Fulton Financial (FULT) in Lancaster, Pa., said late Tuesday that its third-quarter profit climbed 5.7%, to $41.6 million, from the same period last year as improved asset quality and growth in fee income offset sluggish loan growth.

Though total loan balances increased slightly year over year, to $11.9 billion, its net interest income fell 4%, to $135.9 million, due primarily to persistently low interest rates. Its net interest margin fell by 19 basis points from the prior year, to 3.74%.

However, noninterest income climbed 8% year over year, to $52 million, thanks largely to a 33% jump in fees from mortgage banking.

Profits were also aided by a 26% decline in the provision for loan losses from a year ago, to $23 million, as credit quality continued to strengthen. Nonperforming assets were 1.5% of total assets at Sept. 30, down from 1.6% at June 30 and 2.14% in last year's third quarter.

Fulton raised its dividend by a penny, to 8 cents per common share, for the third quarter. It also repurchased about 2.1 million shares in the third quarter of 2012 and said that an additional 2.9 million shares are available for purchase under its buyback plan. 

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