FULT Fulton Financial Corporation

• Diluted earnings per share for the third quarter of 2017 were 28 cents, a 7.7 percent increase from the second quarter of 2017 and a 16.7 percent increase from the third quarter of 2016. Net income was $48.9 million, an increase of 7.6 percent and 17.9 percent, compared to the second quarter of 2017 and third quarter of 2016, respectively.
• Pre-provision net revenue of $65.5 million was 4.1% higher than the second quarter of 2017 and 11.3% higher than the third quarter of 2016.
• Net interest income for the third quarter of 2017 increased $5.2 million, or 3.7 percent, compared to the second quarter of 2017 and $16.2 million, or 12.4 percent, compared to the third quarter of 2016.
• Net interest margin decreased two basis points, to 3.27 percent, compared to the second quarter of 2017, and increased 13 basis points compared to the third quarter of 2016.
• Loans at September 30, 2017 increased $140.3 million, or 0.9 percent, compared to June 30, 2017 and $1.1 billion, or 7.6 percent, compared to September 30, 2016. Average loans for the third quarter of 2017 increased 1.8 percent and 8.3 percent compared to the second quarter of 2017 and the third quarter of 2016, respectively.
• Deposits at September 30, 2017 increased $784.4 million, or 5.1 percent, compared to June 30, 2017 and $1.2 billion, or 8.0 percent, compared, to September 30, 2016. Average deposits for the third quarter of 2017 increased 5.2 percent and 7.8 percent compared to the second quarter of 2017 and the third quarter of 2016, respectively.
• The provision for credit losses in the third quarter of 2017 was $5.1 million, compared to a $6.7 million provision in the second quarter of 2017, and a $4.1 million provision in the third quarter of 2016.
• Non-interest income, excluding investment securities gains, decreased $3.6 million, or 7.0 percent, in comparison to the second quarter of 2017, and decreased $770,000, or 1.6 percent, in comparison to the third quarter of 2016.
• Non-interest expense decreased $538,000, or 0.4 percent, compared to the second quarter of 2017 and increased $12.3 million, or 10.3 percent, compared to the third quarter of 2016.

Fulton Financial Corporation (NASDAQ:FULT) reported net income of $48.9 million, or 28 cents per diluted share, for the third quarter of 2017.

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"Overall, we are pleased with our third quarter financial performance as we’ve hit a couple of key milestones that help us continue to drive shareholder value,” said E. Philip Wenger, Chairman, President and CEO. “I’m extremely proud of our team’s continued focus on growth, efficiency and profitability. This resulted in total revenue that hit a record level in the third quarter and helped our company reach $20 billion in assets.”

Net Interest Income and Margin

Net interest income for the third quarter of 2017 increased $5.2 million, or 3.7 percent, from the second quarter of 2017. Net interest margin decreased two basis points, or 0.6 percent, to 3.27 percent in the third quarter of 2017, from 3.29 percent in the second quarter of 2017. The average yield on interest-earning assets increased two basis points, while the average cost of interest-bearing liabilities increased five basis points, during the third quarter of 2017 in comparison to the second quarter of 2017. The two basis point increase in the average yield on interest-earning assets reflects a seven basis point increase in loan yields, which was partially offset by higher levels of lower-yielding other interest-earning assets in the third quarter of 2017.

Average Balance Sheet

Total average assets for the third quarter of 2017 were $19.9 billion, an increase of $571.8 million from the second quarter of 2017. Average loans, net of unearned income, increased $264.9 million, or 1.8 percent, in comparison to the second quarter of 2017. Average loans and yields, by type, for the third quarter of 2017 in comparison to the second quarter of 2017, are summarized in the following table:

        Three Months Ended Increase (decrease) September 30, 2017 June 30, 2017 in Balance Balance   Yield (1) Balance Yield (1)   $     % (dollars in thousands) Average Loans, net of unearned income, by type: Real estate - commercial mortgage $ 6,208,630 4.07 % $ 6,163,844 4.00 % $ 44,786 0.7 % Commercial - industrial, financial and agricultural 4,257,075 4.08 % 4,221,025 4.00 % 36,050 0.9 % Real estate - residential mortgage 1,841,559 3.83 % 1,707,929 3.77 % 133,630 7.8 % Real estate - home equity 1,569,898 4.48 % 1,587,680 4.33 % (17,782 ) (1.1 %) Real estate - construction 943,029 4.05 % 897,321 3.98 % 45,708 5.1 % Consumer 318,546 4.94 % 300,966 5.03 % 17,580 5.8 % Leasing and other   253,330 4.91 %   248,440 5.04 %   4,890   2.0 %   Total Average Loans, net of unearned income $ 15,392,067 4.12 % $ 15,127,205 4.05 % $ 264,862   1.8 %

(1) Presented on a fully-taxable equivalent basis using a 35% Federal tax rate and statutory interest expense disallowances.

