Fulton Financial Corporation (NASDAQ:FULT) ("Fulton" or the "Corporation") reported net income available to common shareholders of $65.8 million, or $0.39 per diluted share, for the first quarter of 2023, a decrease of $13.5 million, or 17.1%, in comparison to the fourth quarter of 2022.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230418006192/en/

"Our focus remains the same - the long-term financial wellbeing of our company, our customers and our communities," said Curtis J. Myers, Chairman and CEO of Fulton. "During the quarter, we took actions to fortify our balance sheet, increase our liquidity, diversify our funding and enhance our reserves. By taking these actions, monitoring capital and communicating with customers, we've positioned ourselves to continue serving our stakeholders and growing our company."

Net Interest Income and Balance Sheet

Net interest income for the first quarter of 2023 was $215.6 million, a decrease of $10.3 million in comparison to the fourth quarter of 2022. The net interest margin for the first quarter of 2023 decreased 16 basis points, to 3.53%, in comparison to 3.69% in the fourth quarter of 2022.

The linked-quarter decrease in net interest income was primarily due to a shift in funding mix from lower-cost demand deposits to higher-cost borrowings, time deposits and brokered deposits. An increase in the average balance for net loans of $458.6 million and higher loan yields in the first quarter of 2023 primarily contributed to an increase in interest income of $22.0 million to $289.8 million in comparison to $267.8 million in the fourth quarter of 2022. Interest expense from interest-bearing liabilities for the first quarter of 2023 increased by $32.3 million to $74.2 million in comparison to $41.9 million in the fourth quarter of 2022. The linked-quarter increase in interest expense in the first quarter of 2023 was primarily due to a decline in the average balance of noninterest-bearing deposits of $669.1 million and an increase in the average balance for higher-cost borrowings and other interest-bearing liabilities of $1.0 billion in comparison to the fourth quarter of 2022.

For the first quarter of 2023, net interest income was $215.6 million, an increase of $54.3 million, or 33.6%, in comparison to the first quarter of 2022. Interest income for the first quarter of 2023 increased by $116.8 million to $289.8 million in comparison to $173.0 million in the first quarter of 2022 primarily driven by rising interest rates resulting in increases in interest income from net loans, investment securities and other interest-earning assets of $110.9 million, $3.2 million and $2.7 million, respectively. Increases in the average balances for net loans and investment securities in the first quarter of 2023 of $2,080.0 million and $63.3 million, respectively, driven in part by the Prudential Bancorp, Inc. ("Prudential Bancorp") acquisition, also contributed to the increase in interest income. Interest expense from interest-bearing liabilities for the first quarter of 2023 increased by $62.5 million to $74.2 million in comparison to $11.7 million in the first quarter of 2022 primarily driven by rising interest rates resulting in increases in interest expense from interest-bearing deposits and borrowings and other interest-bearing liabilities of $36.0 million and $26.5 million, respectively. An increase in the average balance for borrowings and other interest-bearing liabilities of $2.0 billion in the first quarter of 2023 in comparison to the first quarter of 2022 also contributed to the increase in interest expense.

Total average interest-earning assets for the first quarter of 2023 was $25.2 billion, an increase of $450.6 million from the fourth quarter of 2022 primarily driven by the aforementioned increase in average net loans of $458.6 million and an increase in average other interest-earning assets of $33.0 million, partially offset by a decrease in average investment securities of $41.0 million.

Total average interest-earning assets for the first quarter of 2023 increased by $1.3 billion from the first quarter of 2022. Average net loans for the first quarter of 2023 were $20.5 billion, an increase of $2.1 billion from the same period in 2022. Compared to the first quarter of 2022, average other interest-earning assets decreased $793.6 million and average investment securities increased $63.3 million in the first quarter of 2023.

Total average interest-bearing liabilities increased $1.2 billion, to $17.0 billion, in the first quarter of 2023 in comparison to $15.7 billion in the fourth quarter of 2022 driven by increases in the average balance for borrowings and other interest-bearing liabilities and the average balance for total interest-bearing deposits of $1.0 billion and $215.8 million, respectively.

Total average interest-bearing liabilities for the first quarter of 2023 increased $1.9 billion in comparison to $15.1 billion in the first quarter of 2022, driven by an increase in the average balance for borrowings and other interest-bearing liabilities of $2.0 billion.

