FULTON FINANCIAL CORP [FULT] Filings

10-Q 1 fult-20220630.htm 10-Q fult-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022, or


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-39680

FULTON FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Pennsylvania

23-2195389

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

One Penn Square

P. O. Box 4887

Lancaster,

Pennsylvania

17604

(Address of principal executive offices)

(Zip Code)

(717) 291-2411

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $2.50	FULT	The Nasdaq Stock Market, LLC
Depositary Shares, Each Representing 1/40th Interest in a Share of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series A	FULTP	The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Common Stock, $2.50 Par Value –167,356,767 shares outstanding as of July 29, 2022.

FULTON FINANCIAL CORPORATION

FORM 10-Q FOR THE THREE MONTHS ENDED JUNE 30, 2022

INDEX


Description		Page



Glossary of Terms		3

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited):

(a)	Consolidated Balance Sheets - June 30 , 2022 and December 31, 2021	5

(b)	Consolidated Statements of Income - Three and six months ended June 30 , 2022 and 2021	6

(c)	Consolidated Statements of Comprehensive Income - Three and six months ended June 30 , 2022 and 2021	7

(d)	Consolidated Statements of Shareholders’ Equity - Three and six months ended June 30 , 2022 and 2021	8

(e)	Consolidated Statements of Cash Flows - S ix months ended June 30 , 2022 and 2021	9

(f)	Notes to Consolidated Financial Statements	10

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		41

Item 3. Quantitative and Qualitative Disclosures about Market Risk		66

Item 4. Controls and Procedures		68

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		69

Item 1A. Risk Factors		69

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		69

Item 3. Defaults Upon Senior Securities - (not applicable)

Item 4. Mine Safety Disclosures - (not applicable)

Item 5. Other Information - (none to be reported)

Item 6. Exhibits		70

Signatures		71


FULTON FINANCIAL CORPORATION
GLOSSARY OF DEFINED ACRONYMS AND TERMS

ACL						Allowance for credit losses
AFS						Available for sale
ALCO						Asset/Liability Management Committee
AOCI						Accumulated other comprehensive income
ARC						Auction rate security
ASC						Accounting Standards Codification
ASU						Accounting Standards Update


BHCA						Bank Holding Company Act of 1956, as amended
bp or bps						Basis point(s)
CARES Act						Coronavirus Aid, Relief, and Economic Security Act
Corporation or Company						Fulton Financial Corporation
COVID-19						Coronavirus
Directors' Plan						Amended and Restated Directors’ Equity Participation Plan
Dodd-Frank Act						Dodd-Frank Wall Street Reform and Consumer Protection Act

Employee Equity Plan						2022 Amended and Restated Equity and Cash Incentive Compensation Plan
ESG						Environmental, social and governance
ETR						Effective tax rate
Exchange Act						Securities Exchange Act of 1934
FASB						Financial Accounting Standards Board
FDIC						Federal Deposit Insurance Corporation
Fed Funds Rate						Target federal funds rate
Federal Reserve Board						Board of Governors of the Federal Reserve System
FHLB						Federal Home Loan Bank
FOMC						Federal Open Market Committee
Foreign Currency Nostro Accounts						Foreign currency with international correspondent banks
FRB						Federal Reserve Bank
FTE						Fully taxable-equivalent
Fulton Bank or the Bank						Fulton Bank, N.A.
GAAP						U.S. Generally Accepted Accounting Principles
HTM						Held to maturity
LIBOR						London Interbank Offered Rate
Management Discussion						Management’s Discussion and Analysis of Financial Condition and Results of Operations
Merger						The acquisition by the Corporation of Prudential, which was completed effective as of July 1, 2022
Merger Agreement						Agreement and Plan of Merger, dated as of March 1, 2022, between the Corporation and Prudential
Merger Consideration						For each share of Prudential common stock, $3.65 in cash and 0.7974 of a share of the Corporation's common stock
MSRs						Mortgage servicing rights
Net loans						Loans and lease receivables (net of unearned income)
NIM						Net interest margin
N/M						Not meaningful
OBS						Off-balance-sheet
OCI						Other comprehensive income
OREO						Other real estate owned


