Fulton Financial Corporation (NASDAQ:FULT) ("Fulton" or the "Corporation") reported net income available to common shareholders of $62 million, or $0.38 per diluted share, for the second quarter of 2021.

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"In the second quarter, Fulton Financial again achieved solid performance," said E. Philip Wenger, Chairman and CEO of Fulton Financial Corporation. "Our results reflect stable to improving core business trends, a disciplined operating environment, growth in wealth management revenues and stable asset quality."

Net Interest Income and Balance Sheet

Net interest income for the second quarter of 2021 was $162 million, $2 million lower than the first quarter of 2021. Net interest margin for the second quarter of 2021 decreased 6 basis points, to 2.73%, from 2.79% in the first quarter of 2021. The decreases in net interest income and net interest margin in comparison to the first quarter of 2021 were primarily due to lower fee income recognized related to the Paycheck Protection Program ("PPP") loans, which were $12 million in the second quarter of 2021 compared to $19 million for the first quarter of 2021, as well as lower yields on loans.

Total average interest-earning assets for the second quarter of 2021 were $24 billion, a decrease of $2 million from the first quarter of 2021, driven by a decline in PPP loans and other interest-earning assets, partially offset by growth in the commercial and residential real estate loan portfolios as well as investment securities. Average Net Loans¹, which include loans originated under the PPP, were $18.9 billion, a decrease of $74 million compared to the first quarter of 2021. Average PPP loans were $1.5 billion for the second quarter of 2021 compared to $1.7 billion for the first quarter of 2021. Second quarter loan balances were impacted by the net effect of $639 million of PPP loans forgiven and $60 million of new loans originated under the third phase of the PPP in the second quarter of 2021.

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1}Loans and lease receivables, (net of unearned income)

Average loans and yields, by type, for the second quarter of 2021 in comparison to the first quarter of 2021 are summarized in the following table:

	Three months ended
	June 30, 2021				March 31, 2021				Growth
	Balance		Yield ⁽¹⁾		Balance		Yield ⁽¹⁾		$		%
	(dollars in thousands)
Average Net Loans by type:
Real estate - commercial mortgage	$	7,177,622	3.16	%	$	7,128,997	3.15	%	$	48,625	0.7	%
Commercial and industrial⁽²⁾	5,445,160		2.58	%	5,722,080		2.57	%	(276,920)		(4.8)	%
Real estate - residential mortgage	3,396,690		3.39	%	3,183,585		3.52	%	213,105		6.7	%
Real estate - home equity	1,139,558		3.71	%	1,175,218		3.75	%	(35,660)		(3.0)	%
Real estate - construction	1,054,469		3.05	%	1,054,718		3.09	%	(249)		(0.0)	%
Consumer	451,486		3.89	%	459,038		4.13	%	(7,552)		(1.6)	%
Equipment lease financing	256,248		3.74	%	266,405		4.11	%	(10,157)		(3.8)	%
Other⁽³⁾	(14,677)		N/A		(9,455)		N/A		(5,222)		55.2	%
Total Average Net Loans	$	18,906,556	3.32	%	$	18,980,586	3.53	%	$	(74,030)	(0.4)	%

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

(2) Includes average PPP loans of $1.5 billion and $1.7 billion for the three months ended June 30, 2021 and March 31, 2021, respectively.

(3) Consists of overdrafts and net origination fees and costs.

Total average liabilities decreased $98 million, to $23.3 billion, in the second quarter of 2021 compared to the first quarter of 2021 driven by decreases in short-term and long-term borrowings, partially offset by increases in average deposits. Average deposits and interest rates, by type, for the second quarter of 2021 in comparison to the first quarter of 2021 are summarized in the following table:

	Three months ended
	June 30, 2021				March 31, 2021				Growth
	Balance		Rate		Balance		Rate		$		%
	(dollars in thousands)
Average Deposits, by type:
Noninterest-bearing demand	$	7,203,696	—		$	6,672,832	—		$	530,864	8.0	%
Interest-bearing demand	5,979,855		0.06	%	5,832,174		0.08	%	147,681		2.5	%
Savings	6,280,629		0.09	%	6,137,084		0.10	%	143,545		2.3	%
Total average demand and savings	19,464,180		0.05	%	18,642,090		0.06	%	822,090		4.4	%
Brokered	297,815		0.34	%	324,364		0.49	%	(26,549)		(8.2)	%
Time	2,003,606		1.09	%	2,150,570		1.23	%	(146,964)		(6.8)	%
Total Average Deposits	$	21,765,601	0.15	%	$	21,117,024	0.18	%	$	648,577	3.1	%

