SOURCE: Fulton Financial Corporation

Fulton Financial Corporation

January 20, 2015 16:48 ET

Fulton Financial Reports 2014 Earnings

LANCASTER, PA--(Marketwired - Jan 20, 2015) - Fulton Financial Corporation (NASDAQ: FULT)

  • Diluted earnings per share for the fourth quarter of 2014 was 21 cents, unchanged from the third quarter of 2014. For the year ended December 31, 2014, diluted earnings per share was 84 cents, a 1.2 percent increase from 2013. During the fourth quarter of 2014, total cash dividends increased to 10 cents per share, compared to 8 cents per share for the third quarter of 2014, due to the payment of a special 2 cent per share cash dividend in December 2014. 
  • Net interest income for the fourth quarter of 2014 decreased $1.3 million, or 1.0 percent, compared to the third quarter of 2014, while the net interest margin decreased 8 basis points, to 3.31 percent. For the year ended December 31, 2014, net interest income decreased $12.3 million, or 2.3 percent, compared to 2013, while the net interest margin decreased 11 basis points, to 3.39 percent.
  • Average loans for the fourth quarter of 2014 increased $133.3 million, or 1.0 percent, compared to the third quarter of 2014. Average loans for the year ended December 31, 2014 increased $306.7 million, or 2.4 percent, in comparison to 2013.
  • Average deposits for the fourth quarter of 2014 increased $302.4 million, or 2.3 percent, compared to the third quarter of 2014. Average deposits for the year ended December 31, 2014 increased $394.5 million, or 3.2 percent, compared to 2013. 
  • The provision for credit losses was $3.0 million for the fourth quarter of 2014, a decrease of $500,000 from the third quarter of 2014. For the year ended December 31, 2014, the provision for credit losses decreased $28.0 million, or 69.1 percent, compared to 2013. Non-performing loans decreased $5.4 million, or 3.7 percent, in comparison to September 30, 2014 and $15.8 million, or 10.2 percent, in comparison to December 31, 2013. 
  • Non-interest income, excluding investment securities gains, decreased $566,000, or 1.4 percent, in comparison to the third quarter of 2014, while non-interest expense increased $1.9 million, or 1.7 percent. For the year ended December 31, 2014, non-interest income, excluding investment securities gains, decreased $14.3 million, or 8.0 percent, compared to 2013, while non-interest expense decreased $2.2 million, or 0.5 percent.
  • In November 2014, the Corporation issued $100.0 million subordinated debt, the net proceeds of which were used to repurchase outstanding shares of its common stock pursuant to an accelerated share repurchase agreement (ASR).

Fulton Financial Corporation (NASDAQ: FULT) reported net income of $37.9 million, or 21 cents per diluted share, for the fourth quarter of 2014, and net income of $157.9 million, or 84 cents per diluted share, for 2014.

"Throughout 2014, we deployed capital to enhance shareholder value through a series of stock repurchase programs and a special cash dividend. We also continued the build out of our regulatory, compliance and technology infrastructure, while at the same time reducing non-interest expenses," said E. Philip Wenger, Chairman, CEO and President. "In the fourth quarter, the persistently low interest rate environment exerted further pressure on our earning asset yields and net interest margin. However, we were pleased to see good growth in core deposits and steady improvement in overall asset quality."

Shareholders' Equity and Capital Actions
During the fourth quarter of 2014, the Corporation issued $100.0 million of subordinated debt, maturing in November 2024, at a coupon rate of 4.50 percent. In conjunction with this debt offering, the Corporation entered into an ASR with a third party to repurchase $100 million of shares of the Corporation's common stock. Under the terms of the ASR, the Corporation paid $100 million to the third party on November 18, 2014 and received an initial delivery of 6.5 million shares. The final number of shares to be repurchased under the ASR will depend upon the daily volume-weighted average prices of the Corporation's shares, less a discount, over the term of the ASR. Final settlement of the ASR is scheduled for no later than April 17, 2015. The subordinated debt offering and ASR had positive impacts on both diluted earnings per share and return on average shareholders' equity. Also during the fourth quarter of 2014, the Corporation paid a special 2 cent per share cash dividend to shareholders, resulting in total fourth quarter dividends to common shareholders of 10 cents per share.

In 2014, the Corporation repurchased 14.5 million, or 7.5 percent, of its shares outstanding as of December 31, 2013.

Net Interest Income and Margin
Net interest income for the fourth quarter of 2014 decreased $1.3 million, or 1.0 percent, from the third quarter of 2014. Net interest margin decreased 8 basis points, or 2.4 percent, to 3.31 percent in the fourth quarter of 2014 from 3.39 percent in the third quarter of 2014. Average yields on interest-earning assets decreased five basis points, while the average cost of interest-bearing liabilities increased three basis points during the fourth quarter of 2014 in comparison to the third quarter of 2014.

For the year ended December 31, 2014, net interest income decreased $12.3 million, or 2.3 percent. The net interest margin was 3.39 percent for 2014, compared to 3.50 percent for 2013. Average yields on interest-earning assets decreased 12 basis points, while the average cost of interest-bearing liabilities was unchanged from 2013.

Average Balance Sheet
Total average assets for the fourth quarter of 2014 were $17.1 billion, an increase of $138.5 million, or 0.8 percent, from the third quarter of 2014. Average loans, net of unearned income, increased $133.3 million, or 1.0 percent, in comparison to the third quarter of 2014.

