Fulton Financial Announces First Quarter 2021 Results
04/20/2021 - 04:30 PM
Fulton Financial Corporation (NASDAQ: FULT) (“Fulton” or the “Corporation”) reported net income available to common shareholders of $70 million , or $0.43 per diluted share, for the first quarter of 2021.
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"Fulton achieved solid financial performance during the first quarter, despite the continuing challenges brought about by COVID-19,” said E. Philip Wenger, Chairman and CEO of Fulton Financial Corporation. “We experienced record earnings per share, our mortgage business remained strong, our wealth management business grew to record highs, and asset quality remained stable. The balance sheet restructuring we announced in March had minimal net impact on our earnings in the first quarter, but it will meaningfully enhance our net interest income beginning in the second quarter and going forward.”
Net Interest Income and Balance Sheet
Net interest income for the first quarter of 2021 was $164 million , $3 million higher than the fourth quarter of 2020. Net interest margin for the first quarter of 2021 increased 4 basis points, to 2.79% , from 2.75% in the fourth quarter of 2020. The increases in net interest income and net interest margin in comparison to the fourth quarter of 2020 were primarily due to the forgiveness of Paycheck Protection Program ("PPP") loans and the acceleration of the recognition of related fee income as well as growth in average investment securities and other earning assets during the quarter.
Total average assets for the first quarter of 2021 were $26.1 billion , an increase of $333 million from the fourth quarter of 2020, driven by growth in other interest-earning assets and investment securities. Average loans, net of unearned income, were $19.0 billion , relatively unchanged compared to the fourth quarter of 2020. Average loans included loans originated under the PPP. Average PPP loans were $1.7 billion for the first quarter of 2021 compared to $1.8 billion for the fourth quarter of 2020. First quarter loan balances were impacted by the net effect of $579 million of PPP loans forgiven and $685 million of new loans originated under the third phase of the PPP in the first quarter of 2021 .
Average loans and yields, by type, for the first quarter of 2021 in comparison to the fourth quarter of 2020 are summarized in the following table:
Three months ended
March 31, 2021
December 31, 2020
Growth
Balance
Yield (1)
Balance
Yield (1)
$
%
(dollars in thousands)
Average Loans, net of unearned income, by type:
Real estate - commercial mortgage
$
7,128,997
3.15
%
$
7,101,363
3.21
%
$
27,634
0.4
%
Commercial and industrial(2)
5,722,080
2.57
%
5,855,305
2.57
%
(133,225
)
(2.3
)
%
Real estate - residential mortgage
3,183,585
3.52
%
3,087,529
3.65
%
96,056
3.1
%
Real estate - home equity
1,175,218
3.75
%
1,212,113
3.91
%
(36,895
)
(3.0
)
%
Real estate - construction
1,054,718
3.09
%
1,009,284
3.11
%
45,434
4.5
%
Consumer
459,038
4.13
%
468,678
4.07
%
(9,640
)
(2.1
)
%
Equipment lease financing
266,405
4.11
%
279,059
3.98
%
(12,654
)
(4.5
)
%
Other(3)
(9,455
)
N/A
(18,817
)
N/A
9,362
(49.8
)
%
Total Average Loans, net of unearned income
$
18,980,586
3.53
%
$
18,994,514
3.45
%
$
(13,928
)
(0.1
)
%
(1) Presented on a fully-taxable equivalent basis using a 21% Federal tax rate and statutory interest expense disallowances.
(2) Includes average PPP loans of $1.7 billion and $1.8 billion for the three months ended March 31, 2021 and December 31, 2020, respectively.
(3) Consists of overdrafts and net origination fees and costs.
