%
Loans, net of unearned income 11,823,529 10,988,307 7.6%
Investment securities 2,806,535 2,948,262 (4.8%)
Deposits 9,916,555 10,291,186 (3.6%)
Shareholders' equity 1,603,910 1,554,120 3.2%
Quarter Ended Nine Months Ended
September 30 September 30
-------------------- --------------------
INCOME % %
SUMMARY 2008 2007 Change 2008 2007 Change
--------- --------- ------- --------- --------- -------
Interest
income $ 213,809 $ 238,740 (10.4%) $ 658,421 $ 699,508 (5.9%)
Interest
expense (79,791) (116,330) (31.4%) (266,614) (334,415) (20.3%)
--------- --------- --------- ---------
Net
interest
income 134,018 122,410 9.5% 391,807 365,093 7.3%
Provision for
loan losses (26,700) (4,606) 479.7% (54,626) (8,263) 561.1%
Investment
securities
(losses)
gains (9,501) (134) N/M (29,902) 2,277 N/M
Gain on sale
of credit
card
portfolio - - N/A 13,910 - N/A
Other income 40,116 36,877 8.8% 116,437 110,536 5.3%
Other
expenses (99,155) (107,996) (8.2%) (305,551) (307,008) (0.5%)
--------- --------- --------- ---------
Income
before
income
taxes 38,778 46,551 (16.7%) 132,075 162,635 (18.8%)
Income taxes (9,702) (12,985) (25.3%) (35,825) (48,096) (25.5%)
--------- --------- --------- ---------
Net income $ 29,076 $ 33,566 (13.4%) $ 96,250 $ 114,539 (16.0%)
========= ========= ========= =========
PER-SHARE
DATA:
Net income:
Basic $ 0.17 $ 0.19 (10.5%) $ 0.55 $ 0.66 (16.7%)
Diluted 0.17 0.19 (10.5%) 0.55 0.66 (16.7%)
Cash
dividends 0.15 0.15 - 0.450 0.448 0.4%
Shareholders'
equity 9.18 8.96 2.5%
Shareholders'
equity
(tangible) 5.46 5.17 5.6%
SELECTED
FINANCIAL
RATIOS:
Return on
average
assets 0.73% 0.88% 0.81% 1.03%
Return on
average
shareholders'
equity 7.25% 8.67% 8.02% 10.07%
Return on
average
shareholders'
equity
(tangible) 12.72% 15.76% 14.00% 18.42%
Net interest
margin 3.74% 3.62% 3.69% 3.69%
Efficiency
ratio 54.69% 65.17% 56.21% 61.97%
Non-performing
assets to
total assets 1.15% 0.69%
N/M - Not meaningful
N/A - Not applicable
FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED ENDING BALANCE SHEETS (UNAUDITED)
dollars in thousands
% Change from
----------------
September September September
30 30 June 30 30 June 30
2008 2007 2008 2007 2008
----------- ----------- ----------- ------- -------
ASSETS
Cash and due
from banks $ 315,841 $ 337,306 $ 420,273 (6.4%) (24.8%)
Loans held for
sale 71,090 116,451 116,351 (39.0%) (38.9%)
Other
interest-earning
assets 50,189 19,673 10,234 155.1% 390.4%
Investment
securities 2,806,535 2,948,262 2,706,949 (4.8%) 3.7%
Loans, net of
unearned income 11,823,529 10,988,307 11,577,495 7.6% 2.1%
Allowance for
loan losses (136,988) (109,435) (122,340) 25.2% 12.0%
----------- ----------- -----------
Net Loans 11,686,541 10,878,872 11,455,155 7.4% 2.0%
Premises and
equipment 199,464 190,092 196,934 4.9% 1.3%
Accrued interest
receivable 62,018 73,927 61,366 (16.1%) 1.1%
Goodwill and
intangible
assets 649,635 658,274 651,324 (1.3%) (0.3%)
Other assets 294,832 215,320 439,539 36.9% (32.9%)
----------- ----------- -----------
Total Assets $16,136,145 $15,438,177 $16,058,125 4.5% 0.5%
=========== =========== ===========
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Deposits $ 9,916,555 $10,291,186 $ 9,938,194 (3.6%) (0.2%)
Short-term
borrowings 2,589,966 1,773,083 2,497,387 46.1% 3.7%
