Fulton Financial Corp. swung to a fourth-quarter profit on a smaller loan-loss provision and a large prior-year writedown.
"Our net interest margin increased nicely due to continued strong core deposit growth and a reduction in the cost of time deposits. Expenses were flat. The stabilization in our asset quality enabled us to maintain the same level of provision from the third to the fourth quarter," said chairman and chief executive R. Scott Smith, Jr.
The bank-holding company, which has more than 20% of its assets tied up in nonowner commercial real estate loans, could be hurt by increasing losses in that category. The commercial real estate market deteriorated quickly last year and is not expected to recover for one to two years.
In the latest quarter, Fulton reported a profit of $24.4 million, or 11 cents a share, compared with a prior-year loss of $101.9 million, or 58 cents a share. Analysts estimated earnings of 11 cents, according to a poll by Thomson Reuters.
Net interest income grew 2.8% to $136.1 million.
Fulton's loan-loss provision fell 31%, to $45 million, from a year earlier and was essentially flat with the third quarter. Net charge-offs — loans the bank doesn't think can be collected — grew to 0.97% of average total loans from 0.89% a year earlier and 0.81% in the previous quarter. Nonperforming assets — those near default — rose to 1.83% of total assets from 1.35% and 1.82%, respectively.
Deposits increased 15% year-on-year.
Fulton operates more than 270 branches under a variety of names in Pennsylvania, Maryland, Delaware, New Jersey and Virginia.
Its shares were flat at $9.54 in after-hours trading. The stock, which reached its 52-week high Tuesday, has doubled from a 15-year low in July.