Fulton Financial Corporation Announces First Quarter 2023 Results

Rhea-AI Summary

Fulton Financial Corporation (NASDAQ:FULT) reported a net income of $65.8 million, or $0.39 per diluted share, for Q1 2023. This reflects a decrease of $13.5 million, or 17.1%, compared to Q4 2022. Net interest income was $215.6 million, down $10.3 million from the previous quarter, influenced by a mix shift from low-cost deposits to higher-cost borrowings. Year-over-year, net interest income increased by 33.6%, attributed to rising interest rates and loan growth, including contributions from the Prudential Bancorp acquisition. Non-interest income fell by 4.8% from Q4 2022, mainly due to reduced commercial banking income and lower mortgage banking revenues. Non-interest expense decreased by 4.2% quarter-over-quarter, but rose by 9.6% year-over-year. The provision for credit losses was $24.5 million, up from $14.5 million in the prior quarter, mainly due to loan growth and macroeconomic changes.

Positive

• Net income of $65.8 million in Q1 2023, up 33.6% from Q1 2022.
• Net interest income increased by $54.3 million year-over-year.
• Acquisition of Prudential Bancorp contributed to loan growth.
• Reduction in non-interest expense by 4.2% quarter-over-quarter.

Negative

• Net income decreased by 17.1% compared to Q4 2022.
• Net interest income down $10.3 million from Q4 2022.
• Provision for credit losses increased by $10 million from Q4 2022.

LANCASTER, Pa.--(BUSINESS WIRE)-- Fulton Financial Corporation (NASDAQ:FULT) (“Fulton” or the “Corporation”) reported net income available to common shareholders of $65.8 million, or $0.39 per diluted share, for the first quarter of 2023, a decrease of $13.5 million, or 17.1%, in comparison to the fourth quarter of 2022.

“Our focus remains the same - the long-term financial wellbeing of our company, our customers and our communities,” said Curtis J. Myers, Chairman and CEO of Fulton. “During the quarter, we took actions to fortify our balance sheet, increase our liquidity, diversify our funding and enhance our reserves. By taking these actions, monitoring capital and communicating with customers, we’ve positioned ourselves to continue serving our stakeholders and growing our company.”

Net Interest Income and Balance Sheet

Net interest income for the first quarter of 2023 was $215.6 million, a decrease of $10.3 million in comparison to the fourth quarter of 2022. The net interest margin for the first quarter of 2023 decreased 16 basis points, to 3.53%, in comparison to 3.69% in the fourth quarter of 2022.

The linked-quarter decrease in net interest income was primarily due to a shift in funding mix from lower-cost demand deposits to higher-cost borrowings, time deposits and brokered deposits. An increase in the average balance for net loans of $458.6 million and higher loan yields in the first quarter of 2023 primarily contributed to an increase in interest income of $22.0 million to $289.8 million in comparison to $267.8 million in the fourth quarter of 2022. Interest expense from interest-bearing liabilities for the first quarter of 2023 increased by $32.3 million to $74.2 million in comparison to $41.9 million in the fourth quarter of 2022. The linked-quarter increase in interest expense in the first quarter of 2023 was primarily due to a decline in the average balance of noninterest-bearing deposits of $669.1 million and an increase in the average balance for higher-cost borrowings and other interest-bearing liabilities of $1.0 billion in comparison to the fourth quarter of 2022.

For the first quarter of 2023, net interest income was $215.6 million, an increase of $54.3 million, or 33.6%, in comparison to the first quarter of 2022. Interest income for the first quarter of 2023 increased by $116.8 million to $289.8 million in comparison to $173.0 million in the first quarter of 2022 primarily driven by rising interest rates resulting in increases in interest income from net loans, investment securities and other interest-earning assets of $110.9 million, $3.2 million and $2.7 million, respectively. Increases in the average balances for net loans and investment securities in the first quarter of 2023 of $2,080.0 million and $63.3 million, respectively, driven in part by the Prudential Bancorp, Inc. ("Prudential Bancorp") acquisition, also contributed to the increase in interest income. Interest expense from interest-bearing liabilities for the first quarter of 2023 increased by $62.5 million to $74.2 million in comparison to $11.7 million in the first quarter of 2022 primarily driven by rising interest rates resulting in increases in interest expense from interest-bearing deposits and borrowings and other interest-bearing liabilities of $36.0 million and $26.5 million, respectively. An increase in the average balance for borrowings and other interest-bearing liabilities of $2.0 billion in the first quarter of 2023 in comparison to the first quarter of 2022 also contributed to the increase in interest expense.

Total average interest-earning assets for the first quarter of 2023 was $25.2 billion, an increase of $450.6 million from the fourth quarter of 2022 primarily driven by the aforementioned increase in average net loans of $458.6 million and an increase in average other interest-earning assets of $33.0 million, partially offset by a decrease in average investment securities of $41.0 million.

Total average interest-earning assets for the first quarter of 2023 increased by $1.3 billion from the first quarter of 2022. Average net loans for the first quarter of 2023 were $20.5 billion, an increase of $2.1 billion from the same period in 2022. Compared to the first quarter of 2022, average other interest-earning assets decreased $793.6 million and average investment securities increased $63.3 million in the first quarter of 2023.

