Fulton in Pennsylvania begins cost-cutting effort
Fulton Financial in Lancaster, Pa., is planning to cut $25 million in annual expenses.
The $25.5 billion-asset company said in its press release announcing third-quarter earnings that the initiative includes a recently disclosed plan to close 21 branches. The effort will also include layoffs and renegotiated vendor contracts.
Fulton said the savings should be fully recognized in mid-2021.
The company said it will incur $17 million to $19 million in pretax charges tied to the initiative that will cover severance, fixed asset write-offs and lease termination charges. Most of those expenses will occur in the fourth quarter.
The expense review that led to the initiative “was prompted largely due to the prolonged and continuing effects of COVID-19 and the fact that we are expecting to be in this low-interest rate environment for the next couple of years,” Philip Wenger, Fulton’s chairman and CEO, said during a Wednesday conference call to discuss quarterly results.
“In addition, we are very aware that the pandemic has accelerated the timetable for some of the activities we had already begun,” Wenger added. “These include developing technology and digital tools for employees and customers. Therefore, we needed to find a way to invest resources in these key areas at a faster pace than we had originally planned.”
Fulton plans to reinvest a portion of the annual savings into the “digital transformation of our company,” Mark McCollum, the company’s chief financial officer, said during the conference call.
Fulton’s earnings rose by 56% from the second quarter, to $61.6 million, largely because of a $12.5 million decrease in its loan-loss provision and a $7.3 million increase in fee income.