Fulton Financial Corporation (NASDAQ:FULT) (“Fulton” or the “Corporation”) reported net income of $35.2 million, or $0.20 per diluted share, for the second quarter of 2018, and net income of $84.7 million, or $0.48 per diluted share, for the six months ended June 30, 2018.

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"Overall, we were pleased with the second quarter results, despite the impact of the loss from a single, large commercial lending relationship,” said E. Philip Wenger, Chairman and CEO. “Pre-provision net revenue reached an all-time high this quarter on strong growth in our net interest income, solid fee income growth and a reduction in operating expenses. Absent the impact of the one large commercial lending relationship, we also saw a nice improvement in credit.”

Net income per diluted share decreased 28.6% in comparison to the $0.28 reported for the first quarter of 2018 and 23.1% from the second quarter of 2017. The decrease in net income compared to the two prior periods resulted from a credit loss arising from a single, large commercial lending relationship (“Commercial Relationship”). The provision for credit losses recorded in the second quarter of 2018 for this Commercial Relationship was $36.8 million, or $29.1 million, net of tax. This loss equates to approximately $0.16 per diluted share. The credit loss was previously disclosed and is addressed in more detail below.

Balance Sheet

Total average assets for the second quarter of 2018 were $20.1 billion, an increase of $187.3 million from the first quarter of 2018. Average loans, net of unearned income, increased $107.3 million in comparison to the first quarter of 2018. Average loans and yields, by type, for the second quarter of 2018 in comparison to the first quarter of 2018 are summarized in the following table:

         
Three Months Ended
June 30, 2018 March 31, 2018 Growth
Balance   Yield (1) Balance Yield (1) $ %
(dollars in thousands)
Average Loans, net of unearned income, by type:
Real estate - commercial mortgage $ 6,298,534 4.34 % $ 6,305,821 4.16 % $ (7,287 ) (0.1 %)
Commercial - industrial, financial and agricultural 4,335,097 4.27 % 4,288,634 4.15 % 46,463 1.1 %
Real estate - residential mortgage 2,026,161 3.89 % 1,958,505 3.85 % 67,656 3.5 %
Real estate - home equity 1,502,936 4.83 % 1,538,974 4.65 % (36,038 ) (2.3 %)
Real estate - construction 978,327 4.40 % 984,242 4.22 % (5,915 ) (0.6 %)
Consumer 345,572 4.43 % 315,927 4.67 % 29,645 9.4 %
Leasing 272,298 4.59 % 260,780 4.53 % 11,518 4.4 %
Other   9,452 N/A     8,149 N/A     1,303   16.0 %
 
Total Average Loans, net of unearned income $ 15,768,377 4.32 % $ 15,661,032 4.19 % $ 107,345   0.7 %
 

(1) Presented on a fully-taxable equivalent basis using a 21% Federal tax rate and statutory interest expense disallowances for the three months ended June 30, 2018 and March 31, 2018.

Average deposits increased $97.1 million in comparison to the first quarter of 2018. Average deposits and interest rates, by type, for the second quarter of 2018 in comparison to the first quarter of 2018 are summarized in the following table:

     
Three Months Ended
June 30, 2018   March 31, 2018 Growth
Balance   Rate Balance   Rate $ %
(dollars in thousands)
Average Deposits, by type:
Noninterest-bearing demand $ 4,281,574 - % $ 4,246,168 - % $ 35,406 0.8 %
Interest-bearing demand 3,952,115 0.50 % 3,958,894 0.41 % (6,779 ) (0.2 %)
Savings and money market deposits   4,538,083 0.49 %   4,494,445 0.39 %   43,638   1.0 %
Total average demand and savings 12,771,772 0.34 % 12,699,507 0.27 % 72,265 0.6 %
Brokered deposits 85,242 1.87 % 74,026 1.51 % 11,216 15.2 %
Time deposits   2,660,410 1.26 %   2,646,779 1.20 %   13,631   0.5 %
 
Total Average Deposits $ 15,517,424 0.50 % $ 15,420,312 0.43 % $ 97,112   0.6 %
 

Asset Quality

Non-performing assets were $134.9 million, or 0.67% of total assets, at June 30, 2018, compared to $145.4 million, or 0.73% of total assets, at March 31, 2018.

On May 31, 2018, Fulton filed a Current Report on Form 8-K with the Securities and Exchange Commission disclosing an expected credit loss arising from the Commercial Relationship; at the time of the Current Report, Fulton estimated that the credit loss related to the Commercial Relationship would be up to $32 million, net of tax, or $0.18 per diluted share. Since the date of the Current Report, Fulton determined that the provision for credit loss for the Commercial Relationship, which was recorded in the second quarter of 2018, was $36.8 million, or $29.1 million, net of tax. This loss equates to approximately $0.16 per diluted share. The credit loss resulted from fraudulent activity believed to have been perpetrated by one or more employees of the borrower and its related entities. Based on Fulton’s review of the circumstances of the fraudulent activity involving this borrower, Fulton believes this incident is an isolated occurrence and not indicative of a broader increase in exposure to fraud-related losses in connection with its lending businesses.

Annualized net charge-offs for the quarter ended June 30, 2018 were 1.01% of total average loans compared to 0.10% for the quarter ended March 31, 2018. The second quarter of 2018 net charge-offs included a $33.9 million charge-off, or 0.86% of total average loans on an annualized basis, related to the Commercial Relationship. The allowance for credit losses as a percentage of non-performing loans was 137% at June 30, 2018 compared to 131% for the quarter ended March 31, 2018.

During the second quarter of 2018, Fulton recorded a $33.1 million provision for credit losses, compared to $4.0 million in the first quarter of 2018. The second quarter of 2018 provision for credit losses reflects the $36.8 million provision for credit losses related to the Commercial Relationship, and a $3.7 million negative provision for credit losses, mainly due to payoffs of certain loans that had allowance for credit losses allocations in prior periods and improving overall credit performance.

Net Interest Income and Margin

Net interest income for the second quarter of 2018 was $156.1 million, an increase of $4.7 million, or 3.1%, from the first quarter of 2018. This increase was driven by the aforementioned growth in loans and deposits and a four basis point increase in the net interest margin, to 3.39%. The improvement in the net interest margin resulted from the 11 basis point increase in the average yield on interest-earning assets outpacing the seven basis point increase in the average cost of funds.