Asset Quality

In the first quarter of 2023, a provision for credit losses of $24.5 million was recorded in comparison to a provision for credit losses of $14.5 million in the fourth quarter of 2022, and a negative provision for credit losses of $7.0 million in the first quarter of 2022. The linked-quarter increase in the provision for credit losses of $10.0 million was primarily due to loan growth and changes to the macroeconomic outlook.

Non-performing assets were $167.9 million, or 0.62% of total assets, at March 31, 2023, in comparison to $177.7 million, or 0.66% of total assets, at December 31, 2022, and $163.0 million, or 0.64% of total assets, at March 31, 2022.

Net charge-offs for the first quarter of 2023 were 0.27% of total average loans in comparison to 0.23% and negative 0.02% in the fourth quarter of 2022 and the first quarter of 2022, respectively. Net charge-offs of $14.0 million for the first quarter of 2023 were primarily due to a charge-off of $13.3 million for a commercial office loan due to credit-related concerns; the same loan that received a partial charge-off in the fourth quarter of 2022.

Non-interest Income

Non-interest income before investment securities gains in the first quarter of 2023 was $51.7 million, a decrease of $2.6 million, or 4.8%, from the fourth quarter of 2022. The decrease in non-interest income was driven primarily by decreases in commercial banking income, income from equity method investments, reflected in other income, and consumer banking fees of $1.1 million, $1.0 million and $0.9 million, respectively, partially offset by an increase in wealth management revenues of $0.5 million.

Compared to the first quarter of 2022, non-interest income before investment securities gains in the first quarter of 2023 decreased $3.5 million, or 6.3%, from $55.2 million. The decrease in non-interest income was primarily due to decreases of $2.6 million in mortgage banking income due to lower loan sale volumes and lower spreads, $1.4 million in wealth management revenues primarily due to market performance and $1.1 million from lower income from equity method investments, reflected in other income, partially offset by an increase of $1.5 million in commercial banking income.

Non-interest Expense

Non-interest expense was $159.6 million in the first quarter of 2023, a decrease of $7.0 million, or 4.2%, compared to $166.6 million in the fourth quarter of 2022, which excludes merger-related expenses of $1.9 million. The decline was primarily due to decreases of $3.5 million in salaries and employee benefits expense, $0.7 million in other outside services expense, $0.6 million in professional fees and $0.5 million in marketing expense, partially offset by a $1.6 million increase in FDIC insurance expense primarily due to the adoption of a final rule to increase base deposit insurance assessment rates effective January 1, 2023. Additional contributors of the decline in noninterest expense were decreases of $1.2 million in charitable contributions, $1.1 million in other real estate owned assets due to gains on sales recorded in the first quarter of 2023 and $0.8 million in contingent liabilities, in each case, reflected in other expense.

Compared to the first quarter of 2022, non-interest expense, excluding merger-related expenses of $0.4 million in the first quarter of 2022, increased $14.0 million, or 9.6%. The increase was primarily due to increases of $4.8 million in salaries and employee benefits expense, $2.0 million in other outside services expense, $1.6 million in FDIC insurance expense, primarily due to the adoption of a final rule to increase base deposit insurance assessment rates effective January 1, 2023, $1.5 million in data processing and software expense, $0.6 million in professional fees, $0.6 million in marketing expense and $0.5 million in intangible amortization expense due to the acquisition of Prudential Bancorp. Additional drivers of the increase in noninterest expense were an unfavorable change in owned asset expense due to a $1.5 million gain on sale recorded on owned assets in the first quarter of 2022 and a $0.8 million contingent liability recorded in the first quarter of 2023, in each case, reflected in other expense.

Income Tax Expense

For the first quarter of 2023, the effective tax rate was 17.9%, in comparison to 17.3% for the full-year of 2022.

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

Safe Harbor Statement

This press 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, including future credit losses, 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, the statements 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, 2022 and other current and periodic reports, which have been, or will be, filed with the Securities and Exchange Commission (the "SEC") and are, or will be, available in the Investor Relations section of the Corporation's website (www.fultonbank.com) and on the SEC's website (www.sec.gov).

