LANCASTER, PA, October 21 / MARKET WIRE/ --
Fulton Financial Corporation (NASDAQ: FULT)
earned $29.1 million for the third quarter ended September 30, 2008, a 13.4
percent decrease from the same period in 2007. Diluted net income per share
for the quarter was 17 cents, a 10.5 percent decrease from the 19 cents
reported in the same period in 2007. Diluted net income per share for the
quarter increased 13.3 percent from the 15 cents reported in the second
quarter of 2008.
The Corporation's earnings for the third quarter ended September 30, 2008,
in comparison to the same period in 2007 and the second quarter of 2008
were impacted by a number of previously disclosed significant items
recorded in those prior periods. During the third quarter of 2007, the
Corporation recorded a $16.0 million pre-tax charge related to its mortgage
banking operations. During the second quarter of 2008, the Corporation
recorded a $13.9 million pre-tax gain on the sale of its credit card
portfolio, offset by pre-tax charges of $13.2 million related to the
establishment of a reserve related to the purchase of auction rate
securities (ARCs) held in customer accounts and $24.7 million for
other-than-temporary impairment of bank stocks. During the third quarter of
2008, the Corporation recorded an additional $10.8 million of pre-tax
charges related to the other-than-temporary impairment of bank stocks and
certain debt securities. Excluding these items, the decrease in net income
for the third quarter of 2008 in comparison to the same period in 2007 and
the second quarter of 2008 was primarily due to an increase in the
provision for loan losses.
Net income was $96.3 million for the nine months ended September 30, 2008,
a 16.0 percent decrease from the same period in 2007. Diluted net income
per share for the nine months ended September 30, 2008 was 55 cents, a 16.7
percent decrease from the 66 cents reported in 2007. Total assets at
September 30, 2008 were approximately $16.1 billion.
"Our third quarter performance was negatively impacted by write downs in
the investment portfolio and a significant increase in the provision for
loan losses due to deteriorating economic conditions," said R. Scott Smith,
Jr., chairman, chief executive officer and president. "We do not expect
improvement in our asset quality metrics until we begin to see tangible
signs of economic recovery. Many households and businesses are currently
struggling. We are committed to helping our customers weather these
difficult conditions. Overall loan growth remains healthy due to increased
market share opportunities and we continue to see steady growth in our net
interest income. Retail funding remains a challenge and we will continue to
attract customer deposits through ongoing marketing and promotional
activity. Core banking non-interest income is strong and expenses are well
controlled as a result of our ongoing process improvement initiatives."
Loans, net of unearned income, increased $835.2 million, or 7.6 percent, to
$11.8 billion at September 30, 2008, compared to $11.0 billion at September
30, 2007. The increase was primarily due to a $490.0 million, or 14.4
percent, increase in commercial mortgages, a $225.7 million, or 6.8
percent, increase in commercial loans, a $174.9 million, or 11.9 percent,
increase in home equity loans and a $170.3 million, or 21.1 percent,
increase in residential mortgages. These increases were partially offset by
a $112.2 million, or 22.4 percent, decrease in consumer loans, largely due
to the aforementioned sale of the credit card portfolio in the second
quarter of 2008, and a $111.6 million, or 8.0 percent, decrease in
construction loans. In comparison to the second quarter of 2008, loans, net
of unearned income, increased $246.0 million, or 2.1 percent, which was
mainly due to growth in commercial mortgages of $105.4 million, or 2.8
percent, an increase in home equity loans of $53.5 million, or 3.4 percent,
and an increase in residential mortgages of $50.2 million, or 5.4 percent.
Non-performing assets were $186.4 million, or 1.15 percent of total assets,
at September 30, 2008, compared to $107.0 million, or 0.69 percent, at
September 30, 2007 and $164.5 million, or 1.02 percent, at June 30, 2008.
