Fulton Financial Responds to the COVID-19 Pandemic, “It’s Personal,” and Announces First Quarter Earnings

Fulton Financial Corporation (NASDAQ:FULT) (“Fulton” or the “Corporation”) reported net income of $26 million, or $0.16 per diluted share, for the first quarter of 2020.

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“The COVID-19 pandemic and unprecedented public health response have created extraordinary personal and societal challenges across our nation and world,” said E. Philip Wenger, Chairman and CEO. “Fulton began to experience the effects of these challenges midway through the first quarter and our financial results reflect these challenges. But, as we have seen before, extreme hardship often gives rise to extraordinary efforts, and we have seen that with respect to the heroic efforts of our health care workers, first responders and countless other citizens on the front lines of essential businesses that are enabling us to ‘Stay Together, Apart.’ We are all very thankful for their selfless efforts, including from our own employees.”

“In this crisis, more than ever before, our Fulton brand – ‘It’s Personal’– reflects our own bias for action, rather than just words, and that is exemplified in how Fulton is dealing with COVID-related challenges. We have undertaken a number of measures to help our employees and their families through this difficult time, both to keep them safe and also to reward them for keeping us open for business so that we can continue to provide essential banking services to our customers and communities. I am extremely proud of the efforts our employees have made. One outstanding example is how I have seen our people rally to support the SBA’s efforts to assist small businesses and their employees with the Paycheck Protection Program of the CARES Act. Our employees worked 24/7 the last two weeks to have the SBA approve $1.7 billion in forgiveable loans that Fulton Bank is making to our small business customers so that those businesses can maintain employees on their payrolls and, hopefully, reopen for business sometime in the not-too-distant future.”

“No one can predict when our communities and nation will again enjoy a sense of normalcy, but I can tell you that Fulton Bank is strong – it is ‘well-capitalized,’ it is liquid, and it stands ready to continue to deploy its considerable resources in support of customers and communities across our footprint as we continue to navigate through these difficult times in the days and months ahead.”

Net Interest Income and Balance Sheet

Net interest income for the first quarter of 2020 was $161 million, an increase of $1 million from the fourth quarter of 2019, driven by interest-earning asset growth, primarily in loans and investment securities. Net interest margin for the first quarter of 2020 decreased to 3.21% from 3.22% in the fourth quarter of 2019.

Total average assets for the first quarter of 2020 were $22.3 billion, an increase of $440 million from the fourth quarter of 2019. Average loans, net of unearned income, of $16.9 billion were consistent with the fourth quarter of 2019.

Average loans and yields, by type, for the first quarter of 2020 in comparison to the fourth quarter of 2019 are summarized in the following table:

			Three Months Ended										Increase/(Decrease)
			March 31, 2020					December 31, 2019					in balance
			Balance		Yield (1)			Balance		Yield (1)			$			%
			(dollars in thousands)
Average Loans and Lease, net of unearned income, by type:
	Real estate - commercial mortgage		$ 6,746,766		4.20	%		$ 6,561,029		4.34	%		$185,737			2.8	%
	Commercial and industrial		4,446,750		4.21	%		4,574,047		4.24	%		(127,297	)		(2.8	%)
	Real estate - residential mortgage		2,670,019		3.97	%		2,606,136		4.00	%		63,883			2.5	%
	Real estate - home equity		1,300,132		4.73	%		1,331,088		4.97	%		(30,956	)		(2.3	%)
	Real estate - construction		929,529		4.13	%		934,556		4.37	%		(5,027	)		(0.5	%)
	Consumer		466,415		4.34	%		464,606		4.44	%		1,809			0.4	%
	Equipment lease financing		284,566		4.32	%		281,451		4.35	%		3,115			1.1	%
	Other		15,890		N/A			15,144		N/A			746			4.9	%
	Total Average Loans and leases, net of unearned income		$16,860,067		4.23	%		$16,768,057		4.31	%		$ 92,010			0.5	%

	(1)		Presented on a fully-taxable equivalent basis using a 21% Federal tax rate and statutory interest expense disallowances.

Total average liabilities increased $444 million, from the fourth quarter of 2019 driven by increases in borrowings of $773 million, while average deposits decreased $328 million. Average deposits and interest rates, by type, for the first quarter of 2020 in comparison to the fourth quarter of 2019 are summarized in the following table:

			Three Months Ended										Increase/(Decrease)
			March 31, 2020					December 31, 2019					in balance
			Balance		Rate			Balance		Rate			$			%
			(dollars in thousands)
Average Deposits, by type:
	Noninterest-bearing demand		$ 4,307,027		-	%		$ 4,324,568		-	%		$ (17,541	)		(0.4	%)
	Interest-bearing demand		4,649,905		0.49	%		4,699,040		0.72	%		(49,135	)		(1.0	%)
	Savings and money market deposits		5,127,662		0.56	%		5,205,260		0.78	%		(77,598	)		(1.5	%)
Total average demand and savings			14,084,594		0.36	%		14,228,868		0.52	%		(144,274	)		(1.0	%)
	Brokered deposits		275,359		1.57	%		261,689		1.94	%		13,670			5.2	%
	Time deposits		2,761,474		1.84	%		2,959,008		1.86	%		(197,534	)		(6.7	%)
	Total Average Deposits		$17,121,427		0.62	%		$17,449,565		0.77	%		$(328,138	)		(1.9	%)