Federal Home
Loan Bank
advances and
long-term debt 1,819,889 1,632,980 1,819,428 11.4% -
Other
liabilities 205,825 186,808 209,638 10.2% (1.8%)
----------- ----------- -----------
Total
Liabilities 14,532,235 13,884,057 14,464,647 4.7% 0.5%
Shareholders'
equity 1,603,910 1,554,120 1,593,478 3.2% 0.7%
----------- ----------- -----------
Total
Liabilities
and
Shareholder's
Equity $16,136,145 $15,438,177 $16,058,125 4.5% 0.5%
=========== =========== ===========
LOANS, DEPOSITS
AND SHORT-TERM
BORROWINGS
DETAIL:
Loans, by type:
Real estate -
commercial
mortgage $ 3,897,703 $ 3,407,715 $ 3,792,326 14.4% 2.8%
Commercial -
industrial,
financial and
agricultural 3,554,615 3,328,963 3,518,483 6.8% 1.0%
Real estate -
home equity 1,647,245 1,472,376 1,593,775 11.9% 3.4%
Real estate -
residential
mortgage 979,486 809,148 929,252 21.1% 5.4%
Real estate -
construction 1,277,552 1,389,164 1,296,400 (8.0%) (1.5%)
Consumer 387,849 500,021 362,555 (22.4%) 7.0%
Leasing and
other 79,079 80,920 84,704 (2.3%) (6.6%)
----------- ----------- -----------
Total Loans, net
of unearned
income $11,823,529 $10,988,307 $11,577,495 7.6% 2.1%
=========== =========== ===========
Deposits, by type:
Noninterest-
bearing demand $ 1,690,499 $ 1,696,871 $ 1,789,150 (0.4%) (5.5%)
Interest-bearing
demand 1,690,330 1,738,605 1,671,769 (2.8%) 1.1%
Savings deposits 2,166,998 2,195,363 2,207,617 (1.3%) (1.8%)
Time deposits 4,368,728 4,660,347 4,269,658 (6.3%) 2.3%
----------- ----------- -----------
Total Deposits $ 9,916,555 $10,291,186 $ 9,938,194 (3.6%) (0.2%)
=========== =========== ===========
Short-term
borrowings, by
type:
Federal funds
purchased $ 1,326,873 $ 842,476 $ 1,531,568 57.5% (13.4%)
Short-term
promissory
notes 460,512 476,249 480,489 (3.3%) (4.2%)
Customer
repurchase
agreements 222,415 248,915 219,716 (10.6%) 1.2%
Overnight
borrowings and
other 580,166 205,443 265,614 182.4% 118.4%
----------- ----------- -----------
Total Short-term
borrowings $ 2,589,966 $ 1,773,083 $ 2,497,387 46.1% 3.7%
=========== =========== ===========
FULTON FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (UNAUDITED)
dollars in thousands, except per-share data
Quarter Ended % Change from
------------------------------- --------------------
September September September
30 30 June 30 30 June 30
2008 2007 2008 2007 2008
--------- --------- --------- --------- ---------
Interest Income:
Interest Income $ 213,809 $ 238,740 $ 215,392 (10.4%) (0.7%)
Interest Expense 79,791 116,330 83,502 (31.4%) (4.4%)
--------- --------- ---------
Net Interest
Income 134,018 122,410 131,890 9.5% 1.6%
Provision for Loan
Losses 26,700 4,606 16,706 479.7% 59.8%
--------- --------- ---------
Net Interest
Income after
Provision 107,318 117,804 115,184 (8.9%) (6.8%)
Other Income:
Service charges on
deposit accounts 16,177 11,293 15,319 43.2% 5.6%
Other service
charges and fees 9,598 8,530 9,131 12.5% 5.1%
Investment
management and
trust services 8,045 9,291 8,389 (13.4%) (4.1%)
Gains on sale of
mortgage loans 2,266 2,532 2,670 (10.5%) (15.1%)
Investment
securities
(losses) gains (9,501) (134) (21,647) N/M 56.1%
Gain on sale of
credit card
portfolio - - 13,910 N/A N/A
Other 4,030 5,231 4,378 (23.0%) (7.9%)
--------- --------- ---------
Total Other