The $79.4 million, or 74.2 percent, increase in non-performing assets since
September 30, 2007 was primarily due to deteriorating general economic
conditions with increases in non-performing loans across most loan types.
Annualized net charge-offs for the quarter ended September 30, 2008 were
0.38 percent of average total loans, compared to 0.08 percent for the
quarter ended September 30, 2007 and 0.33 percent for the quarter ended
June 30, 2008. Net loans charged off increased $9.0 million, or 437.8
percent, for the quarter ended September 30, 2008 in comparison to the same
period in 2007. The increase in charge-offs was across all loan types. For
the nine months ended September 30, 2008, annualized net charge-offs were
0.29 percent of average total loans, compared to 0.07 percent for the same
period in 2007. The provision for loan losses increased $22.1 million for
the third quarter of 2008, as compared to the same period in 2007, and
increased $10.0 million from the second quarter of 2008. For the nine
months ended September 30, 2008, the provision for loan losses was $54.6
million, a 561.1 percent increase from the $8.3 million recorded during the
same period in 2007. The increase in the provision for loan losses was due
to the increase in the level of non-performing assets, which required
additional allocations to the allowance for credit losses and reflects the
negative impact of weakening economic conditions on borrowers' ability to
repay their loans.
Total deposits decreased $374.6 million, or 3.6 percent, to $9.9 billion at
September 30, 2008 compared to $10.3 billion at September 30, 2007. The
decrease was due to a $291.6 million, or 6.3 percent, decrease in time
deposits and an $83.0 million, or 1.5 percent, decrease in demand and
savings deposits. In comparison to the second quarter of 2008, total
deposits decreased $21.6 million, or 0.2 percent, due to a $120.7 million,
or 2.1 percent, decrease in demand and savings deposits, offset by a $99.1
million, or 2.3 percent, increase in time deposits.
Net interest income for the third quarter of 2008 increased $11.6 million,
or 9.5 percent, compared to the same period in 2007 and increased $2.1
million, or 1.6 percent, from the second quarter of 2008. The Corporation's
net interest margin was 3.74 percent for the third quarter of 2008, 3.62
percent for the third quarter of 2007 and 3.75 percent for the second
quarter of 2008. The improvement in net interest income in comparison to
the same period in 2007 was mainly due to the Corporation's increased use
of lower cost short-term borrowings, rather than higher cost
interest-bearing deposit accounts, to fund asset growth.
Other income, excluding investment securities (losses) gains, increased
$3.2 million, or 8.8 percent, in the third quarter of 2008 compared to the
same period in 2007. The increase was due to an increase in fee income on
deposit accounts of $4.9 million, an increase due to fees earned in 2008
under an ongoing marketing agreement with the purchaser of the credit card
portfolio of $1.3 million and an increase in fees on non-deposit services
of $1.1 million. These increases in comparison to the same period in 2007
were partially offset by a $2.1 million gain from the sale of certain
mortgage-related assets and the settlement of related lawsuits recorded
during the third quarter of 2007 and a $1.2 million decrease in investment
management and trust services income. Compared to the second quarter of
2008, other income, excluding securities (losses) gains and the gain on the
sale of the credit card portfolio, was essentially unchanged.
Investment securities losses in the third quarter of 2008 were $9.5 million
compared to $134,000 in the third quarter of 2007. The third quarter loss
resulted from $2.1 million other-than-temporary impairment charges on bank
stocks and $8.7 million of other-than-temporary impairment charges on other
securities. These losses were partially offset by $1.3 million in net gains
on the sale of equity and debt securities. During the second quarter of
2008, the Corporation recorded the aforementioned $24.7 million of
other-than-temporary impairment charge on bank stocks. As of September 30,
2008, the bank stock portfolio has a carrying value of $55.2 million and a
fair value of $54.3 million.