Asset Quality

Effective January 1, 2020, Fulton adopted Accounting Standards Update 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” referred to as the current expected credit loss model (“CECL”). This accounting standard requires that credit losses for financial assets and off-balance-sheet credit exposures be measured based on expected credit losses, rather than on incurred credit losses as in prior periods. As a result of the adoption of CECL, the allowance for credit losses was increased by $58 million, and retained earnings was decreased by $44 million.

The provision for credit losses for the first quarter of 2020 was $44 million, applying the expected credit losses measurement standard under CECL. The expected credit losses in the first quarter of 2020 were based on forecasted economic assumptions, including the estimated impacts of COVID-19, over the remaining expected lives of financial assets and off-balance-sheet credit exposures.

Non-performing assets were $147 million, or 0.64% of total assets, at March 31, 2020, relatively unchanged from December 31, 2019 and March 31, 2019.

Annualized net charge-offs for the quarter ended March 31, 2020 were 0.26% of total average loans, compared to 0.65% and 0.10% for the quarters ended December 31, 2019 and March 31, 2019, respectively. A $20 million charge-off was recorded for one credit in the fourth quarter of 2019, accounting for most of the difference in this metric for that period in comparison to the first quarter of 2020.

Non-interest Income

Non-interest income in the first quarter of 2020, excluding investment securities gains, was $55 million, relatively unchanged from the fourth quarter of 2019 and an increase of $8 million, or 17%, compared to the first quarter of 2019. Drivers of non-interest income growth in the first quarter of 2020 were mortgage banking and wealth management, offset by decreases in capital markets, consumer card income and merchant and commercial card income compared to the fourth quarter of 2019.

Mortgage banking revenue increased $1 million from the fourth quarter of 2019, reflecting the net result of a $2 million increase in gains on mortgage loan sales, partially offset by a $1 million mortgage servicing rights impairment charge recorded in the first quarter of 2020 as a result of rapidly declining interest rates and related increases in prepayment speeds.

Non-interest Expense

Non-interest expense was $143 million in the first quarter of 2020, an increase of $4 million, or 3%, compared to the fourth quarter of 2019. The increase was driven by salaries and employee benefits, professional fees, and FDIC insurance expense.

Compared to the first quarter of 2019, non-interest expenses increased $5 million, or 3% due primarily to higher salaries and employee benefits, data processing and software and one additional day.

Income Tax Expense

The effective income tax rate for the first quarter of 2020 was 10%, as compared to 13% and 16% for the fourth quarter of 2019 and first quarter of 2019, respectively. The decrease in the effective income tax rate in 2020 was related to a decline in 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 relate 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, 2019 and other current and periodic reports, which have been or will be filed with the Securities and Exchange Commission and are or will be 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). The Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 will address risks and uncertainties associated with the COVID-19 pandemic.

In addition, the COVID-19 pandemic is having an adverse impact on the Corporation, its customers and the communities it serves. The adverse effect of the COVID-19 pandemic on the Corporation, its customers and the communities where it operates may adversely affect the Corporation’s business, results of operations and financial condition for an indefinite period of time.