Income 30,615 36,743 32,150 (16.7%) (4.8%)
Other Expenses:
Salaries and
employee benefits 55,310 52,505 54,281 5.3% 1.9%
Net occupancy
expense 10,237 9,813 10,238 4.3% -
Operating risk
loss 3,480 16,345 14,385 (78.7%) (75.8%)
Data processing 3,242 3,131 3,116 3.5% 4.0%
Advertising 3,097 2,470 3,519 25.4% (12.0%)
Equipment expense 3,061 3,438 3,398 (11.0%) (9.9%)
Intangible
amortization 1,730 1,995 1,799 (13.3%) (3.8%)
Other 18,998 18,299 19,000 3.8% -
--------- --------- ---------
Total Other
Expenses 99,155 107,996 109,736 (8.2%) (9.6%)
--------- --------- ---------
Income Before
Income Taxes 38,778 46,551 37,598 (16.7%) 3.1%
Income Taxes 9,702 12,985 11,920 (25.3%) (18.6%)
--------- --------- ---------
Net Income $ 29,076 $ 33,566 $ 25,678 (13.4%) 13.2%
========= ========= =========
SHARE AND PER-SHARE
INFORMATION:
Net income:
Basic $ 0.17 $ 0.19 $ 0.15 (10.5%) 13.3%
Diluted 0.17 0.19 0.15 (10.5%) 13.3%
Cash dividends $ 0.15 $ 0.15 $ 0.15 - -
Shareholders'
equity 9.18 8.96 9.15 2.5% 0.3%
Shareholders'
equity (tangible) 5.46 5.17 5.41 5.6% 0.9%
Weighted average
shares (basic) 174,463 173,304 173,959 0.7% 0.3%
Weighted average
shares (diluted) 174,912 174,370 174,528 0.3% 0.2%
Shares
outstanding, end
of period 174,687 173,394 174,107 0.7% 0.3%
SELECTED FINANCIAL
RATIOS:
Return on average
assets 0.73% 0.88% 0.65%
Return on average
shareholders'
equity 7.25% 8.67% 6.33%
Return on average
shareholders'
equity (tangible) 12.72% 15.76% 11.03%
Net interest
margin 3.74% 3.62% 3.75%
Efficiency ratio 54.69% 65.17% 56.93%
Nine Months Ended
September 30
--------------------
2008 2007 % Change
--------- --------- ---------
Interest Income:
Interest Income $ 658,421 $ 699,508 (5.9%)
Interest Expense 266,614 334,415 (20.3%)
--------- ---------
Net Interest
Income 391,807 365,093 7.3%
Provision for Loan
Losses 54,626 8,263 561.1%
--------- ---------
Net Interest
Income after
Provision 337,181 356,830 (5.5%)
Other Income:
Service charges on
deposit accounts 45,463 33,145 37.2%
Other service
charges and fees 27,320 23,746 15.1%
Investment
management and
trust services 25,193 29,374 (14.2%)
Gains on sale of
mortgage loans 7,247 12,113 (40.2%)
Investment
securities
(losses) gains (29,902) 2,277 N/M
Gain on sale of
credit card
portfolio 13,910 - N/A
Other 11,214 12,158 (7.8%)
--------- ---------
Total Other
Income 100,445 112,813 (11.0%)
Other Expenses:
Salaries and
employee benefits 164,786 164,353 0.3%
Net occupancy
expense 30,999 29,963 3.5%
Operating risk
loss 19,108 26,462 (27.8%)
Data processing 9,604 9,550 0.6%
Advertising 9,521 7,869 21.0%
Equipment expense 9,907 10,589 (6.4%)
Intangible
amortization 5,386 6,176 (12.8%)
Other 56,240 52,046 8.1%
--------- ---------
Total Other
Expenses 305,551 307,008 (0.5%)
--------- ---------
Income Before
Income Taxes 132,075 162,635 (18.8%)
Income Taxes 35,825 48,096 (25.5%)
--------- ---------
Net Income $ 96,250 $ 114,539 (16.0%)
========= =========
SHARE AND PER-SHARE
INFORMATION:
Net income:
Basic $ 0.55 $ 0.66 (16.7%)
Diluted 0.55 0.66 (16.7%)
Cash dividends $ 0.450 $ 0.448 0.4%
Shareholders'
equity
Shareholders'
equity (tangible)
Weighted average
shares (basic) 174,017 173,254 0.4%
Weighted average
shares (diluted) 174,551 174,493 -
Shares
outstanding, end
of period
SELECTED FINANCIAL
