LANCASTER, Pa., July 16, 2024 /PRNewswire/ -- Fulton Financial Corporation (NASDAQ:FULT) ("Fulton" or the "Corporation") reported net income available to common shareholders of $92.4 million, or $0.52 per diluted share, for the second quarter of 2024, an increase of $33.0 million, or $0.16 per share, in comparison to the first quarter of 2024. Operating net income available to common shareholders for the three months ended June 30, 2024 was $82.5 million, or $0.47 per diluted share(1), an increase of $17.1 million, or $0.07 per share in comparison to the first quarter of 2024. "The second quarter was an extraordinary quarter for Fulton. I want to personally thank both our new Republic teammates and our dedicated Fulton team for an exceptional effort," said Curtis J. Myers Chairman and CEO of Fulton Financial Corporation. "Fulton's solid performance, steady business trends and stable asset quality were supplemented by a meaningful contribution from the Republic transaction." Republic Transaction On April 26, 2024, the Corporation announced that its wholly owned banking subsidiary, Fulton Bank, National Association ("Fulton Bank"), acquired substantially all of the assets and assumed substantially all of the deposits and certain liabilities of Republic First Bank, doing business as Republic Bank ("Republic Bank"), from the Federal Deposit Insurance Corporation (the "FDIC"), as receiver for Republic Bank (the "Acquisition"), pursuant to the terms of the Purchase and Assumption Agreement - Whole Bank, All Deposits, effective as of April 26, 2024 (the "Acquisition Date"), among the FDIC, as receiver of Republic Bank, the FDIC and Fulton Bank. The Acquisition included total assets with preliminary fair values of approximately $4.8 billion including total loans with preliminary fair values of approximately $2.5 billion and investments with a fair value of $1.9 billion. Following the Acquisition, the Corporation sold the acquired investments with a portion of the proceeds used to repay $1.4 billion of assumed borrowings. In the Acquisition, the Corporation assumed $4.1 billion of deposits without a premium. Additionally, the Corporation received $809.9 million in cash from the FDIC and $208.5 million in cash reflected on Republic Bank's balance sheet. (1) Financial measure derived by methods other than generally accepted accounting principles ("GAAP"). Refer to the calculation on the page titled "Reconciliation of Non-GAAP Measures" at the end of the press release. Financial Highlights Second quarter of 2024 results were impacted by the following items: Preliminary gain on acquisition of $47.4 million (net of tax). Core deposit intangible of $92.6 million in connection with the Acquisition resulting in intangible amortization expense of $4.1 million for the quarter. Provision for credit losses of $23.4 million related to non-purchased credit deteriorated loans acquired in the Acquisition. Acquisition-related expenses of $13.8 million. Pre-tax gain of $20.3 million in connection with a sale-leaseback transaction (the "Sale-Leaseback Transaction") involving 40 Fulton Bank financial center office locations. Restructured a portion of the available-for-sale investment portfolio and realized a pre-tax loss of $20.3 million on the sale of $356.4 million of investment securities with the proceeds reinvested in higher-yielding securities of a similar type and similar duration. FultonFirst implementation and asset disposal costs of $6.3 million. Issued 19,166,667 shares of common stock at $15.00 per share resulting in proceeds of approximately $273.0 million net of issuance costs. The following items highlight notable changes in the components of net income in the second quarter of 2024 compared to the first quarter of 2024: Net interest income totaled $241.7 million, an increase of $34.8 million. The Acquisition contributed approximately $30.7 million to the increase. Net interest margin was 3.43%, an increase of 11 basis points, entirely due to the Acquisition. Non-interest income before investment securities gains (losses) was $113.3 million compared to $57.1 million in the first quarter of 2024. The increase was primarily due to a $47.4 million gain on acquisition (net of tax) as well as $2.8 million from Republic Bank's operations. The remaining $6.1 million increase in non-interest income