             
    Three Months Ended     Increase (decrease)  
    December 31, 2014     September 30, 2014     in Balance  
    Balance   Yield (1)     Balance   Yield (1)     $     %  
    (dollars in thousands)  
Average Loans, net of unearned income, by type:                                      
  Real estate - commercial mortgage   $ 5,131,375   4.36 %   $ 5,114,221   4.35 %   $ 17,154     0.3 %
  Commercial - industrial, financial and agricultural     3,723,211   3.81 %     3,657,047   3.97 %     66,164     1.8 %
  Real estate - home equity     1,735,769   4.13 %     1,727,253   4.18 %     8,516     0.5 %
  Real estate - residential mortgage     1,378,452   3.91 %     1,369,087   3.93 %     9,365     0.7 %
  Real estate - construction     697,741   3.96 %     663,922   3.98 %     33,819     5.1 %
  Consumer     275,349   5.65 %     284,630   5.39 %     (9,281 )   (3.3 %)
  Leasing and other     114,256   7.15 %     106,661   7.36 %     7,595     7.1 %
                                       
Total Average Loans, net of unearned income   $ 13,056,153   4.16 %   $ 12,922,821   4.20 %   $ 133,332     1.0 %
                                       
(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, 2014, average loans increased $306.7 million, or 2.4 percent, in comparison to 2013.

Total average liabilities increased $175.8 million, or 1.2 percent, from the third quarter of 2014, due to a $302.4 million, or 2.3 percent, increase in average deposits and a $90.8 million, or 9.1 percent, increase in Federal Home Loan Bank (FHLB) advances and long-term debt, partially offset by a $249.6 million, or 37.4 percent, decrease in average short-term borrowings. Average deposits and interest rates, by type, for the fourth quarter of 2014 in comparison to the third quarter of 2014, are summarized in the following table:

             
    Three Months Ended        
    December 31, 2014     September 30, 2014     Increase (decrease) in Balance  
    Balance   Rate     Balance   Rate     $   %  
    (dollars in thousands)      
Average Deposits, by type:                                    
  Noninterest-bearing demand   $ 3,630,780   - %   $ 3,514,033   - %   $ 116,747   3.3 %
  Interest-bearing demand     3,145,658   0.13 %     3,047,191   0.12 %     98,467   3.2 %
  Savings deposits     3,548,504   0.13 %     3,468,958   0.12 %     79,546   2.3 %
Total average demand and savings     10,324,942   0.08 %     10,030,182   0.08 %     294,760   2.9 %
  Time deposits     3,016,834   0.96 %     3,009,225   0.92 %     7,609   0.3 %
                                     
  Total Average Deposits   $ 13,341,776   0.28 %   $ 13,039,407   0.27 %   $ 302,369   2.3 %
                                     

For the year ended December 31, 2014, average deposits increased $394.5 million, or 3.2 percent, in comparison to 2013.

Asset Quality
Non-performing assets were $150.5 million, or 0.88 percent of total assets, at December 31, 2014, compared to $157.3 million, or 0.91 percent of total assets, at September 30, 2014 and $169.3 million, or 1.00 percent of total assets, at December 31, 2013. The $6.8 million, or 4.3 percent, decrease in non-performing assets in comparison to the third quarter of 2014 was primarily due to a decrease in non-performing commercial loans and construction loans, as well as a decrease in other real estate owned (OREO).

Annualized net charge-offs for the quarter ended December 31, 2014 were 0.25 percent of average total loans, compared to 0.18 percent for the quarter ended September 30, 2014 and 0.33 percent for the quarter ended December 31, 2013. The allowance for credit losses as a percentage of non-performing loans was 134.3 percent at December 31, 2014, as compared to 132.9 percent at September 30, 2014 and 132.8 percent at December 31, 2013.

Non-interest Income 
Non-interest income, excluding investment securities gains, decreased $566,000, or 1.4 percent, in comparison to the third quarter of 2014. Service charges on deposit accounts decreased $572,000, or 4.5 percent, primarily due to a decrease in overdraft fees. Mortgage banking income decreased $315,000 due to a decrease in spreads, while loan volumes were flat. Partially offsetting these decreases was a $535,000, or 5.4 percent, increase in other service charges and fees.

For the year ended December 31, 2014, non-interest income, excluding investment securities gains, decreased $14.3 million, or 8.0 percent, in comparison to 2013. Mortgage banking income decreased $13.5 million, or 44.2 percent, due to decreases in volumes and spreads. Service charges on deposit accounts decreased $6.2 million, or 11.1 percent, due primarily to lower overdraft fees. These decreases in non-interest income were partially offset by a $2.9 million increase in other service charges and fees and a $2.9 million increase in investment management and trust services income.

Non-interest Expense
Non-interest expense increased $1.9 million, or 1.7 percent, in the fourth quarter of 2014, compared to the third quarter of 2014. Salaries and employee benefits increased $3.0 million, or 4.7 percent, in comparison to the third quarter of 2014, due primarily to an increase in self-insured healthcare costs and employee salaries. Marketing expenses increased $616,000, or 34.3 percent. Other non-interest expense increased $1.6 million, or 14.5 percent, including increases in travel and entertainment expenses and provisions for reward points earned on debit card transactions. Partially offsetting these increases in non-interest expense were a $1.1 million decrease in OREO and repossession expense, an $870,000 decrease in professional fees and a $757,000 decrease in operating risk loss. 