RATIOS:
Return on average
assets 0.81% 1.03%
Return on average
shareholders'
equity 8.02% 10.07%
Return on average
shareholders'
equity (tangible) 14.00% 18.42%
Net interest
margin 3.69% 3.69%
Efficiency ratio 56.21% 61.97%
N/M - Not meaningful
N/A - Not applicable
FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)
dollars in thousands
Quarter Ended
----------------------------------------
September 30, 2008
----------------------------------------
Average Yield/
Balance Interest (1) Rate
------------ ------------ ------------
ASSETS
Interest-earning assets:
Loans, net of unearned income $ 11,696,841 $ 181,562 6.18%
Taxable investment securities 2,117,207 26,025 4.70%
Tax-exempt investment
securities 509,994 6,944 5.45%
Equity securities 168,690 1,614 3.82%
------------ ------------ ------------
Total Investment Securities 2,795,891 34,583 4.78%
Loans held for sale 101,319 1,539 6.08%
Other interest-earning assets 19,013 142 2.94%
------------ ------------ ------------
Total Interest-earning Assets 14,613,064 217,826 5.91%
Noninterest-earning assets:
Cash and due from banks 322,550
Premises and equipment 197,895
Other assets 933,303
Less: allowance for loan losses (123,865)
------------
Total Assets $ 15,942,947
============
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing liabilities:
Demand deposits $ 1,734,198 $ 3,166 0.73%
Savings deposits 2,192,747 6,633 1.20%
Time deposits 4,308,903 37,393 3.45%
------------ ------------ ------------
Total Interest-bearing Deposits 8,235,848 47,192 2.28%
Short-term borrowings 2,432,109 12,877 2.08%
Federal Home Loan Bank advances
and long-term debt 1,819,897 19,722 4.32%
------------ ------------ ------------
Total Interest-bearing
Liabilities 12,487,854 79,791 2.54%
Noninterest-bearing liabilities:
Demand deposits 1,669,908
Other 190,012
------------
Total Liabilities 14,347,774
Shareholders' equity 1,595,173
------------
Total Liabilities and
Shareholders' Equity $ 15,942,947
============
Net interest income/net
interest margin (fully taxable
equivalent) 138,035 3.74%
============
Tax equivalent adjustment (4,017)
------------
Net interest income $ 134,018
============
Quarter Ended
----------------------------------------
September 30, 2007
----------------------------------------
Average Yield/
Balance Interest (1) Rate
------------ ------------ ------------
ASSETS
Interest-earning assets:
Loans, net of unearned income $ 10,857,636 $ 205,747 7.52%
Taxable investment securities 2,116,123 24,583 4.65%
Tax-exempt investment
securities 499,389 6,377 5.11%
Equity securities 188,490 2,269 4.80%
------------ ------------ ------------
Total Investment Securities 2,804,002 33,229 4.74%
Loans held for sale 159,492 2,694 6.76%
Other interest-earning assets 34,536 432 4.91%
------------ ------------ ------------
Total Interest-earning Assets 13,855,666 242,102 6.95%
Noninterest-earning assets:
Cash and due from banks 338,862
Premises and equipment 190,175
Other assets 890,901
Less: allowance for loan losses (108,628)
------------
Total Assets $ 15,166,976
============
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing liabilities:
Demand deposits $ 1,729,357 $ 7,630 1.75%
Savings deposits 2,259,231 13,680 2.40%
Time deposits 4,626,160 55,093 4.72%