Total average interest-bearing liabilities increased $1.2 billion, to $17.0 billion, in the first quarter of 2023 in comparison to $15.7 billion in the fourth quarter of 2022 driven by increases in the average balance for borrowings and other interest-bearing liabilities and the average balance for total interest-bearing deposits of $1.0 billion and $215.8 million, respectively.

Total average interest-bearing liabilities for the first quarter of 2023 increased $1.9 billion in comparison to $15.1 billion in the first quarter of 2022, driven by an increase in the average balance for borrowings and other interest-bearing liabilities of $2.0 billion.

Asset Quality

In the first quarter of 2023, a provision for credit losses of $24.5 million was recorded in comparison to a provision for credit losses of $14.5 million in the fourth quarter of 2022, and a negative provision for credit losses of $7.0 million in the first quarter of 2022. The linked-quarter increase in the provision for credit losses of $10.0 million was primarily due to loan growth and changes to the macroeconomic outlook.

Non-performing assets were $167.9 million, or 0.62% of total assets, at March 31, 2023, in comparison to $177.7 million, or 0.66% of total assets, at December 31, 2022, and $163.0 million, or 0.64% of total assets, at March 31, 2022.

Net charge-offs for the first quarter of 2023 were 0.27% of total average loans in comparison to 0.23% and negative 0.02% in the fourth quarter of 2022 and the first quarter of 2022, respectively. Net charge-offs of $14.0 million for the first quarter of 2023 were primarily due to a charge-off of $13.3 million for a commercial office loan due to credit-related concerns; the same loan that received a partial charge-off in the fourth quarter of 2022.

Non-interest Income

Non-interest income before investment securities gains in the first quarter of 2023 was $51.7 million, a decrease of $2.6 million, or 4.8%, from the fourth quarter of 2022. The decrease in non-interest income was driven primarily by decreases in commercial banking income, income from equity method investments, reflected in other income, and consumer banking fees of $1.1 million, $1.0 million and $0.9 million, respectively, partially offset by an increase in wealth management revenues of $0.5 million.

Compared to the first quarter of 2022, non-interest income before investment securities gains in the first quarter of 2023 decreased $3.5 million, or 6.3%, from $55.2 million. The decrease in non-interest income was primarily due to decreases of $2.6 million in mortgage banking income due to lower loan sale volumes and lower spreads, $1.4 million in wealth management revenues primarily due to market performance and $1.1 million from lower income from equity method investments, reflected in other income, partially offset by an increase of $1.5 million in commercial banking income.

Non-interest Expense

Non-interest expense was $159.6 million in the first quarter of 2023, a decrease of $7.0 million, or 4.2%, compared to $166.6 million in the fourth quarter of 2022, which excludes merger-related expenses of $1.9 million. The decline was primarily due to decreases of $3.5 million in salaries and employee benefits expense, $0.7 million in other outside services expense, $0.6 million in professional fees and $0.5 million in marketing expense, partially offset by a $1.6 million increase in FDIC insurance expense primarily due to the adoption of a final rule to increase base deposit insurance assessment rates effective January 1, 2023. Additional contributors of the decline in noninterest expense were decreases of $1.2 million in charitable contributions, $1.1 million in other real estate owned assets due to gains on sales recorded in the first quarter of 2023 and $0.8 million in contingent liabilities, in each case, reflected in other expense.

Compared to the first quarter of 2022, non-interest expense, excluding merger-related expenses of $0.4 million in the first quarter of 2022, increased $14.0 million, or 9.6%. The increase was primarily due to increases of $4.8 million in salaries and employee benefits expense, $2.0 million in other outside services expense, $1.6 million in FDIC insurance expense, primarily due to the adoption of a final rule to increase base deposit insurance assessment rates effective January 1, 2023, $1.5 million in data processing and software expense, $0.6 million in professional fees, $0.6 million in marketing expense and $0.5 million in intangible amortization expense due to the acquisition of Prudential Bancorp. Additional drivers of the increase in noninterest expense were an unfavorable change in owned asset expense due to a $1.5 million gain on sale recorded on owned assets in the first quarter of 2022 and a $0.8 million contingent liability recorded in the first quarter of 2023, in each case, reflected in other expense.

Income Tax Expense

For the first quarter of 2023, the effective tax rate was 17.9%, in comparison to 17.3% for the full-year of 2022.

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, 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.