Total average liabilities increased $537.6 million, or 3.1 percent, from the second quarter of 2017, while average deposits increased $786.4 million, or 5.2 percent. Average deposits and interest rates, by type, for the third quarter of 2017 in comparison to the second quarter of 2017, are summarized in the following table:

        Three Months Ended Increase (decrease) September 30, 2017 June 30, 2017 in Balance Balance   Rate Balance Rate $   % (dollars in thousands) Average Deposits, by type: Noninterest-bearing demand $ 4,494,897 - % $ 4,387,517 - % $ 107,380 2.4 % Interest-bearing demand 3,943,118 0.39 % 3,690,059 0.30 % 253,059 6.9 % Savings and money market deposits   4,603,155 0.34 %   4,315,495 0.25 %   287,660 6.7 % Total average demand and savings 13,041,170 0.24 % 12,393,071 0.18 % 648,099 5.2 % Brokered deposits 89,767 1.23 % - - % 89,767 - % Time deposits   2,744,532 1.15 %   2,696,033 1.10 %   48,499 1.8 %   Total Average Deposits $ 15,875,469 0.40 % $ 15,089,104 0.34 % $ 786,365 5.2 %  

Average short-term borrowings decreased $230.8 million, or 36.4%, from the second quarter of 2017, as a portion of these borrowings were repaid with funds provided by the strong growth in deposits experienced during the third quarter of 2017.

Asset Quality

Non-performing assets were $147.0 million, or 0.73 percent of total assets, at September 30, 2017, compared to $147.2 million, or 0.75 percent of total assets, at June 30, 2017 and $150.1 million, or 0.80 percent of total assets, at September 30, 2016.

Annualized net charge-offs for the quarter ended September 30, 2017 were 0.14 percent of total average loans, compared to annualized net charge-offs of 0.11 percent for the quarters ended June 30, 2017 and September 30, 2016. The allowance for credit losses as a percentage of non-performing loans was 128.1 percent at September 30, 2017, as compared to 128.9 percent at June 30, 2017 and 119.6 percent at September 30, 2016.

During the third quarter of 2017, the Corporation recorded a $5.1 million provision for credit losses, compared to a $6.7 million provision for credit losses in the second quarter of 2017 and a $4.1 million provision in the third quarter of 2016.

Non-interest Income

Non-interest income, excluding investment securities gains, decreased $3.6 million, or 7.0 percent, in comparison to the second quarter of 2017. Other service charges and fees decreased $2.1 million, or 14.6 percent, due primarily to lower commercial loan interest rate swap fees. Mortgage banking income declined $1.3 million due to a reversal of the valuation allowance for mortgage servicing rights recorded in the second quarter of 2017. Also contributing to the decrease in non-interest income was lower gains from the sales of Small Business Administration loans.

Compared to the third quarter of 2016, non-interest income, excluding investment securities gains, decreased $770,000, or 1.6 percent, primarily due to lower commercial loan interest rate swap fees, partially offset by an increase in investment management and trust services income.

Gains on sales of investment securities increased $3.2 million in comparison to the second quarter of 2017, and increased $4.6 million from the third quarter of 2016. These increases resulted from sales in the Corporation’s portfolio of financial institution common stocks, which has increased in value over the past twelve months.

Non-interest Expense

Non-interest expense decreased $538,000, or 0.4 percent, in the third quarter of 2017, compared to the second quarter of 2017. Salaries and employee benefits decreased $1.6 million, or 2.2 percent, largely due to adjustments made to estimates of incentive compensation expense for 2017 and a seasonal decrease in payroll taxes. Other decreases occurred in outside services, other real estate expenses and professional fees. These reductions were offset by increases in data processing and software and FDIC insurance.

Compared to the third quarter of 2016, non-interest expense increased $12.3 million, or 10.3 percent, primarily due to increases in salaries and employee benefits, amortization of tax credit investments, state taxes, data processing and software and other outside services.

Income Tax Expense

The effective income tax rate for the third quarter of 2017 was 20.5 percent, as compared to 16.6 percent for the second quarter of 2017. The increase was partially due to an increase in income before income taxes. In addition, approximately $1.6 million of excess tax benefits associated with vesting of employee stock awards and stock option exercises were recorded as a reduction to income tax expense in the second quarter of 2017.

Additional information on Fulton Financial Corporation 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" and similar expressions which are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, some of which are beyond the Corporation's control and ability to predict, that could cause actual results to differ materially from those expressed in the forward-looking statements.

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, 2016 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2017 and June 30, 2017, which have been filed with the Securities and Exchange Commission and are available in the Investor Relations section of the Corporation's website (www.fult.com) and on the Securities and Exchange Commission's website (www.sec.gov). 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.

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 CONDENSED CONSOLIDATED ENDING BALANCE SHEETS (UNAUDITED) dollars in thousands % Change from September 30 June 30 March 31 December 31 September 30 June 30 September 30   2017       2017       2017       2016       2016     2017   2016  

ASSETS

  Cash and due from banks $ 99,803 $ 94,938 $ 93,844 $ 118,763 $ 86,497 5.1 % 15.4 % Other interest-earning assets 645,796 392,842 350,387 291,252 428,966 64.4 % 50.5 % Loans held for sale 23,049 62,354 24,783 28,697 27,836 -63.0 % -17.2 % Investment securities 2,561,516 2,488,699 2,506,017 2,559,227 2,508,068 2.9 % 2.1 % Loans, net of unearned income 15,486,899 15,346,617 14,963,177 14,699,272 14,391,238 0.9 % 7.6 % Allowance for loan losses   (172,245 )     (172,342 )     (170,076 )     (168,679 )     (162,526 ) -0.1 % 6.0 % Net loans 15,314,654 15,174,275 14,793,101 14,530,593 14,228,712 0.9 % 7.6 % Premises and equipment 221,551 217,558 216,171 217,806 228,009 1.8 % -2.8 % Accrued interest receivable 50,082 47,603 46,355 46,294 43,600 5.2 % 14.9 % Goodwill and intangible assets 531,556 531,556 531,556 531,556 531,556 0.0 % 0.0 % Other assets   614,853       637,610       616,362       620,059       617,818   -3.6 % -0.5 %   Total Assets $ 20,062,860     $ 19,647,435     $ 19,178,576     $ 18,944,247     $ 18,701,062   2.1 % 7.3 %  