For the year ended December 31, 2014, non-interest expense decreased $2.2 million, or 0.5 percent, in comparison to 2013. In 2014, the Corporation implemented a series of cost saving initiatives which reduced expenses by approximately $7 million. These initiatives included the consolidation of 13 branches, streamlining of subsidiary bank management structures and other employee compensation and benefit reductions. Salaries and employee benefits decreased $2.2 million, or 0.9 percent, due to the cost saving initiatives, partially offset by an increase in self-insured healthcare costs. Also contributing to the decrease in non-interest expense was a $5.0 million decrease in operating risk loss and a $4.1 million decrease in OREO and repossession expense. Offsetting these decreases in non-interest expense was a $9.5 million, or 50.6 percent, increase in other outside services, largely attributable to continuing risk management and compliance efforts, including the enhancement of the Corporation's Bank Secrecy Act and anti-money laundering compliance program (the "BSA/AML Compliance Program"). The Corporation previously disclosed regulatory enforcement orders received by the Corporation and five of its banking subsidiaries during 2014 related to its BSA/AML Compliance Program.

About Fulton Financial
Fulton Financial Corporation is a Lancaster, Pennsylvania-based financial holding company that has banking offices in Pennsylvania, Maryland, Delaware, New Jersey and Virginia through the following affiliates, headquartered as indicated: Fulton Bank, N.A., Lancaster, PA; Swineford National Bank, Middleburg, PA; Lafayette Ambassador Bank, Easton, PA; FNB Bank, N.A., Danville, PA; Fulton Bank of New Jersey, Mt. Laurel, NJ; and The Columbia Bank, Columbia, MD.

The Corporation's investment management and trust services are offered at all banks through Fulton Financial Advisors, a division of Fulton Bank, N.A. Residential mortgage lending is offered by all banks under the Fulton Mortgage Company brand.

Additional information on Fulton Financial Corporation is available on the Internet at www.fult.com.

Safe Harbor Statement
This news release may contain forward-looking statements with respect to the Corporation's financial condition, results of operations and business. Do not unduly rely on forward-looking statements. Forward-looking statements can be identified by the use of words such as "may," "should," "will," "could," "estimates," "predicts," "potential," "continue," "anticipates," "believes," "plans," "expects," "future," "intends" and similar expressions which are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, some of which are beyond the Corporation's control and ability to predict, that could cause actual results to differ materially from those expressed in the forward-looking statements.

A discussion of certain risks and uncertainties affecting the Corporation, and some of the factors that could cause the Corporation's actual results to differ materially from those described in the forward-looking statements, can be found in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2013, and the Quarterly Reports on Form 10-Q for the quarters ended March 31, 2014, June 30, 2014, and September 30, 2014, 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.

   
   
FULTON FINANCIAL CORPORATION  
CONDENSED CONSOLIDATED ENDING BALANCE SHEETS (UNAUDITED)  
dollars in thousands  
              % Change from  
  December 31   December 31   September 30   December 31   September 30  
  2014   2013   2014   2013   2014  
                           
ASSETS                          
  Cash and due from banks $ 105,702   $ 218,540   $ 220,946   (51.6 %) (52.2 %)
  Other interest-earning assets   423,083     248,161     377,579   70.5 % 12.1 %
  Loans held for sale   17,522     21,351     25,212   (17.9 %) (30.5 %)
  Investment securities   2,323,371     2,568,434     2,470,609   (9.5 %) (6.0 %)
  Loans, net of unearned income   13,111,716     12,782,220     13,030,405   2.6 % 0.6 %
  Allowance for loan losses   (184,144 )   (202,780 )   (189,477 ) (9.2 %) (2.8 %)
    Net loans   12,927,572     12,579,440     12,840,928   2.8 % 0.7 %
  Premises and equipment   226,027     226,021     224,441   -   0.7 %
  Accrued interest receivable   41,818     44,037     43,544   (5.0 %) (4.0 %)
  Goodwill and intangible assets   531,803     533,076     532,117   (0.2 %) (0.1 %)
  Other assets   527,869     495,574     502,798   6.5 % 5.0 %
                             
      Total Assets $ 17,124,767   $ 16,934,634   $ 17,238,174   1.1 % (0.7 %)
                           
LIABILITIES AND SHAREHOLDERS' EQUITY                          
  Deposits $ 13,367,506   $ 12,491,186   $ 13,333,627   7.0 % 0.3 %
  Short-term borrowings   329,719     1,258,629     564,952   (73.8 %) (41.6 %)
  Other liabilities   291,464     238,048     243,300   22.4 % 19.8 %
  FHLB advances and long-term debt   1,139,413     883,584     1,018,289   29.0 % 11.9 %
                             
    Total Liabilities   15,128,102     14,871,447     15,160,168   1.7 % (0.2 %)
                           
  Shareholders' equity   1,996,665     2,063,187     2,078,006   (3.2 %) (3.9 %)
                           
      Total Liabilities and Shareholders' Equity $ 17,124,767   $ 16,934,634   $ 17,238,174   1.1 % (0.7 %)
                           
LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL:                      
Loans, by type:                          
  Real estate - commercial mortgage $ 5,197,155   $ 5,101,922   $ 5,156,979   1.9 % 0.8 %
  Commercial - industrial, financial and agricultural   3,725,567     3,628,420     3,691,262   2.7 % 0.9 %
  Real estate - home equity   1,736,688     1,764,197     1,733,036   (1.6 %) 0.2 %
  Real estate - residential mortgage   1,377,068     1,337,380     1,372,033   3.0 % 0.4 %
  Real estate - construction   690,601     573,672     687,728   20.4 % 0.4 %
  Consumer   265,431     283,124     278,219   (6.2 %) (4.6 %)
  Leasing and other   119,206     93,505     111,148   27.5 % 7.2 %
                           