Non-interest Income

Non-interest income in the second quarter of 2018, excluding investment securities gains, was $49.1 million, an increase of $3.2 million, or 7.1%, in comparison to the first quarter of 2018. For the second quarter of 2018, other service charges and fees increased $2.2 million, or 19.7%, due primarily to higher commercial loan interest rate swap fees and merchant fees. Mortgage banking revenues and gains on sales of Small Business Administration loans also experienced increases of $1.0 million and $0.5 million, respectively.

Non-interest Expense

Non-interest expense was $133.3 million in the second quarter of 2018, a decrease of $3.3 million, or 2.4%, compared to the first quarter of 2018. This decrease was primarily due to a $2.4 million decrease in professional fees, a $0.8 million decrease in occupancy expenses resulting from higher snow removal and utilities costs in the first quarter of 2018, and a $0.8 million decrease in salaries and benefits due to lower incentive compensation expense, partially offset by a seasonal increase in employee salaries.

Income Tax Expense

The effective income tax rate for the second quarter of 2018 was 9.0%, as compared to 12.5% for the first quarter of 2018. The decrease in the effective income tax rate resulted from lower income before income taxes.

Additional information on Fulton is available on the Internet at www.fult.com.

Safe Harbor Statement

This news release may contain forward-looking statements with respect to the Corporation’s financial condition, results of operations and business. Do not unduly rely on forward-looking statements. Forward-looking statements can be identified by the use of words such as "may," "should," "will," "could," "estimates," "predicts," "potential," "continue," "anticipates," "believes," "plans," "expects," "future," "intends," “projects,” the negative of these terms and other comparable terminology. These forward looking statements may include projections of, or guidance on, the Corporation’s future financial performance, expected levels of future expenses, anticipated growth strategies, descriptions of new business initiatives and anticipated trends in the Corporation’s business or financial results.

Forward-looking statements are neither historical facts, nor assurance of future performance. Instead, they are based on current beliefs, expectations and assumptions regarding the future of the Corporation’s business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements related to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Corporation’s control, and actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not unduly rely on any of these forward-looking statements. Any forward-looking statement is based only on information currently available and speaks only as of the date when made. The Corporation undertakes no obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

A discussion of certain risks and uncertainties affecting the Corporation, and some of the factors that could cause the Corporation's actual results to differ materially from those described in the forward-looking statements, can be found in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2017 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, which have been filed with the Securities and Exchange Commission and are available in the Investor Relations section of the Corporation's website (www.fult.com) and on the Securities and Exchange Commission's website (www.sec.gov).

Non-GAAP Financial Measures

The Corporation uses certain non-GAAP financial measures in this earnings release. These non-GAAP financial measures are reconciled to the most comparable GAAP measures in tables at the end of this release.

       
FULTON FINANCIAL CORPORATION
SUMMARY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
in thousands, except per-share data and percentages
 
Three Months Ended
Jun 30 Mar 31 Dec 31 Sep 30 Jun 30
  2018     2018     2017     2017     2017  

Ending Balances

Investments $ 2,593,283 $ 2,592,823 $ 2,547,956 $ 2,561,516 $ 2,488,699
Loans, net of unearned income 15,792,969 15,696,284 15,768,247 15,486,899 15,346,617
Total assets 20,172,539 19,948,941 20,036,905 20,062,860 19,647,435
Deposits 15,599,799 15,477,103 15,797,532 16,141,780 15,357,361
Shareholders' equity 2,245,785 2,235,493 2,229,857 2,225,786 2,191,770
 

Average Balances

Investments $ 2,601,705 $ 2,556,986 $ 2,566,337 $ 2,523,758 $ 2,488,684
Loans, net of unearned income 15,768,377 15,661,032 15,560,185 15,392,067 15,127,205
Total assets 20,063,375 19,876,093 20,072,579 19,872,726 19,300,975
Deposits 15,517,424 15,420,312 16,056,789 15,875,469 15,089,104
Shareholders' equity 2,246,904 2,224,615 2,237,031 2,215,389 2,181,189
 

Income Statement

Net interest income $ 156,067 $ 151,318 $ 149,413 $ 146,809 $ 141,563
Provision for credit losses 33,117 3,970 6,730 5,075 6,700
Non-interest income 49,094 45,875 56,956 51,974 52,371
Non-interest expense 133,345 136,661 138,452 132,157 132,695
Income before taxes 38,699 56,562 61,187 61,551 54,539
Net income 35,197 49,480 34,001 48,905 45,467
Pre-provision net revenue(1) 73,449 62,150 69,361 65,532 62,954
 

Per Share

Net income (basic) $ 0.20 $ 0.28 $ 0.19 $ 0.28 $ 0.26
Net income (diluted) 0.20 0.28 0.19 0.28 0.26
Cash dividends 0.12 0.12 0.14 0.11 0.11
Tangible common equity(1) 9.75 9.71 9.70 9.68 9.50
Weighted average shares (basic) 175,764 175,303 175,132 174,991 174,597
Weighted average shares (diluted) 176,844 176,568 176,374 176,216 175,532
 

Asset Quality

Net charge-offs to average loans (annualized) 1.01 % 0.10 % 0.14 % 0.14 % 0.11 %
Non-performing loans to total loans 0.78 % 0.86 % 0.85 % 0.88 % 0.88 %
Non-performing assets to total assets 0.67 % 0.73 % 0.72 % 0.73 % 0.75 %
Allowance for credit losses to loans outstanding 1.07 % 1.12 % 1.12 % 1.13 % 1.14 %
Allowance for loan losses to loans outstanding 0.99 % 1.04 % 1.08 % 1.11 % 1.12 %
Allowance for credit losses to non-performing loans 136.77 % 130.73 % 130.67 % 128.05 % 128.92 %
Allowance for loan losses to non-performing loans 126.11 % 121.22 % 126.08 % 126.22 % 126.96 %
Non-performing assets to tangible shareholders' equity

and allowance for credit losses(1)

 7.16 % 7.73 % 7.71 % 7.87 % 8.02 %
Total delinquency rate 1.18 % 1.19 % 1.24 % 1.28 % 1.20 %
 

Profitability

Return on average assets 0.70 % 1.01 % 0.67 % 0.98 % 0.94 %
Return on average shareholders' equity 6.28 % 9.02 % 6.03 % 8.76 % 8.36 %
Return on average shareholders' equity (tangible)(1) 8.23 % 11.85 % 7.91 % 11.52 % 11.06 %
Net interest margin 3.39 % 3.35 % 3.29 % 3.27 % 3.29 %
Efficiency ratio(1) 63.29 % 67.48 % 64.24 % 64.30 % 65.33 %
 