Total average liabilities in the first quarter of 2021 increased $241 million , to $23.4 billion , from the fourth quarter of 2020 driven by increases in demand and savings deposits, partially offset by decreases in time deposits and short-term borrowings. Average deposits and interest rates, by type, for the first quarter of 2021 in comparison to the fourth quarter of 2020 are summarized in the following table:
Three months ended
March 31, 2021
December 31, 2020
Growth
Balance
Rate
Balance
Rate
$
%
(dollars in thousands)
Average Deposits, by type:
Noninterest-bearing demand
$
6,672,832
—
$
6,477,228
—
$
195,604
3.0
%
Interest-bearing demand
5,832,174
0.08
%
5,762,150
0.10
%
70,024
1.2
%
Savings
6,137,084
0.10
%
5,905,137
0.13
%
231,947
3.9
%
Total average demand and savings
18,642,090
0.06
%
18,144,515
0.07
%
497,575
2.7
%
Brokered
324,364
0.49
%
340,451
0.53
%
(16,087
)
(4.7
)
%
Time
2,150,570
1.23
%
2,306,556
1.39
%
(155,986
)
(6.8
)
%
Total Average Deposits
$
21,117,024
0.18
%
$
20,791,522
0.23
%
$
325,502
1.6
%
Asset Quality
In the first quarter of 2021 a reversal of provision of credit losses of $6 million was recognized, as compared to provisions for credit losses of $6 million , and $44 million for the fourth quarter of 2020 and first quarter of 2020, respectively. Several factors as of the end of the first quarter of 2021 in comparison to the end of the fourth quarter of 2020, including improved economic forecasts and a decrease in specific allocations within the allowance for credit losses for loans evaluated individually, reduced the level of the allowance for credit losses determined to be necessary at the end of the first quarter of 2021, resulting in the negative provision for credit losses.
The $44 million provision for credit losses in the first quarter of 2020 was driven primarily by assessment of the initial estimated impacts of the COVID-19 pandemic, as reflected in economic forecasts as of the end of the first quarter of 2020, on the level of expected credit losses.
Non-performing assets were $156 million , or 0.60% of total assets, at March 31, 2021, compared to $151 million , or 0.58% of total assets, and $147 million , or 0.64% of total assets at December 31, 2020 and March 31, 2020, respectively.
Annualized net charge-offs for the quarter ended March 31, 2021 were 0.13% of total average loans, compared to annualized net recoveries of 0.07% and annualized net charge-offs of 0.26% for the quarters ended December 31, 2020 and March 31, 2020, respectively.
Non-interest Income
Non-interest income in the first quarter of 2021, excluding investment securities gains, was $62 million , an increase of $6 million , or 11% , from the fourth quarter of 2020, primarily driven by increases of $5 million in mortgage banking income and $2 million in wealth management fees. The increase in mortgage banking income was due to a $6 million reversal of the valuation allowance for mortgage servicing assets.
Compared to the first quarter of 2020, non-interest income, excluding investment securities gains, in the first quarter of 2021 increased $7 million , or 13% , from $55 million , primarily driven by an $8 million increase in mortgage banking income, resulting from a combination of higher mortgage sales gains and a $6 million reversal of the mortgage servicing valuation allowance, both due to lower mortgage interest rates.
In the first quarter of 2021, Fulton completed a balance sheet restructuring involving gains on sales of Visa, Inc. Class B restricted shares of $34 million , which were offset in non-interest expense by corresponding debt extinguishment costs of $32 million , other securities losses of $0.4 million and a write-off of $1 million recognized in net interest income in connection with the purchase of certain of the Corporation's outstanding senior and subordinated notes and the prepayment of certain term Federal Home Loan Bank advances.
Non-interest Expense
Non-interest expense was $178 million in the first quarter of 2021, an increase of $24 million compared to the fourth quarter of 2020, which was driven by costs recognized during the first quarter of 2021 associated with the aforementioned balance sheet restructuring. In the fourth quarter of 2020, $15 million of charges, reflected in salaries and employee benefits and other expense, were recognized in connection with the cost saving initiatives announced in October 2020.
Compared to the first quarter of 2020, non-interest expense increased $36 million , or 25% in the first quarter of 2021, due primarily to costs associated with the previously mentioned balance sheet restructuring. Other increases were recognized in salaries and employee benefits and data processing and software, partially offset by lower professional fees.
Income Tax Expense
The effective income tax rate (ETR) for the first quarter of 2021 was 16% , as compared to 10% for both the fourth quarter of 2020 and first quarter of 2020. The increase was a result of higher income before income taxes.
Additional information on Fulton 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," “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, they 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, 2020 and other current and periodic reports, which have been or will be filed with the Securities and Exchange Commission and are or will be 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 ).