  Total Loans, net of unearned income $ 13,111,716   $ 12,782,220   $ 13,030,405   2.6 % 0.6 %
                           
Deposits, by type:                          
  Noninterest-bearing demand $ 3,640,623   $ 3,283,172   $ 3,556,810   10.9 % 2.4 %
  Interest-bearing demand   3,150,612     2,945,210     3,164,514   7.0 % (0.4 %)
  Savings deposits   3,504,820     3,344,882     3,620,919   4.8 % (3.2 %)
  Time deposits   3,071,451     2,917,922     2,991,384   5.3 % 2.7 %
                             
  Total Deposits $ 13,367,506   $ 12,491,186   $ 13,333,627   7.0 % 0.3 %
                           
Short-term borrowings, by type:                          
  Customer repurchase agreements $ 158,394   $ 175,621   $ 195,121   (9.8 %) (18.8 %)
  Customer short-term promissory notes   95,106     100,572     78,225   (5.4 %) 21.6 %
  Federal funds purchased   6,219     582,436     6,606   (98.9 %) (5.9 %)
  Short-term FHLB advances   70,000     400,000     285,000   (82.5 %) (75.4 %)
                             
  Total Short-term Borrowings $ 329,719   $ 1,258,629   $ 564,952   (73.8 %) (41.6 %)
                           
                           
                           
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       
    Dec 31 2014   Dec 31 2013   Sep 30 2014   Dec 31 2013     Sep 30 2014     2014   2013   % Change  
                                                 
Interest Income:                                                
  Interest income   $ 149,594   $ 152,457   $ 149,790   (1.9 %)   (0.1 %)   $ 596,078   $ 609,689   (2.2 %)
  Interest expense     21,556     19,505     20,424   10.5 %   5.5 %     81,211     82,495   (1.6 %)
    Net Interest Income     128,038     132,952     129,366   (3.7 %)   (1.0 %)     514,867     527,194   (2.3 %)
  Provision for credit losses     3,000     2,500     3,500   20.0 %   (14.3 %)     12,500     40,500   (69.1 %)
    Net Interest Income after Provision     125,038     130,452     125,866   (4.2 %)   (0.7 %)     502,367     486,694   3.2 %
                                                 
Non-Interest Income:                                                
  Service charges on deposit accounts     12,229     12,770     12,801   (4.2 %)   (4.5 %)     49,293     55,470   (11.1 %)
  Investment management and trust services     11,188     10,589     11,120   5.7 %   0.6 %     44,605     41,706   7.0 %
  Other service charges and fees     10,489     9,421     9,954   11.3 %   5.4 %     39,896     36,957   8.0 %
  Mortgage banking income     3,723     4,363     4,038   (14.7 %)   (7.8 %)     17,107     30,656   (44.2 %)
  Investment securities gains     848     33     81   N/M     N/M       2,041     8,004   (74.5 %)
  Other     3,624     3,556     3,906   1.9 %   (7.2 %)     14,437     14,871   (2.9 %)
    Total Non-Interest Income     42,101     40,732     41,900   3.4 %   0.5 %     167,379     187,664   (10.8 %)
                                                 
Non-Interest Expense:                                                
  Salaries and employee benefits     65,398     65,194     62,434   0.3 %   4.7 %     251,021     253,240   (0.9 %)
  Net occupancy expense     11,481     12,134     11,582   (5.4 %)   (0.9 %)     48,130     46,944   2.5 %
  Other outside services     8,720     5,633     8,632   54.8 %   1.0 %     28,404     18,856   50.6 %
  Data processing     4,346     3,386     4,689   28.4 %   (7.3 %)     17,162     16,555   3.7 %
  Equipment expense     3,298     3,972     3,307   (17.0 %)   (0.3 %)     13,567     15,419   (12.0 %)
  Software     3,271     2,450     3,353   33.5 %   (2.4 %)     12,758     11,560   10.4 %
  FDIC insurance expense     2,772     2,839     2,882   (2.4 %)   (3.8 %)     10,958     11,605   (5.6 %)
  Marketing     2,414     1,660     1,798   45.4 %   34.3 %     8,133     7,705   5.6 %
  Professional fees     2,382     3,379     3,252   (29.5 %)   (26.8 %)     12,097     13,150   (8.0 %)
  Operating risk loss     485     2,367     1,242   (79.5 %)   (61.0 %)     4,271     9,290   (54.0 %)
  Intangible amortization     315     835     314   (62.3 %)   0.3 %     1,259     2,438   (48.4 %)
  OREO and repossession expense     236     1,116     1,303   (78.9 %)   (81.9 %)     3,270     7,364   (55.6 %)
  Other     12,602     11,797     11,010   6.8 %   14.5 %     48,216     47,307   1.9 %
    Total Non-Interest Expense     117,720     116,762     115,798   0.8 %   1.7 %     459,246     461,433   (0.5 %)
                                                   
    Income Before Income Taxes     49,419     54,422     51,968   (9.2 %)   (4.9 %)     210,500     212,925   (1.1 %)
  Income tax expense     11,470     12,339     13,402   (7.0 %)   (14.4 %)     52,606     51,085   3.0 %
    Net Income   $ 37,949   $ 42,083   $ 38,566   (9.8 %)   (1.6 %)   $ 157,894   $ 161,840   (2.4 %)
                                                 