FULTON FINANCIAL CORPORATION
SUMMARY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
dollars in thousands, except per share data
	Three months ended
	Mar 31				Dec 31				Sep 30				Jun 30				Mar 31
	2023				2022				2022				2022				2022
Ending Balances
Investment securities	$	3,950,101			$	3,968,023			$	3,936,694			$	4,117,801			$	4,288,674
Net loans		20,670,188				20,279,547				19,695,199				18,920,950				18,476,119
Total assets		27,112,176				26,931,702				26,146,042				25,252,686				25,598,310
Deposits		21,316,584				20,649,538				21,376,554				21,143,866				21,541,174
Shareholders' equity		2,618,998				2,579,757				2,471,159				2,471,093				2,569,535
Average Balances
Investment securities		3,964,615				3,936,579				4,254,216				4,216,507				4,228,827
Net loans		20,463,096				20,004,513				19,563,825				18,637,175				18,383,118
Total assets		26,900,653				26,386,355				26,357,095				25,578,432				25,622,462
Deposits		20,574,323				21,027,656				21,788,052				21,523,713				21,480,183
Shareholders' equity		2,613,316				2,489,148				2,604,057				2,531,346				2,688,834
Income Statement
Net interest income		215,587				225,911				215,582				178,831				161,310
Provision for credit losses		24,544				14,513				18,958				1,500				(6,950	)
Non-interest income		51,753				54,321				59,162				58,391				55,256
Non-interest expense		159,616				168,462				169,558				149,730				145,978
Income before taxes		83,180				97,257				86,228				85,992				77,538
Net income available to common shareholders		65,752				79,271				68,309				67,427				61,726
Pre-provision net revenue(1)		108,375				115,049				113,631				89,384				71,842
Per Share
Net income available to common shareholders (basic)	$	0.39			$	0.47			$	0.41			$	0.42			$	0.38
Net income available to common shareholders (diluted)	$	0.39			$	0.47			$	0.40			$	0.42			$	0.38
Operating net income available to common shareholders(1)	$	0.39			$	0.48			$	0.48			$	0.42			$	0.38
Cash dividends	$	0.15			$	0.21			$	0.15			$	0.15			$	0.15
Common shareholders' equity	$	14.67			$	14.24			$	13.61			$	14.15			$	14.79
Common shareholders' equity (tangible)(1)	$	11.26			$	10.90			$	10.26			$	10.81			$	11.44
Weighted average shares (basic)		166,605				167,504				167,353				160,920				160,588
Weighted average shares (diluted)		168,401				169,136				168,781				162,075				161,911
(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.
	Three months ended
	Mar 31				Dec 31				Sep 30				Jun 30				Mar 31
	2023				2022				2022				2022				2022
Asset Quality
Net charge-offs (recoveries) to average loans		0.27	%			0.23	%			0.01	%			(0.08	) %			(0.02	) %
Non-performing loans to total loans		0.80	%			0.85	%			0.98	%			0.92	%			0.87	%
Non-performing assets to total assets		0.62	%			0.66	%			0.76	%			0.71	%			0.64	%
ACL - loans(1) to total loans		1.35	%			1.33	%			1.35	%			1.31	%			1.32	%
ACL - loans(1) to non-performing loans		169	%			157	%			138	%			143	%			151	%
Profitability
Return on average assets		1.03	%			1.23	%			1.07	%			1.10	%			1.02	%
Operating return on average assets(2)		1.04	%			1.26	%			1.25	%			1.11	%			1.02	%
Return on average common shareholders' equity		11.02	%			13.70	%			11.24	%			11.57	%			10.03	%
Return on average common shareholders' equity (tangible)(2)		14.46	%			18.59	%			17.31	%			15.23	%			12.88	%
Net interest margin		3.53	%			3.69	%			3.54	%			3.04	%			2.78	%
Efficiency ratio(2)		58.5	%			58.1	%			57.8	%			61.4	%			65.8	%
Non-interest expenses to total average assets		2.41	%			2.53	%			2.55	%			2.35	%			2.31	%
Operating non-interest expenses to total average assets(2)		2.40	%			2.48	%			2.43	%			2.32	%			2.29	%
Capital Ratios
Tangible common equity ratio ("TCE")(2)		7.0	%			6.9	%			6.7	%			7.0	%			7.3	%
TCE ratio, (excluding AOCI)(2)(4)		8.3	%			8.2	%			8.3	%			8.2	%			7.9	%
Tier 1 leverage ratio(3)		9.3	%			9.5	%			9.2	%			9.1	%			8.9	%
Common equity Tier 1 capital ratio(3)		9.8	%			10.0	%			10.0	%			9.9	%			10.0	%
Tier 1 risk-based capital ratio(3)		10.7	%			10.9	%			10.9	%			10.8	%			10.9	%
Total risk-based capital ratio(3)		13.5	%			13.6	%			13.6	%			13.7	%			13.8	%
(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.
(3) Regulatory capital ratios as of March 31, 2023 are preliminary and prior periods are actual.
(4) Tangible common equity ("TCE") ratio, excluding accumulated other comprehensive income ("AOCI").

FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED ENDING BALANCE SHEETS (UNAUDITED)
dollars in thousands
		Mar 31				Dec 31				Sep 30				Jun 30				Mar 31
		2023				2022				2022				2022				2022
ASSETS
	Cash and due from banks	$	129,003			$	126,898			$	143,465			$	158,605			$	161,462
	Other interest-earning assets		545,355				685,209				467,164				383,715				1,054,232
	Loans held for sale		6,507				7,264				14,411				17,528				27,675
	Investment securities		3,950,101				3,968,023				3,936,694				4,117,801				4,288,674
	Net loans		20,670,188				20,279,547				19,695,199				18,920,950				18,476,119
	Less: ACL - loans(1)		(278,695	)			(269,366	)			(266,838	)			(248,564	)			(243,705	)
	Loans, net		20,391,493				20,010,181				19,428,361				18,672,386				18,232,414
	Net premises and equipment		216,059				225,141				221,496				211,639				218,257
	Accrued interest receivable		90,267				91,579				72,821				64,457				55,102
	Goodwill and intangible assets		563,502				560,824				561,495				537,700				537,877
	Other assets		1,219,889				1,256,583				1,300,135				1,088,855				1,022,617
	Total Assets	$	27,112,176			$	26,931,702			$	26,146,042			$	25,252,686			$	25,598,310
LIABILITIES AND SHAREHOLDERS' EQUITY
	Deposits	$	21,316,584			$	20,649,538			$	21,376,554			$	21,143,866			$	21,541,174
	Borrowings		2,446,770				2,871,207				1,424,681				1,013,315				1,008,934
	Other liabilities		729,824				831,200				873,648				624,412				478,667
	Total Liabilities		24,493,178				24,351,945				23,674,883				22,781,593				23,028,775
	Shareholders' equity		2,618,998				2,579,757				2,471,159				2,471,093				2,569,535
	Total Liabilities and Shareholders' Equity	$	27,112,176			$	26,931,702			$	26,146,042			$	25,252,686			$	25,598,310
LOANS, DEPOSITS AND BORROWINGS DETAIL:
Loans, by type:
	Real estate - commercial mortgage	$	7,746,920			$	7,693,835			$	7,554,509			$	7,417,036			$	7,289,376
	Commercial and industrial		4,596,096				4,473,004				4,240,865				4,170,975				4,156,562
	Real estate - residential mortgage		4,880,919				4,737,279				4,574,228				4,203,827				3,946,741
	Real estate - home equity		1,074,712				1,102,838				1,110,103				1,108,808				1,098,171
	Real estate - construction		1,326,754				1,269,925				1,273,097				1,177,446				1,210,340
	Consumer		730,775				699,179				633,666				538,747				481,551
	Leases and other loans(2)		314,012				303,487				308,731				304,111				293,378
	Total Net Loans	$	20,670,188			$	20,279,547			$	19,695,199			$	18,920,950			$	18,476,119
Deposits, by type:
	Noninterest-bearing demand	$	6,403,484			$	7,006,388			$	7,372,896			$	7,530,777			$	7,528,391
	Interest-bearing demand		5,478,237				5,410,903				5,676,600				5,403,805				5,625,286
	Savings		6,579,806				6,434,621				6,563,003				6,406,051				6,479,196
	Total demand and savings		18,461,527				18,851,912				19,612,499				19,340,633				19,632,873
	Brokered		960,919				208,416				226,883				243,172				248,833
	Time		1,894,138				1,589,210				1,537,172				1,560,061				1,659,468
	Total Deposits	$	21,316,584			$	20,649,538			$	21,376,554			$	21,143,866			$	21,541,174
Borrowings, by type:
	Federal funds purchased	$	525,000			$	191,000			$	136,000			$	20,000			$	—
	Federal Home Loan Bank advances		747,000				1,250,000				265,500				—				—
	Senior debt and subordinated debt		539,814				539,634				539,461				555,748				555,594
	Other borrowings		634,956				890,573				483,720				437,567				453,340
	Total Borrowings	$	2,446,770			$	2,871,207			$	1,424,681			$	1,013,315			$	1,008,934
(1) "ACL - loans" relates to the ACL specifically on "Net Loans" and does not include the ACL related to OBS credit exposures.
(2) Includes equipment lease financing, overdraft and net origination fees and costs.

FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
dollars in thousands, except per share
			Three Months Ended
			Mar 31				Dec 31				Sep 30				Jun 30				Mar 31
			2023				2022				2022				2022				2022
Interest Income:
	Interest income		$	289,820			$	267,847			$	233,691			$	190,299			$	173,001
	Interest expense			74,233				41,936				18,109				11,468				11,691
	Net Interest Income			215,587				225,911				215,582				178,831				161,310
	Provision for credit losses			24,544				14,513				18,958				1,500				(6,950	)
	Net Interest Income after Provision			191,043				211,398				196,624				177,331				168,260
Non-Interest Income:
	Commercial banking:
	Merchant and card			6,834				7,223				7,601				7,355				6,097
	Cash management			5,515				5,756				6,483				6,062				5,428
	Capital markets			2,344				2,627				4,060				3,893				1,676
	Other commercial banking			2,820				2,998				2,664				3,049				2,807
	Total commercial banking			17,513				18,604				20,808				20,359				16,008
	Consumer banking:
	Card			6,243				6,331				6,278				6,067				5,796
	Overdraft			2,733				3,364				4,463				3,881				3,772
	Other consumer banking			2,241				2,380				2,534				2,524				2,106
	Total consumer banking			11,217				12,075				13,275				12,472				11,674
	Wealth management			18,062				17,531				17,610				18,274				19,428
	Mortgage banking			1,970				2,140				3,720				3,768				4,576
	Other			2,968				3,972				3,802				3,510				3,551
	Non-interest income before investment securities gains (losses)			51,730				54,322				59,215				58,383				55,237
	Investment securities gains (losses), net			23				(1	)			(53	)			8				19
	Total Non-Interest Income			51,753				54,321				59,162				58,391				55,256
Non-Interest Expense:
	Salaries and employee benefits			89,283				92,733				94,283				85,404				84,464
	Data processing and software			15,796				15,448				15,807				14,685				14,315
	Net occupancy			14,438				14,061				14,025				13,587				14,522
	Other outside services			10,126				10,860				9,361				8,764				8,167
	FDIC insurance			4,795				3,219				3,158				2,961				3,209
	Equipment			3,389				3,640				3,548				3,422				3,423
	Professional fees			2,392				2,945				2,373				2,013				1,792
	Marketing			1,886				2,380				1,859				1,326				1,320
	Intangible amortization			674				688				690				177				176
	Merger-related expenses			—				1,894				7,006				1,027				401
	Other			16,837				20,594				17,448				16,364				14,189
	Total Non-Interest Expense			159,616				168,462				169,558				149,730				145,978
	Income Before Income Taxes			83,180				97,257				86,228				85,992				77,538
	Income tax expense			14,866				15,424				15,357				16,003				13,250
	Net Income			68,314				81,833				70,871				69,989				64,288
	Preferred stock dividends			(2,562	)			(2,562	)			(2,562	)			(2,562	)			(2,562	)
	Net Income Available to Common Shareholders		$	65,752			$	79,271			$	68,309			$	67,427			$	61,726
			Three Months Ended
			Mar 31				Dec 31				Sep 30				Jun 30				Mar 31
			2023				2022				2022				2022				2022
PER SHARE:
	Net income available to common shareholders:
	Basic		$	0.39			$	0.47			$	0.41			$	0.42			$	0.38
	Diluted		$	0.39			$	0.47			$	0.40			$	0.42			$	0.38
	Cash dividends		$	0.15			$	0.21			$	0.15			$	0.15			$	0.15
	Weighted average shares (basic)			166,605				167,504				167,353				160,920				160,588
	Weighted average shares (diluted)			168,401				169,136				168,781				162,075				161,911

FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)
dollars in thousands
		Three months ended
		March 31, 2023											December 31, 2022											March 31, 2022
		Average								Yield/			Average								Yield/			Average								Yield/
		Balance				Interest(1)				Rate			Balance				Interest(1)				Rate			Balance				Interest(1)				Rate
ASSETS
Interest-earning assets:
	Net loans	$	20,463,096			$	263,065			5.21	%		$	20,004,513			$	241,453			4.80	%		$	18,383,118			$	151,127			3.32	%
	Investment securities		4,289,643				27,522			2.60	%			4,330,635				27,781			2.56	%			4,226,352				24,251			2.29	%
	Other interest-earning assets		493,130				3,648			3.00	%			460,082				2,923			2.53	%			1,286,723				912			0.29	%
	Total Interest-Earning Assets		25,245,869				294,235			4.73	%			24,795,230				272,157			4.36	%			23,896,193				176,290			2.98	%
Noninterest-Earning assets:
	Cash and due from banks		141,254											149,472											162,320
	Premises and equipment		223,025											223,245											219,932
	Other assets		1,563,806											1,488,684											1,595,039
	Less: ACL - loans(2)		(273,301	)										(270,276	)										(251,022	)
	Total Assets	$	26,900,653										$	26,386,355										$	25,622,462
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-Bearing liabilities:
	Demand deposits	$	5,326,566			$	8,455			0.64	%		$	5,479,443			$	4,589			0.33	%		$	5,664,987			$	728			0.05	%
	Savings deposits		6,469,468				20,535			1.29	%			6,466,775				11,539			0.71	%			6,436,548				1,021			0.06	%
	Brokered deposits		439,670				5,173			4.77	%			215,729				1,947			3.58	%			250,350				216			0.35	%
	Time deposits		1,696,878				7,458			1.78	%			1,554,885				4,302			1.10	%			1,697,063				3,640			0.87	%
	Total Interest-Bearing Deposits		13,932,582				41,621			1.21	%			13,716,832				22,377			0.65	%			14,048,948				5,605			0.16	%
	Borrowings and other interest-bearing liabilities		3,058,684				32,613			4.32	%			2,025,522				19,559			3.83	%			1,033,815				6,087			2.39	%
	Total Interest-Bearing Liabilities		16,991,266				74,234			1.78	%			15,742,354				41,936			1.06	%			15,082,763				11,692			0.31	%
Noninterest-Bearing liabilities:
	Demand deposits		6,641,741											7,310,824											7,431,235
	Other noninterest-bearing liabilities		654,330											844,029											419,630
	Total Liabilities		24,287,337											23,897,207											22,933,628
	Total Deposits/Cost of Deposits		20,574,323							0.82	%			21,027,656							0.42	%			21,480,183							0.11	%
	Total interest-bearing liabilities and non-interest bearing deposits ("Cost of Funds")		23,633,007							1.27	%			23,053,178							0.72	%			22,513,998							0.21	%
	Shareholders' equity		2,613,316											2,489,148											2,688,834
	Total Liabilities and Shareholders' Equity	$	26,900,653										$	26,386,355										$	25,622,462
	Net interest income/net interest margin (fully taxable equivalent)						220,001			3.53	%							230,221			3.69	%							164,598			2.78	%
	Tax equivalent adjustment						(4,414	)										(4,310	)										(3,288	)
	Net Interest Income					$	215,587										$	225,911										$	161,310
	(1) Presented on a fully taxable-equivalent basis using a 21% federal tax rate and statutory interest expense disallowances.
	(2) "ACL - loans" relates to the ACL specifically on "Net Loans" and does not include the ACL related to OBS credit exposures.