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
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
in thousands, except per-share data and percentages
Three months ended
Mar 31
Dec 31
Sep 30
Jun 30
Mar 31
2021
2020
2020
2020
2020
Ending Balances
Investments
$
3,612,010
$
3,340,424
$
3,097,721
$
2,974,813
$
3,141,440
Loans, net of unearned income
18,990,986
18,900,820
19,028,621
18,704,722
17,077,403
Total assets
25,892,990
25,906,733
25,543,281
24,617,863
22,929,859
Deposits
21,633,838
20,839,207
20,730,051
19,884,208
17,365,026
Shareholders' equity
2,629,655
2,616,828
2,390,261
2,340,501
2,285,748
Average Balances
Investments
$
3,448,166
$
3,221,289
$
2,977,672
$
3,096,632
$
3,071,828
Loans, net of unearned income
18,980,586
18,994,514
18,880,519
18,331,797
16,860,067
Total assets
26,082,816
25,749,405
25,169,508
24,139,116
22,252,099
Deposits
21,117,024
20,791,522
20,388,447
19,276,658
17,121,428
Shareholders' equity
2,637,098
2,544,866
2,374,091
2,309,133
2,337,016
Income Statement
Net interest income
$
164,448
$
161,591
$
154,116
$
152,754
$
160,746
Provision for credit losses
(5,500
)
6,240
7,080
19,570
44,030
Non-interest income
95,397
55,574
63,248
55,922
54,644
Non-interest expense
178,384
154,737
139,147
143,005.8
142,552
Income before taxes
86,961
56,187
71,137
46,101
28,808
Net income available to common shareholders
70,472
48,690
61,607
39,559
26,047
Pre-provision net revenue(1)
81,795
64,092
80,043
67,125
74,374
Per Share
Net income available to common shareholders (basic)
$
0.43
$
0.30
$
0.38
$
0.24
$
0.16
Net income available to common shareholders (diluted)
$
0.43
$
0.30
$
0.38
$
0.24
$
0.16
Cash dividends
$
0.14
$
0.17
$
0.13
$
0.13
$
0.13
Common shareholders' equity
$
14.99
$
14.93
$
14.74
$
14.45
$
14.16
Common shareholders' equity (tangible)(1)
$
11.69
$
11.62
$
11.44
$
11.15
$
10.84
Weighted average shares (basic)
162,441
162,242
162,061
161,715
163,475
Weighted average shares (diluted)
163,737
163,071
162,579
162,267
164,417
(1) Non-GAAP financial measure. Refer to the calculation on the page titled “Reconciliation of Non-GAAP Measures” at the end of this document.
Three months ended
Mar 31
Dec 31
Sep 30
Jun 30
Mar 31
2021
2020
2020
2020
2020
Asset Quality
Net charge-offs (recoveries) to average loans (annualized)
0.13
%
(0.07
)
%
(0.05
)
%
0.09
%
0.26
%
Non-performing loans to total loans
0.80
%
0.78
%
0.75
%
0.75
%
0.82
%
Non-performing assets to total assets
0.60
%
0.58
%
0.57
%
0.59
%
0.64
%
ACL - loans(2) to total loans
1.40
%
1.47
%
1.40
%
1.37
%
1.40
%
ACL - loans(2) to non-performing loans
174
%
189
%
188
%
183
%
170
%
Asset Quality, excluding PPP(1)(3)
Net charge-offs (recoveries) to average loans (annualized)
0.14
%
(0.08
)
%
(0.06
)
%
0.10
%
—
%
Non-performing loans to total adjusted loans
0.88
%
0.85
%
0.83
%
0.83
%
—
%
ACL - loans(2) to total adjusted loans
1.54
%
1.60
%
1.56
%
1.53
%
—
%
Profitability
Return on average assets
1.14
%
0.79
%
0.97
%
0.66
%
0.47
%
Return on average shareholders' equity
11.24
%
7.95
%
10.32
%
6.89
%
4.48
%
Return on average common shareholders' equity (tangible)(1)
15.00
%
10.32
%
13.50
%
8.99
%
5.84
%
Net interest margin
2.79
%
2.75
%
2.70
%
2.81
%
3.21
%
Efficiency ratio(1)
63.0
%
62.5
%
62.3
%
66.4
%
64.5
%
Capital Ratios
Tangible common equity ratio(1)
7.5
%
7.4
%
7.4
%
7.5
%
7.8
%
Tier 1 leverage ratio(4)
8.3
%
8.2
%
7.4
%
7.6
%
7.9
%
Common equity Tier 1 capital ratio(4)
9.8
%
9.5
%
9.5
%
9.5
%
9.4
%
Tier 1 capital ratio(4)
10.8
%
10.5
%
9.5
%
9.5
%
9.4
%
Total risk-based capital ratio(4)
14.2
%
14.4
%
13.9
%
13.8
%
13.8
%
(1) Non-GAAP financial measure. Refer to the calculation on the page titled "Reconciliation of Non-GAAP Measures" at the end of this document.