                                                 
PER SHARE:                                                
                                                 
  Net income:                                                
    Basic   $ 0.21   $ 0.22   $ 0.21   (4.5 %)   -     $ 0.85   $ 0.84   1.2 %
    Diluted     0.21     0.22     0.21   (4.5 %)   -       0.84     0.83   1.2 %
                                                   
  Cash dividends   $ 0.10   $ 0.08   $ 0.08   25.0 %   25.0 %   $ 0.34   $ 0.32   6.3 %
  Shareholders' equity     11.16     10.71     11.22   4.2 %   (0.5 %)     11.16     10.71   4.2 %
  Shareholders' equity (tangible)     8.19     7.94     8.35   3.1 %   (1.9 %)     8.19     7.94   3.1 %
                                                   
  Weighted average shares (basic)     181,251     191,577     186,109   (5.4 %)   (2.6 %)     186,219     193,334   (3.7 %)
  Weighted average shares (diluted)     182,189     192,658     186,955   (5.4 %)   (2.5 %)     187,181     194,354   (3.7 %)
  Shares outstanding, end of period     178,924     192,652     185,158   (7.1 %)   (3.4 %)     178,924     192,652   (7.1 %)
                                                 
SELECTED FINANCIAL RATIOS:                                                
                                                 
  Return on average assets     0.88 %   0.99 %   0.90 %               0.93 %   0.96 %    
  Return on average shareholders' equity     7.34 %   8.14 %   7.32 %               7.62 %   7.88 %    
  Return on average shareholders' equity (tangible)     9.96 %   11.15 %   9.88 %               10.31 %   10.76 %    
  Net interest margin     3.31 %   3.48 %   3.39 %               3.39 %   3.50 %    
  Efficiency ratio     67.53 %   65.14 %   65.80 %               65.65 %   63.39 %    
                                                 
N/M - Not meaningful  
                                                 
                         
                         
FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)
dollars in thousands
 
  Three Months Ended  
  December 31, 2014     December 31, 2013     September 30, 2014  
  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 $ 13,056,153     $ 136,636   4.16 %   $ 12,792,566   $ 138,336     4.29 %   $ 12,922,821     $ 136,773     4.20 %
  Taxable investment securities   2,109,884       12,689   2.40 %     2,289,672     13,431     2.35 %     2,181,099       12,278     2.25 %
  Tax-exempt investment securities   241,711       3,249   5.38 %     283,799     3,574     5.04 %     256,303       3,414     5.33 %
  Equity securities   33,981       442   5.16 %     33,887     413     4.83 %     34,002       438     5.12 %
  Total Investment Securities   2,385,576       16,380   2.74 %     2,607,358     17,418     2.67 %     2,471,404       16,130     2.61 %
                                                               
  Loans held for sale   15,340       201   5.24 %     20,059     290     5.78 %     23,699       237     4.01 %
  Other interest-earning assets   464,342       953   0.82 %     263,478     737     1.12 %     293,286       976     1.33 %
  Total Interest-earning Assets   15,921,411       154,170   3.85 %     15,683,461     156,781     3.98 %     15,711,210       154,116     3.90 %
                                                             
Noninterest-earning assets:                                                            
  Cash and due from banks   110,292                   212,463                   203,134                
  Premises and equipment   224,516                   226,955                   224,241                
  Other assets   1,073,302                   1,008,304                   1,055,521                
  Less: allowance for loan losses   (189,029 )                 (210,636 )                 (192,163 )              
  Total Assets $ 17,140,492                 $ 16,920,547                 $ 17,001,943                
                                                             
LIABILITIES AND SHAREHOLDERS' EQUITY                                                            
Interest-bearing liabilities:                                                            
  Demand deposits $ 3,145,658     $ 1,027   0.13 %   $ 2,966,994   $ 969     0.13 %   $ 3,047,191     $ 953     0.12 %
  Savings deposits   3,548,504       1,171   0.13 %     3,410,030     1,042     0.12 %     3,468,958       1,061     0.12 %
  Time deposits   3,016,834       7,333   0.96 %     2,965,604     6,117     0.82 %     3,009,225       6,984     0.92 %
  Total Interest-bearing Deposits   9,710,996       9,531   0.39 %     9,342,628     8,128     0.35 %     9,525,374       8,998     0.37 %
  Short-term borrowings   417,838       138   0.13 %     1,099,709     520     0.19 %     667,397       297     0.18 %
  FHLB advances and long-term debt   1,086,321       11,887   4.36 %     888,378     10,857     4.87 %     995,486       11,129     4.45 %
  Total Interest-bearing Liabilities   11,215,155       21,556   0.76 %     11,330,715     19,505     0.68 %     11,188,257       20,424     0.73 %
Noninterest-bearing liabilities:                                                            
  Demand deposits   3,630,780                   3,318,073                   3,514,033                
  Other   242,346                   221,010                   210,194                
  Total Liabilities   15,088,281                   14,869,798                   14,912,484                
  Shareholders' equity   2,052,211                   2,050,749                   2,089,459                
  Total Liabilities and Shareholders' Equity $ 17,140,492                 $ 16,920,547                 $ 17,001,943                
                                                             
Net interest income/net interest margin (fully taxable equivalent)       132,614   3.31 %           137,276     3.48 %             133,692     3.39 %
Tax equivalent adjustment           (4,576 )               (4,324 )                   (4,326 )      
                                                             
Net interest income         $ 128,038               $ 132,952                   $ 129,366        
                                                             
