LANCASTER, Pa., January 17, 2023–(BUSINESS WIRE)–Fulton Financial Corporation (NASDAQ:FULT) (“Fulton” or the “Corporation”) reported net income available to common shareholders of $79.3 million, or $0.47 per diluted share, for the fourth quarter of 2022, an increase of $11.0 million, or 16.0%, in comparison to the third quarter of 2022. The Corporation reported net income available to common shareholders of $276.7 million, or $1.67 per diluted share, for the year ended December 31, 2022, an increase of $11.5 million or 4.3%, in comparison to the year ended December 31, 2021. The results for the third and fourth quarters of 2022 include the impact of the consummation of the acquisition by the Corporation of Prudential Bancorp, Inc. (“Prudential Bancorp”) on July 1, 2022.
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“2022 was a record year for Fulton, as we continued to execute on our strategy to Grow the bank, Deliver effectively for customers, Operate with excellence, and Serve our stakeholders,” said Curtis J. Myers, Chairman and CEO of Fulton Financial Corporation. “I’m very proud of our team’s results, especially given the large number of strategic initiatives, we tackled, including the Prudential Bancorp acquisition – our first whole-bank acquisition in over a decade. Coming out of 2022, we are well positioned for continued success in 2023.”
Operating net income available to common shareholders was $81.2 million, or $0.48 per diluted share, for the fourth quarter of 2022, calculated as shown below.
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Three months ended |
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|
(in thousands except per share data) |
December 31, 2022 |
|||||
|
Net income available to common shareholders |
$79,271 |
|||||
|
Plus: Core deposit intangible amortization |
514 |
|||||
|
Plus: Merger-related expenses |
1,894 |
|||||
|
Less: Tax impact of adjustments |
(506) |
|||||
|
Operating net income available to common shareholders (numerator) |
$81,173 |
|||||
|
Weighted average shares (diluted) (denominator) |
169,136 |
|||||
|
Operating net income available to common shareholders per share (diluted)(1) |
$0.48 |
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|
(1) Non-GAAP financial measure. |
Net Interest Income and Balance Sheet
Net interest income for the fourth quarter of 2022 was $225.9 million, an increase of $10.3 million in comparison to the third quarter of 2022. The net interest margin for the fourth quarter of 2022 increased 15 basis points, to 3.69%, in comparison to 3.54% in the third quarter of 2022.
The linked-quarter increase in net interest income was primarily due to rising interest rates resulting in increases in interest income from net loans of $33.8 million. An increase in the average balances for net loans of $440.7 million also contributed to the increase in interest income. Interest expense from interest-bearing liabilities for the fourth quarter of 2022 increased by $23.8 million to $41.9 million in comparison to $18.1 million in the third quarter of 2022 primarily due to rising interest rates resulting in increases in interest expense from interest-bearing deposits and borrowings of $12.3 million and $11.5 million, respectively. An increase in the average balance for borrowings of $666.2 million in the fourth quarter of 2022 in comparison to the third quarter of 2022 also contributed to the increase in interest expense.
For the fourth quarter of 2022, net interest income was $225.9 million, an increase of $60.3 million, or 36.4%, in comparison to the fourth quarter of 2021 primarily driven by rising interest rates resulting in increases in interest income from net loans, investment securities and other interest-earning assets of $81.6 million, $5.0 million and $3.5 million, respectively. Increases in the average balances for net loans and investment securities of $1,784.0 million and $408.4 million, respectively, driven in part by the Prudential Bancorp acquisition, also contributed to the increase in interest income. Interest expense from interest-bearing liabilities for the fourth quarter of 2022 increased by $29.8 million to $41.9 million in comparison to $12.1 million in the fourth quarter of 2021 primarily driven by rising interest rates resulting in increases in interest expense from interest-bearing deposits and borrowings of $16.5 million and $13.3 million, respectively. An increase in the average balance for borrowings of $928.4 million in the fourth quarter of 2022 in comparison to the fourth quarter of 2021 also contributed to the increase in interest expense.