Capital Ratios

Tangible common equity ratio(1) 8.73 % 8.78 % 8.71 % 8.67 % 8.68 %
Tier 1 leverage ratio(2) 9.20 % 9.20 % 8.93 % 8.97 % 9.06 %
Common equity Tier 1 capital ratio(2)

10.60

% 10.70 % 10.38 % 10.42 % 10.25 %
Tier 1 capital ratio(2)

10.60

% 10.70 % 10.38 % 10.42 % 10.25 %
Total risk-based capital ratio(2)

13.20

% 13.30 % 13.02 % 13.09 % 12.95 %
 

Financial information, as adjusted (3):

Net income $ 49,635
Net income per share, diluted $ 0.28
Return on average assets 0.98 %
Return on average shareholders' equity 8.80 %
Return on average shareholders' equity (tangible) 11.55 %
 
(1) Please refer to the calculation on the page titled “Reconciliation of Non-GAAP Measures” at the end of this document.
(2) Regulatory capital ratios as of June 30, 2018 are preliminary and remaining periods are actual.
(3)Excluding the re-measurement of net deferred tax assets of $15.6 million, which is considered a Non-GAAP based financial measure. Please refer to the calculation and management’s reasons for using this measure on the page titled “Reconciliation of Non-GAAP Measures" at the end of this document.
           

FULTON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED ENDING BALANCE SHEETS (UNAUDITED)

dollars in thousands

 
% Change from
Jun 30 Mar 31 Dec 31 Sep 30 Jun 30 Mar 31   Jun 30
  2018       2018       2017       2017       2017     2018   2017
 

ASSETS

 
Cash and due from banks $ 99,742 $ 100,151 $ 108,291 $ 99,803 $ 94,938 -0.4 % 5.1 %
Other interest-earning assets 364,802 267,806 354,566 645,796 392,842 36.2 % -7.1 %
Loans held for sale 35,898 23,450 31,530 23,049 62,354 53.1 % -42.4 %
Investment securities 2,593,283 2,592,823 2,547,956 2,561,516 2,488,699 0.0 % 4.2 %
Loans, net of unearned income 15,792,969 15,696,284 15,768,247 15,486,899 15,346,617 0.6 % 2.9 %
Allowance for loan losses   (156,050 )     (163,217 )     (169,910 )     (172,245 )     (172,342 ) -4.4 % -9.5 %
Net loans 15,636,919 15,533,067 15,598,337 15,314,654 15,174,275 0.7 % 3.0 %
Premises and equipment 230,195 230,313 222,802 221,551 217,558 -0.1 % 5.8 %
Accrued interest receivable 55,208 53,060 52,910 50,082 47,603 4.0 % 16.0 %
Goodwill and intangible assets 531,556 531,556 531,556 531,556 531,556 0.0 % 0.0 %
Other assets   624,936       616,715       588,957       614,853       637,610   1.3 % -2.0 %
 
Total Assets $ 20,172,539     $ 19,948,941     $ 20,036,905     $ 20,062,860     $ 19,647,435   1.1 % 2.7 %
 

LIABILITIES AND SHAREHOLDERS' EQUITY

 
Deposits $ 15,599,799 $ 15,477,103 $ 15,797,532 $ 16,141,780 $ 15,357,361 0.8 % 1.6 %
Short-term borrowings 983,833 937,852 617,524 298,751 694,859 4.9 % 41.6 %
Other liabilities 351,174 359,994 353,646 358,384 365,484 -2.5 % -3.9 %
FHLB advances and long-term debt   991,948       938,499       1,038,346       1,038,159       1,037,961   5.7 % -4.4 %
 
Total Liabilities 17,926,754 17,713,448 17,807,048 17,837,074 17,455,665 1.2 % 2.7 %
 
Shareholders' equity   2,245,785       2,235,493       2,229,857       2,225,786       2,191,770   0.5 % 2.5 %
 
Total Liabilities and Shareholders' Equity $ 20,172,539     $ 19,948,941     $ 20,036,905     $ 20,062,860     $ 19,647,435   1.1 % 2.7 %
 

LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL:

 
Loans, by type:
Real estate - commercial mortgage $ 6,304,475 $ 6,332,508 $ 6,364,804 $ 6,275,140 $ 6,262,008 -0.4 % 0.7 %
Commercial - industrial, financial and agricultural 4,264,602 4,299,072 4,300,297 4,223,075 4,245,849 -0.8 % 0.4 %
Real estate - residential mortgage 2,094,530 1,976,524 1,954,711 1,887,907 1,784,712 6.0 % 17.4 %
Real estate - home equity 1,491,395 1,514,241 1,559,719 1,567,473 1,579,739 -1.5 % -5.6 %
Real estate - construction 990,705 976,131 1,006,935 973,108 938,900 1.5 % 5.5 %
Consumer 360,315 326,766 313,783 302,448 283,156 10.3 % 27.2 %
Leasing and other   286,947       271,042       267,998       257,748       252,253   5.9 % 13.8 %
 
Total Loans, net of unearned income $ 15,792,969     $ 15,696,284     $ 15,768,247     $ 15,486,899     $ 15,346,617   0.6 % 2.9 %
 
Deposits, by type:
Noninterest-bearing demand $ 4,324,659 $ 4,291,821 $ 4,437,294 $ 4,363,915 $ 4,574,619 0.8 % -5.5 %
Interest-bearing demand 3,854,680 3,984,423 4,018,107 4,119,419 3,650,204 -3.3 % 5.6 %
Savings and money market accounts   4,597,510       4,487,277       4,586,746       4,790,985       4,386,128   2.5 % 4.8 %
Total demand and savings 12,776,849 12,763,521 13,042,147 13,274,319 12,610,951 0.1 % 1.3 %
Brokered deposits 161,447 64,195 90,473 109,936 - 151.5 % 0.0 %
Time deposits   2,661,503       2,649,387       2,664,912       2,757,525       2,746,410   0.5 % -3.1 %
 
Total Deposits $ 15,599,799     $ 15,477,103     $ 15,797,532     $ 16,141,780     $ 15,357,361   0.8 % 1.6 %
 
Short-term borrowings, by type:
Customer repurchase agreements $ 152,594 $ 165,186 $ 172,017 $ 185,945 $ 174,224 -7.6 % -12.4 %
Customer short-term promissory notes 303,239 342,666 225,507 106,994 74,366 -11.5 % N/M
Short-term FHLB advances 185,000 35,000 - - 240,000 N/M -22.9 %
Federal funds purchased   343,000       395,000       220,000       5,812       206,269   -13.2 % 66.3 %
 