Non-GAAP Financial Measures

The Corporation uses certain financial measures in this press release that have been derived from methods other than generally accepted accounting principles ("GAAP"). These non-GAAP financial measures are reconciled to the most comparable GAAP measures in tables at the end of this press release.

FULTON FINANCIAL CORPORATION
SUMMARY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
dollars in thousands, except per share data
	Three months ended
	Mar 31			Dec 31			Sep 30			Jun 30			Mar 31
	2023			2022			2022			2022			2022
Ending Balances
Investment securities	$	3,950,101		$	3,968,023		$	3,936,694		$	4,117,801		$	4,288,674
Net loans		20,670,188			20,279,547			19,695,199			18,920,950			18,476,119
Total assets		27,112,176			26,931,702			26,146,042			25,252,686			25,598,310
Deposits		21,316,584			20,649,538			21,376,554			21,143,866			21,541,174
Shareholders' equity		2,618,998			2,579,757			2,471,159			2,471,093			2,569,535

Average Balances
Investment securities		3,964,615			3,936,579			4,254,216			4,216,507			4,228,827
Net loans		20,463,096			20,004,513			19,563,825			18,637,175			18,383,118
Total assets		26,900,653			26,386,355			26,357,095			25,578,432			25,622,462
Deposits		20,574,323			21,027,656			21,788,052			21,523,713			21,480,183
Shareholders' equity		2,613,316			2,489,148			2,604,057			2,531,346			2,688,834

Income Statement
Net interest income		215,587			225,911			215,582			178,831			161,310
Provision for credit losses		24,544			14,513			18,958			1,500			(6,950	)
Non-interest income		51,753			54,321			59,162			58,391			55,256
Non-interest expense		159,616			168,462			169,558			149,730			145,978
Income before taxes		83,180			97,257			86,228			85,992			77,538
Net income available to common shareholders		65,752			79,271			68,309			67,427			61,726
Pre-provision net revenue⁽¹⁾		108,375			115,049			113,631			89,384			71,842

Per Share
Net income available to common shareholders (basic)	$	0.39		$	0.47		$	0.41		$	0.42		$	0.38
Net income available to common shareholders (diluted)	$	0.39		$	0.47		$	0.40		$	0.42		$	0.38
Operating net income available to common shareholders⁽¹⁾	$	0.39		$	0.48		$	0.48		$	0.42		$	0.38
Cash dividends	$	0.15		$	0.21		$	0.15		$	0.15		$	0.15
Common shareholders' equity	$	14.67		$	14.24		$	13.61		$	14.15		$	14.79
Common shareholders' equity (tangible)⁽¹⁾	$	11.26		$	10.90		$	10.26		$	10.81		$	11.44
Weighted average shares (basic)		166,605			167,504			167,353			160,920			160,588
Weighted average shares (diluted)		168,401			169,136			168,781			162,075			161,911

⁽¹⁾ Non-GAAP financial measure. Refer to the calculation on the page titled "Reconciliation of Non-GAAP Measures" at the end of this press release.

	Three months ended
	Mar 31			Dec 31			Sep 30			Jun 30			Mar 31
	2023			2022			2022			2022			2022
Asset Quality
Net charge-offs (recoveries) to average loans		0.27	%		0.23	%		0.01	%		(0.08	) %		(0.02	) %
Non-performing loans to total loans		0.80	%		0.85	%		0.98	%		0.92	%		0.87	%
Non-performing assets to total assets		0.62	%		0.66	%		0.76	%		0.71	%		0.64	%
ACL - loans⁽¹⁾ to total loans		1.35	%		1.33	%		1.35	%		1.31	%		1.32	%
ACL - loans⁽¹⁾ to non-performing loans		169	%		157	%		138	%		143	%		151	%

Profitability
Return on average assets		1.03	%		1.23	%		1.07	%		1.10	%		1.02	%
Operating return on average assets⁽²⁾		1.04	%		1.26	%		1.25	%		1.11	%		1.02	%
Return on average common shareholders' equity		11.02	%		13.70	%		11.24	%		11.57	%		10.03	%
Return on average common shareholders' equity (tangible)⁽²⁾		14.46	%		18.59	%		17.31	%		15.23	%		12.88	%
Net interest margin		3.53	%		3.69	%		3.54	%		3.04	%		2.78	%
Efficiency ratio⁽²⁾		58.5	%		58.1	%		57.8	%		61.4	%		65.8	%
Non-interest expenses to total average assets		2.41	%		2.53	%		2.55	%		2.35	%		2.31	%
Operating non-interest expenses to total average assets⁽²⁾		2.40	%		2.48	%		2.43	%		2.32	%		2.29	%