(2) "ACL - loans" relates to the allowance for credit losses ("ACL") specifically on "Loans, net of unearned income" and does not include the ACL related to off-balance-sheet ("OBS") credit exposures.
(3) Asset quality information excluding Paycheck Protection Program ("PPP") loans. Refer to the calculation on the page titled "Reconciliation of Non-GAAP Measures" at the end of this document.
(4) Regulatory capital ratios as of March 31, 2021 are preliminary and prior periods are actual.
FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED ENDING BALANCE SHEETS (UNAUDITED)
dollars in thousands
% Change from
Mar 31
Dec 31
Sep 30
Jun 30
Mar 31
Dec 31
Mar 31
2021
2020
2020
2020
2020
2020
2020
ASSETS
Cash and due from banks
$
102,570
$
120,462
$
139,304
$
141,702
$
181,777
(14.9
)
%
(43.6
)
%
Other interest-earning assets
1,625,515
1,819,499
1,489,550
1,007,939
793,572
(10.7
)
%
104.8
%
Loans held for sale
34,092
83,886
93,621
77,415
40,645
(59.4
)
%
(16.1
)
%
Investment securities
3,612,010
3,340,424
3,097,721
2,974,813
3,141,440
8.1
%
15.0
%
Net Loans
18,990,986
18,900,820
19,028,621
18,704,722
17,077,403
0.5
%
11.2
%
Less: ACL - loans(1)
(265,986
)
(277,567
)
(266,825
)
(256,537
)
(238,508
)
(4.2
)
%
11.5
%
Loans, net
18,725,000
18,623,253
18,761,796
18,448,185
16,838,895
0.5
%
11.2
%
Net, premises and equipment
229,035
231,480
236,943
239,596
236,908
(1.1
)
%
(3.3
)
%
Accrued interest receivable
65,649
72,942
70,766
73,720
59,365
(10.0
)
%
10.6
%
Goodwill and intangible assets
536,544
536,659
534,907
535,039
535,171
—
%
0.3
%
Other assets
962,575
1,078,128
1,118,673
1,119,454
1,102,086
(10.7
)
%
(12.7
)
%
Total Assets
$
25,892,990
$
25,906,733
$
25,543,281
$
24,617,863
$
22,929,859
(0.1
)
%
12.9
%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
$
21,633,838
$
20,839,207
$
20,730,051
$
19,884,208
$
17,365,026
3.8
%
24.6
%
Short-term borrowings
520,989
630,066
611,727
572,551
1,386,808
(17.3
)
%
(62.4
)
%
Other liabilities
482,101
524,369
515,230
525,407
513,811
(8.1
)
%
(6.2
)
%
FHLB advances and long-term debt
626,407
1,296,263
1,296,012
1,295,196
1,378,466
(51.7
)
%
(54.6
)
%
Total Liabilities
23,263,335
23,289,905
23,153,020
22,277,362
20,644,111
(0.1
)
%
12.7
%
Shareholders' equity
2,629,655
2,616,828
2,390,261
2,340,501
2,285,748
0.5
%
15.0
%
Total Liabilities and Shareholders' Equity
$
25,892,990
$
25,906,733
$
25,543,281
$
24,617,863
$
22,929,859
(0.1
)
%
12.9
%
LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL:
Loans, by type:
Real estate - commercial mortgage
$
7,142,137
$
7,105,092
$
7,046,330
$
6,934,936
$
6,895,069
0.5
%
3.6
%
Commercial and industrial
3,986,858
4,088,561
4,007,278
4,033,439
4,450,557
(2.5
)
%
(10.4
)
%
Real estate - residential mortgage
3,254,058
3,141,915
3,061,835
2,862,226
2,718,290
3.6
%
19.7
%
Real estate - home equity
1,149,958
1,202,913
1,222,709
1,251,455
1,292,677
(4.4
)
%
(11.0
)
%
Real estate - construction
1,083,494
1,047,218
1,007,534
972,909
947,768
3.5
%
14.3
%
Consumer
451,857
466,772
469,551
465,610
468,172
(3.2
)
%
(3.5
)
%
Equipment lease financing
260,907
279,118
280,286
281,897