(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:  
                       
    Three Months Ended   % Change from  
    December 31   December 31   September 30   December 31   September 30  
    2014   2013   2014   2013   2014  
                 
Loans, by type:                            
  Real estate - commercial mortgage   $ 5,131,375   $ 5,065,963   $ 5,114,221   1.3 % 0.3 %
  Commercial - industrial, financial and agricultural     3,723,211     3,639,690     3,657,047   2.3 % 1.8 %
  Real estate - home equity     1,735,769     1,774,919     1,727,253   (2.2 %) 0.5 %
  Real estate - residential mortgage     1,378,452     1,331,987     1,369,087   3.5 % 0.7 %
  Real estate - construction     697,741     581,306     663,922   20.0 % 5.1 %
  Consumer     275,349     287,245     284,630   (4.1 %) (3.3 %)
  Leasing and other     114,256     111,456     106,661   2.5 % 7.1 %
                               
  Total Loans, net of unearned income   $ 13,056,153   $ 12,792,566   $ 12,922,821   2.1 % 1.0 %
                             
Deposits, by type:                            
  Noninterest-bearing demand   $ 3,630,780   $ 3,318,073   $ 3,514,033   9.4 % 3.3 %
  Interest-bearing demand     3,145,658     2,966,994     3,047,191   6.0 % 3.2 %
  Savings deposits     3,548,504     3,410,030     3,468,958   4.1 % 2.3 %
  Time deposits     3,016,834     2,965,604     3,009,225   1.7 % 0.3 %
                             
  Total Deposits   $ 13,341,776   $ 12,660,701   $ 13,039,407   5.4 % 2.3 %
                             
  Short-term borrowings, by type:                            
  Customer repurchase agreements   $ 183,331   $ 196,997   $ 202,809   (6.9 %) (9.6 %)
  Customer short-term promissory notes     87,338     93,986     83,734   (7.1 %) 4.3 %
  Federal funds purchased     59,669     408,726     224,930   (85.4 %) (73.5 %)
  Short-term FHLB advances and other borrowings     87,500     400,000     155,924   (78.1 %) (43.9 %)
                             
  Total Short-term Borrowings   $ 417,838   $ 1,099,709   $ 667,397   (62.0 %) (37.4 %)
                               
                               
                               
FULTON FINANCIAL CORPORATION  
CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)  
dollars in thousands  
  Year Ended December 31  
  2014         2013      
  Average Balance   Interest (1)   Yield/Rate     Average Balance   Interest (1)   Yield/Rate  
ASSETS                                  
                                   
Interest-earning assets:                                  
  Loans, net of unearned income $ 12,885,180   $ 542,540   4.21 %   $ 12,578,524   $ 552,427   4.39 %
  Taxable investment securities   2,189,510     50,651   2.31 %     2,391,650     54,321   2.27 %
  Tax-exempt investment securities   261,825     13,810   5.27 %     285,174     14,577   5.11 %
  Equity securities   33,957     1,728   5.09 %     38,722     1,829   4.72 %
  Total Investment Securities   2,485,292     66,189   2.66 %     2,715,546     70,727   2.60 %
                                     
  Loans held for sale   17,524     786   4.49 %     36,561     1,551   4.24 %
  Other interest-earning assets   314,345     4,018   1.28 %     229,444     2,264   0.99 %
                                     
  Total Interest-earning Assets   15,702,341     613,533   3.91 %     15,560,075     626,969   4.03 %
                                   
Noninterest-earning assets:                                  
  Cash and due from banks   177,664                 207,931            
  Premises and equipment   224,903                 226,041            
  Other assets   1,049,765                 1,037,338            
  Less: allowance for loan losses   (195,166 )               (220,048 )          
  Total Assets $ 16,959,507               $ 16,811,337            
                                   
LIABILITIES AND SHAREHOLDERS' EQUITY                                  
                                   
Interest-bearing liabilities:                                  
  Demand deposits $ 3,013,879   $ 3,793   0.13 %   $ 2,822,583   $ 3,656   0.13 %
  Savings deposits   3,431,957     4,298   0.13 %     3,363,943     4,096   0.12 %
  Time deposits   2,992,920     27,019   0.90 %     3,129,162     29,018   0.93 %
                                     
  Total Interest-bearing Deposits   9,438,756     35,110   0.37 %     9,315,688     36,770   0.39 %
                                     
  Short-term borrowings   832,839     1,608   0.19 %     1,196,323     2,420   0.20 %
  FHLB advances and long-term debt   965,601     44,493   4.61 %     889,461     43,305   4.87 %
                                     
  Total Interest-bearing Liabilities   11,237,196     81,211   0.72 %     11,401,472     82,495   0.72 %
                                   
Noninterest-bearing liabilities:                                  
  Demand deposits   3,428,907                 3,157,496            
  Other   221,764                 198,548            
  Total Liabilities   14,887,867                 14,757,516            
                                     
  Shareholders' equity   2,071,640                 2,053,821            
  Total Liabilities and Shareholders' Equity $ 16,959,507               $ 16,811,337            
                                   
  Net interest income/net interest margin (fully taxable equivalent)     532,322   3.39 %           544,474   3.50 %
  Tax equivalent adjustment         (17,455 )               (17,280 )    
  Net interest income       $ 514,867               $ 527,194      
                                     
(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:
   