Total Short-term Borrowings $ 983,833     $ 937,852     $ 617,524     $ 298,751     $ 694,859   4.9 % 41.6 %
 
N/M - Not meaningful
 
                       
FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
dollars in thousands
                         
Three Months Ended   % Change from Six Months Ended
Jun 30 Mar 31 Dec 31 Sep 30 Jun 30 Mar 31 Jun 30 Jun 30
2018 2018 2017 2017 2017 2018 2017 2018 2017 % Change
 
Interest Income:
Interest income $ 186,170 $ 177,687 $ 174,987 $ 171,511 $ 163,881 4.8 % 13.6 % $ 363,857 $ 322,368 12.9 %
Interest expense   30,103   26,369   25,574   24,702   22,318 14.2 % 34.9 %   56,472   43,226 30.6 %
 
Net Interest Income 156,067 151,318 149,413 146,809 141,563 3.1 % 10.2 % 307,385 279,142 10.1 %
Provision for credit losses   33,117   3,970   6,730   5,075   6,700

N/M

 

N/M

 

  37,087   11,500

N/M

 

 
Net Interest Income after Provision 122,950 147,348 142,683 141,734 134,863 (16.6 %) (8.8 %) 270,298 267,642 1.0 %
 
Non-Interest Income:
Other service charges and fees:
Merchant fees 4,920 4,115 4,308 4,398 4,531 19.6 % 8.6 % 9,035 8,138 11.0 %
Debit card income 3,077 2,817 3,526 2,830 2,884 9.2 % 6.7 % 5,894 5,549 6.2 %
Commercial loan interest rate swap fees 2,393 1,291 2,914 1,954 3,768 85.4 % (36.5 %) 3,684 6,826 (46.0 %)
Letter of credit fees 956 992 1,037 1,056 1,109 (3.6 %) (13.8 %) 1,948 2,309 (15.6 %)
Foreign exchange income 591 533 510 470 446 10.8 % 32.6 % 1,124 780 44.1 %
Other   1,728   1,671   1,534   1,543   1,605 3.4 % 7.7 %   3,399   3,177 7.0 %
Total 13,665 11,419 13,829 12,251 14,342 19.7 % (4.7 %) 25,084 26,779 (6.3 %)
Service charges on deposit accounts:
Overdraft fees 5,092 5,145 5,609 5,844 5,648 (1.0 %) (9.8 %) 10,237 11,116 (7.9 %)
Cash management fees 4,452 4,317 3,669 3,624 3,614 3.1 % 23.2 % 8,769 7,151 22.6 %
Other   2,726   2,500   3,392   3,554   3,652 9.0 % (25.4 %)   5,226   7,047 (25.8 %)
Total 12,270 11,962 12,670 13,022 12,914 2.6 % (5.0 %) 24,232 25,314 (4.3 %)
Investment management and trust services 12,803 12,871 13,152 12,157 12,132 (0.5 %) 5.5 % 25,674 23,940 7.2 %
Mortgage banking income 5,163 4,193 4,386 4,805 6,141 23.1 % (15.9 %) 9,356 10,737 (12.9 %)
Other:
Credit card income 2,866 2,816 2,778 2,829 2,666 1.8 % 7.5 % 5,682 5,314 6.9 %
Small business administration lending income 846 357 1,355 565 1,163 137.0 % (27.2 %) 1,203 1,591 (24.4 %)
Other income   1,477   2,238   6,854   1,748   1,577 (34.0 %) (6.3 %)   3,715   2,827 31.4 %
Total   5,189   5,411   10,987   5,142   5,406 (4.1 %) (4.0 %)   10,600   9,732 8.9 %
Non-Interest Income before Investment Securities Gains 49,090 45,856 55,024 47,377 50,935 7.1 % (3.6 %) 94,946 96,502 (1.6 %)
Investment securities gains   4   19   1,932   4,597   1,436 (78.9 %) (99.7 %)   23   2,542 (99.1 %)
 
Total Non-Interest Income 49,094 45,875 56,956 51,974 52,371 7.0 % (6.3 %) 94,969 99,044 (4.1 %)
 
Non-Interest Expense:

 

Salaries and employee benefits 74,919 75,768 73,504 72,894 74,496 (1.1 %) 0.6 % 150,687 143,732 4.8 %
Net occupancy expense 12,760 13,632 12,549 12,180 12,316 (6.4 %) 3.6 % 26,392 24,979 5.7 %
Data processing and software 10,453 10,473 10,401 10,301 9,054 (0.2 %) 15.5 % 20,926 18,033 16.0 %
Other outside services 7,568 8,124 7,665 6,582 7,708 (6.8 %) (1.8 %) 15,692 13,254 18.4 %
Professional fees 2,372 4,816 3,632 3,388 2,931 (50.7 %) (19.1 %) 7,188 5,668 26.8 %
Equipment expense 3,434 3,534 3,244 3,298 3,034 (2.8 %) 13.2 % 6,968 6,393 9.0 %
FDIC insurance expense 2,663 2,953 3,618 3,007 2,366 (9.8 %) 12.6 % 5,616 4,424 26.9 %
Marketing 2,335 2,250 1,725 2,089 2,234 3.8 % 4.5 % 4,585 4,220 8.6 %
Amortization of tax credit investments 1,637 1,637 3,376 3,503 3,151 (0.0 %) (48.0 %) 3,274 4,149 (21.1 %)
Other   15,204   13,474   18,738   14,915   15,405 12.8 % (1.3 %)   28,678   30,118 (4.8 %)
 
Total Non-Interest Expense   133,345   136,661   138,452   132,157   132,695 (2.4 %) 0.5 %   270,006   254,970 5.9 %
 
Income before Income Taxes 38,699 56,562 61,187 61,551 54,539 (31.6 %) (29.0 %) 95,261 111,716 (14.7 %)
Income tax expense   3,502   7,082   27,186   12,646   9,072 (50.6 %) (61.4 %)   10,584   22,869 (53.7 %)
 
Net Income $ 35,197 $ 49,480 $ 34,001 $ 48,905 $ 45,467 (28.9 %) (22.6 %) $ 84,677 $ 88,847 (4.7 %)
 

PER SHARE:

 
Net income:
Basic $ 0.20 $ 0.28 $ 0.19 $ 0.28 $ 0.26 (28.6 %) (23.1 %) $ 0.48 $ 0.51 (5.9 %)
Diluted 0.20 0.28 0.19 0.28 0.26 (28.6 %) (23.1 %) 0.48 0.51 (5.9 %)
 