------------ ------------ ------------
Total Interest-bearing Deposits 8,614,748 76,403 3.52%
Short-term borrowings 1,477,288 17,786 4.74%
Federal Home Loan Bank advances
and long-term debt 1,655,599 22,141 5.32%
------------ ------------ ------------
Total Interest-bearing
Liabilities 11,747,635 116,330 3.93%
Noninterest-bearing liabilities:
Demand deposits 1,703,137
Other 179,391
------------
Total Liabilities 13,630,163
Shareholders' equity 1,536,813
------------
Total Liabilities and
Shareholders' Equity $ 15,166,976
============
Net interest income/net
interest margin (fully taxable
equivalent) 125,772 3.62%
============
Tax equivalent adjustment (3,362)
------------
Net interest income $ 122,410
============
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
============
(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
-------------------------------------- ----------------
September
September 30 September 30 June 30 30 June 30
2008 2007 2008 2007 2008
------------ ------------ ------------ ------- -------
Loans, by type:
Real estate -
commercial
mortgage $ 3,820,045 $ 3,383,487 $ 3,697,650 12.9% 3.3%
Commercial -
industrial,
financial and
agricultural 3,557,142 3,281,342 3,510,150 8.4% 1.3%
Real estate -
home equity 1,619,935 1,454,947 1,568,173 11.3% 3.3%
Real estate -
residential
mortgage 953,420 769,381 894,652 23.9% 6.6%
Real estate -
construction 1,293,096 1,382,951 1,291,064 (6.5%) 0.2%
Consumer 368,804 502,482 376,537 (26.6%) (2.1%)
Leasing and
other 84,399 83,046 85,183 1.6% (0.9%)
------------ ------------ ------------
Total Loans, net
of unearned
income $ 11,696,841 $ 10,857,636 $ 11,423,409 7.7% 2.4%
============ ============ ============
Deposits, by type:
Noninterest-
bearing demand $ 1,669,908 $ 1,703,137 $ 1,662,266 (2.0%) 0.5%
Interest-bearing
demand 1,734,198 1,729,357 1,708,050 0.3% 1.5%
Savings deposits 2,192,747 2,259,231 2,207,699 (2.9%) (0.7%)
Time deposits 4,308,903 4,626,160 4,361,280 (6.9%) (1.2%)
------------ ------------ ------------
Total Deposits $ 9,905,756 $ 10,317,885 $ 9,939,295 (4.0%) (0.3%)
============ ============ ============
Short-term
borrowings, by
type:
Federal funds
purchased $ 1,399,130 $ 756,360 $ 1,303,590 85.0% 7.3%
Short-term
promissory
notes 486,179 446,182 468,802 9.0% 3.7%
Customer
repurchase
agreements 213,827 242,375 223,092 (11.8%) (4.2%)
Overnight
borrowings and
other 332,973 32,371 319,361 928.6% 4.3%
------------ ------------ ------------
Total Short-term
borrowings $ 2,432,109 $ 1,477,288 $ 2,314,845 64.6% 5.1%
============ ============ ============
FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)
dollars in thousands
Nine Months Ended September 30
------------------------------------------------------------
2008 2007
----------------------------- -----------------------------
Average Interest Yield Average Interest Yield
Balance (1) /Rate Balance (1) /Rate
------------ --------- ---- ------------ --------- ----
ASSETS
Interest-
earning assets:
Loans, net
of
unearned
income $ 11,472,748 $ 554,437 6.45% $ 10,619,834 $ 601,390 7.57%
Taxable
investment
securities 2,275,681 84,114 4.84% 2,092,916 71,201 4.54%
Tax-exempt
investment
securities 511,871 20,831 5.43% 497,504 19,010 5.09%
Equity