included a $1.3 million decrease in losses from equity method investments, a $0.9 million increase in merchant fee income due to seasonality and a merchant fee increase during the quarter, a $0.9 million increase in mortgage banking income from higher loan volumes and higher spreads, an $0.8 million increase in wealth management revenues due to an increase in assets under management in the brokerage business due to equity market returns and organic sales results, a $0.6 million increase in cash management fee income due to an increase in account analysis fees with customers electing to move funds to interest-bearing accounts along with a pricing increase and a $0.3 million increase in gains from Small Business Administration loan sales. Excluding the $20.3 million gain on the Sale-Leaseback Transaction, reflected in other expense, non-interest expense was $219.8 million compared to $177.6 million in the first quarter of 2024. The increase was largely due to $13.8 million of Acquisition-related expenses and $21.1 million from Republic Bank's operations. The remaining increase of $7.3 million was primarily due to a $6.7 million increase in salaries and benefits expense as a result of an increase in variable incentive expenses, the impact of the annual merit increases and approximately $1.0 million of severance costs related to the FultonFirst initiative. Balance Sheet Summary Net loans totaled $24.1 billion, an increase of $2.7 billion compared to $21.4 billion as of March 31, 2024. The increase was primarily due to the Acquisition resulting in an increase of $2.5 billion based on preliminary fair values as of the Acquisition Date. The reduction in fair value on the acquired loans as of the Acquisition Date was $378.9 million, which included an adjustment for interest rates of $299.5 million, an adjustment for credit of $55.9 million on purchased credit deteriorated ("PCD") loans and an adjustment for credit of $23.4 million for non-PCD loans. Excluding the impact from the day 1 PCD credit-related adjustment of $55.9 million and purchase accounting accretion of $10.4 million, net loans acquired from Republic Bank declined approximately $33.1 million subsequent to the Acquisition Date. Excluding the Acquisition, net loans increased $123.6 million largely due to increases of $102.9 million and $63.8 million in residential mortgage loans and construction loans, respectively, partially offset by a decrease of $25.7 million in consumer loans and a $19.8 million decrease in leases and other loans. Deposits totaled $25.6 billion, an increase of $3.8 billion compared to $21.7 billion as of March 31, 2024. The increase was primarily due to the Acquisition resulting in an increase of $3.6 billion based on preliminary fair values as of the Acquisition Date. Deposits assumed in the Acquisition declined approximately $357.3 million subsequent to the Acquisition Date. Excluding the Acquisition, deposits increased $62.7 million largely due to increases of $180.1 million, $159.4 million and $102.8 million in interest-bearing demand deposits, time deposits and savings deposits, respectively, partially offset by decreases of $190.8 million in brokered deposits and $188.8 million in noninterest-bearing demand deposits. Provision for Credit Losses and Asset Quality The provision for credit losses was $32.1 million in the second quarter of 2024 compared to $10.9 million in the first quarter of 2024. The increase was primarily related to the Acquisition, which included a provision for credit losses of $23.4 million for non-PCD loans. Excluding the Acquisition, the provision declined $2.2 million primarily due to a $1.4 million reduction in the reserve for unfunded commitments. Non-performing assets were $163.8 million, or 0.52% of total assets, at June 30, 2024, in comparison to $156.4 million, or 0.57% of total assets, at March 31, 2024. The dollar increase was largely due to the Acquisition. Net charge-offs for the second quarter of 2024 were 0.19% of total average loans in comparison to 0.16% in the first quarter of 2024. The allowance for credit losses attributable to net loans totaled $375.9 million, or 1.56% of total loans at June 30, 2024, an increase of $78.1 million. The Acquisition resulted in a $79.4 million increase in the allowance for credit losses. 