LIABILITIES AND SHAREHOLDERS' EQUITY

  Deposits $ 16,141,780 $ 15,357,361 $ 15,090,344 $ 15,012,864 $ 14,952,479 5.1 % 8.0 % Short-term borrowings 298,751 694,859 453,317 541,317 264,042 -57.0 % 13.1 % Other liabilities 358,384 365,484 342,323 339,548 389,819 -1.9 % -8.1 % FHLB advances and long-term debt   1,038,159       1,037,961       1,137,909       929,403       965,286   0.0 % 7.5 %   Total Liabilities 17,837,074 17,455,665 17,023,893 16,823,132 16,571,626 2.2 % 7.6 %   Shareholders' equity   2,225,786       2,191,770       2,154,683       2,121,115       2,129,436   1.6 % 4.5 %   Total Liabilities and Shareholders' Equity $ 20,062,860     $ 19,647,435     $ 19,178,576     $ 18,944,247     $ 18,701,062   2.1 % 7.3 %  

LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL:

  Loans, by type: Real estate - commercial mortgage $ 6,275,140 $ 6,262,008 $ 6,118,533 $ 6,018,582 $ 5,818,915 0.2 % 7.8 % Commercial - industrial, financial and agricultural 4,223,075 4,245,849 4,167,809 4,087,486 4,024,119 -0.5 % 4.9 % Real estate - residential mortgage 1,887,907 1,784,712 1,665,142 1,601,994 1,542,696 5.8 % 22.4 % Real estate - home equity 1,567,473 1,579,739 1,595,901 1,625,115 1,640,421 -0.8 % -4.4 % Real estate - construction 973,108 938,900 882,983 843,649 861,634 3.6 % 12.9 % Consumer 302,448 283,156 288,826 291,470 283,673 6.8 % 6.6 % Leasing and other   257,748       252,253       243,983       230,976       219,780   2.2 % 17.3 %   Total Loans, net of unearned income $ 15,486,899     $ 15,346,617     $ 14,963,177     $ 14,699,272     $ 14,391,238   0.9 % 7.6 %   Deposits, by type: Noninterest-bearing demand $ 4,363,915 $ 4,574,619 $ 4,417,733 $ 4,376,137 $ 4,210,099 -4.6 % 3.7 % Interest-bearing demand 4,119,419 3,650,204 3,702,663 3,703,712 3,703,048 12.9 % 11.2 % Savings and money market accounts   4,790,985       4,386,128       4,251,574       4,179,773       4,235,015   9.2 % 13.1 % Total demand and savings 13,274,319 12,610,951 12,371,970 12,259,622 12,148,162 5.3 % 9.3 % Brokered deposits 109,936 - - - - 0.0 % 0.0 % Time deposits   2,757,525       2,746,410       2,718,374       2,753,242       2,804,317   0.4 % -1.7 %   Total Deposits $ 16,141,780     $ 15,357,361     $ 15,090,344     $ 15,012,864     $ 14,952,479   5.1 % 8.0 %   Short-term borrowings, by type: Customer repurchase agreements $ 185,945 $ 174,224 $ 181,170 $ 195,734 $ 189,727 6.7 % -2.0 % Customer short-term promissory notes 106,994 74,366 87,726 67,013 65,871 43.9 % 62.4 % Short-term FHLB advances - 240,000 130,000 - - -100.0 % 0.0 % Federal funds purchased   5,812       206,269       54,421       278,570       8,444   -97.2 % -31.2 %   Total Short-term Borrowings $ 298,751     $ 694,859     $ 453,317     $ 541,317     $ 264,042   -57.0 % 13.1 %                     FULTON FINANCIAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) in thousands, except per-share data and percentages               Three Months Ended   % Change from Nine Months Ended Sep 30 Jun 30 Mar 31 Dec 31 Sep 30 Jun 30 Sep 30 Sep 30   2017     2017    

2017

    2016     2016   2017 2016   2017     2016   % Change   Interest Income: Interest income $ 171,511 $ 163,881 $ 158,487 $ 153,012 $ 151,468 4.7 % 13.2 % $ 493,879 $ 450,088 9.7 % Interest expense   24,702     22,318     20,908     20,775     20,903   10.7 % 18.2 %   67,928     61,553   10.4 %   Net Interest Income 146,809 141,563 137,579 132,237 130,565 3.7 % 12.4 % 425,951 388,535 9.6 % Provision for credit losses   5,075     6,700     4,800     5,000     4,141   (24.3 %) 22.6 %   16,575     8,182   102.6 %   Net Interest Income after Provision 141,734 134,863 132,779 127,237 126,424 5.1 % 12.1 % 409,376 380,353 7.6 %   Non-Interest Income: Service charges on deposit accounts 13,022 12,914 12,400 12,814 13,078 0.8 % (0.4 %) 38,336 38,532 (0.5 %) Other service charges and fees 12,251 14,342 12,437 13,333 14,407 (14.6 %) (15.0 %) 39,030 38,140 2.3 % Investment management and trust services 12,157 12,132 11,808 11,610 11,425 0.2 % 6.4 % 36,097 33,660 7.2 % Mortgage banking income 4,805 6,141 4,596 6,959 4,529 (21.8 %) 6.1 % 15,542 12,456 24.8 % Other   5,142     5,406     4,326     6,514     4,708   (4.9 %) 9.2 %   14,874     13,610   9.3 % Non-Interest Income before Investment Securities Gains 47,377 50,935 45,567 51,230 48,147 (7.0 %) (1.6 %) 143,879 136,398 5.5 % Investment securities gains   4,597     1,436     1,106     1,525     2   N/M N/M   7,139     1,025   N/M   Total Non-Interest Income 51,974 52,371 46,673 52,755 48,149 (0.8 %) 7.9 % 151,018 137,423 9.9 %   Non-Interest Expense:

