The new tax law prompted a nearly $16 million charge at Fulton Financial in Lancaster, Pa., that drove down headline earnings and masked some core growth.
Net income at the $20 billion-asset company fell 19% from a year earlier to $34 million; it earned 19 cents per share. Without the tax-related charge, related to a write-down of deferred tax assets, net income would have increased 18% to $49.6 million and its EPS would have been 28 cents, or 2 cents better than the consensus estimate of analysts compiled by FactSet Research Systems.
"We generated positive operating leverage and hit record levels in revenue and net income, excluding the tax charge," Chairman and CEO Phillip Wenger said in a news release Monday.
Net interest income improved 12% to $143 million. The average yield on loans rose 2 basis points, and the average yield on securities in Fulton’s investment portfolio rose 6 basis points.
Total loans increased 7% to $16 billion on higher commercial real estate and construction lending.
Noninterest income rose 8% to $57 million. Fulton benefited from a $5.1 million gain from the settlement of litigation. Fulton also reported higher deposit service fees and investment management and trust service income. Noninterest income also improved from the sale of Small Business Administration loans.
Noninterest expense increased 9% to $138 million. Fulton's release attributed the increase partly to a $3.4 million write-off of “accumulated capital expenditures related to in-process technology initiatives in commercial banking due to a strategic shift to an alternative solution.”