Capital Ratios
Tangible common equity ratio ("TCE")⁽²⁾		7.0	%		6.9	%		6.7	%		7.0	%		7.3	%
TCE ratio, (excluding AOCI)⁽²⁾⁽⁴⁾		8.3	%		8.2	%		8.3	%		8.2	%		7.9	%
Tier 1 leverage ratio⁽³⁾		9.3	%		9.5	%		9.2	%		9.1	%		8.9	%
Common equity Tier 1 capital ratio⁽³⁾		9.8	%		10.0	%		10.0	%		9.9	%		10.0	%
Tier 1 risk-based capital ratio⁽³⁾		10.7	%		10.9	%		10.9	%		10.8	%		10.9	%
Total risk-based capital ratio⁽³⁾		13.5	%		13.6	%		13.6	%		13.7	%		13.8	%

(1) "ACL - loans" relates to the allowance for credit losses ("ACL") specifically on "Net Loans" and does not include the ACL related to off-balance-sheet ("OBS") credit exposures.
(2) Non-GAAP financial measure. Refer to the calculation on the page titled "Reconciliation of Non-GAAP Measures" at the end of this press release.
(3) Regulatory capital ratios as of March 31, 2023 are preliminary and prior periods are actual.
(4) Tangible common equity ("TCE") ratio, excluding accumulated other comprehensive income ("AOCI").

FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED ENDING BALANCE SHEETS (UNAUDITED)
dollars in thousands

		Mar 31			Dec 31			Sep 30			Jun 30			Mar 31
		2023			2022			2022			2022			2022
ASSETS
	Cash and due from banks	$	129,003		$	126,898		$	143,465		$	158,605		$	161,462
	Other interest-earning assets		545,355			685,209			467,164			383,715			1,054,232
	Loans held for sale		6,507			7,264			14,411			17,528			27,675
	Investment securities		3,950,101			3,968,023			3,936,694			4,117,801			4,288,674
	Net loans		20,670,188			20,279,547			19,695,199			18,920,950			18,476,119
	Less: ACL - loans⁽¹⁾		(278,695	)		(269,366	)		(266,838	)		(248,564	)		(243,705	)
	Loans, net		20,391,493			20,010,181			19,428,361			18,672,386			18,232,414
	Net premises and equipment		216,059			225,141			221,496			211,639			218,257
	Accrued interest receivable		90,267			91,579			72,821			64,457			55,102
	Goodwill and intangible assets		563,502			560,824			561,495			537,700			537,877
	Other assets		1,219,889			1,256,583			1,300,135			1,088,855			1,022,617
	Total Assets	$	27,112,176		$	26,931,702		$	26,146,042		$	25,252,686		$	25,598,310
LIABILITIES AND SHAREHOLDERS' EQUITY
	Deposits	$	21,316,584		$	20,649,538		$	21,376,554		$	21,143,866		$	21,541,174
	Borrowings		2,446,770			2,871,207			1,424,681			1,013,315			1,008,934
	Other liabilities		729,824			831,200			873,648			624,412			478,667
	Total Liabilities		24,493,178			24,351,945			23,674,883			22,781,593			23,028,775
	Shareholders' equity		2,618,998			2,579,757			2,471,159			2,471,093			2,569,535
	Total Liabilities and Shareholders' Equity	$	27,112,176		$	26,931,702		$	26,146,042		$	25,252,686		$	25,598,310