Other expenses decreased $8.8 million, or 8.2 percent, compared to the same
period in 2007, to $99.2 million. The decrease was primarily due to the
aforementioned $16.0 million pre-tax charge in 2007 related to the
Corporation's potential repurchase of previously sold residential mortgage
loans and home equity loans, partially offset by a $2.8 million increase in
salaries and employee benefits and an additional $2.7 million loss in 2008
due to a decrease in the estimated fair value of ARCs still held in
customer accounts. Compared to the second quarter of 2008, other expenses
decreased $10.6 million, or 9.6 percent, due primarily to the
aforementioned $13.2 million loss recorded in the second quarter of 2008
related to ARCs.
Fulton Financial Corporation is a Lancaster, Pennsylvania-based financial
holding company which has nearly 3,900 employees and operates more than 265
banking offices in Pennsylvania, Maryland, Delaware, New Jersey and
Virginia through the following affiliates: Fulton Bank, Lancaster, PA;
Swineford National Bank, Middleburg, PA; Lafayette Ambassador Bank, Easton,
PA; FNB Bank, N.A., Danville, PA; Hagerstown Trust Company, Hagerstown, MD;
Delaware National Bank, Georgetown, DE; The Bank, Woodbury, NJ; The Peoples
Bank of Elkton, Elkton, MD; Skylands Community Bank, Hackettstown, NJ and
The Columbia Bank, Columbia, MD.
The Corporation's financial services affiliates include: Fulton Financial
Advisors, N.A., Lancaster, PA; Fulton Insurance Services Group, Inc.,
Lancaster, PA; and Dearden, Maguire, Weaver and Barrett, LLC, West
Conshohocken, PA. Residential mortgage lending is offered by all banks
through Fulton Mortgage Company.
Additional information on Fulton Financial Corporation is available on the
Internet at
www.fult.com
.
Safe Harbor Statement:
This news release may contain forward-looking statements with respect to
our financial condition, results of operations and business.
Forward-looking statements are encouraged by the Private Securities
Litigation Reform Act of 1995. When words such as "believes," "expects,"
"anticipates" or similar expressions are used in this release, the
Corporation is making forward-looking statements.
Such forward-looking statements reflect the Corporation's current views and
expectations based largely on information currently available to its
management, and on its current expectations, assumptions, plan, estimates,
judgments, and projections about its business and its industry, and they
involve inherent risks, contingencies, uncertainties and other factors.
Although the Corporation believes that these forward-looking statements are
based on reasonable estimates and assumptions, the Corporation is unable to
provide any assurance that its expectations will, in fact, occur or that
its estimates or assumptions will be correct and actual results could
differ materially from those expressed or implied by such forward-looking
statements and such statements are not guarantees of future performance.
The Corporation undertakes no obligation to update or revise any
forward-looking statements. Accordingly, investors and others are cautioned
not to place undue reliance on such forward-looking statements.
Many factors could affect future financial results including, without
limitation, acquisition and growth strategies; market risk; changes or
adverse developments in economic, political or regulatory conditions; a
continuation or worsening of the current disruption in credit and other
markets, including the lack of or reduced access to, and the abnormal
functioning of markets for mortgage and other asset-backed securities and
for commercial paper and other short-term borrowings; the effect of
competition and interest rates on net interest margin and net interest
income; investment strategy and income growth; investment securities gains;
declines in the value of securities which may result in charges to
earnings; changes in rates of deposit and loan growth; asset quality and
the impact on assets from adverse changes in the economy and in credit and
other markets and resulting effects on credit risk and asset values;
balances of risk-sensitive assets to risk-sensitive liabilities; salaries
and employee benefits and other expenses; amortization of intangible
assets; goodwill impairment; capital and liquidity strategies; and other
financial and business matters for future periods.
For a more complete discussion of certain risks and uncertainties affecting
the Corporation, please see the sections entitled "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" set forth in the Corporation's filings with the Securities and
Exchange Commission.
2008
Media Contact:
Laura J. Wakeley
Office: 717-291-2616