Total average interest-earning assets for the fourth quarter of 2022 was $24.8 billion, an increase of $99.2 million from the third quarter of 2022 primarily driven by the aforementioned increases in average net loans of $440.7 million, partially offset by decreases in average investment securities and average other interest-earning assets of $169.8 million and $171.9 million, respectively.
Total average interest-earning assets for the fourth quarter of 2022 increased by $516.9 million from the fourth quarter of 2021 driven in part by the Prudential Bancorp acquisition. Average net loans for the fourth quarter of 2022 were $20.0 billion, an increase of $1.8 billion from the same period in 2021. Included in average net loans for the fourth quarter of 2022 were Paycheck Protection Program (“PPP”) loans with an average balance of $25.5 million, a decrease of $409.5 million from the fourth quarter of 2021. Compared to the fourth quarter of 2021, average other interest-earning assets decreased $1,649.6 million and average investment securities increased $408.4 million.
Total average interest-bearing liabilities increased $130.7 million, to $15.7 billion, in the fourth quarter of 2022 in comparison to $15.6 billion in the third quarter of 2022 driven by an increase in the average balance for borrowings of $666.2 million, partially offset by a decrease in the average balance for total interest-bearing deposits of $535.4 million.
Total average interest-bearing liabilities for the fourth quarter of 2022 increased $285.0 million in comparison to $15.5 billion in the fourth quarter of 2021, driven by an increase in the average balance for borrowings of $928.4 million, partially offset by a decrease in the average balance for total interest-bearing deposits of $643.5 million.
Asset Quality
In the fourth quarter of 2022, a provision for credit losses of $14.5 million was recorded in comparison to a provision for credit losses of $19.0 million in the third quarter of 2022, and a negative provision for credit losses of $5.0 million in the fourth quarter of 2021. Included in the third quarter of 2022 provision for credit losses was a CECL Day 1 provision for credit losses of $8.0 million for the acquired Prudential Bancorp loan portfolio. Excluding the CECL Day 1 Provision, the third quarter of 2022 provision for credit losses was $11.0 million. Excluding the CECL Day 1 Provision, the linked-quarter increase in the provision for credit losses of $3.5 million was primarily due to loan growth and changes to the macroeconomic outlook.
Non-performing assets were $177.7 million, or 0.66% of total assets, at December 31, 2022, in comparison to $198.6 million, or 0.76% at September 30, 2022, and $153.9 million, or 0.60% of total assets, at December 31, 2021.
Net charge-offs for the fourth quarter of 2022 were 0.23% of total average loans in comparison to 0.01% and 0.07% in the third quarter of 2022 and the fourth quarter of 2021, respectively. Net charge-offs of $11.7 million for the fourth quarter of 2022 were primarily due to a charge-off for a commercial office loan due to credit-related concerns.
Non-interest Income
Non-interest income before investment securities gains in the fourth quarter of 2022 was $54.3 million, a decrease of $4.9 million, or 8.3%, from the third quarter of 2022. The decrease in non-interest income was driven primarily by decreases in mortgage banking income, commercial customer swap fees, reflected in capital markets, overdraft fees and cash management fees of $1.6 million, $1.3 million, $1.1 million and $0.7 million, respectively.
Compared to the fourth quarter of 2021, non-interest income before investment securities gains in the fourth quarter of 2022 decreased $9.6 million, or 15.0%, from $63.9 million. The decrease in non-interest income was primarily due to decreases of $5.1 million in mortgage banking income, $3.8 million in other income, primarily due to a decline from equity method investments of $4.1 million, and $0.8 million in wealth management revenues.
Non-interest Expense
Non-interest expense, excluding merger-related expenses of $1.9 million, was $166.6 million in the fourth quarter of 2022, an increase of $4.0 million, or 2.5%, compared to $162.6 million, excluding merger-related expenses of $7.0 million, in the third quarter of 2022. The increase was primarily due to increases of $1.5 million in other outside services expense, $0.6 million in professional fees, $0.5 million in marketing expense, and $1.6 million for a contingent liability, $0.8 million for branch-related closures and $0.6 million in fraud-related losses which are reflected in other non-interest expenses, partially offset by a $1.6 million decrease in salaries and employee benefits expense.