securities 192,803 5,723 3.96% 185,215 6,628 4.78%
------------ --------- ---- ------------ --------- ----
Total
Investment
Securities 2,980,355 110,668 4.89% 2,775,635 96,839 4.65%
Loans held
for sale 102,819 4,726 6.13% 188,223 9,771 6.92%
Other
interest-
earning
assets 20,701 462 2.96% 36,008 1,339 4.93%
------------ --------- ---- ------------ --------- ----
Total
Interest-
earning
Assets 14,576,623 670,293 6.13% 13,619,700 709,339 6.96%
Noninterest-
earning
assets:
Cash and
due from
banks 318,844 331,945
Premises
and
equipment 196,977 190,711
Other
assets 948,134 896,604
Less:
allowance
for loan
losses (116,598) (108,425)
------------ ------------
Total
Assets $ 15,923,980 $ 14,930,535
============ ============
LIABILITIES
AND
SHAREHOLDERS'
EQUITY
Interest-
bearing
liabilities:
Demand
deposits $ 1,709,380 $ 10,538 0.82% $ 1,688,129 $ 21,733 1.72%
Savings
deposits 2,179,432 22,396 1.37% 2,284,521 41,266 2.41%
Time
deposits 4,396,409 128,873 3.92% 4,537,160 158,411 4.67%
------------ --------- ---- ------------ --------- ----
Total
Interest-
bearing
Deposits 8,285,221 161,807 2.61% 8,509,810 221,410 3.48%
Short-term
borrowings 2,365,052 44,093 2.46% 1,424,109 51,734 4.82%
Federal
Home Loan
Bank
advances
and
long-term
debt 1,829,981 60,714 4.43% 1,564,333 61,271 5.23%
------------ --------- ---- ------------ --------- ----
Total
Interest-
bearing
Liabilities 12,480,254 266,614 2.85% 11,498,252 334,415 3.88%
Noninterest-
bearing
liabilities:
Demand
deposits 1,649,560 1,726,782
Other 190,487 184,010
------------ ------------
Total
Liabilities 14,320,301 13,409,044
Share-
holders'
equity 1,603,679 1,521,491
------------ ------------
Total
Liabilities
and Share-
holders'
Equity $ 15,923,980 $ 14,930,535
============ ============
Net
interest
income/net
interest
margin
(fully
taxable
equivalent) 403,679 3.69% 374,924 3.69%
==== ====
Tax
equivalent
adjustment (11,872) (9,831)
--------- ---------
Net
interest
income $ 391,807 $ 365,093
========= =========
(1) Presented on a tax-equivalent basis using a 35% Federal tax rate and
statutory interest expense disallowances.
AVERAGE LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL:
Nine Months Ended
September 30
-------------------------
2008 2007 % Change
------------ ------------ -----------
Loans, by type:
Real estate - commercial mortgage $ 3,688,880 $ 3,303,854 11.7%
Commercial - industrial, financial
and agricultural 3,513,406 3,162,524 11.1%
Real estate - home equity 1,571,705 1,444,100 8.8%
Real estate - residential mortgage 903,226 727,491 24.2%
Real estate - construction 1,304,252 1,386,960 (6.0%)
Consumer 406,058 508,544 (20.2%)
Leasing and other 85,221 86,361 (1.3%)
------------ ------------
Total Loans, net of unearned
income $ 11,472,748 $ 10,619,834 8.0%
============ ============
Deposits, by type:
Noninterest-bearing demand $ 1,649,560 $ 1,726,782 (4.5%)
Interest-bearing demand 1,709,380 1,688,129 1.3%
Savings deposits 2,179,432 2,284,521 (4.6%)
Time deposits 4,396,409 4,537,160 (3.1%)
------------ ------------
Total Deposits $ 9,934,781 $ 10,236,592 (2.9%)
============ ============
Short-term borrowings, by type:
Federal funds purchased $ 1,296,074 $ 751,954 72.4%
Short-term promissory notes 475,523 379,761 25.2%
Customer repurchase agreements 221,253 251,520 (12.0%)