Pension Plan						Defined Benefit Pension Plan
Postretirement Plan						Postretirement Benefits Plan
PPP						Paycheck Protection Program
Prudential						Prudential Bancorp, Inc.
PSU						Performance-based restricted stock unit
RSU						Restricted stock unit
SBA						Small Business Administration
SEC						United States Securities and Exchange Commission
TCI						Tax credit investment
TDR						Troubled debt restructuring
TruPS						Trust Preferred Securities
Visa Shares						Visa, Inc. Class B restricted shares

Note: Some numbers contained in the document may not sum due to rounding

Item 1. Financial Statements

CONSOLIDATED BALANCE SHEETS

(in thousands, except per-share data)


	June 30, 2022		December 31, 2021
	(unaudited)
ASSETS
Cash and due from banks	$	158,605	$	172,276
Interest-bearing deposits with other banks	291,069		1,466,338
Cash and cash equivalents	449,674		1,638,614
FRB and FHLB stock	62,146		57,635
Federal funds sold	30,500		—
Loans held for sale	17,528		35,768
Investment securities:
AFS, at estimated fair value	2,778,838		3,187,390
HTM, at amortized cost	1,338,963		980,384
Net loans	18,920,950		18,325,350
Less: ACL - loans	(248,564)		(249,001)
Loans, net	18,672,386		18,076,349
Net premises and equipment	211,639		220,357
Accrued interest receivable	64,457		57,451
Goodwill and net intangible assets	537,700		538,053
Other assets	1,088,855		1,004,397
Total Assets	$	25,252,686	$	25,796,398
LIABILITIES
Deposits:
Noninterest-bearing	$	7,530,777	$	7,370,963
Interest-bearing	13,613,089		14,202,536
Total Deposits	21,143,866		21,573,499
Short-term borrowings:
Federal funds purchased	20,000		—
Other short-term borrowings	436,185		416,764
Short-term borrowings	456,185		416,764
Accrued interest payable	6,010		7,000
Long-term borrowings	557,130		621,345
Other liabilities	618,402		465,110
Total Liabilities	22,781,593		23,083,718
SHAREHOLDERS' EQUITY
Preferred stock, no par value, 10.0 million shares authorized; Series A, 0.2 million shares authorized and issued as of June 30, 2022 and December 31, 2021, liquidation preference of $1,000 per share	192,878		192,878
Common stock, $2.50 par value, 600.0 million shares authorized, 224.5 million shares issued as of June 30, 2022 and 223.9 million issued as of December 31, 2021	561,181		559,766
Additional paid-in capital	1,527,756		1,519,873
Retained earnings	1,363,344		1,282,383
Accumulated other comprehensive (loss) gain	(304,210)		27,411
Treasury stock, at cost, 63.4 million shares as of June 30, 2022 and December 31, 2021	(869,856)		(869,631)
Total Shareholders' Equity	2,471,093		2,712,680
Total Liabilities and Shareholders' Equity	$	25,252,686	$	25,796,398

See Notes to Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


(in thousands, except per-share data)	Three months ended June 30				Six months ended June 30
	2022		2021		2022		2021
Interest Income
Loans, including fees	$	164,171	$	155,080	$	313,908	$	319,065
Investment securities:	24,144		19,819		46,497		39,162