Compared to the fourth quarter of 2021, non-interest expense, excluding merger-related expenses of $1.9 million, increased $12.5 million, or 8.1%, in the fourth quarter of 2022 primarily due to increases of $7.2 million in salaries and employee benefits expense, $1.2 million in other outside services expense, $1.0 million in professional fees, $0.9 million in marketing expense, $0.8 million in data processing and software expense, $0.5 million in intangible asset amortization expense related to the acquisition of Prudential Bancorp, and $0.8 million for branch-related closures reflected in other non-interest expense.
Income Tax Expense
For the full-year 2022, the effective tax rate was 17.3%, in comparison to 17.6% for the full-year of 2021.
Additional information on Fulton is available on the Internet at www.fultonbank.com.
Safe Harbor Statement
This press 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,” “projects,” the negative of these terms and other comparable terminology. These forward-looking statements may include projections of, or guidance on, the Corporation’s future financial performance, expected levels of future expenses, including future credit losses, anticipated growth strategies, descriptions of new business initiatives and anticipated trends in the Corporation’s business or financial results.
Forward-looking statements are neither historical facts, nor assurance of future performance. Instead, the statements are based on current beliefs, expectations and assumptions regarding the future of the Corporation’s business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Corporation’s control, and actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not unduly rely on any of these forward-looking statements. Any forward-looking statement is based only on information currently available and speaks only as of the date when made. 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.
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, 2021, Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022, June 30, 2022 and September 30, 2022 and other current and periodic reports, which have been or will be filed with the Securities and Exchange Commission (the “SEC”) and are or will be available in the Investor Relations section of the Corporation’s website (www.fultonbank.com) and on the SEC’s website (www.sec.gov).
Non-GAAP Financial Measures
The Corporation uses certain financial measures in this press release that have been derived from methods other than generally accepted accounting principles (“GAAP”). These non-GAAP financial measures are reconciled to the most comparable GAAP measures in tables at the end of this press release.
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FULTON FINANCIAL CORPORATION |
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SUMMARY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED) |
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|
in thousands, except share data, per-share data and percentages |
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Three months ended |
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Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
Dec 31 |
||||||||||||||||
|
2022 |
2022 |
2022 |
2022 |
2021 |
||||||||||||||||
|
Ending Balances |
||||||||||||||||||||
|
Investments |
$ |
3,968,023 |
$ |
3,936,694 |
$ |
4,117,801 |
$ |
4,288,674 |
$ |
4,167,774 |
||||||||||
|
Net loans |
20,279,547 |