Weighted average shares (basic) 175,764 175,303 175,132 174,991 174,597 0.3 % 0.7 % 175,535 174,399 0.7 %
Weighted average shares (diluted)     176,844     176,568     176,374     176,216     175,532   0.2 %   0.7 %       176,506     175,579   0.5 %
               
FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)
dollars in thousands  
Three Months Ended
June 30, 2018 March 31, 2018 June 30, 2017
Average Yield/ Average Yield/ Average Yield/
Balance Interest (1) Rate Balance Interest (1) Rate Balance Interest (1) Rate

ASSETS

 
Interest-earning assets:
Loans, net of unearned income $ 15,768,377 $ 170,006 4.32 % $ 15,661,032 $ 162,262 4.19 % $ 15,127,205 $ 152,649 4.05 %
 
Taxable investment securities 2,262,789 13,885 2.45 % 2,198,838 13,193 2.40 % 2,090,120 11,473 2.20 %
Tax-exempt investment securities 408,715 3,713 3.63 % 412,830 3,753 3.64 % 404,680 4,394 4.34 %
Equity securities   -     -  

-

 

  509     5   3.93 %   10,759     148   5.52 %
 
Total Investment Securities 2,671,504 17,598 2.63 % 2,612,177 16,951 2.60 % 2,505,559 16,015 2.56 %
 
Loans held for sale 22,237 284 5.11 % 20,015 216 4.31 % 19,750 201 4.07 %
Other interest-earning assets   316,381     1,243   1.57 %   302,783     1,172   1.55 %   324,719     802   0.99 %
 
Total Interest-earning Assets 18,778,499 189,131 4.04 % 18,596,007 180,601 3.93 % 17,977,233 169,667 3.78 %
 
Noninterest-earning assets:
Cash and due from banks 100,811 105,733 103,078
Premises and equipment 232,048 230,247 218,075
Other assets 1,112,913 1,113,326 1,174,745
Less: allowance for loan losses   (160,896 )   (169,220 )   (172,156 )
 
Total Assets $ 20,063,375   $ 19,876,093   $ 19,300,975  
 
 

LIABILITIES AND SHAREHOLDERS' EQUITY

 
Interest-bearing liabilities:
Demand deposits $ 3,952,115 $ 4,959 0.50 % $ 3,958,894 $ 4,004 0.41 % $ 3,690,059 $ 2,780 0.30 %
Savings deposits 4,538,083 5,545 0.49 % 4,494,445 4,367 0.39 % 4,315,495 2,710 0.25 %
Brokered deposits 85,242 396 1.87 % 74,026 276 1.51 %

-

-

-

 

Time deposits   2,660,410     8,385   1.26 %   2,646,779     7,803   1.20 %   2,696,033     7,394   1.10 %
 
Total Interest-bearing Deposits 11,235,850 19,285 0.69 % 11,174,144 16,450 0.60 % 10,701,587 12,884 0.48 %
 
Short-term borrowings 1,023,160 3,036 1.18 % 896,839 2,041 0.91 % 633,102 974 0.61 %
FHLB advances and long-term debt   945,177     7,783   3.30 %   987,315     7,878   3.21 %   1,070,845     8,460   3.16 %
 
Total Interest-bearing Liabilities 13,204,187 30,104 0.91 % 13,058,298 26,369 0.82 % 12,405,534 22,318 0.72 %
 
Noninterest-bearing liabilities:
Demand deposits 4,281,574 4,246,168 4,387,517
Other   330,710     347,012     326,735  
 
Total Liabilities 17,816,471 17,651,478 17,119,786
 
Shareholders' equity   2,246,904     2,224,615     2,181,189  
 
Total Liabilities and Shareholders' Equity $ 20,063,375   $ 19,876,093   $ 19,300,975  
 
Net interest income/net interest margin (fully taxable equivalent) 159,027 3.39 % 154,232 3.35 % 147,349 3.29 %
Tax equivalent adjustment   (2,960 )   (2,914 )   (5,786 )
 
Net interest income $ 156,067   $ 151,318   $ 141,563  
 
(1) Three months ended June 30, 2018 and March 31, 2018 are presented on a fully taxable-equivalent basis using a 21% Federal tax rate and statutory interest expense disallowances. Prior periods are presented on a fully taxable-equivalent basis using a 35% Federal tax rate and statutory interest expense disallowances.
Note: The weighted average interest rate on total average interest-bearing liabilities and average non-interest bearing demand deposits (“cost of funds”) was 0.69%, 0.62% and 0.53% for the three months ended June 30, 2018, March 31, 2018 and June 30, 2017, respectively.
 
AVERAGE LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL:
             
Three Months Ended   % Change from
Jun 30 Mar 31 Dec 31 Sep 30 Jun 30 Mar 31 Jun 30
2018 2018 2017 2017 2017 2018 2017
 
Loans, by type:
Real estate - commercial mortgage $ 6,298,534 $ 6,305,821 $ 6,232,674 $ 6,208,630 $ 6,163,844 (0.1 %) 2.2 %
Commercial - industrial, financial and agricultural 4,335,097 4,288,634 4,263,199 4,257,075 4,221,025 1.1 % 2.7 %
Real estate - residential mortgage 2,026,161 1,958,505 1,926,067 1,841,559 1,707,929 3.5 % 18.6 %
Real estate - home equity 1,502,936 1,538,974 1,560,713 1,569,898 1,587,680 (2.3 %) (5.3 %)
Real estate - construction 978,327 984,242 1,004,166 943,029 897,321 (0.6 %) 9.0 %
Consumer 345,572 315,927 312,320 318,546 300,967 9.4 % 14.8 %
Leasing and other   281,750   268,930   261,046   253,330   248,439 4.8 % 13.4 %
 
Total Loans, net of unearned income $ 15,768,377 $ 15,661,032 $ 15,560,185 $ 15,392,067 $ 15,127,205 0.7 % 4.2 %
 
Deposits, by type:
Noninterest-bearing demand $ 4,281,574 $ 4,246,168 $ 4,454,456 $ 4,494,897 $ 4,387,517 0.8 % (2.4 %)
Interest-bearing demand 3,952,115 3,958,894 4,037,879 3,943,118 3,690,059 (0.2 %) 7.1 %
Savings and money market accounts   4,538,083   4,494,445   4,752,337   4,603,155   4,315,495 1.0 % 5.2 %
Total demand and savings 12,771,772 12,699,507 13,244,672 13,041,170 12,393,071 0.6 % 3.1 %
Brokered deposits 85,242 74,026 105,135 89,767

-

15.2 % 100.0 %
Time deposits   2,660,410   2,646,779   2,706,982   2,744,532   2,696,033 0.5 % (1.3 %)
 