FULTON FINANCIAL CORPORATION
AVERAGE LOANS, DEPOSITS AND BORROWINGS DETAIL (UNAUDITED):
dollars in thousands
		Three months ended
		Mar 31			Dec 31			Sep 30			Jun 30			Mar 31
		2023			2022			2022			2022			2022
Loans, by type:
	Real estate - commercial mortgage	$	7,720,975		$	7,696,997		$	7,566,259		$	7,340,417		$	7,294,914
	Commercial and industrial		4,565,923			4,372,935			4,250,573			4,155,436			4,213,014
	Real estate - residential mortgage		4,790,868			4,643,784			4,485,649			4,052,666			3,887,428
	Real estate - home equity		1,086,032			1,106,325			1,099,487			1,118,494			1,106,319
	Real estate - construction		1,276,145			1,209,998			1,268,590			1,188,932			1,137,649
	Consumer		721,248			679,108			604,634			485,095			471,129
	Leases and other loans(1)		301,905			295,366			288,633			296,135			272,665
	Total Net Loans	$	20,463,096		$	20,004,513		$	19,563,825		$	18,637,175		$	18,383,118
Deposits, by type:
	Noninterest-bearing demand	$	6,641,741		$	7,310,824		$	7,535,791		$	7,647,618		$	7,431,235
	Interest-bearing demand		5,326,566			5,479,443			5,708,059			5,597,975			5,664,987
	Savings		6,469,468			6,466,775			6,681,713			6,425,634			6,436,548
	Total demand and savings		18,437,775			19,257,042			19,925,563			19,671,227			19,532,770
	Brokered		439,670			215,729			247,105			244,200			250,350
	Time		1,696,878			1,554,885			1,615,384			1,608,286			1,697,063
	Total Deposits	$	20,574,323		$	21,027,656		$	21,788,052		$	21,523,713		$	21,480,183
Borrowings, by type:
	Federal funds purchased	$	505,142		$	261,737		$	96,965		$	2,857		$	—
	Federal Home Loan Bank advances		1,261,589			564,692			206,152			—			—
	Senior debt and subordinated debt		539,726			539,550			554,735			555,701			608,961
	Other borrowings and other interest-bearing liabilities		752,227			659,543			501,496			445,261			424,854
	Total Borrowings	$	3,058,684		$	2,025,522		$	1,359,348		$	1,003,819		$	1,033,815
(1) Includes equipment lease financing, overdraft and net origination fees and costs.

FULTON FINANCIAL CORPORATION
ASSET QUALITY INFORMATION (UNAUDITED)
dollars in thousands
		Three months ended
		Mar 31				Dec 31				Sep 30				Jun 30				Mar 31
		2023				2022				2022				2022				2022
Allowance for credit losses related to net loans:
Balance at beginning of period		$	269,366			$	266,838			$	248,564			$	243,705			$	249,001
	CECL Day 1 provision expense		—				—				7,954				—				—
	Initial purchased credit deteriorated loans		—				—				1,135				—				—
	Loans charged off:
	Real estate - commercial mortgage		(13,362	)			(12,235	)			(86	)			—				(152	)
	Commercial and industrial		(612	)			(179	)			(1,783	)			(201	)			(227	)
	Real estate - residential mortgage		—				—				—				(66	)			—
	Consumer and home equity		(2,206	)			(1,311	)			(1,172	)			(877	)			(1,052	)
	Real estate - construction		—				—				—				—				—
	Leases and other loans(1)		(723	)			(505	)			(683	)			(474	)			(469	)
	Total loans charged off		(16,903	)			(14,230	)			(3,724	)			(1,618	)			(1,900	)
Recoveries of loans previously charged off:
	Real estate - commercial mortgage		786				183				29				3,536				112
	Commercial and industrial		1,086				961				2,213				739				1,980
	Real estate - residential mortgage		48				10				101				92				222
	Consumer and home equity		661				683				682				762				454
	Real estate - construction		202				530				—				12				32
	Leases and other loans(1)		116				132				247				226				154
	Recoveries of loans previously charged off		2,899				2,499				3,272				5,367				2,954
Net loans recovered (charged off)			(14,004	)			(11,731	)			(452	)			3,749				1,054
Provision for credit losses			23,333				14,259				9,637				1,110				(6,350	)
Balance at end of period		$	278,695			$	269,366			$	266,838			$	248,564			$	243,705
Net (recoveries) charge-offs to average loans			0.27	%			0.23	%			0.01	%			(0.08	) %			(0.02	) %
Provision for credit losses related to OBS Credit Exposures
	Provision for credit losses	$	1,211			$	254			$	1,367			$	390			($	600	)
NON-PERFORMING ASSETS:
	Non-accrual loans	$	134,303			$	144,443			$	178,204			$	162,530			$	136,799
	Loans 90 days past due and accruing		30,336				27,463				14,559				11,016				24,182
	Total non-performing loans		164,639				171,906				192,763				173,546				160,981
	Other real estate owned		3,304				5,790				5,877				4,786				2,014
	Total non-performing assets	$	167,943			$	177,696			$	198,640			$	178,332			$	162,995
NON-PERFORMING LOANS, BY TYPE:
	Real estate - commercial mortgage	$	61,322			$	72,634			$	96,281			$	59,940			$	64,190
	Commercial and industrial		33,555				28,288				29,831				44,713				30,193
	Real estate - residential mortgage		46,576				46,509				41,597				42,922				39,308
	Consumer and home equity		8,983				9,800				10,016				10,552				11,465
	Real estate - construction		1,509				1,368				1,456				1,357				672
	Leases and other loans(1)		12,694				13,307				13,582				14,062				15,153
	Total non-performing loans	$	164,639			$	171,906			$	192,763			$	173,546			$	160,981
(1) Includes equipment lease financing, overdraft and net origination fees and costs.