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, 2023, Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 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 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 and shares data) Three months ended Jun 30 Mar 31 Dec  31 Sep 30 June 30 2024 2024 2023 2023 2023 Ending Balances Investment securities $   4,184,027 $    3,783,392 $   3,666,274 $   3,698,601 $   3,867,334 Net loans 24,106,297 21,444,483 21,351,094 21,177,508 21,044,685 Total assets 31,769,813 27,642,957 27,571,915 27,375,177 27,403,163 Deposits 25,559,654 21,741,950 21,537,623 21,421,589 21,206,540 Shareholders' equity 3,101,609 2,757,679 2,760,139 2,566,693 2,642,152 Average Balances Investment securities 4,043,136 3,672,844 3,665,261 3,834,824 3,916,130 Net loans 23,345,914 21,370,033 21,255,779 21,121,277 20,866,235 Total assets 30,774,891 27,427,626 27,397,671 27,377,836 27,235,567 Deposits 24,642,954 21,378,754 21,476,548 21,357,295 21,207,143 Shareholders' equity 2,952,671 2,766,945 2,618,024 2,645,977 2,647,464 Income Statement Net interest income 241,720 206,937 212,006 213,842 212,852 Provision for credit losses 32,056 10,925 9,808 9,937 9,747 Non-interest income 92,994 57,140 59,378 55,961 60,585 Non-interest expense 199,488 177,600 180,552 171,020 168,018 Income before taxes 103,170 75,552 81,024 88,846 95,672 Net income available to common shareholders 92,413 59,379 61,701 69,535 77,045 Per Share Net income available to common shareholders (basic) $0.53 $0.36 $0.38 $0.42 $0.46 Net income available to common shareholders (diluted) $0.52 $0.36 $0.37 $0.42 $0.46 Operating net income available to common shareholders(1) $0.47 $0.40 $0.42 $0.43 $0.47 Cash dividends $0.17 $0.17 $0.17 $0.16 $0.16 Common shareholders' equity $16.00 $15.82 $15.67 $14.47 $14.75 Common shareholders' equity (tangible)(1) $12.43 $12.37 $12.25 $11.05 $11.36 Weighted average shares (basic) 175,305 162,706 163,975 164,566 165,854 Weighted average shares (diluted) 176,934 164,520 165,650 166,023 167,191 (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 Jun 30 Mar 31 Dec  31 Sep 30 June 30 2024 2024 2023 2023 2023 Asset Quality Net charge-offs to average loans 0.19 % 0.16 % 0.15 % 0.10 % 0.04 % Non-performing loans to total net loans 0.67 % 0.73 % 0.72 % 0.67 % 0.70 % Non-performing assets to total assets 0.52 % 0.57 % 0.56 % 0.52 % 0.55 % ACL - loans(1) to total loans 1.56 % 1.39 % 1.37 % 1.38 % 1.37 % ACL - loans(1) to non-performing loans 232 % 191 % 191 % 208 % 195 % Profitability Return on average assets 1.24 % 0.91 % 0.93 % 1.04 % 1.17 % Operating return on average assets(2) 1.11 % 1.00 % 1.03 % 1.08 % 1.18 % Return on average common shareholders' equity 13.47 % 9.28 % 10.09 % 11.25 % 12.59 % Operating return on average common shareholders' equity (tangible)(2) 15.56 % 13.08 % 14.68 % 15.17 % 16.52 % Net interest margin 3.43 % 3.32 % 3.36 % 3.40 % 3.40 % Efficiency ratio(2) 62.6 % 63.2 % 62.0 % 61.5 % 60.1 % Non-interest expense to total average assets 2.61 % 2.60 % 2.61 % 2.48 % 2.47 % Operating non-interest expense to total average assets(2) 2.55 % 2.49 % 2.47 % 2.47 % 2.46 % Capital Ratios(3) Tangible common equity ratio ("TCE")(2) 7.3 % 7.4 % 7.4 % 6.8 % 7.0 % Tier 1 leverage ratio 9.0 % 9.3 % 9.5 % 9.4 % 9.3 % Common equity Tier 1 capital ratio 10.3 % 10.3 % 10.3 % 10.3 % 10.1 % Tier 1 risk-based capital ratio 11.1 % 11.1 % 11.2 % 11.1 % 11.0 % Total risk-based capital ratio 13.8 % 14.0 % 14.0 % 14.0 % 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 June 30, 2024 are preliminary estimates and prior periods are actual.   FULTON FINANCIAL CORPORATION CONDENSED CONSOLIDATED ENDING BALANCE SHEETS (UNAUDITED) (dollars in thousands) Jun 30 Mar 31 Dec  31 Sep 30 Jun 30 2024 2024 2023 2023 2023 ASSETS Cash and due from banks $     333,238 $     247,581 $     300,343 $     304,042 $     123,779 Other interest-earning assets 1,188,341 231,389 373,772 222,781 505,141 Loans held for sale 26,822 10,624 15,158 20,368 14,673 Investment securities 4,184,027 3,783,392 3,666,274 3,698,601 3,867,334 Net loans 24,106,297 21,444,483 21,351,094 21,177,508 21,044,685 Less: ACL - loans(1) (375,941) (297,888) (293,404) (292,739) (287,442)    Loans, net 23,730,356 21,146,595 21,057,690 20,884,769 20,757,243 Net premises and equipment 180,642 213,541 222,881 215,626 216,322 Accrued interest receivable 120,752 107,089 107,972 