Total Deposits $ 15,517,424 $ 15,420,312 $ 16,056,789 $ 15,875,469 $ 15,089,104 0.6 % 2.8 %
 
Short-term borrowings, by type:
Customer repurchase agreements $ 162,276 $ 175,292 $ 179,948 $ 176,415 $ 199,657 (7.4 %) (18.7 %)
Customer short-term promissory notes 316,049 308,725 195,951 80,147 77,554 2.4 % N/M
Federal funds purchased 398,297 379,822 15,374 90,453 242,375 4.9 % 64.3 %
Short-term FHLB advances and other borrowings   146,538   33,000   11   55,326   113,516 N/M 29.1 %
 
Total Short-term Borrowings $ 1,023,160 $ 896,839 $ 391,284 $ 402,341 $ 633,102 14.1 % 61.6 %
 

N/M - Not meaningful

         
FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)
dollars in thousands  
 
Six Months Ended June 30
2018 2017
Average Average
Balance Interest (1) Yield/Rate Balance Interest (1) Yield/Rate

ASSETS

 
Interest-earning assets:
Loans, net of unearned income $ 15,715,001 $ 332,268 4.26 % $ 14,993,129 $ 299,299 4.02 %
Taxable investment securities 2,230,991 27,078 2.43 % 2,117,733 23,387 2.21 %
Tax-exempt investment securities 410,761 7,466 3.64 % 404,271 8,777 4.34 %
Equity securities   253     5   8.30 %   11,247     324   5.81 %
 
Total Investment Securities 2,642,005 34,549 2.62 % 2,533,251 32,488 2.57 %
 
Loans held for sale 21,132 500 4.73 % 17,814 388 4.36 %
Other interest-earning assets   309,620     2,415   1.56 %   318,542     1,644   1.03 %
 
Total Interest-earning Assets 18,687,758 369,732 3.98 % 17,862,736 333,819 3.76 %
 
Noninterest-earning assets:
Cash and due from banks 103,258 109,766
Premises and equipment 231,152 217,974
Other assets 1,113,118 1,162,254
Less: allowance for loan losses   (165,035 )   (171,151 )
 
Total Assets $ 19,970,251   $ 19,181,579  
 

LIABILITIES AND SHAREHOLDERS' EQUITY

 
Interest-bearing liabilities:
Demand deposits $ 3,955,485 $ 8,963 0.46 % $ 3,670,603 $ 5,019 0.28 %
Savings deposits 4,516,384 9,912 0.44 % 4,255,190 4,921 0.23 %
Brokered deposits 79,665 672 1.70 %

-

-

-

 

Time deposits   2,653,634     16,188   1.23 %   2,717,624     14,745   1.09 %
 
Total Interest-bearing Deposits 11,205,168 35,735 0.64 % 10,643,417 24,685 0.47 %
 
Short-term borrowings 960,348 5,077 1.06 % 672,580 1,829 0.54 %
FHLB advances and long-term debt   966,129     15,661   3.25 %   1,030,667     16,712   3.25 %
 
Total Interest-bearing Liabilities 13,131,645 56,473 0.87 % 12,346,664 43,226 0.70 %
 
Noninterest-bearing liabilities:
Demand deposits 4,263,968 4,344,859
Other   338,817     329,076  
 
Total Liabilities 17,734,430 17,020,599
 
Shareholders' equity   2,235,821     2,160,980  
 
Total Liabilities and Shareholders' Equity $ 19,970,251   $ 19,181,579  
 
Net interest income/net interest margin (fully taxable equivalent) 313,259 3.37 % 290,593 3.28 %
Tax equivalent adjustment   (5,874 )   (11,451 )
 
Net interest income $ 307,385   $ 279,142  
 
(1) Six months ended June 30, 2018 is presented on a fully taxable-equivalent basis using a 21% Federal tax rate and statutory interest expense disallowances. Prior periods are presented on a fully taxable-equivalent basis using a 35% Federal tax rate and statutory interest expense disallowances.
Note: The weighted average interest rate on total average interest-bearing liabilities and average non-interest bearing demand deposits (“cost of funds”) was 0.65% and 0.52% for the six months ended June 30, 2018 and 2017, respectively.
 

AVERAGE LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL:

     
Six Months Ended

June 30

 

2018 2017 % Change
 
Loans, by type:
Real estate - commercial mortgage $ 6,302,157 $ 6,101,836 3.3 %
Commercial - industrial, financial and agricultural 4,311,994 4,213,094 2.3 %
Real estate - residential mortgage 1,992,520 1,672,994 19.1 %
Real estate - home equity 1,520,855 1,600,394 (5.0 %)
Real estate - construction 981,269 869,299 12.9 %
Consumer 330,831 292,704 13.0 %
Leasing and other   275,375   242,808 13.4 %
 
Total Loans, net of unearned income $ 15,715,001 $ 14,993,129 4.8 %
 
Deposits, by type:
Noninterest-bearing demand $ 4,263,968 $ 4,344,859 (1.9 %)
Interest-bearing demand 3,955,485 3,670,603 7.8 %
Savings and money market accounts   4,516,384   4,255,190 6.1 %
Total demand and savings 12,735,837 12,270,652 3.8 %
Brokered deposits 79,665

-

100.0 %
Time deposits   2,653,634   2,717,624 (2.4 %)
 
Total Deposits $ 15,469,136 $ 14,988,276 3.2 %
 
Short-term borrowings, by type:
Customer repurchase agreements $ 169,300 $ 199,945 (15.3 %)
Customer short-term promissory notes 312,407 78,348 N/M
Federal funds purchased 389,111 275,116 41.4 %
Short-term FHLB advances and other borrowings   89,530   119,171 (24.9 %)
 
Total Short-term Borrowings $ 960,348 $ 672,580 42.8 %
 
N/M - Not meaningful
             
FULTON FINANCIAL CORPORATION
ASSET QUALITY INFORMATION (UNAUDITED)
dollars in thousands
 
Three Months Ended Six Months Ended
Jun 30 Mar 31 Dec 31 Sep 30 Jun 30 Jun 30 Jun 30
2018 2018 2017 2017 2017 2018 2017

ALLOWANCE FOR CREDIT LOSSES:

 
Balance at beginning of period $ 176,019 $ 176,084 $ 174,749 $ 174,998 $ 172,647 $ 176,084 $ 171,325
 