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
		Mar 31			Dec 31			Sep 30			Jun 30			Mar 31
		2020			2019			2019			2019			2019
Ending Balances
Investments		$	3,141,440		$	2,867,378		$	2,705,610		$	2,853,358		$	2,748,249
Loans, net of unearned income			17,077,403			16,837,526			16,686,866			16,368,458			16,262,633
Total assets			22,929,859			21,886,040			21,703,618			21,308,670			20,974,649
Deposits			17,365,026			17,393,913			17,342,717			16,388,895			16,377,978
Shareholders' equity			2,285,748			2,342,176			2,324,016			2,308,798			2,301,019
Average Balances
Investments		$	3,071,828		$	2,830,999		$	2,829,672		$	2,790,392		$	2,699,130
Loans, net of unearned income			16,860,067			16,768,057			16,436,507			16,316,076			16,194,375
Total assets			22,252,099			21,812,438			21,457,800			21,057,030			20,690,365
Deposits			17,121,427			17,449,565			16,950,667			16,375,456			16,275,633
Shareholders' equity			2,337,016			2,341,397			2,315,585			2,301,258			2,265,097
Income Statement
Net interest income		$	160,746		$	159,270		$	161,260		$	164,544		$	163,315
Provision for credit losses			44,030			20,530			2,170			5,025			5,100
Non-interest income			54,644			55,281			59,813			54,315			46,751
Non-interest expense			142,552			138,974			146,770			144,168			137,824
Income before taxes			28,808			55,047			72,133			69,666			67,142
Net income			26,047			47,789			62,108			59,779			56,663
Pre-provision net revenue(1)			74,374			77,224			76,741			76,114			73,775
Per Share
Net income (basic)		$	0.16		$	0.29		$	0.38		$	0.36		$	0.33
Net income (diluted)		$	0.16		$	0.29		$	0.37		$	0.35		$	0.33
Cash dividends		$	0.13		$	0.17		$	0.13		$	0.13		$	0.13
Tangible common equity(1)		$	10.84		$	11.00		$	10.91		$	10.63		$	10.39
Weighted average shares (basic)			163,475			164,135			165,324			168,343			169,884
Weighted average shares (diluted)			164,417			165,039			166,126			169,168			170,909
Asset Quality(2)
Net charge-offs (recoveries) to average loans (annualized)			0.26%			0.65%			0.15%			-0.04%			0.10%
Non-performing loans to total loans			0.82%			0.84%			0.81%			0.90%			0.85%
Non-performing assets to total assets			0.64%			0.68%			0.66%			0.73%			0.70%
ACL - loans (3) to loans outstanding			1.40%			0.97%			1.00%			1.04%			1.00%
ACL - loans (3) to non-performing loans			170%			116%			122%			115%			117%
Non-performing assets to tangible shareholders' equity and ACL - loans (1)(3)			7.37%			7.51%			7.35%			7.97%			7.66%
Profitability
Return on average assets			0.47%			0.87%			1.15%			1.14%			1.11%
Return on average shareholders' equity			4.48%			8.10%			10.64%			10.42%			10.15%
Return on average shareholders' equity (tangible)(1)			5.84%			10.52%			14.03%			13.60%			13.28%
Net interest margin			3.21%			3.22%			3.31%			3.44%			3.49%
Efficiency ratio(1)			64.5%			63.1%			63.6%			64.2%			63.9%
Capital Ratios
Tangible common equity ratio(1)			7.8%			8.5%			8.5%			8.5%			8.6%
Tier 1 leverage ratio(4)			7.9%			8.4%			8.5%			8.7%			8.9%
Common equity Tier 1 capital ratio(4)			9.4%			9.7%			9.6%			10.0%			10.2%
Tier 1 capital ratio(4)			9.4%			9.7%			9.6%			10.0%			10.2%
Total risk-based capital ratio(4)			13.8%			11.8%			12.0%			12.4%			12.6%

(1) Please refer to the calculation on the page titled “Reconciliation of Non-GAAP Measures” at the end of this document.

(2) Effective January 1, 2020, Fulton adopted Accounting Standards Update 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” referred to as the current expected credit loss model (“CECL”). This accounting standard requires that credit losses for financial assets and off-balance-sheet ("OBS") credit exposures be measured based on expected credit losses, rather than on incurred credit losses as in prior periods.

(3) "ACL - loans" relates to the allowance for credit losses (ACL) specifically on "Loans, net of unearned income" and does not include the ACL related to OBS credit exposures.

(4) Regulatory capital ratios as of March 31, 2020 are preliminary and prior periods are actual.

FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED ENDING BALANCE SHEETS (UNAUDITED)
dollars in thousands
																						% Change from
		Mar 31				Dec 31				Sep 30				Jun 30				Mar 31				Dec 31			Mar 31
		2020				2019				2019				2019				2019				2019			2019
ASSETS
Cash and due from banks		$	181,777			$	132,283			$	120,671			$	107,091			$	115,884			37.4	%		56.9	%
Other interest-earning assets			793,572				482,930				572,499				488,968				411,037			64.3	%		93.1	%
Loans held for sale			40,645				37,828				33,945				45,754				27,768			7.4	%		46.4	%
Investment securities			3,141,440				2,867,378				2,705,610				2,853,358				2,748,249			9.6	%		14.3	%
Loans, net of unearned income			17,077,403				16,837,526				16,686,866				16,368,458				16,262,633			1.4	%		5.0	%
ACL - loans, net of unearned income(1)			(238,508	)			(163,622	)			(166,135	)			(170,233	)			(162,109	)		45.8	%		47.1	%
Net loans			16,838,895				16,673,904				16,520,731				16,198,225				16,100,524			1.0	%		4.6	%
Premises and equipment			236,908				240,046				237,344				243,300				239,004			(1.3	%)		(0.9	%)
Accrued interest receivable			59,365				60,898				60,447				62,984				62,207			(2.5	%)		(4.6	%)
Goodwill and intangible assets			535,171				535,303				534,178				535,249				535,356			(0.0	%)		(0.0	%)
Other assets			1,102,086				855,470				918,193				773,741				734,620			28.8	%		50.0	%
Total Assets		$	22,929,859			$	21,886,040			$	21,703,618			$	21,308,670			$	20,974,649			4.8	%		9.3	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits		$	17,365,026			$	17,393,913			$	17,342,717			$	16,388,895			$	16,377,978			(0.2	%)		6.0	%
Short-term borrowings			1,386,808				883,241				832,860				1,188,390				829,016			57.0	%		67.3	%
Other liabilities			513,811				384,941				477,311				435,171				401,324			33.5	%		28.0	%
FHLB advances and long-term debt			1,378,466				881,769				726,714				987,416				1,065,312			56.3	%		29.4	%
Total Liabilities			20,644,111				19,543,864				19,379,602				18,999,872				18,673,630			5.6	%		10.6	%
Shareholders' equity			2,285,748				2,342,176				2,324,016				2,308,798				2,301,019			(2.4	%)		(0.7	%)
Total Liabilities and Shareholders' Equity		$	22,929,859			$	21,886,040			$	21,703,618			$	21,308,670			$	20,974,649			4.8	%		9.3	%
LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL:
Loans, by type:
Real estate - commercial mortgage		$	6,895,069			$	6,700,776			$	6,604,634			$	6,497,973			$	6,428,688			2.9	%		7.3	%
Commercial and industrial			4,451,239				4,446,701				4,494,496				4,365,248				4,429,538			0.1	%		0.5	%
Real estate - residential mortgage			2,718,290				2,641,465				2,570,793				2,451,966				2,313,908			2.9	%		17.5	%
Real estate - home equity			1,292,677				1,314,944				1,346,115				1,386,974				1,413,500			(1.7	%)		(8.5	%)
Real estate - construction			947,768				971,079				913,644				922,547				953,087			(2.4	%)		(0.6	%)
Consumer			468,172				463,164				464,213				452,874				433,545			1.1	%		8.0	%
Equipment lease financing and other			304,188				299,397				292,971				290,876				290,367			1.6	%		4.8	%
Total Loans, net of unearned income		$	17,077,403			$	16,837,526			$	16,686,866			$	16,368,458			$	16,262,633			1.4	%		5.0	%
Deposits, by type:
Noninterest-bearing demand		$	4,531,872			$	4,453,324			$	4,240,478			$	4,226,404			$	4,255,043			1.8	%		6.5	%
Interest-bearing demand			4,724,520				4,720,188				4,771,109				4,083,615				4,207,442			0.1	%		12.3	%
Savings and money market accounts			5,092,865				5,153,941				5,094,387				4,938,998				4,907,346			(1.2	%)		3.8	%
Total demand and savings			14,349,257				14,327,453				14,105,974				13,249,017				13,369,831			0.2	%		7.3	%
Brokered deposits			313,337				264,531				256,870				246,116				251,395			18.4	%		24.6	%
Time deposits			2,702,432				2,801,929				2,979,873				2,893,762				2,756,752			(3.6	%)		(2.0	%)
Total Deposits		$	17,365,026			$	17,393,913			$	17,342,717			$	16,388,895			$	16,377,978			(0.2	%)		6.0	%
Short-term borrowings, by type:
Customer repurchase agreements		$	52,919			$	56,707			$	58,853			$	56,496			$	54,440			(6.7	%)		(2.8	%)
Customer short-term promissory notes			408,889				326,534				279,007				281,894				299,576			25.2	%		36.5	%
Short-term FHLB advances			725,000				500,000				475,000				650,000				475,000			45.0	%		52.6	%
Federal funds purchased			200,000				-				20,000				200,000				-			N/M			N/M
Total Short-term Borrowings		$	1,386,808			$	883,241			$	832,860			$	1,188,390			$	829,016			57.0	%		67.3	%

N/M - Not meaningful
(1) "ACL - loans" relates to the ACL specifically on "Loans, net of unearned income" and does not include the ACL related to OBS credit exposures.

FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
dollars in thousands
		Three Months Ended															% Change from
		Mar 31			Dec 31			Sep 30			Jun 30			Mar 31			Dec 31			Mar 31
		2020			2019			2019			2019			2019			2019			2019
Interest Income:
Interest income		$	199,378		$	202,159		$	208,414		$	210,034		$	204,700		(1.4	%)		(2.6	%)
Interest expense			38,632			42,889			47,153			45,490			41,385		(9.9	%)		(6.7	%)
Net Interest Income			160,746			159,270			161,260			164,544			163,315		0.9	%		(1.6	%)
Provision for credit losses			44,030			20,530			2,170			5,025			5,100		114.5	%		N/M
Net Interest Income after Provision			116,716			138,740			159,090			159,519			158,215		(15.9	%)		(26.2	%)
Non-Interest Income:
Wealth management			15,055			14,419			13,867			14,153			13,239		4.4	%		13.7	%
Mortgage banking			6,234			5,076			6,658			6,593			4,772		22.8	%		30.6	%
Consumer banking:
Card			4,685			4,991			5,791			5,047			4,686		(6.1	%)		(0.0	%)
Overdraft			4,058			4,750			4,682			4,413			4,104		(14.6	%)		(1.1	%)
Other consumer banking			2,496			2,688			2,860			2,907			2,587		(7.1	%)		(3.5	%)
Total consumer banking			11,239			12,429			13,333			12,367			11,377		(9.6	%)		(1.2	%)
Commercial banking:
Merchant and card			5,624			5,841			6,166			6,512			5,558		(3.7	%)		1.2	%
Cash management			4,742			4,697			4,696			4,638			4,361		1.0	%		8.7	%
Capital markets			5,075			5,939			4,448			4,053			2,515		(14.5	%)		101.8	%
Other commercial banking			2,978			3,664			3,478			3,815			2,816		(18.7	%)		5.8	%
Total commercial banking			18,419			20,140			18,788			19,017			15,250		(8.5	%)		20.8	%
Other			3,651			3,217			2,675			2,009			2,048		13.5	%		78.3	%
Non-Interest Income before Investment Securities Gains			54,598			55,281			55,321			54,139			46,686		(1.2	%)		16.9	%
Investment securities gains, net			46			-			4,492			176			65		N/M			(29.2	%)
Total Non-Interest Income			54,644			55,281			59,813			54,315			46,751		(1.2	%)		16.9	%
Non-Interest Expense:
Salaries and employee benefits			80,228			76,975			78,211			78,991			77,757		4.2	%		3.2	%
Net occupancy			13,486			13,080			12,368			14,469			12,909		3.1	%		4.5	%
Data processing and software			11,645			11,468			11,590			11,268			10,353		1.5	%		12.5	%
Other outside services			7,881			8,215			12,163			11,259			8,352		(4.1	%)		(5.6	%)
Professional fees			4,202			2,873			3,331			2,970			3,960		46.3	%		6.1	%
Equipment			3,418			3,475			3,459			3,299			3,342		(1.6	%)		2.3	%
FDIC insurance			2,808			2,177			239			2,755			2,609		29.0	%		7.6	%
Marketing			1,579			1,503			3,322			2,863			2,160		5.1	%		(26.9	%)
Amortization of tax credit investments			1,450			1,505			1,533			1,492			1,491		(3.6	%)		(2.7	%)
Intangible amortization			132			142			1,071			107			107		(6.9	%)		23.5	%
Prepayment penalty on FHLB advances			-			-			4,326			-			-		-			-
Other			15,723			17,561			15,157			14,695			14,784		(10.5	%)		6.3	%
Total Non-Interest Expense			142,552			138,974			146,770			144,168			137,824		2.6	%		3.4	%
Income before Income Taxes			28,808			55,047			72,133			69,666			67,142		(47.7	%)		(57.1	%)
Income tax expense			2,761			7,258			10,025			9,887			10,479		(62.0	%)		(73.7	%)
Net Income		$	26,047		$	47,789		$	62,108		$	59,779		$	56,663		(45.5	%)		(54.0	%)
PER SHARE:
Net income:
Basic		$	0.16		$	0.29		$	0.38		$	0.36		$	0.33		(44.8	%)		(51.5	%)
Diluted			0.16			0.29			0.37			0.35			0.33		(44.8	%)		(51.5	%)
Cash dividends			0.13			0.17			0.13			0.13			0.13		(23.5	%)		-
Weighted average shares (basic)			163,475			164,135			165,324			168,343			169,884		(0.4	%)		(3.8	%)
Weighted average shares (diluted)			164,417			165,039			166,126			169,168			170,909		(0.4	%)		(3.8	%)
N/M - not meaningful

FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)
dollars in thousands
		Three Months Ended
		March 31, 2020											December 31, 2019											March 31, 2019
		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		$	16,860,067			$	177,496			4.23	%		$	16,768,057			$	182,024			4.31	%		$	16,194,375			$	186,122			4.65	%
Taxable investment securities			2,284,457				16,294			2.85	%			2,198,252				15,621			2.84	%			2,285,724				15,435			2.70	%
Tax-exempt investment securities			720,223				5,960			3.29	%			594,487				5,058			3.38	%			444,132				4,150			3.71	%
Total Investment Securities			3,004,680				22,254			2.96	%			2,792,739				20,679			2.96	%			2,729,856				19,585			2.87	%
Loans held for sale			27,178				320			4.71	%			30,062				295			3.93	%			16,434				240			5.85	%
Other interest-earning assets			602,270				2,532			1.69	%			492,560				2,370			1.92	%			366,175				2,002			2.20	%
Total Interest-earning Assets			20,494,195				202,602			3.97	%			20,083,418				205,368			4.07	%			19,306,840				207,949			4.35	%
Noninterest-earning assets:
Cash and due from banks			138,248											128,417											110,693
Premises and equipment			239,619											239,294											237,124
Other assets			1,590,666											1,528,758											1,197,034
Less: ACL - loans(2)			(210,629	)										(167,449	)										(161,326	)
Total Assets		$	22,252,099										$	21,812,438										$	20,690,365
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Demand deposits		$	4,649,905			$	5,643			0.49	%		$	4,699,040			$	8,494			0.72	%		$	4,153,984			$	7,519			0.73	%
Savings deposits			5,127,662				7,110			0.56	%			5,205,260				10,253			0.78	%			4,912,856				9,962			0.82	%
Brokered deposits			275,359				1,073			1.57	%			261,689				1,279			1.94	%			220,115				1,382			2.55	%
Time deposits			2,761,474				12,614			1.84	%			2,959,008				13,775			1.86	%			2,765,803				10,826			1.59	%
Total Interest-bearing Deposits			12,814,400				26,440			0.83	%			13,124,997				33,801			1.02	%			12,052,758				29,689			1.00	%
Short-term borrowings			1,303,047				4,073			1.25	%			717,811				2,343			1.29	%			820,054				3,582			1.76	%
FHLB advances and long-term debt			1,063,214				8,119			3.06	%			875,802				6,745			3.07	%			1,002,463				8,114			3.26	%
Total Interest-bearing Liabilities			15,180,661				38,632			1.02	%			14,718,610				42,889			1.16	%			13,875,275				41,385			1.21	%
Noninterest-bearing liabilities:
Demand deposits			4,307,027											4,324,568											4,222,875
Total Deposits			17,121,427											17,449,565											16,275,633
Other			427,395											427,863											327,118
Total Liabilities			19,915,083											19,471,041											18,425,268
Total Interest-bearing liabilities and non interest-bearing deposits ("Cost of Funds")			19,487,688							0.80	%			19,043,178							0.89	%			18,098,150							0.93	%
Shareholders' equity			2,337,016											2,341,397											2,265,097
Total Liabilities and Shareholders' Equity		$	22,252,099										$	21,812,438										$	20,690,365
Net interest income/net interest margin (fully taxable equivalent)							163,970			3.21	%							162,479			3.22	%							166,564			3.49	%
Tax equivalent adjustment							(3,224	)										(3,209	)										(3,249	)
Net interest income						$	160,746										$	159,270										$	163,315

AVERAGE LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL:
		Three Months Ended															% Change from
		Mar 31			Dec 31			Sep 30			Dec 31			Mar 31			Dec 31			Mar 31
		2020			2019			2019			2019			2019			2019			2019
Loans, by type:
Real estate - commercial mortgage		$	6,746,766		$	6,561,029		$	6,489,456		$	6,424,213		$	6,378,145		2.8	%		5.8	%
Commercial and industrial			4,446,750			4,574,047			4,414,992			4,440,860			4,462,609		(2.8	%)		(0.4	%)
Real estate - residential mortgage			2,670,019			2,606,136			2,512,899			2,366,685			2,276,611		2.5	%		17.3	%
Real estate - home equity			1,300,132			1,331,088			1,364,161			1,404,141			1,433,574		(2.3	%)		(9.3	%)
Real estate - construction			929,529			934,556			905,060			943,080			930,246		(0.5	%)		(0.1	%)
Consumer			466,415			464,606			457,524			445,666			424,480		0.4	%		9.9	%
Equipment lease financing and other			300,457			296,595			292,415			291,431			288,710		1.3	%		4.1	%
Total Loans, net of unearned income		$	16,860,067		$	16,768,057		$	16,436,507		$	16,316,076		$	16,194,375		0.5	%		4.1	%
Deposits, by type:
Noninterest-bearing demand		$	4,307,027		$	4,324,568		$	4,247,820		$	4,200,810		$	4,222,875		(0.4	%)		2.0	%
Interest-bearing demand			4,649,905			4,699,040			4,448,112			4,186,280			4,153,984		(1.0	%)		11.9	%
Savings and money market accounts			5,127,662			5,205,260			5,026,316			4,925,788			4,912,856		(1.5	%)		4.4	%
Total demand and savings			14,084,594			14,228,868			13,722,248			13,312,878			13,289,715		(1.0	%)		6.0	%
Brokered deposits			275,359			261,689			253,426			246,154			220,115		5.2	%		25.1	%
Time deposits			2,761,474			2,959,008			2,974,993			2,816,425			2,765,803		(6.7	%)		(0.2	%)
Total Deposits		$	17,121,427		$	17,449,565		$	16,950,667		$	16,375,457		$	16,275,633		(1.9	%)		5.2	%
Short-term borrowings, by type:
Customer repurchase agreements		$	52,399		$	59,363		$	61,230		$	56,171		$	56,707		(11.7	%)		(7.6	%)
Customer short-term promissory notes			375,841			318,166			271,663			288,696			312,092		18.1	%		20.4	%
Federal funds purchased			186,868			91,467			101,022			181,769			157,122		104.3	%		18.9	%
Short-term FHLB advances and other borrowings			687,939			248,815			485,782			414,868			294,133		176.5	%		133.9	%
Total Short-term Borrowings		$	1,303,047		$	717,811		$	919,697		$	941,504		$	820,054		81.5	%		58.9	%

(1) Presented on a fully taxable-equivalent basis using a 21% federal tax rate and statutory interest expense disallowances.