 

Salaries and employee benefits 72,894 74,496 69,236 73,256 70,696 (2.2 %) 3.1 % 216,626 210,097 3.1 % Net occupancy expense 12,180 12,316 12,663 11,798 11,782 (1.1 %) 3.4 % 37,159 35,813 3.8 % Data processing and software 10,301 9,054 8,979 9,442 8,727 13.8 % 18.0 % 28,334 27,477 3.1 % Other outside services 6,582 7,708 5,546 6,536 5,783 (14.6 %) 13.8 % 19,836 17,347 14.3 % Amortization of tax credit investments 3,503 3,151 998 - - 11.2 % 100.0 % 7,652 - 100.0 % Professional fees 3,388 2,931 2,737 2,783 2,535 15.6 % 33.6 % 9,056 8,221 10.2 % Equipment expense 3,298 3,034 3,359 3,408 3,137 8.7 % 5.1 % 9,691 9,380 3.3 % FDIC insurance expense 3,007 2,366 2,058 2,067 1,791 27.1 % 67.9 % 7,431 7,700 (3.5 %) Marketing 2,089 2,234 1,986 1,730 1,774 (6.5 %) 17.8 % 6,309 5,314 18.7 % Other   14,915     15,405     14,713     16,601     13,623   (3.2 %) 9.5 %   45,033     40,549   11.1 %   Total Non-Interest Expense   132,157     132,695     122,275     127,621     119,848   (0.4 %) 10.3 %   387,127     361,898   7.0 %   Income before Income Taxes 61,551 54,539 57,177 52,371 54,725 12.9 % 12.5 % 173,267 155,878 11.2 % Income tax expense   12,646     9,072     13,797     10,221     13,257   39.4 % (4.6 %)   35,515     36,403   (2.4 %)   Net Income $ 48,905   $ 45,467   $ 43,380   $ 42,150   $ 41,468   7.6 % 17.9 % $ 137,752   $ 119,475   15.3 %    

PER SHARE:

  Net income: Basic $ 0.28 $ 0.26 $ 0.25 $ 0.24 $ 0.24 7.7 % 16.7 % $ 0.79 $ 0.69 14.5 % Diluted 0.28 0.26 0.25 0.24 0.24 7.7 % 16.7 % 0.78 0.69 13.0 %   Cash dividends $ 0.11 $ 0.11 $ 0.11 $ 0.12 $ 0.10 - 10.0 % $ 0.33 $ 0.29 13.8 % Shareholders' equity 12.71 12.54 12.36 12.19 12.30 1.4 % 3.3 % 12.71 12.30 3.3 % Shareholders' equity (tangible) 9.68 9.50 9.31 9.13 9.23 1.9 % 4.9 % 9.68 9.23 4.9 %   Weighted average shares (basic) 174,991 174,597 174,150 173,554 173,020 0.2 % 1.1 % 174,582 173,248 0.8 % Weighted average shares (diluted) 176,216 175,532 175,577 174,874 174,064 0.4 % 1.2 % 175,776 174,265 0.9 % Shares outstanding, end of period 175,057 174,740 174,343 174,040 173,144 0.2 % 1.1 % 175,057 173,144 1.1 %  

SELECTED FINANCIAL RATIOS:

. Return on average assets 0.98 % 0.94 % 0.92 % 0.89 % 0.89 % 0.95 % 0.87 % Return on average shareholders' equity 8.76 % 8.36 % 8.22 % 7.86 % 7.78 % 8.45 % 7.64 % Return on average shareholders' equity (tangible) 11.52 % 11.06 % 10.93 % 10.47 % 10.38 % 11.18 % 10.24 % Net interest margin 3.27 % 3.29 % 3.26 % 3.15 % 3.14 % 3.27 % 3.19 % Efficiency ratio   64.30 %     65.33 %     64.23 %     67.60 %     65.16 %           64.63 %     67.01 %       N/M - Not meaningful                 FULTON FINANCIAL CORPORATION CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED) dollars in thousands   Three Months Ended September 30, 2017 June 30, 2017 September 30, 2016 Average Yield/ Average Yield/ Average Yield/ Balance Interest (1) Rate Balance Interest (1) Rate Balance Interest (1) Rate