Loans charged off:
Commercial - industrial, financial and agricultural (38,632 ) (4,005 ) (5,473 ) (2,714 ) (5,353 ) (42,637 ) (10,880 )
Consumer and home equity (1,528 ) (1,300 ) (1,071 ) (920 ) (1,022 ) (2,828 ) (2,576 )
Real estate - construction (606 ) (158 )

-

(2,744 ) (774 ) (764 ) (1,021 )
Real estate - residential mortgage (483 ) (162 ) (152 ) (195 ) (124 ) (645 ) (340 )
Real estate - commercial mortgage (366 ) (267 ) (220 ) (483 ) (242 ) (633 ) (1,466 )
Leasing and other   (545 )   (505 )   (457 )   (739 )   (1,200 )   (1,050 )   (1,839 )
Total loans charged off (42,160 ) (6,397 ) (7,373 ) (7,795 ) (8,715 ) (48,557 ) (18,122 )
Recoveries of loans previously charged off:
Commercial - industrial, financial and agricultural 541 1,075 941 665 1,974 1,616 6,165
Consumer and home equity 717 385 466 445 685 1,102 1,058
Real estate - construction 444 306 32 629 373 750 921
Real estate - residential mortgage 96 107 186 219 151 203 381
Real estate - commercial mortgage 321 279 178 106 934 600 1,384
Leasing and other   152     210     175     407     249     362     386  
Recoveries of loans previously charged off   2,271     2,362     1,978     2,471     4,366     4,633     10,295  
Net loans charged off (39,889 ) (4,035 ) (5,395 ) (5,324 ) (4,349 ) (43,924 ) (7,827 )
Provision for credit losses 33,117 3,970 6,730 5,075 6,700 37,087 11,500
             
Balance at end of period $ 169,247   $ 176,019   $ 176,084   $ 174,749   $ 174,998   $ 169,247   $ 174,998  
 
Net charge-offs to average loans (annualized)   1.01 %   0.10 %   0.14 %   0.14 %   0.11 %   0.56 %   0.10 %
 

NON-PERFORMING ASSETS:

 
Non-accrual loans $ 111,116 $ 122,966 $ 124,749 $ 123,345 $ 122,600
Loans 90 days past due and accruing   12,628     11,676     10,010     13,124     13,143  
Total non-performing loans 123,744 134,642 134,759 136,469 135,743
Other real estate owned   11,181     10,744     9,823     10,542     11,432  
 
Total non-performing assets $ 134,925   $ 145,386   $ 144,582   $ 147,011   $ 147,175  
 

NON-PERFORMING LOANS, BY TYPE:

 
Commercial - industrial, financial and agricultural $ 44,045 $ 54,915 $ 54,309 $ 54,209 $ 51,320
Real estate - commercial mortgage 39,278 36,183 35,446 34,650 32,576
Real estate - residential mortgage 18,888 20,169 20,972 21,643 21,846
Consumer and home equity 12,038 12,272 11,803 12,472 13,156
Real estate - construction 9,319 10,931 12,197 13,415 16,564
Leasing   176     172     32     80     281  
 
Total non-performing loans $ 123,744   $ 134,642   $ 134,759   $ 136,469   $ 135,743  
 
 

TROUBLED DEBT RESTRUCTURINGS (TDRs), BY TYPE:

 
Real-estate - residential mortgage $ 25,055 $ 25,602 $ 26,016 $ 26,193 $ 26,368
Real-estate - commercial mortgage 16,420 18,181 13,959 14,439 13,772
Consumer and home equity 16,212 16,091 15,584 14,822 12,064
Commercial - industrial, financial and agricultural 11,199 11,740 10,820 7,512 8,086
Real estate - construction   -     -     -     169     1,475  
Total accruing TDRs 68,886 71,614 66,379 63,135 61,765
Non-accrual TDRs(1)   24,743     24,897     29,051     28,742     29,373  
Total TDRs $ 93,629   $ 96,511   $ 95,430   $ 91,877   $ 91,138  
 
(1) Included within non-accrual loans above.
Total Delinquency %

DELINQUENCY RATES, BY TYPE:

Jun 30 Mar 31 Dec 31 Sep 30 Jun 30
2018 2018 2017 2017 2017
 
 
Real estate - commercial mortgage 0.77 % 0.77 % 0.77 % 0.75 % 0.66 %
Commercial - industrial, financial and agricultural 1.44 % 1.48 % 1.50 % 1.54 % 1.43 %
Real estate - construction 1.02 % 1.12 % 1.32 % 1.50 % 1.82 %
Real estate - residential mortgage 1.90 % 1.91 % 2.04 % 2.25 % 2.08 %
Consumer, home equity, leasing and other 1.22 % 1.20 % 1.37 % 1.38 % 1.34 %
         
Total   1.18 %   1.19 %   1.24 %   1.28 %   1.20 %
 
 
FULTON FINANCIAL CORPORATION
RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED)
in thousands, except per share data and percentages
 

Explanatory note:

 This press release contains supplemental financial information, as detailed below, which has been derived by methods other than Generally Accepted Accounting Principles ("GAAP"). The Corporation has presented these non-GAAP financial measures because it believes that these measures provide useful and comparative information to assess trends in the Corporation's results of operations. Presentation of these non-GAAP financial measures is consistent with how the Corporation evaluates its performance internally and these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the Corporation's industry. Management believes that these non-GAAP financial measures, in addition to GAAP measures, are also useful to investors to evaluate the Corporation's results. Investors should recognize that the Corporation's presentation of these non-GAAP financial measures might not be comparable to similarly-titled measures of other companies. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures, and the Corporation strongly encourages a review of its condensed consolidated financial statements in their entirety. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measure follow:
       
Three Months Ended Six Months Ended
Jun 30   Mar 31   Dec 31 Sep 30 Jun 30 Jun 30   Jun 30
2018 2018 2017 2017 2017 2018 2017

Shareholders' equity (tangible), per share

Shareholders' equity $ 2,245,785 $ 2,235,493 $ 2,229,857 $ 2,225,786 $ 2,191,770
Less: Goodwill and intangible assets   (531,556 )   (531,556 )   (531,556 )   (531,556 )   (531,556 )
Tangible shareholders' equity (numerator) $ 1,714,229   $ 1,703,937   $ 1,698,301   $ 1,694,230   $ 1,660,214  
 
Shares outstanding, end of period (denominator)   175,847     175,404     175,170     175,057     174,740  
 
Shareholders' equity (tangible), per share $ 9.75   $ 9.71   $ 9.70   $ 9.68   $ 9.50  
 

Return on average shareholders' equity (tangible)

Net Income (numerator $ 35,197   $ 49,480   $ 34,001   $ 48,905   $ 45,467   $ 84,677   $ 88,847  
 