19,695,199 |
18,920,950 |
18,476,119 |
18,325,350 |
|||||||||||||||
|
Total assets |
26,931,702 |
26,146,042 |
25,252,686 |
25,598,310 |
25,796,398 |
|||||||||||||||
|
Deposits |
20,649,538 |
21,376,554 |
21,143,866 |
21,541,174 |
21,573,499 |
|||||||||||||||
|
Shareholders’ equity |
2,579,757 |
2,471,159 |
2,471,093 |
2,569,535 |
2,712,680 |
|||||||||||||||
|
Average Balances |
||||||||||||||||||||
|
Investments |
$ |
3,936,579 |
$ |
4,254,216 |
$ |
4,216,507 |
$ |
4,228,827 |
$ |
3,980,045 |
||||||||||
|
Net loans |
20,004,513 |
19,563,825 |
18,637,175 |
18,383,118 |
18,220,550 |
|||||||||||||||
|
Total assets |
26,386,355 |
26,357,095 |
25,578,432 |
25,622,462 |
26,136,536 |
|||||||||||||||
|
Deposits |
21,027,656 |
21,788,052 |
21,523,713 |
21,480,183 |
21,876,938 |
|||||||||||||||
|
Shareholders’ equity |
2,489,148 |
2,604,057 |
2,531,346 |
2,688,834 |
2,713,198 |
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|
Income Statement |
||||||||||||||||||||
|
Net interest income |
$ |
225,911 |
$ |
215,582 |
$ |
178,831 |
$ |
161,310 |
$ |
165,613 |
||||||||||
|
Provision for credit losses |
14,513 |
18,958 |
1,500 |
(6,950 |
) |
(5,000 |
) |
|||||||||||||
|
Non-interest income |
54,321 |
59,162 |
58,391 |
55,256 |
63,881 |
|||||||||||||||
|
Non-interest expense |
168,462 |
169,558 |
149,730 |
145,978 |
154,019 |
|||||||||||||||
|
Income before taxes |
97,257 |
86,228 |
85,992 |
77,538 |
80,475 |
|||||||||||||||
|
Net income available to common shareholders |
79,271 |
68,309 |
67,427 |
61,726 |
59,325 |
|||||||||||||||
|
Pre-provision net revenue(1) |
115,049 |
113,631 |
89,384 |
71,842 |
77,837 |
|||||||||||||||
|
Per Share |
||||||||||||||||||||
|
Net income available to common shareholders (basic) |
$ |
0.47 |
$ |
0.41 |
$ |
0.42 |
$ |
0.38 |
$ |
0.37 |
||||||||||
|
Net income available to common shareholders (diluted) |
$ |
0.47 |
$ |
0.40 |
$ |
0.42 |
$ |
0.38 |
$ |
0.37 |
||||||||||
|
Operating net income available to common shareholders(1) |
$ |
0.48 |
$ |
0.48 |
$ |
0.42 |
$ |
0.38 |
$ |
0.37 |
||||||||||
|
Cash dividends |
$ |
0.21 |
$ |
0.15 |
$ |
0.15 |
$ |
0.15 |
$ |
0.22 |
||||||||||
|
Common shareholders’ equity |
$ |
14.24 |
$ |
13.61 |
$ |
14.15 |
$ |
14.79 |
$ |
15.70 |
||||||||||
|
Common shareholders’ equity (tangible)(1) |
$ |
10.90 |
$ |
10.26 |
$ |
10.81 |
$ |
11.44 |
$ |
12.35 |
||||||||||
|
Weighted average shares (basic) |
167,504 |
167,353 |
160,920 |
160,588 |
161,210 |
|||||||||||||||
|
Weighted average shares (diluted) |
169,136 |
168,781 |
162,075 |
161,911 |
162,355 |
|||||||||||||||
|
(1) Non-GAAP financial measure. Refer to the calculation on the page titled “Reconciliation of Non-GAAP Measures” at the end of this press release. |
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Three months ended |
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Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
Dec 31 |
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|
2022 |
2022 |
2022 |
2022 |
2021 |
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|
Asset Quality |
||||||||||||||||||||
|
Net (recoveries) charge offs to average loans |
0.23 |
% |
0.01 |
% |
(0.08 |
) % |
(0.02 |
) % |
0.07 |
% |
||||||||||
|
Non-performing loans to total loans |
0.85 |
% |
0.98 |
% |
0.92 |
% |
0.87 |
% |
0.83 |
% |
||||||||||
|
Non-performing assets to total assets |
0.66 |
% |
0.76 |
% |
0.71 |
% |
0.64 |
% |
0.60 |
% |
||||||||||
|
ACL – loans(1) to total loans |