ASSETS

  Interest-earning assets: Loans, net of unearned income $ 15,392,067 $ 159,454 4.12 % $ 15,127,205 $ 152,649 4.05 % $ 14,212,250 $ 140,434 3.93 % Taxable investment securities 2,115,931 11,423 2.01 % 2,090,120 11,473 2.12 % 2,110,084 10,872 2.06 % Tax-exempt investment securities 408,594 4,492 4.40 % 404,680 4,394 4.34 % 344,231 3,923 4.56 % Equity securities   8,709     143   6.52 %   10,759     148   5.52 %   14,209     196   5.50 %   Total Investment Securities 2,533,234 16,058 2.53 % 2,505,559 16,015 2.56 % 2,468,524 14,991 2.43 %   Loans held for sale 22,456 243 4.33 % 19,750 201 4.07 % 22,593 210 3.72 % Other interest-earning assets   590,676     1,667   1.12 %   324,719     802   0.99 %   501,666     1,051   0.84 %   Total Interest-earning Assets 18,538,433 177,422 3.80 % 17,977,233 169,667 3.78 % 17,205,033 156,686 3.63 %   Noninterest-earning assets: Cash and due from banks 101,643 103,078 101,927 Premises and equipment 220,129 218,075 227,906 Other assets 1,186,622 1,174,745 1,219,844 Less: allowance for loan losses   (174,101 )   (172,156 )   (163,074 )   Total Assets $ 19,872,726   $ 19,300,975   $ 18,591,636      

LIABILITIES AND SHAREHOLDERS' EQUITY

  Interest-bearing liabilities: Demand deposits $ 3,943,118 $ 3,847 0.39 % $ 3,690,059 $ 2,780 0.30 % $ 3,602,448 $ 1,706 0.19 % Savings deposits 4,603,155 3,962 0.34 % 4,315,495 2,710 0.25 % 4,078,942 2,042 0.20 % Brokered deposits 89,767 277 1.23 % 0 - 0.00 % - - 0.00 % Time deposits   2,744,532     7,937   1.15 %   2,696,033     7,394   1.10 %   2,814,258     7,562   1.07 %   Total Interest-bearing Deposits 11,380,572 16,023 0.56 % 10,701,587 12,884 0.48 % 10,495,648 11,310 0.43 %   Short-term borrowings 402,341 578 0.57 % 633,102 974 0.61 % 426,369 254 0.23 % FHLB advances and long-term debt   1,038,062     8,100   3.11 %   1,070,845     8,460   3.16 %   965,228     9,338   3.86 %   Total Interest-bearing Liabilities 12,820,975 24,701 0.77 % 12,405,534 22,318 0.72 % 11,887,245 20,902 0.70 %   Noninterest-bearing liabilities: Demand deposits 4,494,897 4,387,517 4,227,639 Other   341,465     326,735     356,156     Total Liabilities 17,657,337 17,119,786 16,471,040   Shareholders' equity   2,215,389     2,181,189     2,120,596     Total Liabilities and Shareholders' Equity $ 19,872,726   $ 19,300,975   $ 18,591,636     Net interest income/net interest margin (fully taxable equivalent) 152,721 3.27 % 147,349 3.29 % 135,784 3.14 % Tax equivalent adjustment   (5,912 )   (5,786 )   (5,219 )   Net interest income $ 146,809   $ 141,563   $ 130,565   (1) Presented on a fully taxable-equivalent basis using a 35% Federal tax rate and statutory interest expense disallowances. Note: The weighted average interest rate on total average interest-bearing liabilities and average non-interest bearing demand deposits (“cost of funds”) was 0.57%, 0.53% and 0.52% for the three months ended September 30, 2017, June 30, 2017 and September 30, 2016, respectively.  

AVERAGE LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL:

              Three Months Ended   % Change from September 30 June 30 March 31 December 31 September 30 June 30 September 30 2017 2017 2017 2016 2016 2017 2016   Loans, by type: Real estate - commercial mortgage $ 6,208,630 $ 6,163,844 $ 6,039,140 $ 5,828,313 $ 5,670,888 0.7 % 9.5 % Commercial - industrial, financial and agricultural 4,257,075 4,221,025 4,205,070 4,081,498 4,066,275 0.9 % 4.7 % Real estate - residential mortgage 1,841,559 1,707,929 1,637,669 1,572,895 1,503,209 7.8 % 22.5 % Real estate - home equity 1,569,898 1,587,680 1,613,249 1,633,668 1,640,913 (1.1 %) (4.3 %) Real estate - construction 943,029 897,321 840,968 845,528 837,920 5.1 % 12.5 % Consumer 318,546 300,967 284,352 289,864 281,517 5.8 % 13.2 % Leasing and other   253,330   248,440   237,114   224,050   211,528 2.0 % 19.8 %   Total Loans, net of unearned income $ 15,392,067 $ 15,127,205 $ 14,857,562 $ 14,475,816 $ 14,212,250 1.8 % 8.3 %   Deposits, by type: Noninterest-bearing demand $ 4,494,897 $ 4,387,517 $ 4,301,727 $ 4,331,894 $ 4,227,639 2.4 % 6.3 % Interest-bearing demand 3,943,118 3,690,059 3,650,931 3,714,391 3,602,448 6.9 % 9.5 % Savings and money market accounts   4,603,155   4,315,495   4,194,216   4,216,090   4,078,942 6.7 % 12.9 % Total demand and savings 13,041,170 12,393,071 12,146,874 12,262,375 11,909,029 5.2 % 9.5 % Brokered deposits 89,767 - - - - - - Time deposits   2,744,532   2,696,033   2,739,453   2,777,203   2,814,258 1.8 % (2.5 %)   Total Deposits $ 15,875,469 $ 15,089,104 $ 14,886,327 $ 15,039,578 $ 14,723,287 5.2 % 7.8 %   Short-term borrowings, by type: Customer repurchase agreements $ 176,415 $ 199,657 $ 199,403 $ 200,126 $ 187,587 (11.6 %) (6.0 %) Customer short-term promissory notes 80,147 77,554 79,985 67,355 70,072 3.3 % 14.4 % Federal funds purchased 90,453 242,375 308,220 40,613 148,546 (62.7 %) (39.1 %) Short-term FHLB advances and other borrowings   55,326   113,516   124,889   -   20,163 (51.3 %) N/M   Total Short-term Borrowings $ 402,341 $ 633,102 $ 712,497 $ 308,094 $ 426,368 (36.4 %) (5.6 %)   N/M - Not meaningful             FULTON FINANCIAL CORPORATION CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED) dollars in thousands Nine Months Ended September 30 2017 2016 Average Average Balance Interest (1) Yield/Rate Balance Interest (1) Yield/Rate