Average shareholders' equity $ 2,246,904 $ 2,224,615 $ 2,237,031 $ 2,215,389 $ 2,181,189 $ 2,235,821 $ 2,160,980
Less: Average goodwill and intangible assets   (531,556 )   (531,556 )   (531,556 )   (531,556 )   (531,556 )   (531,556 )   (531,556 )
Average tangible shareholders' equity (denominator) $ 1,715,348   $ 1,693,059   $ 1,705,475   $ 1,683,833   $ 1,649,633   $ 1,704,265   $ 1,629,424  
 
Return on average shareholders' equity (tangible), annualized   8.23 %   11.85 %   7.91 %   11.52 %   11.06 %   10.02 %   11.00 %
 

Tangible Common Equity to Tangible Assets (TCE Ratio)

Shareholders' equity $ 2,245,785 $ 2,235,493 $ 2,229,857 $ 2,225,786 $ 2,191,770
Less: Intangible assets   (531,556 )   (531,556 )   (531,556 )   (531,556 )   (531,556 )
Tangible shareholders' equity (numerator) $ 1,714,229   $ 1,703,937   $ 1,698,301   $ 1,694,230   $ 1,660,214  
 
Total assets $ 20,172,539 $ 19,948,941 $ 20,036,905 $ 20,062,860 $ 19,647,435
Less: Intangible assets   (531,556 )   (531,556 )   (531,556 )   (531,556 )   (531,556 )
Total tangible assets (denominator) $ 19,640,983   $ 19,417,385   $ 19,505,349   $ 19,531,304   $ 19,115,879  
 
Tangible Common Equity to Tangible Assets   8.73 %   8.78 %   8.71 %   8.67 %   8.68 %
 

Efficiency ratio

Non-interest expense $ 133,345 $ 136,661 $ 138,452 $ 132,157 $ 132,695 $ 270,006 $ 254,970
Less: Amortization of tax credit investments   (1,637 )   (1,637 )   (3,376 )   (3,503 )   (3,151 )   (3,274 )   (4,149 )
Non-interest expense (numerator) $ 131,708   $ 135,024   $ 135,076   $ 128,654   $ 129,544   $ 266,732   $ 250,821  
 
Net interest income (fully taxable equivalent) $ 159,027 $ 154,232 $ 155,253 $ 152,721 $ 147,349 $ 313,259 $ 290,593
Plus: Total Non-interest income 49,094 45,875 56,956 51,974 52,371 94,969 99,044
Less: Investment securities gains   (4 )   (19 )   (1,932 )   (4,597 )   (1,436 )   (23 )   (2,542 )
Net interest income (denominator) $ 208,117   $ 200,088   $ 210,277   $ 200,098   $ 198,284   $ 408,205   $ 387,095  
 
Efficiency ratio   63.29 %   67.48 %   64.24 %   64.30 %   65.33 %   65.34 %   64.80 %
 

Non-performing assets to tangible shareholders' equity and allowance for credit losses

Non-performing assets (numerator) $ 134,925   $ 145,386   $ 144,582   $ 147,011   $ 147,175  
 
Tangible shareholders' equity $ 1,714,229 $ 1,703,937 $ 1,698,301 $ 1,694,230 $ 1,660,214
Plus: Allowance for credit losses   169,247     176,019     176,084     174,749     174,998  
Tangible shareholders' equity and allowance for credit losses (denominator) $ 1,883,476   $ 1,879,956   $ 1,874,385   $ 1,868,979   $ 1,835,212  
 
Non-performing assets to tangible shareholders' equity and allowance for credit losses   7.16 %   7.73 %   7.71 %   7.87 %   8.02 %
 

Pre-provision net revenue

Net interest income $ 156,067 $ 151,318 $ 149,413 $ 146,809 $ 141,563 $ 307,385 $ 279,142
Non-interest income 49,094 45,875 56,956 51,974 52,371 94,969 99,044
Less: Investment securities gains   (4 )   (19 )   (1,932 )   (4,597 )   (1,436 )   (23 )   (2,542 )
Total revenue $ 205,157   $ 197,174   $ 204,437   $ 194,186   $ 192,498   $ 402,331   $ 375,644  
 
Non-interest expense $ 133,345 $ 136,661 $ 138,452 $ 132,157 $ 132,695 $ 270,006 $ 254,970
Less: Amortization of tax credit investments   (1,637 )   (1,637 )   (3,376 )   (3,503 )   (3,151 )   (3,274 )   (4,149 )
Total non-interest expense $ 131,708   $ 135,024   $ 135,076   $ 128,654   $ 129,544   $ 266,732   $ 250,821  
 

Pre-provision net revenue

$ 73,449   $ 62,150   $ 69,361   $ 65,532   $ 62,954   $ 135,599   $ 124,823  
 
 
FULTON FINANCIAL CORPORATION
RECONCILIATION OF NON-GAAP MEASURES CONTINUED (UNAUDITED)
in thousands, except per share data and percentages
 

Reconciliation of Net Income; Net Income per share, diluted; and Selected Financial Ratios, adjusted to exclude the charge to income taxes recognized in the fourth quarter of 2017 related to the re-measurement of net deferred tax assets:

                         

Three Months Ended

Dec 31
2017

Net income and Net income per share, diluted

Net income $ 34,001
Plus: Re-measurement of net deferred tax assets   15,634  
Net Income, adjusted (numerator) $ 49,635  
 
Weighted average shares (diluted) (denominator)   176,374  
 
Net income per share, diluted $ 0.28  
 

Return on average assets

Net income $ 34,001
Plus: Re-measurement of net deferred tax assets   15,634  
Net Income, adjusted (numerator) $ 49,635  
 
Average assets (denominator) $ 20,072,579  
 
Return on average assets, annualized   0.98 %
 

Return on average shareholders' equity

Net income $ 34,001
Plus: Re-measurement of net deferred tax assets   15,634  
Net Income, adjusted (numerator) $ 49,635  
 
Average shareholders' equity (denominator) $ 2,237,031  
 
Return on average shareholders' equity, annualized   8.80 %
 
 

Return on average shareholders' equity (tangible)

Net Income, as reported $ 34,001
Plus: Re-measurement of net deferred tax assets   15,634  
Net Income, adjusted (numerator) $ 49,635  
 
Average shareholders' equity $ 2,237,031
Less: Average goodwill and intangible assets   (531,556 )
Average tangible shareholders' equity (denominator) $ 1,705,475  
 
Return on average shareholders' equity (tangible), annualized   11.55 %