Loans held for sale	260		199		501		671
Other interest income	1,724		1,575		2,394		2,711
Total Interest Income	190,299		176,673		363,300		361,609
Interest Expense
Deposits	5,796		7,982		11,401		17,584
Short-term borrowings	190		137		311		325
Long-term borrowings	5,482		6,155		11,447		16,853
Total Interest Expense	11,468		14,274		23,159		34,762
Net Interest Income	178,831		162,399		340,141		326,847
Provision for credit losses	1,500		(3,500)		(5,450)		(9,000)
Net Interest Income After Provision for Credit Losses	177,331		165,899		345,591		335,847
Non-Interest Income
Commercial banking	20,359		17,129		36,367		33,471
Consumer banking	12,472		10,860		24,146		21,614
Wealth management	18,274		17,634		37,702		34,981
Mortgage banking	3,768		2,838		8,344		16,798
Other	3,510		3,393		7,061		6,912
Non-Interest Income Before Investment Securities Gains	58,383		51,854		113,620		113,776
Investment securities gains, net	8		36		27		33,511
Total Non-Interest Income	58,391		51,890		113,647		147,287
Non-Interest Expense
Salaries and employee benefits	85,404		78,367		169,868		160,953
Data processing and software	14,685		13,932		29,000		27,493
Net occupancy	13,587		12,494		28,109		26,476
Other outside services	8,764		8,178		16,931		16,668
State taxes	3,568		4,384		6,605		8,889
Equipment	3,422		3,424		6,845		6,852
FDIC insurance	2,961		2,282		6,170		4,906
Professional fees	2,013		2,651		3,805		5,430
Marketing	1,326		1,348		2,646		2,350
Intangible amortization	177		178		353		293
Debt extinguishment	—		412		—		32,575
Merger-related expenses	1,027		—		1,428		—
Other	12,796		13,181		23,948		26,330
Total Non-Interest Expense	149,730		140,831		295,708		319,215
Income Before Income Taxes	85,992		76,958		163,530		163,919
Income taxes	16,003		11,994		29,253		25,892
Net Income	69,989		64,964		134,277		138,027
Preferred stock dividends	(2,562)		(2,562)		(5,124)		(5,153)
Net Income Available to Common Shareholders	$	67,427	$	62,402	$	129,153	$	132,874

PER SHARE:
Net income available to common shareholders (basic)	$	0.42	$	0.38	$	0.80	$	0.81
Net income available to common shareholders (diluted)	0.42		0.38		0.80		0.81
Cash dividends	0.15		0.14		0.30		0.28
See Notes to Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)


	Three months ended June 30				Six months ended June 30
	2022		2021		2022		2021

Net Income	$	69,989	$	64,964	$	134,277	$	138,027
Other Comprehensive (Loss)/Income, net of tax:
Unrealized gains (losses) on AFS investment securities
Unrealized (loss)/gain on securities	(88,352)		19,298		(242,211)		(20,701)
Reclassification adjustment for securities gains included in net income	6		(28)		21		349
Amortization of net unrealized losses on AFS securities transferred to HTM	(48,113)		(270)		(47,677)		1,517

Net unrealized gains (losses) on AFS investment securities	(136,459)		19,000		(289,867)		(18,835)
Unrealized (losses) gains on interest rate swaps used in cash flow hedges
Net unrealized holding (losses) gains arising during the period	(8,586)		2,752		(39,962)		1,158
Reclassification adjustment for net (losses) gains realized in net income	(335)		(678)		(1,842)		(791)
Net unrealized (losses) gains on interest rate swaps used in cash flow hedges	(8,921)		2,074		(41,804)		367
Defined benefit pension plan and postretirement benefits


Amortization of net unrecognized pension and postretirement items	25		289		50		578
Other Comprehensive (Loss)/Income	(145,355)		21,363		(331,621)		(17,890)
Total Comprehensive (Loss) Income	$	(75,366)	$	86,327	$	(197,344)	$	120,137

See Notes to Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

(in thousands, except per-share data)


	Preferred Stock			Common Stock			Additional		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total
	Shares	Amount		Shares	Amount		Paid-in Capital
Three months ended June 30, 2022
Balance at March 31, 2022	200	$	192,878	160,669	$	560,045	$	1,524,110	$	1,320,076	$	(158,855)	$	(868,719)	$	2,569,535
Net income									69,989						69,989
Other comprehensive loss											(145,355)				(145,355)
Common stock issued				388	1,136		(94)						(1,137)		(95)
Stock-based compensation awards							3,740								3,740