FULTON FINANCIAL CORPORATION
RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED)
(dollars in thousands, except per share data)
Explanatory note:	This press release contains supplemental financial information, as detailed below, that 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 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
						Mar 31				Dec 31				Sep 30				Jun 30				Mar 31
						2023				2022				2022				2022				2022
Operating net income available to common shareholders
Net income available to common shareholders						$	65,752			$	79,271			$	68,309			$	67,427			$	61,726
Plus: Core deposit intangible amortization							514				514				514				—				—
Plus: Merger-related expenses							—				1,894				7,006				1,027				401
Plus: CECL Day 1 Provision expense							—				—				7,954				—				—
Less: Tax impact of adjustments							(108	)			(506	)			(3,250	)			(216	)			(84	)
Operating net income available to common shareholders (numerator)						$	66,158			$	81,173			$	80,533			$	68,238			$	62,043
Weighted average shares (diluted) (denominator)							168,401				169,136				168,781				162,075				161,911
Operating net income available to common shareholders, per share (diluted)						$	0.39			$	0.48			$	0.48			$	0.42			$	0.38
Common shareholders' equity (tangible), per share
Shareholders' equity						$	2,618,998			$	2,579,757			$	2,471,159			$	2,471,093			$	2,569,535
Less: Preferred stock							(192,878	)			(192,878	)			(192,878	)			(192,878	)			(192,878	)
Less: Goodwill and intangible assets							(563,502	)			(560,824	)			(561,495	)			(537,700	)			(537,877	)
Tangible common shareholders' equity (numerator)						$	1,862,618			$	1,826,055			$	1,716,786			$	1,740,515			$	1,838,780
Shares outstanding, end of period (denominator)							165,396				167,599				167,399				161,057				160,669
Common shareholders' equity (tangible), per share						$	11.26			$	10.90			$	10.26			$	10.81			$	11.44
Operating return on average assets
Net income						$	68,314			$	81,833			$	70,871			$	69,989			$	64,288
Plus: Core deposit intangible amortization							514				514				514				—				—
Plus: Merger-related expenses							—				1,894				7,006				1,027				401
Plus: CECL Day 1 Provision expense							—				—				7,954				—				—
Less: Tax impact of adjustments							(108	)			(506	)			(3,250	)			(216	)			(84	)
Operating net income (numerator)						$	68,720			$	83,735			$	83,095			$	70,800			$	64,605
Total average assets (denominator)						$	26,900,653			$	26,386,355			$	26,357,095			$	25,578,432			$	25,622,462
Operating return on average assets							1.04	%			1.26	%			1.25	%			1.11	%			1.02	%
Return on average common shareholders' equity (tangible)
Net income available to common shareholders						$	65,752			$	79,271			$	68,309			$	67,427			$	61,726
Plus: Intangible amortization							674				688				690				177				176
Plus: Merger-related expenses							—				1,894				7,006				1,027				401
Plus: CECL Day 1 Provision expense							—				—				7,954				—				—
Less: Tax impact of adjustments							(142	)			(542	)			(3,287	)			(253	)			(122	)
Operating net income available to common shareholders (numerator)						$	66,284			$	81,311			$	80,672			$	68,378			$	62,181
Average shareholders' equity						$	2,613,316			$	2,489,148			$	2,604,057			$	2,531,346			$	2,688,834
Less: Average preferred stock							(192,878	)			(192,878	)			(192,878	)			(192,878	)			(192,878	)
Less: Average goodwill and intangible assets							(561,744	)			(561,219	)			(562,285	)			(537,786	)			(537,976	)
Average tangible common shareholders' equity (denominator)						$	1,858,694			$	1,735,051			$	1,848,894			$	1,800,682			$	1,957,980
Return on average common shareholders' equity (tangible)							14.46	%			18.59	%			17.31	%			15.23	%			12.88	%
						Three months ended
						Mar 31				Dec 31				Sep 30				Jun 30				Mar 31
						2023				2022				2022				2022				2022
Tangible common equity to tangible assets (TCE Ratio)
Shareholders' equity						$	2,618,998			$	2,579,757			$	2,471,159			$	2,471,093			$	2,569,535
Less: Preferred stock							(192,878	)			(192,878	)			(192,878	)			(192,878	)			(192,878	)
Less: Goodwill and intangible assets							(563,502	)			(560,824	)			(561,495	)			(537,700	)			(537,877	)
Tangible common shareholders' equity (numerator)						$	1,862,618			$	1,826,055			$	1,716,786			$	1,740,515			$	1,838,780
Total assets						$	27,112,176			$	26,931,702			$	26,146,042			$	25,252,686			$	25,598,310
Less: Goodwill and intangible assets							(563,502	)			(560,824	)			(561,495	)			(537,700	)			(537,877	)
Total tangible assets (denominator)						$	26,548,674			$	26,370,878			$	25,584,547			$	24,714,986			$	25,060,433
Tangible common equity to tangible assets							7.02	%			6.92	%			6.71	%			7.04	%			7.34	%
Tangible common equity to tangible assets (TCE Ratio) excluding AOCI