Asset Quality

In the second quarter of 2021, a negative provision for credit losses of $4 million was recognized, as compared to a negative provision for credit losses of $6 million recognized in the first quarter of 2021. A $20 million provision for credit losses was recognized in the second quarter of 2020. Consistent with the first quarter of 2021, improved economic forecasts and a decrease in specific allocations within the allowance for credit losses for loans evaluated individually reduced the level of the allowance for credit losses determined to be necessary at the end of the second quarter of 2021.

The $20 million provision for credit losses in the second quarter of 2020 reflected expected credit losses based on economic forecasts as of the end of the second quarter of 2020 and the assessment of the estimated impacts of the COVID-19 pandemic at that time.

Non-performing assets were $157 million, or 0.60% of total assets, at June 30, 2021, compared to $156 million, or 0.60% of total assets, and $145 million, or 0.59% of total assets at March 31, 2021 and June 30, 2020, respectively.

Annualized net charge-offs for the quarter ended June 30, 2021 were 0.15% of total average loans, compared to 0.13% and 0.09% for the quarters ended March 31, 2021 and June 30, 2020, respectively.

Non-interest Income

Non-interest income in the second quarter of 2021, excluding investment securities gains, was $52 million, a decrease of $10 million, or 16%, from the first quarter of 2021, primarily driven by decreases of $11 million in mortgage banking income and a $1 million decrease in capital markets income. The decrease in mortgage banking income was due to lower mortgage sales and gain-on-sale spreads on loans sold, as well as a $2 million addition to the valuation allowance for mortgage servicing assets. The $1 million decrease in capital markets income was the result of lower commercial loan interest rate swap revenues.

Compared to the second quarter of 2020, non-interest income, excluding investment securities gains, in the second quarter of 2021 decreased $1 million, or 2%, from $53 million, primarily driven by a $7 million decrease in mortgage banking income, resulting from a combination of lower mortgage sales gains and higher rates. During the second quarter of 2020, mortgage banking income was higher as a result of lower mortgage interest rates which drove an increase in activity. The decrease in mortgage banking income was partially offset by a $4 million increase in wealth management income and a $2 million increase in consumer banking income.

Net investment securities gains were $33 million lower compared to the first quarter of 2021. In the first quarter of 2021, Fulton completed a balance sheet restructuring involving gains on sales of Visa, Inc. Class B restricted shares of $34 million, which were offset in non-interest expense by corresponding debt extinguishment costs of $32 million, other securities losses of $0.4 million and a write-off of $1 million recognized in net interest income in connection with the purchase of certain of the Corporation's outstanding senior and subordinated notes and the prepayment of term Federal Home Loan Bank advances.

Non-interest Expense

Non-interest expense was $141 million in the second quarter of 2021, a decrease of $38 million compared to the first quarter of 2021, with the decrease driven by costs recognized during the first quarter of 2021 associated with the aforementioned balance sheet restructuring.

Compared to the second quarter of 2020, non-interest expense decreased $2 million, or 2%, in the second quarter of 2021, due primarily to a decrease in salaries and employee benefits and debt extinguishment costs. In the second quarter of 2020 a $3 million prepayment penalty on redemption of FHLB advances was incurred. These decreases were partially offset by increases in multiple other non-interest expense categories.

Income Tax Expense

The effective income tax rate (ETR) was 16% for both the second and first quarters of 2021 as compared to 14% for second quarter of 2020. The increase was a result of higher income before income taxes, while net favorable permanent differences were relatively the same compared to the second quarter of 2020.