101,624 96,991 Goodwill and intangible assets 648,026 560,114 560,687 561,284 561,885 Other assets 1,357,609 1,342,632 1,267,138 1,366,082 1,259,795     Total Assets $ 31,769,813 $ 27,642,957 $ 27,571,915 $ 27,375,177 $ 27,403,163 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits $ 25,559,654 $ 21,741,950 $ 21,537,623 $ 21,421,589 $ 21,206,540 Borrowings 2,178,597 2,296,040 2,487,526 2,370,112 2,719,114 Other liabilities 929,953 847,288 786,627 1,016,783 835,357     Total Liabilities 28,668,204 24,885,278 24,811,776 24,808,484 24,761,011 Shareholders' equity 3,101,609 2,757,679 2,760,139 2,566,693 2,642,152     Total Liabilities and Shareholders' Equity $ 31,769,813 $ 27,642,957 $ 27,571,915 $ 27,375,177 $ 27,403,163 LOANS, DEPOSITS AND BORROWINGS DETAIL: Loans, by type: Real estate - commercial mortgage $  9,289,770 $  8,252,117 $  8,127,728 $  8,106,300 $  7,846,861 Commercial and industrial 4,967,796 4,467,589 4,545,552 4,577,334 4,599,759 Real estate - residential mortgage 6,248,856 5,395,720 5,325,923 5,279,681 5,147,262 Real estate - home equity 1,120,878 1,040,335 1,047,184 1,045,438 1,061,891 Real estate - construction 1,463,799 1,249,199 1,239,075 1,078,263 1,308,564 Consumer 692,086 698,421 729,318 743,976 763,530 Leases and other loans(2) 323,112 341,102 336,314 346,516 316,818 Total Net Loans $ 24,106,297 $ 21,444,483 $ 21,351,094 $ 21,177,508 $ 21,044,685 Deposits, by type: Noninterest-bearing demand $  5,609,383 $  5,086,514 $  5,314,094 $  5,575,374 $  5,865,855 Interest-bearing demand 7,478,077 5,521,017 5,722,695 5,757,487 5,543,320 Savings 7,563,495 6,846,038 6,616,901 6,707,729 6,646,448      Total demand and savings 20,650,955 17,453,569 17,653,690 18,040,590 18,055,623 Brokered 995,975 1,152,427 1,144,692 941,059 949,259 Time 3,912,724 3,135,954 2,739,241 2,439,940 2,201,658 Total Deposits $ 25,559,654 $ 21,741,950 $ 21,537,623 $ 21,421,589 $ 21,206,540 Borrowings, by type: Federal funds purchased $              — $              — $     240,000 $     544,000 $     555,000 Federal Home Loan Bank advances 750,000 900,000 1,100,000 730,000 1,165,000 Senior debt and subordinated debt 535,741 535,566 535,384 540,174 539,994 Other borrowings 892,856 860,474 612,142 555,938 459,120 Total Borrowings $  2,178,597 $  2,296,040 $  2,487,526 $  2,370,112 $  2,719,114 (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 and share data) Three months ended Six months ended Jun 30 Mar 31 Dec  31 Sep 30 June 30 Jun 30 2024 2024 2023 2023 2023 2024 2023 Net Interest Income: Interest income $ 400,506 $ 339,666 $ 338,134 $ 330,371 $ 314,912 $ 740,172 $ 604,732 Interest expense 158,786 132,729 126,128 116,529 102,060 291,515 176,293     Net Interest Income 241,720 206,937 212,006 213,842 212,852 448,657 428,439 Provision for credit losses 32,056 10,925 9,808 9,937 9,747 42,981 34,291     Net Interest Income after Provision 209,664 196,012 202,198 203,905 203,105 405,676 394,148 Non-Interest Income: Wealth management 20,990 20,155 19,388 19,413 18,678 41,144 36,740 Commercial banking:    Merchant and card 7,798 6,808 7,045 7,626 7,700 14,607 14,534    Cash management 6,966 6,305 6,030 5,960 5,835 13,271 11,350    Capital markets 2,585 2,341 4,258 2,960 6,092 4,926 8,436    Other commercial banking 4,061 3,375 3,447 3,176 3,518 7,434 6,338 Total commercial banking 21,410 18,829 20,780 19,722 23,145 40,238 40,658 Consumer banking:   Card 8,305 6,628 6,739 6,770 6,592 14,933 12,835   Overdraft 3,377 2,786 2,991 2,996 2,696 6,163 5,429   Other consumer banking 2,918 2,254 2,357 2,407 2,432 5,172 4,673 Total consumer banking 14,600 11,668 12,087 12,173 11,720 26,268 22,937 Mortgage banking 3,951 3,090 2,288 3,190 2,940 7,041 4,910 Gain on acquisition, net of tax 47,392 — — — — 47,392 — Other 4,933 3,398 5,587 1,463 4,106 8,332 7,075 Non-interest income before investment securities gains (losses) 113,276 57,140 60,130 55,961 60,589 170,415 112,320 Investment securities gains (losses), net (20,282) — (752) — (4) (20,282) 19     Total Non-Interest Income 92,994 57,140 59,378 55,961 60,585 150,133 112,339 Non-Interest Expense: Salaries and employee benefits 110,630 95,481 97,275 96,757 94,102 206,111 183,385 Data processing and software 20,357 17,661 16,985 16,914 16,776 38,018 32,571 Net occupancy 17,793 16,149 14,647 14,561 14,374 33,943 28,812 Other outside services 16,933 13,283