Overnight borrowings and other 372,202 40,874 810.6%
------------ ------------
Total Short-term borrowings $ 2,365,052 $ 1,424,109 66.1%
============ ============
FULTON FINANCIAL CORPORATION
ASSET QUALITY INFORMATION (UNAUDITED)
dollars in thousands
Quarter Ended
------------------------------- Nine Months Ended
September September September 30
30 30 June 30 --------- ---------
2008 2007 2008 2008 2007
--------- --------- --------- --------- ---------
ALLOWANCE FOR CREDIT
LOSSES:
Balance at
beginning of
period $ 126,223 $ 106,892 $ 119,069 $ 112,209 $ 106,884
Loans charged-off:
Commercial -
financial and
agricultural (4,684) (1,452) (4,752) (12,200) (4,596)
Real estate -
mortgage (5,857) (122) (2,105) (8,811) (527)
Consumer (991) (874) (1,366) (3,738) (2,509)
Leasing and
other (1,166) (357) (1,973) (3,771) (1,039)
--------- --------- --------- --------- ---------
Total loans
charged off (12,698) (2,805) (10,196) (28,520) (8,671)
Recoveries of
loans charged
off:
Commercial -
financial and
agricultural 749 267 - 1,025 1,467
Real estate -
mortgage 238 8 67 385 89
Consumer 304 324 300 1,022 903
Leasing and
other 313 143 277 1,082 500
--------- --------- --------- --------- ---------
Recoveries of
loans
previously
charged off 1,604 742 644 3,514 2,959
--------- --------- --------- --------- ---------
Net loans charged
off (11,094) (2,063) (9,552) (25,006) (5,712)
Provision for loan
losses 26,700 4,606 16,706 54,626 8,263
--------- --------- --------- --------- ---------
Balance at end of
period $ 141,829 $ 109,435 $ 126,223 $ 141,829 $ 109,435
========= ========= ========= ========= =========
Net charge-offs to
average loans
(annualized) 0.38% 0.08% 0.33% 0.29% 0.07%
========= ========= ========= ========= =========
COMPONENTS OF
ALLOWANCE FOR
CREDIT LOSSES:
Allowance for loan
losses $ 136,988 $ 109,435 $ 122,340
Reserve for
unfunded lending
commitments (1) 4,841 - 3,883
--------- --------- ---------
Allowance for
credit losses $ 141,829 $ 109,435 $ 126,223
========= ========= =========
(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 $ 143,310 $ 71,043 $ 108,699
Loans 90 days past
due and accruing 21,354 23,406 35,656
--------- --------- ---------
Total
non-performing
loans 164,664 94,449 144,355
Other real estate
owned 21,706 12,536 20,156
--------- --------- ---------
Total
non-performing
assets $ 186,370 $ 106,985 $ 164,511
========= ========= =========
NON-PERFORMING
LOANS, BY TYPE:
Commercial -
industrial,
agricultural and
financial $ 41,489 $ 24,078 $ 40,127
Real estate -
commercial
mortgage 32,642 14,254 39,099
Real estate -
residential
mortgage and home
equity 26,274 24,505 21,988
Real estate -
construction 57,436 28,029 37,003
Consumer 6,558 3,447 5,748
Leasing 265 136 390
--------- --------- ---------
Total
non-performing
loans $ 164,664 $ 94,449 $ 144,355
========= ========= =========
ASSET QUALITY
RATIOS:
Non-accrual loans
to total loans 1.21% 0.65% 0.94%
Non-performing
assets to total
loans and OREO 1.57% 0.97% 1.42%
Non-performing
assets to total
assets 1.15% 0.69% 1.02%
Allowance for
credit losses to
loans outstanding 1.20% 1.00% 1.09%
Allowance for loan
losses to loans
outstanding 1.16% 1.00% 1.06%
Allowance for
credit losses to
non-performing
loans 86% 116% 87%