(2) "ACL - loans" relates to the ACL specifically on "Loans, net of unearned income" and does not include the ACL related to OBS credit exposures.

FULTON FINANCIAL CORPORATION
ASSET QUALITY INFORMATION (UNAUDITED)
dollars in thousands
		Three Months Ended
		Mar 31				Dec 31				Sep 30				Jun 30				Mar 31
		2020				2019				2019				2019				2019
Allowance for credit losses related to Loans, net of unearned income
Balance at beginning of period		$	163,620			$	166,135			$	170,233			$	162,109			$	160,537
Impact of adopting CECL			45,724				-				-				-				-
Loans charged off:
Commercial and industrial			(10,899	)			(30,547	)			(7,181	)			(1,895	)			(2,787	)
Consumer and home equity			(1,529	)			(1,416	)			(1,375	)			(1,001	)			(902	)
Real estate - commercial mortgage			(855	)			(68	)			(394	)			(230	)			(1,145	)
Equipment lease financing and other			(533	)			(727	)			(600	)			(448	)			(785	)
Real estate - residential mortgage			(187	)			(223	)			(533	)			(134	)			(655	)
Real estate - construction			-				-				(45	)			(3	)			(95	)
Total loans charged off			(14,003	)			(32,981	)			(10,128	)			(3,711	)			(6,369	)
Recoveries of loans previously charged off:
Commercial and industrial			1,734				2,487				2,311				2,680				1,243
Consumer and home equity			646				437				348				802				407
Real estate - commercial mortgage			244				1,453				444				169				136
Equipment lease financing and other			108				182				107				148				229
Real estate - residential mortgage			85				206				440				211				132
Real estate - construction			70				1,098				164				1,245				84
Recoveries of loans previously charged off			2,887				5,863				3,814				5,255				2,231
Net loans charged off (recoveries)			(11,116	)			(27,118	)			(6,314	)			1,544				(4,138	)
Provision for credit losses			40,280				24,603				2,216				6,580				5,710
Balance at end of period		$	238,508			$	163,620			$	166,135			$	170,233			$	162,109
Net charge-offs (recoveries) to average loans (annualized)			0.26	%			0.65	%			0.15	%			(0.04	%)			0.10	%
Allowance credit losses related to OBS Credit Exposures(1)
Balance at beginning of period		$	2,588			$	6,662			$	6,708			$	8,263			$	8,873
Impact of adopting CECL			12,625				-				-				-				-
Provision for credit losses			3,750				(4,074	)			(46	)			(1,555	)			(610	)
Balance at end of period		$	18,963			$	2,588			$	6,662			$	6,708			$	8,263
NON-PERFORMING ASSETS:
Non-accrual loans		$	120,345			$	125,098			$	124,287			$	133,118			$	127,141
Loans 90 days past due and accruing			19,593				16,057				11,689				14,598				11,540
Total non-performing loans			139,938				141,155				135,976				147,716				138,681
Other real estate owned			6,593				6,831				7,706				7,241				9,012
Total non-performing assets		$	146,531			$	147,986			$	143,682			$	154,957			$	147,693
NON-PERFORMING LOANS, BY TYPE:
Commercial and industrial		$	41,318			$	49,491			$	37,126			$	47,260			$	50,148
Real estate - commercial mortgage			36,536				37,279				45,710				43,850				29,817
Real estate - residential mortgage			25,832				22,411				20,150				21,659				22,299
Consumer and home equity			11,226				11,026				11,012				12,378				10,770
Real estate - construction			4,380				4,306				4,312				4,632				7,039
Leasing			20,646				16,642				17,666				17,937				18,608
Total non-performing loans		$	139,938			$	141,155			$	135,976			$	147,716			$	138,681

(1) The allowance for credit losses related to OBS credit exposures is presented in "other liabilities" on the consolidated balance sheets.