Preferred stock dividend									(2,562)						(2,562)
Common stock cash dividends - $0.15 per share									(24,159)						(24,159)
Balance at June 30, 2022	200	$	192,878	161,057	$	561,181	$	1,527,756	$	1,363,344	$	(304,210)	$	(869,856)	$	2,471,093

Three months ended June 30, 2021
Balance at March 31, 2021	200	$	192,878	162,517	$	558,116	$	1,511,101	$	1,168,491	$	25,838	$	(826,769)	$	2,629,655
Net income									64,964						64,964
Other comprehensive income											21,363				21,363

Common stock issued				471	1,369		446						(1,568)		247
Stock-based compensation awards							2,098								2,098

Preferred stock dividend									(2,562)						(2,562)
Common stock cash dividends - $0.14 per share									(22,807)						(22,807)
Balance at June 30, 2021	200	$	192,878	162,988	$	559,485	$	1,513,645	$	1,208,086	$	47,201	$	(828,337)	$	2,692,958

Six months ended June 30, 2022
Balance at December 31, 2021	200	$	192,878	160,490	$	559,766	$	1,519,873	$	1,282,383	$	27,411	$	(869,631)	$	2,712,680
Net income									134,277						134,277
Other comprehensive loss											(331,621)				(331,621)
Common stock issued				567	1,415		1,508						(225)		2,698
Stock-based compensation awards							6,375								6,375

Preferred stock dividend									(5,124)						(5,124)
Common stock cash dividends - $0.30 per share									(48,192)						(48,192)
Balance at June 30, 2022	200	$	192,878	161,057	$	561,181	$	1,527,756	$	1,363,344	$	(304,210)	$	(869,856)	$	2,471,093

Six months ended June 30, 2021
Balance at December 31, 2020	200	$	192,878	162,350	$	557,917	$	1,508,117	$	1,120,781	$	65,091	$	(827,956)	$	2,616,828
Net income									138,027						138,027
Other comprehensive loss											(17,890)				(17,890)

Common stock issued				638	1,568		1,528						(381)		2,715
Stock-based compensation awards							4,000								4,000

Preferred stock dividend									(5,153)						(5,153)
Common stock cash dividends - $0.28 per share									(45,569)						(45,569)
Balance at June 30, 2021	200	$	192,878	162,988	$

FULTON FINANCIAL CORP [FULT] Filings
FULTON FINANCIAL CORP [FULTP] Filings
10-Q	[2022-08-08]
10-Q	[2022-05-09]
10-K	[2022-02-28]
10-Q	[2021-11-08]
10-Q	[2021-08-09]
10-Q	[2021-05-07]
10-K	[2021-03-01]
10-Q	[2020-11-06]
10-Q	[2020-08-07]
10-Q	[2020-05-11]
10-K	[2020-02-21]
10-Q	[2019-11-08]
10-Q	[2019-08-07]
10-Q	[2019-05-08]
10-K	[2019-03-01]
10-Q	[2018-11-06]
10-Q	[2018-08-09]
10-Q	[2018-05-08]
10-K	[2018-03-01]
10-Q	[2017-11-03]
10-Q	[2017-08-04]
10-Q	[2017-05-05]
10-K	[2017-02-27]
10-Q	[2016-11-04]
10-Q	[2016-08-05]
10-Q	[2016-05-05]
10-K	[2016-02-26]
10-Q	[2015-11-06]
10-Q	[2015-08-07]
10-Q	[2015-05-11]
10-K	[2015-02-27]
10-Q	[2014-11-05]
10-Q	[2014-08-08]
10-Q	[2014-05-12]
10-K	[2014-03-03]
10-Q	[2013-11-08]
10-Q	[2013-08-08]
10-Q	[2013-05-09]
10-K	[2013-02-28]
10-Q	[2012-11-09]
10-Q	[2012-08-09]
10-Q	[2012-05-10]
10-K	[2012-02-29]

FULTON FINANCIAL CORP [FULT] Filings

FULTON FINANCIAL CORP [FULTP] Filings