ASSETS

  Interest-earning assets: Loans, net of unearned income $ 15,127,569 $ 458,753 4.05 % $ 14,011,301 $ 416,646 3.97 % Taxable investment securities 2,117,127 34,811 2.11 % 2,139,378 34,034 2.12 % Tax-exempt investment securities 405,728 13,268 4.36 % 306,298 10,631 4.63 % Equity securities   10,391     467   6.01 %   14,272     599   5.60 %   Total Investment Securities 2,533,246 48,546 2.56 % 2,459,948 45,264 2.45 %   Loans held for sale 19,378 631 4.34 % 18,114 529 3.90 % Other interest-earning assets   410,250     3,311   1.08 %   406,163     2,813   0.92 %   Total Interest-earning Assets 18,090,443 511,241 3.78 % 16,895,526 465,252 3.68 %   Noninterest-earning assets: Cash and due from banks 107,029 100,417 Premises and equipment 218,700 227,237 Other assets 1,170,466 1,182,260 Less: allowance for loan losses   (172,145 )   (164,999 )   Total Assets $ 19,414,493   $ 18,240,441    

LIABILITIES AND SHAREHOLDERS' EQUITY

  Interest-bearing liabilities: Demand deposits $ 3,762,439 $ 8,865 0.32 % $ 3,498,659 $ 4,727 0.18 % Savings deposits 4,372,453 8,883 0.27 % 4,000,871 5,732 0.19 % Brokered deposits 30,251 277 1.23 % - - 0.00 % Time deposits   2,726,693     22,684   1.11 %   2,842,011     22,465   1.06 %   Total Interest-bearing Deposits 10,891,836 40,709 0.50 % 10,341,541 32,924 0.43 %   Short-term borrowings 581,511 2,407 0.55 % 425,151 739 0.23 % FHLB advances and long-term debt   1,033,159     24,812   3.21 %   962,997     27,889   3.86 %   Total Interest-bearing Liabilities 12,506,506 67,928 0.73 % 11,729,689 61,552 0.70 %   Noninterest-bearing liabilities: Demand deposits 4,395,421 4,091,555 Other   333,250     329,315     Total Liabilities 17,235,177 16,150,559   Shareholders' equity   2,179,316     2,089,882     Total Liabilities and Shareholders' Equity $ 19,414,493   $ 18,240,441     Net interest income/net interest margin (fully taxable equivalent) 443,313 3.27 % 403,700 3.19 % Tax equivalent adjustment   (17,362 )   (15,165 )   Net interest income $ 425,951   $ 388,535   (1) Presented on a fully taxable-equivalent basis using a 35% Federal tax rate and statutory interest expense disallowances. Note: The weighted average interest rate on total average interest-bearing liabilities and average non-interest bearing demand deposits (“cost of funds”) was 0.54% and 0.52% for the nine months ended September 30, 2017 and 2016, respectively.  

AVERAGE LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL:

      Nine Months Ended

September 30

2017 2016 % Change   Loans, by type: Real estate - commercial mortgage $ 6,137,824 $ 5,572,356 10.1 % Commercial - industrial, financial and agricultural 4,227,918 4,080,638 3.6 % Real estate - residential mortgage 1,729,799 1,428,430 21.1 % Real estate - home equity 1,590,117 1,656,969 (4.0 %) Real estate - construction 894,146 817,014 9.4 % Consumer 301,414 272,402 10.7 % Leasing and other   246,351   183,492 34.3 %   Total Loans, net of unearned income $ 15,127,569 $ 14,011,301 8.0 %   Deposits, by type: Noninterest-bearing demand $ 4,395,421 $ 4,091,555 7.4 % Interest-bearing demand 3,762,439 3,498,659 7.5 % Savings and money market accounts   4,372,453   4,000,871 9.3 % Total demand and savings 12,530,313 11,591,085 8.1 % Brokered deposits 30,251 - - Time deposits   2,726,693   2,842,011 (4.1 %)   Total Deposits $ 15,287,257 $ 14,433,096 5.9 %   Short-term borrowings, by type: Customer repurchase agreements $ 192,015 $ 179,892 6.7 % Customer short-term promissory notes 78,955 73,859 6.9 % Federal funds purchased 212,885 156,812 35.8 % Short-term FHLB advances and other borrowings   97,656   14,588 N/M   Total Short-term Borrowings $ 581,511 $ 425,151 36.8 %   N/M - Not meaningful             FULTON FINANCIAL CORPORATION ASSET QUALITY INFORMATION (UNAUDITED) dollars in thousands   Three Months Ended Nine Months Ended Sep 30 Jun 30 Mar 31 Dec 31 Sep 30 Sep 30 Sep 30   2017     2017     2017     2016     2016     2017     2016  