1.33 |
% |
1.35 |
% |
1.31 |
% |
1.32 |
% |
1.36 |
% |
||||||||||
|
ACL – loans(1) to non-performing loans |
157 |
% |
138 |
% |
143 |
% |
151 |
% |
164 |
% |
||||||||||
|
Asset Quality, excluding PPP(2)(3) |
||||||||||||||||||||
|
Net (recoveries) charge offs to adjusted average loans |
0.23 |
% |
0.01 |
% |
(0.08 |
) % |
(0.02 |
) % |
0.07 |
% |
||||||||||
|
Non-performing loans to total adjusted loans |
0.85 |
% |
0.98 |
% |
0.92 |
% |
0.88 |
% |
0.84 |
% |
||||||||||
|
ACL – loans(1) to total adjusted loans |
1.33 |
% |
1.36 |
% |
1.32 |
% |
1.33 |
% |
1.38 |
% |
||||||||||
|
Profitability |
||||||||||||||||||||
|
Return on average assets |
1.23 |
% |
1.07 |
% |
1.10 |
% |
1.02 |
% |
0.94 |
% |
||||||||||
|
Operating return on average assets(2) |
1.26 |
% |
1.25 |
% |
1.11 |
% |
1.02 |
% |
0.94 |
% |
||||||||||
|
Return on average common shareholders’ equity |
13.70 |
% |
11.24 |
% |
11.57 |
% |
10.03 |
% |
9.34 |
% |
||||||||||
|
Return on average common shareholders’ equity (tangible)(2) |
18.59 |
% |
17.31 |
% |
15.23 |
% |
12.88 |
% |
11.89 |
% |
||||||||||
|
Net interest margin |
3.69 |
% |
3.54 |
% |
3.04 |
% |
2.78 |
% |
2.77 |
% |
||||||||||
|
Efficiency ratio(2) |
58.1 |
% |
57.8 |
% |
61.4 |
% |
65.8 |
% |
65.2 |
% |
||||||||||
|
Non-interest expenses to total average assets |
2.53 |
% |
2.55 |
% |
2.35 |
% |
2.31 |
% |
2.34 |
% |
||||||||||
|
Operating non-interest expenses to total average assets(2) |
2.48 |
% |
2.43 |
% |
2.32 |
% |
2.29 |
% |
2.30 |
% |
||||||||||
|
Capital Ratios |
||||||||||||||||||||
|
Tangible common equity ratio (“TCE”)(2) |
6.9 |
% |
6.7 |
% |
7.0 |
% |
7.3 |
% |
7.8 |
% |
||||||||||
|
TCE ratio, (excluding AOCI)(2)(5) |
8.2 |
% |
8.3 |
% |
8.2 |
% |
7.9 |
% |
7.8 |
% |
||||||||||
|
Tier 1 leverage ratio(4) |
9.4 |
% |
9.2 |
% |
9.1 |
% |
8.9 |
% |
8.6 |
% |
||||||||||
|
Common equity Tier 1 capital ratio(4) |
10.0 |
% |
10.0 |
% |
9.9 |
% |
10.0 |
% |
9.9 |
% |
||||||||||
|
Tier 1 risk-based capital ratio(4) |
10.8 |
% |
10.9 |
% |
10.8 |
% |
10.9 |
% |
10.9 |
% |
||||||||||
|
Total risk-based capital ratio(4) |
13.5 |
% |
13.6 |
% |
13.7 |
% |
13.8 |
% |
14.1 |
% |
||||||||||
|
(1) “ACL – loans” relates to the allowance for credit losses (“ACL”) specifically on “Net Loans” and does not include the ACL related to off-balance-sheet (“OBS”) credit exposures. |
||||||||||||||||||||
|
(2) Non-GAAP financial measure. Refer to the calculation on the page titled “Reconciliation of Non-GAAP Measures” at the end of this press release. |
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|
(3) Asset quality information excluding PPP loans. |
||||||||||||||||||||
|
(4) Regulatory capital ratios as of December 31, 2022 are preliminary and prior periods are actual. |
||||||||||||||||||||
|
(5) Tangible common equity (“TCE”) ratio, excluding accumulated other comprehensive income (“AOCI”) |
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FULTON FINANCIAL CORPORATION |
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CONDENSED CONSOLIDATED ENDING BALANCE SHEETS (UNAUDITED) |
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dollars in thousands |
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% Change from |
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Dec 31 |
Sep 30 |
Jun 30 |
Mar 31 |
Dec 31 |
Sep 30 |
Dec 31 |
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2022 |
2022 |
2022 |
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