Shareholders' equity						$	2,618,998			$	2,579,757			$	2,471,159			$	2,471,093			$	2,569,535
Less: Preferred stock							(192,878	)			(192,878	)			(192,878	)			(192,878	)			(192,878	)
Less: Accumulated other comprehensive (income) loss							350,992				385,476				442,947				304,210				158,855
Less: Goodwill and intangible assets							(563,502	)			(560,824	)			(561,495	)			(537,700	)			(537,877	)
Tangible common shareholders' equity (numerator)						$	2,213,610			$	2,211,531			$	2,159,733			$	2,044,725			$	1,997,635
Total assets						$	27,112,176			$	26,931,702			$	26,146,042			$	25,252,686			$	25,598,310
Less: Goodwill and intangible assets							(563,502	)			(560,824	)			(561,495	)			(537,700	)			(537,877	)
Plus: AOCI - unrealized losses/(gains) on AFS investments securities							282,092				632,456				368,196				249,424				112,965
Total tangible assets (denominator)						$	26,830,766			$	27,003,334			$	25,952,743			$	24,964,410			$	25,173,398
Tangible common equity to tangible assets, excluding AOCI							8.25	%			8.19	%			8.32	%			8.19	%			7.94	%
Efficiency ratio
Non-interest expense						$	159,616			$	168,462			$	169,558			$	149,730			$	145,978
Less: Amortization of tax credit investments							—				(696	)			(696	)			(696	)			(696	)
Less: Merger-related expenses							—				(1,894	)			(7,006	)			(1,027	)			(401	)
Less: Intangible amortization							(674	)			(688	)			(690	)			(177	)			(176	)
Non-interest expense (numerator)						$	158,942			$	165,184			$	161,166			$	147,830			$	144,705
Net interest income						$	215,587			$	225,911			$	215,582			$	178,831			$	161,310
Tax equivalent adjustment							4,414				4,310				3,970				3,427				3,288
Plus: Total non-interest income							51,753				54,321				59,162				58,391				55,256
Less: Investment securities (gains) losses, net							(23	)			1				53				(8	)			(19	)
Total revenue (denominator)						$	271,731			$	284,543			$	278,767			$	240,641			$	219,835
Efficiency ratio							58.5	%			58.1	%			57.8	%			61.4	%			65.8	%
Operating non-interest expenses to total average assets
Non-interest expense						$	159,616			$	168,462			$	169,558			$	149,730			$	145,978
Less: Amortization of tax credit investments							—				(696	)			(696	)			(696	)			(696	)
Less: Intangible amortization							(674	)			(688	)			(690	)			(177	)			(176	)
Less: Merger-related expenses							—				(1,894	)			(7,006	)			(1,027	)			(401	)
Non-interest expense (numerator)						$	158,942			$	165,184			$	161,166			$	147,830			$	144,705
Total average assets (denominator)						$	26,900,653			$	26,386,355			$	26,357,095			$	25,578,432			$	25,622,462
Operating non-interest expenses to total average assets							2.40	%			2.48	%			2.43	%			2.32	%			2.29	%
						Three months ended
						Mar 31				Dec 31				Sep 30				Jun 30				Mar 31
						2023				2022				2022				2022				2022
Pre-provision net revenue
Net interest income						$	215,587			$	225,911			$	215,582			$	178,831			$	161,310
Non-interest income							51,753				54,321				59,162				58,391				55,256
Less: Investment securities (gains) losses, net							(23	)			1				53				(8	)			(19	)
Total revenue						$	267,317			$	280,233			$	274,797			$	237,214			$	216,547
Non-interest expense						$	159,616			$	168,462			$	169,558			$	149,730			$	145,978
Less: Amortization on tax credit investments							—				(696	)			(696	)			(696	)			(696	)
Less: Merger-related expenses							—				(1,894	)			(7,006	)			(1,027	)			(401	)
Less: Intangible amortization							(674	)			(688	)			(690	)			(177	)			(176	)
Total non-interest expense						$	158,942			$	165,184			$	161,166			$	147,830			$	144,705
Pre-provision net revenue						$	108,375			$	115,049			$	113,631			$	89,384			$	71,842
Note: numbers may not sum due to rounding.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230418006192/en/

Media Contact: Lacey Dean (717) 735-8688

Investor Contact: Matt Jozwiak (717) 327-2657

Source: Fulton Financial Corporation

FAQ

What were the net earnings reported by Fulton Financial Corporation for Q1 2023?

Fulton reported net income of $65.8 million, or $0.39 per diluted share, for Q1 2023.

How did Fulton Financial's net interest income change in Q1 2023?

Net interest income was $215.6 million, a decrease of $10.3 million compared to Q4 2022.

What was the provision for credit losses for Fulton Financial in Q1 2023?

The provision for credit losses in Q1 2023 was $24.5 million, up from $14.5 million in Q4 2022.

How did Fulton Financial's non-interest income perform in Q1 2023?

Non-interest income before investment securities gains decreased by 4.8% from Q4 2022.

What factors contributed to the decline in net income for Fulton Financial in Q1 2023?

Net income declined by 17.1% due to decreased net interest income and increased provision for credit losses.