LOANS, DEPOSITS AND BORROWINGS DETAIL:
Loans, by type:
	Real estate - commercial mortgage	$	7,746,920		$	7,693,835		$	7,554,509		$	7,417,036		$	7,289,376
	Commercial and industrial		4,596,096			4,473,004			4,240,865			4,170,975			4,156,562
	Real estate - residential mortgage		4,880,919			4,737,279			4,574,228			4,203,827			3,946,741
	Real estate - home equity		1,074,712			1,102,838			1,110,103			1,108,808			1,098,171
	Real estate - construction		1,326,754			1,269,925			1,273,097			1,177,446			1,210,340
	Consumer		730,775			699,179			633,666			538,747			481,551
	Leases and other loans⁽²⁾		314,012			303,487			308,731			304,111			293,378
	Total Net Loans	$	20,670,188		$	20,279,547		$	19,695,199		$	18,920,950		$	18,476,119
Deposits, by type:
	Noninterest-bearing demand	$	6,403,484		$	7,006,388		$	7,372,896		$	7,530,777		$	7,528,391
	Interest-bearing demand		5,478,237			5,410,903			5,676,600			5,403,805			5,625,286
	Savings		6,579,806			6,434,621			6,563,003			6,406,051			6,479,196
	Total demand and savings		18,461,527			18,851,912			19,612,499			19,340,633			19,632,873
	Brokered		960,919			208,416			226,883			243,172			248,833
	Time		1,894,138			1,589,210			1,537,172			1,560,061			1,659,468
	Total Deposits	$	21,316,584		$	20,649,538		$	21,376,554		$	21,143,866		$	21,541,174
Borrowings, by type:
	Federal funds purchased	$	525,000		$	191,000		$	136,000		$	20,000		$	—
	Federal Home Loan Bank advances		747,000			1,250,000			265,500			—			—
	Senior debt and subordinated debt		539,814			539,634			539,461			555,748			555,594
	Other borrowings		634,956			890,573			483,720			437,567			453,340
	Total Borrowings	$	2,446,770		$	2,871,207		$	1,424,681		$	1,013,315		$	1,008,934


(1) "ACL - loans" relates to the ACL specifically on "Net Loans" and does not include the ACL related to OBS credit exposures.
(2) Includes equipment lease financing, overdraft and net origination fees and costs.

FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
dollars in thousands, except per share
		Three Months Ended
		Mar 31		Dec 31			Sep 30			Jun 30		Mar 31
		2023		2022			2022			2022		2022
Interest Income:
	Interest income	$	289,820	$	267,847		$	233,691		$	190,299	$	173,001
	Interest expense		74,233		41,936			18,109			11,468		11,691
	Net Interest Income		215,587		225,911			215,582			178,831		161,310
	Provision for credit losses		24,544		14,513			18,958			1,500		(6,950	)
	Net Interest Income after Provision		191,043		211,398			196,624			177,331		168,260
Non-Interest Income:
	Commercial banking:
	Merchant and card		6,834		7,223			7,601			7,355		6,097
	Cash management		5,515		5,756			6,483			6,062		5,428
	Capital markets		2,344		2,627			4,060			3,893		1,676
	Other commercial banking		2,820		2,998			2,664			3,049		2,807
	Total commercial banking		17,513		18,604			20,808			20,359		16,008
	Consumer banking:
	Card		6,243		6,331			6,278			6,067		5,796
	Overdraft		2,733		3,364			4,463			3,881		3,772
	Other consumer banking		2,241		2,380			2,534			2,524		2,106
	Total consumer banking		11,217		12,075			13,275			12,472		11,674
	Wealth management		18,062		17,531			17,610			18,274		19,428
	Mortgage banking		1,970		2,140			3,720			3,768		4,576
	Other		2,968		3,972			3,802			3,510		3,551
	Non-interest income before investment securities gains (losses)		51,730		54,322			59,215			58,383		55,237
	Investment securities gains (losses), net		23		(1	)		(53	)		8		19
	Total Non-Interest Income		51,753		54,321			59,162			58,391		55,256
Non-Interest Expense:
	Salaries and employee benefits		89,283		92,733			94,283			85,404		84,464
	Data processing and software		15,796		15,448			15,807			14,685		14,315
	Net occupancy		14,438		14,061			14,025			13,587		14,522
	Other outside services		10,126		10,860			9,361			8,764		8,167
	FDIC insurance		4,795		3,219			3,158			2,961		3,209
	Equipment		3,389		3,640			3,548			3,422		3,423
	Professional fees		2,392		2,945			2,373			2,013		1,792
	Marketing		1,886		2,380			1,859			1,326		1,320
	Intangible amortization		674		688			690			177		176
	Merger-related expenses		—		1,894			7,006			1,027