    Year Ended      
    December 31      
    2014   2013   % Change  
             
Loans, by type:                  
  Real estate - commercial mortgage   $ 5,117,433   $ 4,864,460   5.2 %
  Commercial - industrial, financial and agricultural     3,659,059     3,680,772   (0.6 %)
  Real estate - home equity     1,738,449     1,734,622   0.2 %
  Real estate - residential mortgage     1,355,876     1,312,127   3.3 %
  Real estate - construction     631,968     591,540   6.8 %
  Consumer     277,853     299,127   (7.1 %)
  Leasing and other     104,542     95,876   9.0 %
                   
  Total Loans, net of unearned income   $ 12,885,180   $ 12,578,524   2.4 %
                   
Deposits, by type:                  
  Noninterest-bearing demand   $ 3,428,907   $ 3,157,496   8.6 %
  Interest-bearing demand     3,013,879     2,822,583   6.8 %
  Savings deposits     3,431,957     3,363,943   2.0 %
  Time deposits     2,992,920     3,129,162   (4.4 %)
                   
  Total Deposits   $ 12,867,663   $ 12,473,184   3.2 %
                   
Short-term borrowings, by type:                  
  Customer repurchase agreements   $ 197,432   $ 186,851   5.7 %
  Customer short-term promissory notes     88,670     98,882   (10.3 %)
  Federal funds purchased     285,169     612,803   (53.5 %)
  Short-term FHLB advances and other borrowings     261,568     297,787   (12.2 %)
                     
  Total Short-term Borrowings   $ 832,839   $ 1,196,323   (30.4 %)
                     
                     
                     
FULTON FINANCIAL CORPORATION  
ASSET QUALITY INFORMATION (UNAUDITED)  
dollars in thousands  
                             
  Three Months Ended     Year Ended Dec 31   
  Dec 31 2014     Dec 31 2013     Sep 30 2014     2014     2013  
ALLOWANCE FOR CREDIT LOSSES:                                      
                                       
  Balance at beginning of period $ 191,108     $ 212,838     $ 193,442     $ 204,917     $ 225,439  
                                         
  Loans charged off:                                      
    Commercial - industrial, financial and agricultural   (8,712 )     (5,527 )     (5,167 )     (24,516 )     (30,383 )
    Consumer and home equity   (1,696 )     (1,879 )     (2,030 )     (7,811 )     (10,070 )
    Real estate - commercial mortgage   (920 )     (7,779 )     (1,557 )     (6,004 )     (20,829 )
    Real estate - residential mortgage   (752 )     (1,423 )     (231 )     (2,918 )     (9,705 )
    Real estate - construction   (464 )     (1,391 )     (313 )     (1,209 )     (6,572 )
    Leasing and other   (701 )     (616 )     (306 )     (2,135 )     (2,653 )
    Total loans charged off   (13,245 )     (18,615 )     (9,604 )     (44,593 )     (80,212 )
  Recoveries of loans previously charged off:                                      
    Commercial - industrial, financial and agricultural   1,724       5,851       1,013       4,256       9,281  
    Consumer and home equity   419       451       784       2,347       2,378  
    Real estate - commercial mortgage   319       740       1,167       1,960       3,494  
    Real estate - residential mortgage   132       106       95       451       548  
    Real estate - construction   2,325       888       470       3,177       2,682  
    Leasing and other   149       158       241       916       807  
    Recoveries of loans previously charged off   5,068       8,194       3,770       13,107       19,190  
  Net loans charged off   (8,177 )     (10,421 )     (5,834 )     (31,486 )     (61,022 )
  Provision for credit losses   3,000       2,500       3,500       12,500       40,500  
                                         
  Balance at end of period $ 185,931     $ 204,917     $ 191,108     $ 185,931     $ 204,917  
                                         
  Net charge-offs to average loans (annualized)   0.25 %     0.33 %     0.18 %     0.24 %     0.49 %
                                       
NON-PERFORMING ASSETS:                                      
                                       
  Non-accrual loans $ 121,080     $ 133,753     $ 126,420                  
  Loans 90 days past due and accruing   17,402       20,524       17,428                  
    Total non-performing loans   138,482       154,277       143,848                  
  Other real estate owned   12,022       15,052       13,489                  
                                         
  Total non-performing assets $ 150,504     $ 169,329     $ 157,337                  
                                       
NON-PERFORMING LOANS, BY TYPE:                                      
                                       
  Real estate - commercial mortgage $ 45,237     $ 44,068     $ 44,602                  
  Commercial - industrial, financial and agricultural   30,388       38,021       33,277                  
  Real estate - residential mortgage   28,995       31,347       28,135                  
  Consumer and home equity   17,330       19,526       17,586                  
  Real estate - construction   16,399       21,267       19,860                  
  Leasing   133       48       388                  
                                         
  Total non-performing loans $ 138,482     $ 154,277     $ 143,848                  
                                       
                                       
TROUBLED DEBT RESTRUCTURINGS (TDRs), BY TYPE:                                  
                                       
  Real-estate - residential mortgage $ 31,308     $ 28,815     $ 30,850                  
  Real-estate - commercial mortgage   18,822       19,758       18,869                  
  Real estate - construction   9,241       10,117       9,251                  
  Commercial - industrial, financial and agricultural   5,237       8,045       5,115                  
  Consumer and home equity   3,013       1,376       2,927                  
  Total accruing TDRs   67,621       68,111       67,012                  
  Non-accrual TDRs (1)   25,235       30,209       27,724                  
  Total TDRs $ 92,856     $ 98,320     $ 94,736                  
                                       
(1) Included within non-accrual loans above.  
   