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
			Mar 31				Dec 31				Sep 30				Jun 30				Mar 31
			2020				2019				2019				2019				2019
	Shareholders' equity (tangible), per share
	Shareholders' equity		$	2,285,748			$	2,342,176			$	2,324,016			$	2,308,798			$	2,301,019
	Less: Goodwill and intangible assets			(535,171	)			(535,303	)			(534,178	)			(535,249	)			(535,356	)
	Tangible shareholders' equity (numerator)		$	1,750,577			$	1,806,873			$	1,789,838			$	1,773,549			$	1,765,663
	Shares outstanding, end of period (denominator)			161,435				164,218				164,036				166,903				169,923
	Shareholders' equity (tangible), per share		$	10.84			$	11.00			$	10.91			$	10.63			$	10.39
	Return on average shareholders' equity (tangible)
	Net income		$	26,047			$	47,789			$	62,108			$	59,779			$	56,663
	Plus: Intangible amortization, net of tax			104				112				846				85				85
	(Numerator)		$	26,152			$	47,901			$	62,954			$	59,865			$	56,748
	Average shareholders' equity		$	2,337,016			$	2,341,397			$	2,315,585			$	2,301,258			$	2,265,097
	Less: Goodwill and intangible assets			(535,235	)			(534,190	)			(535,184	)			(535,301	)			(531,767	)
	Average tangible shareholders' equity (denominator)		$	1,801,781			$	1,807,207			$	1,780,401			$	1,765,957			$	1,733,330
	Return on average shareholders' equity (tangible), annualized			5.84	%			10.52	%			14.03	%			13.60	%			13.28	%
	Tangible Common Equity to Tangible Assets (TCE Ratio)
	Shareholders' equity		$	2,285,748			$	2,342,176			$	2,324,016			$	2,308,798			$	2,301,019
	Less: Goodwill and intangible assets			(535,171	)			(535,303	)			(534,178	)			(535,249	)			(535,356	)
	Tangible shareholders' equity (numerator)		$	1,750,577			$	1,806,873			$	1,789,838			$	1,773,549			$	1,765,663
	Total assets		$	22,929,859			$	21,886,040			$	21,703,618			$	21,308,670			$	20,974,649
	Less: Goodwill and intangible assets			(535,171	)			(535,303	)			(534,178	)			(535,249	)			(535,356	)
	Total tangible assets (denominator)		$	22,394,688			$	21,350,737			$	21,169,440			$	20,773,421			$	20,439,293
	Tangible Common Equity to Tangible Assets			7.82	%			8.46	%			8.45	%			8.54	%			8.64	%
	Efficiency ratio
	Non-interest expense		$	142,552			$	138,974			$	146,770			$	144,168			$	137,824
	Less: Intangible amortization			(132	)			(142	)			(1,071	)			(107	)			(107	)
	Less: Amortization of tax credit investments			(1,450	)			(1,505	)			(1,533	)			(1,492	)			(1,491	)
	Less: Prepayment penalty on FHLB advances			-				-				(4,326	)			-				-
	Non-interest expense (numerator)		$	140,970			$	137,327			$	139,840			$	142,569			$	136,226
	Net interest income (fully taxable equivalent)		$	163,970			$	162,479			$	164,517			$	167,794			$	166,564
	Plus: Total Non-interest income			54,644				55,281				59,813				54,315				46,751
	Less: Investment securities gains			(46	)			-				(4,492	)			(176	)			(65	)
	Net interest income (denominator)		$	218,568			$	217,760			$	219,838			$	221,933			$	213,250
	Efficiency ratio			64.5	%			63.1	%			63.6	%			64.2	%			63.9	%
	Non-performing assets to tangible shareholders' equity and ACL - Loans(1)
	Non-performing assets (numerator)		$	146,531			$	147,986			$	143,682			$	154,957			$	147,693
	Tangible shareholders' equity		$	1,750,577			$	1,806,873			$	1,789,838			$	1,773,549			$	1,765,663
	Plus: ACL - loans			238,508				163,620				166,135				170,233				162,109
	Tangible shareholders' equity and ACL - loans (denominator)		$	1,989,085			$	1,970,493			$	1,955,973			$	1,943,782			$	1,927,772
	Non-performing assets to tangible shareholders' equity and ACL - loans			7.37	%			7.51	%			7.35	%			7.97	%			7.66	%
	Pre-provision net revenue
	Net interest income		$	160,746			$	159,270			$	161,260			$	164,544			$	163,315
	Non-interest income			54,644				55,281				59,813				54,315				46,751
	Less: Investment securities gains			(46	)			-				(4,492	)			(176	)			(65	)
	Total revenue		$	215,344			$	214,551			$	216,581			$	218,683			$	210,001
	Non-interest expense		$	142,552			$	138,974			$	146,770			$	144,168			$	137,824
	Less: Prepayment penalty on FHLB advances			-				-				(4,326	)			-				-
	Less: Amortization of tax credit investments			(1,450	)			(1,505	)			(1,533	)			(1,492	)			(1,491	)
	Less: Intangible amortization			(132	)			(142	)			(1,071	)			(107	)			(107	)
	Total non-interest expense		$	140,970			$	137,327			$	139,840			$	142,569			$	136,226
	Pre-provision net revenue		$	74,374			$	77,224			$	76,741			$	76,114			$	73,775

(1) "ACL - loans" relates to the ACL specifically on "Loans, net of unearned income" and does not include the ACL related to OBS credit exposures.

 

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