ALLOWANCE FOR CREDIT LOSSES:

  Balance at beginning of period $ 174,998 $ 172,647 $ 171,325 $ 165,169 $ 165,108 $ 171,325 $ 171,412   Loans charged off: Commercial - industrial, financial and agricultural (2,714 ) (5,353 ) (5,527 ) (1,319 ) (3,144 ) (13,594 ) (13,957 ) Consumer and home equity (920 ) (1,022 ) (1,554 ) (2,156 ) (1,394 ) (3,496 ) (5,556 ) Real estate - construction (2,744 ) (774 ) (247 ) 0 (150 ) (3,765 ) (1,218 ) Real estate - commercial mortgage (483 ) (242 ) (1,224 ) (174 ) (1,350 ) (1,949 ) (3,406 ) Real estate - residential mortgage (195 ) (124 ) (216 ) (116 ) (802 ) (535 ) (2,210 ) Leasing and other   (739 )   (1,200 )   (639 )   (589 )   (832 )   (2,578 )   (3,226 ) Total loans charged off (7,795 ) (8,715 ) (9,407 ) (4,354 ) (7,672 ) (25,917 ) (29,573 ) Recoveries of loans previously charged off: Commercial - industrial, financial and agricultural 665 1,974 4,191 2,192 1,539 6,830 6,789 Consumer and home equity 445 685 373 580 463 1,503 1,886 Real estate - construction 629 373 548 1,080 898 1,550 2,844 Real estate - commercial mortgage 106 934 450 885 296 1,490 2,488 Real estate - residential mortgage 219 151 230 288 228 600 784 Leasing and other   407     249     137     485     168     793     357   Recoveries of loans previously charged off   2,471     4,366     5,929     5,510     3,592     12,766     15,148   Net loans (charged off) recovered (5,324 ) (4,349 ) (3,478 ) 1,156 (4,080 ) (13,151 ) (14,425 ) Provision for credit losses 5,075 6,700 4,800 5,000 4,141 16,575 8,182               Balance at end of period $ 174,749   $ 174,998   $ 172,647   $ 171,325   $ 165,169   $ 174,749   $ 165,169     Net charge-offs (recoveries) to average loans (annualized)   0.14 %   0.11 %   0.09 %   (0.03 %)   0.11 %   0.12 %   0.14 %  

NON-PERFORMING ASSETS:

  Non-accrual loans $ 123,345 $ 122,600 $ 117,264 $ 120,133 $ 124,017 Loans 90 days past due and accruing   13,124     13,143     14,268     11,505     14,095   Total non-performing loans 136,469 135,743 131,532 131,638 138,112 Other real estate owned   10,542     11,432     11,906     12,815     11,981     Total non-performing assets $ 147,011   $ 147,175   $ 143,438   $ 144,453   $ 150,093    

NON-PERFORMING LOANS, BY TYPE:

  Commercial - industrial, financial and agricultural $ 54,209 $ 51,320 $ 43,826 $ 43,460 $ 47,330 Real estate - commercial mortgage 34,650 32,576 36,713 39,319 39,631 Real estate - residential mortgage 21,643 21,846 23,597 23,655 23,451 Real estate - construction 13,415 16,564 13,550 9,842 11,223 Consumer and home equity 12,472 13,156 13,408 15,045 16,426 Leasing   80     281     438     317     51     Total non-performing loans $ 136,469   $ 135,743   $ 131,532   $ 131,638   $ 138,112      

TROUBLED DEBT RESTRUCTURINGS (TDRs), BY TYPE:

  Real-estate - residential mortgage $ 26,193 $ 26,368 $ 27,033 $ 27,617 $ 26,854 Real-estate - commercial mortgage 14,439 13,772 15,237 15,957 16,085 Consumer and home equity 14,822 12,064 9,638 8,633 7,707 Commercial - industrial, financial and agricultural 7,512 8,086 7,441 6,627 7,488 Real estate - construction   169     1,475     273     726     843   Total accruing TDRs 63,135 61,765 59,622 59,560 58,977 Non-accrual TDRs (1)   28,742     29,373     27,220     27,850     27,904   Total TDRs $ 91,877   $ 91,138   $ 86,842   $ 87,410   $ 86,881     (1) Included within non-accrual loans above.   Total Delinquency %

DELINQUENCY RATES, BY TYPE:

Sep 30 Jun 30 Mar 31 Dec 31 Sep 30   2017     2017     2017     2016     2016     Real estate - commercial mortgage 0.75 % 0.66 % 0.78 % 0.78 % 0.87 % Commercial - industrial, financial and agricultural 1.54 % 1.43 % 1.25 % 1.31 % 1.48 % Real estate - construction 1.50 % 1.82 % 1.99 % 1.29 % 1.61 % Real estate - residential mortgage 2.25 % 2.08 % 2.44 % 2.74 % 2.67 % Consumer, home equity, leasing and other   1.38 %   1.34 %   1.22 %   1.45 %   1.53 % Total   1.28 %   1.20 %   1.23 %   1.27 %   1.38 %  

ASSET QUALITY RATIOS:

                  Sep 30 Jun 30 Mar 31 Dec 31 Sep 30   2017     2017     2017     2016     2016     Non-accrual loans to total loans 0.80 % 0.80 % 0.78 % 0.82 % 0.86 % Non-performing loans to total loans 0.88 % 0.88 % 0.88 % 0.90 % 0.96 % Non-performing assets to total loans and OREO 0.95 % 0.96 % 0.96 % 0.98 % 1.04 % Non-performing assets to total assets 0.73 % 0.75 % 0.75 % 0.76 % 0.80 % Allowance for credit losses to loans outstanding 1.13 % 1.14 % 1.15 % 1.17 % 1.15 % Allowance for credit losses to non-performing loans 128.05 % 128.92 % 131.26 % 130.15 % 119.59 %

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

7.87 % 8.02 % 7.99 % 8.20 % 8.51 %   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 Nine Months Ended September 30 June 30 March 31 December 31 September 30 September 30 September 30   2017     2017     2017     2016     2016     2017     2016  

Shareholders' equity (tangible), per share

Shareholders' equity $ 2,225,786 $ 2,191,770 $ 2,154,683 $ 2,121,115 $ 2,129,436 Less: Goodwill and intangible assets   (531,556 )   (531,556 )   (531,556 )   (531,556 )   (531,556 ) Tangible shareholders' equity (numerator) $ 1,694,230   $ 1,660,214   $ 1,623,127   $ 1,589,559   $ 1,597,880     Shares outstanding, end of period (denominator)   175,057     174,740     174,343     174,040     173,144     Shareholders' equity (tangible), per share $ 9.68   $ 9.50   $ 9.31   $ 9.13   $ 9.23    

Return on average shareholders' equity (tangible)

Net Income - Numerator $ 48,905   $ 45,467   $ 43,380   $ 42,150   $ 41,468   $ 137,752   $ 119,475     Average shareholders' equity $ 2,215,389 $ 2,181,189 $ 2,140,547 $ 2,132,655 $ 2,120,596 $ 2,179,316 $ 2,089,882 Less: Average goodwill and intangible assets   (531,556 )   (531,556 )   (531,556 )   (531,556 )   (531,556 )   (531,556 )   (531,556 ) Average tangible shareholders' equity (denominator) $ 1,683,833   $ 1,649,633   $ 1,608,991   $ 1,601,099   $ 1,589,040   $ 1,647,760   $ 1,558,326     Return on average shareholders' equity (tangible), annualized   11.52 %   11.06 %   10.93 %   10.47 %   10.38 %   11.18 %   10.24 %  

Efficiency ratio

Non-interest expense $ 132,157 $ 132,695 $ 122,275 $ 127,621 $ 119,848 $ 387,127 $ 361,898 Less: Amortization of tax credit investments (1)   (3,503 )   (3,151 )   (998 )   -     -     (7,652 )   -   Non-interest expense - Numerator $ 128,654   $ 129,544   $ 121,277   $ 127,621   $ 119,848   $ 379,475   $ 361,898     Net interest income (fully taxable equivalent) $ 152,721 $ 147,349 $ 143,243 $ 137,571 $ 135,784 $ 443,313 $ 403,700 Plus: Total Non-interest income 51,974 52,371 46,673 52,755 48,149 151,018 137,423 Less: Investment securities gains   (4,597 )   (1,436 )   (1,106 )   (1,525 )   (2 )   (7,139 )   (1,025 ) Denominator $ 200,098   $ 198,284   $ 188,810   $ 188,801   $ 183,931   $ 587,192   $ 540,098     Efficiency ratio   64.30 %   65.33 %   64.23 %   67.60 %   65.16 %   64.63 %   67.01 %  

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

Non-performing assets (numerator) $ 147,011   $ 147,175   $ 143,438   $ 144,453   $ 150,093     Tangible shareholders' equity $ 1,694,230 $ 1,660,214 $ 1,623,127 $ 1,589,559 $ 1,597,880 Plus: Allowance for credit losses   174,749     174,998     172,647     171,325     165,169   Tangible shareholders' equity and allowance for credit losses (denominator) $ 1,868,979   $ 1,835,212   $ 1,795,774   $ 1,760,884   $ 1,763,049     Non-performing assets to tangible shareholders' equity and allowance for credit losses   7.87 %   8.02 %   7.99 %   8.20 %   8.51 %  

Pre-provision net revenue

Net interest income $ 146,809 $ 141,563 $ 137,579 $ 132,237 $ 130,565 $ 425,951 $ 388,535 Non-interest income 51,974 52,371 46,673 52,755 48,149 151,018 137,423 Less: Investment securities gains   (4,597 )   (1,436 )   (1,106 )   (1,525 )   (2 )   (7,139 )   (1,025 ) Total revenue $ 194,186   $ 192,498   $ 183,146   $ 183,467   $ 178,712   $ 569,830   $ 524,933     Non-interest expense $ 132,157 $ 132,695 $ 122,275 $ 127,621 $ 119,848 $ 387,127 $ 361,898 Less: Amortization of tax credit investments (1) $ (3,503 )   (3,151 )   (998 )   -     -     (7,652 )   -   Total non-interest expense $ 128,654   $ 129,544   $ 121,277   $ 127,621   $ 119,848   $ 379,475   $ 361,898     Pre-provision net revenue $ 65,532   $ 62,954   $ 61,869   $ 55,846   $ 58,864   $ 190,355   $ 163,035   (1) Amortization expense for tax credit investments that are considered to be affordable housing projects under applicable accounting guidance is included in income taxes. Amortization expense for other tax credit investments that are not considered to be affordable housing projects is included in non-interest expense.

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Fulton Financial CorporationMedia Contact:Stacey Karshin, 717-291-2739orInvestor Contact:Jason Weber, 717-327-2394