                                     
DELINQUENCY RATES, BY TYPE:  
  Dec 31, 2014   Dec 31, 2013   Sep 30, 2014  
    31-89 Days   Greater than or equal to 90 Days (2)   Total   31-89 Days   Greater than or equal to 90 Days (2)   Total   31-89 Days   Greater than or equal to 90 Days (2)   Total  
                                       
  Real estate - commercial mortgage 0.35 % 0.87 % 1.22 % 0.38 % 0.87 % 1.25 % 0.48 % 0.86 % 1.34 %
  Commercial - industrial, financial and agricultural 0.17 % 0.81 % 0.98 % 0.30 % 1.04 % 1.34 % 0.28 % 0.91 % 1.19 %
  Real estate - construction 0.02 % 2.38 % 2.40 % 0.11 % 3.71 % 3.82 % 0.03 % 2.89 % 2.92 %
  Real estate - residential mortgage 1.96 % 2.10 % 4.06 % 1.74 % 2.34 % 4.08 % 1.81 % 2.06 % 3.87 %
  Consumer, home equity, leasing and other 0.80 % 0.82 % 1.62 % 1.10 % 0.91 % 2.01 % 0.74 % 0.85 % 1.59 %
                                       
  Total 0.52 % 1.06 % 1.58 % 0.61 % 1.20 % 1.81 % 0.58 % 1.11 % 1.69 %
                                     
(2) Includes non-accrual loans  
   
   
ASSET QUALITY RATIOS:  
    Dec 31     Dec 31     Sep 30  
    2014     2013     2014  
                   
  Non-accrual loans to total loans   0.92 %   1.05 %   0.97 %
  Non-performing assets to total loans and OREO   1.15 %   1.32 %   1.21 %
  Non-performing assets to total assets   0.88 %   1.00 %   0.91 %
  Allowance for credit losses to loans outstanding   1.42 %   1.60 %   1.47 %
  Allowance for credit losses to non-performing loans   134.26 %   132.82 %   132.85 %
  Non-performing assets to tangible common shareholders' equity and allowance for credit losses   9.12 %   9.76 %   9.06 %
                   
                   
FULTON FINANCIAL CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (UNAUDITED)
in thousands, except per share data and percentages
 
Explanatory note: This press release contains certain financial information, as detailed below, which has been derived by methods other than Generally Accepted Accounting Principles ("GAAP"). The Corporation has presented these non-GAAP financial measures because it believes that these measures provide useful and comparative information to assess trends in the Corporation's quarterly and annual 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   
  December 31 2014     December 31 2013     September 30 2014     2014   2013  
Shareholders' equity (tangible), per share                                    
Shareholders' equity $ 1,996,665     $ 2,063,187     $ 2,078,006                
Less: Goodwill and intangible assets   (531,803 )     (533,076 )     (532,117 )              
Tangible shareholders' equity (numerator) $ 1,464,862     $ 1,530,111     $ 1,545,889                
                                     
Shares outstanding, end of period (denominator)   178,924       192,652       185,158                
                                     
  Shareholders' equity (tangible), per share $ 8.19     $ 7.94     $ 8.35                
                                     
Return on average common shareholders' equity (tangible)                                    
Net income $ 37,949     $ 42,083     $ 38,566     $ 157,894   $ 161,840  
Plus: Intangible amortization, net of tax   205       543       204       818     1,585  
Numerator $ 38,154     $ 42,626     $ 38,770     $ 158,712   $ 163,425  
                                     
Average shareholders' equity $ 2,052,211     $ 2,050,749       2,089,459       2,071,640     2,053,821  
Less: Average goodwill and intangible assets   (531,955 )     (533,597 )     (532,271 )     (532,425 )   (534,431 )
Average tangible shareholders' equity (denominator) $ 1,520,256     $ 1,517,152     $ 1,557,188     $ 1,539,215   $ 1,519,390  
                                     
  Return on average common shareholders' equity (tangible), annualized   9.96 %     11.15 %     9.88 %     10.31 %   10.76 %
                                     
Efficiency ratio                                    
Non-interest expense $ 117,720     $ 116,762     $ 115,798     $ 459,246   $ 461,433  
Less: Intangible amortization   (315 )     (835 )     (314 )     (1,259 )   (2,438 )
Numerator $ 117,405     $ 115,927     $ 115,484     $ 457,987   $ 458,995  
                                     
Net interest income (fully taxable equivalent) $ 132,614     $ 137,276     $ 133,692     $ 532,322   $ 544,474  
Plus: Total Non-interest income   42,101       40,732       41,900       167,379     187,664  
Less: Investment securities gains   (848 )     (33 )     (81 )     (2,041 )   (8,004 )
Denominator $ 173,867     $ 177,975     $ 175,511     $ 697,660   $ 724,134  
                                     
  Efficiency ratio   67.53 %     65.14 %     65.80 %     65.65 %   63.39 %
                                     
Non-performing assets to tangible common shareholders' equity and allowance for credit losses                                    
Non-performing assets (numerator) $ 150,504     $ 169,329     $ 157,337                
                                     
Tangible shareholders' equity $ 1,464,862     $ 1,530,111     $ 1,545,889                
Plus: Allowance for credit losses   185,931       204,917       191,108                
Tangible shareholders' equity and allowance for credit losses (denominator) $ 1,650,793     $ 1,735,028     $ 1,736,997                
                                     
  Non-performing assets to tangible common shareholders' equity and allowance for credit losses   9.12 %     9.76 %     9.06 %              

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