289,726
(6.5
)
%
(9.9
)
%
Other(2)
(26,677
)
(12,481
)
(27,067
)
(34,784
)
15,144
113.7
%
N/M
Loans, net of unearned income before PPP
17,302,592
17,319,108
17,068,456
16,767,688
17,077,403
(0.1
)
%
1.3
%
PPP
1,688,394
1,581,712
1,960,165
1,937,034
—
6.7
%
N/M
Total Loans, net of unearned income
$
18,990,986
$
18,900,820
$
19,028,621
$
18,704,722
$
17,077,403
0.5
%
11.2
%
Deposits, by type:
Noninterest-bearing demand
$
7,046,116
$
6,531,002
$
6,378,077
$
6,239,055
$
4,531,872
7.9
%
55.5
%
Interest-bearing demand
5,959,909
5,818,564
5,813,935
5,099,405
4,724,520
2.4
%
26.1
%
Savings
6,244,513
5,929,792
5,805,431
5,667,893
5,092,865
5.3
%
22.6
%
Total demand and savings
19,250,538
18,279,358
17,997,443
17,006,353
14,349,257
5.3
%
34.2
%
Brokered
309,873
335,185
317,588
310,689
313,337
(7.6
)
%
(1.1
)
%
Time
2,073,427
2,224,664
2,415,020
2,567,166
2,702,432
(6.8
)
%
(23.3
)
%
Total Deposits
$
21,633,838
$
20,839,207
$
20,730,051
$
19,884,208
$
17,365,026
3.8
%
24.6
%
Short-term borrowings, by type:
Customer funding
$
520,989
$
630,066
$
611,727
$
572,551
$
461,808
(17.3
)
%
12.8
%
Federal funds purchased
—
—
—
—
200,000
N/M
(100.0
)
%
Short-term FHLB advances
—
—
—
—
725,000
N/M
(100.0
)
%
Total Short-term Borrowings
$
520,989
$
630,066
$
611,727
$
572,551
$
1,386,808
(17.3
)
%
(62.4
)
%
N/M - Not meaningful
(1) "ACL - loans" relates to the ACL specifically on "Loans, net of unearned income" and does not include the ACL related to OBS credit
exposures.
(2) Consists of overdrafts and net origination fees and costs.
FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
dollars in thousands
Three Months Ended
% Change from
Mar 31
Dec 31
Sep 30
Jun 30
Mar 31
Dec 31
Mar 31
2021
2020
2020
2020
2020
2020
2020
Interest Income:
Interest income
$
184,936
$
183,645
$
179,159
$
180,696
$
199,378
0.7
%
(7.2
)
%
Interest expense
20,488
22,054
25,043
27,942
38,632
FULT Rankings
#3948 Ranked by Stock Gains
FULT Stock Data
Industry
Commercial Banking
Sector
Finance and Insurance
Tags
Finance, Regional Banks, Finance and Insurance, Commercial Banking
Country
US
City
Lancaster
About FULT
fulton financial corporation is a $17+ billion regional financial holding company headquartered in lancaster, pennsylvania, providing a variety of financial services throughout our ten affiliates in pennsylvania, maryland, delaware, new jersey and virginia. we operate approximately 250 offices and atms. our flagship bank, fulton bank, was founded in 1882 and operates throughout south central pennsylvania, delaware and virginia. our corporation also provides a broad array of financial services through: fulton financial advisors, n.a. (trust, brokerage and investment management services) fulton mortgage company (residential mortgage services) as part of fulton financial corporation, our affiliate banks are able to offer a broad array of financial services while maintaining the strong personal relationships and community support our customers have come to expect and appreciate. our community-oriented style of banking enables us to be better listeners, and to satisfy and maintain lo