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

Safe Harbor Statement

This news release may contain forward-looking statements with respect to the Corporation's financial condition, results of operations and business. Do not unduly rely on forward-looking statements. Forward-looking statements can be identified by the use of words such as "may," "should," "will," "could," "estimates," "predicts," "potential," "continue," "anticipates," "believes," "plans," "expects," "future," "intends," "projects," the negative of these terms and other comparable terminology. These forward-looking statements may include projections of, or guidance on, the Corporation's future financial performance, expected levels of future expenses, 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, they are based on current beliefs, expectations and assumptions regarding the future of the Corporation's business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Corporation's control, and actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not unduly rely on any of these forward-looking statements. Any forward-looking statement is based only on information currently available and speaks only as of the date when made. The Corporation undertakes no obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

A discussion of certain risks and uncertainties affecting the Corporation, and some of the factors that could cause the Corporation's actual results to differ materially from those described in the forward-looking statements, can be found in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2020, Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 and other current and periodic reports, which have been or will be filed with the Securities and Exchange Commission and are or will be available in the Investor Relations section of the Corporation's website (www.fult.com) and on the Securities and Exchange Commission's website (www.sec.gov).

Non-GAAP Financial Measures

The Corporation uses certain non-GAAP financial measures in this earnings release. These non-GAAP financial measures are reconciled to the most comparable GAAP measures in tables at the end of this release.

FULTON FINANCIAL CORPORATION
SUMMARY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
in thousands, except per-share data and percentages
	Three months ended
	Jun 30		Mar 31		Dec 31		Sep 30		Jun 30
	2021		2021		2020		2020		2020
Ending Balances
Investments	$	3,921,658	$	3,612,010	$	3,340,424	$	3,097,721	$	2,974,813
Net Loans	18,586,756		18,990,986		18,900,820		19,028,621		18,704,722
Total assets	26,079,774		25,892,990		25,906,733		25,543,281		24,617,863
Deposits	21,724,312		21,633,838		20,839,207		20,730,051		19,884,208
Shareholders' equity	2,692,958		2,629,655		2,616,828		2,390,261		2,340,501

Average Balances
Investments	$	3,670,333	$	3,448,166	$	3,221,289	$	2,977,672	$	3,096,632
Net Loans	18,906,556		18,980,586		18,994,514		18,880,519		18,331,797
Total assets	26,017,542		26,082,816		25,749,405		25,169,508		24,139,116
Deposits	21,765,601		21,117,024		20,791,522		20,388,447		19,276,658
Shareholders' equity	2,669,413		2,637,098		2,544,866		2,374,091		2,309,133

Income Statement
Net interest income	$	162,399	$	164,448	$	161,591	$	154,116	$	152,754
Provision for credit losses	(3,500)		(5,500)		6,240		7,080		19,570
Non-interest income	51,890		95,397		55,574		63,248		55,922
Non-interest expense	140,831		178,384		154,737		139,147		143,006
Income before taxes	76,958		86,961		56,187		71,137		46,101
Net income available to common shareholders	62,402		70,472		48,690		61,607		39,559
Pre-provision net revenue⁽¹⁾	75,575		81,795		64,092		80,043		67,125

Per Share
Net income available to common shareholders (basic)	$	0.38	$	0.43	$	0.30	$	0.38	$	0.24
Net income available to common shareholders (diluted)	$	0.38	$	0.43	$	0.30	$	0.38	$	0.24
Cash dividends	$	0.14	$	0.14	$	0.17	$	0.13	$	0.13
Common shareholders' equity	$	15.34	$	14.99	$	14.93	$	14.74	$	14.45
Common shareholders' equity (tangible)⁽¹⁾	$	12.05	$	11.69	$	11.62	$	11.44	$	11.15
Weighted average shares (basic)	162,785		162,441		162,242		162,061		161,715
Weighted average shares (diluted)	163,858		163,737		163,071		162,579		162,267

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

	Three months ended
	Jun 30		Mar 31		Dec 31		Sep 30		Jun 30
	2021		2021		2020		2020		2020
Asset Quality
Net charge-offs (recoveries) to average loans (annualized)	0.15	%	0.13	%	(0.07)	%	(0.05)	%	0.09	%
Non-performing loans to total loans	0.83	%	0.80	%	0.78	%	0.75	%	0.75	%
Non-performing assets to total assets	0.60	%	0.60	%	0.58	%	0.57	%	0.59	%
ACL - loans⁽²⁾ to total loans	1.37	%	1.40	%	1.47	%	1.40	%	1.37	%
ACL - loans⁽²⁾ to non-performing loans	166	%	174	%	189	%	188	%	183	%

Asset Quality, excluding PPP⁽¹⁾⁽³⁾
Net charge-offs (recoveries) to adjusted average loans (annualized)	0.16	%	0.14	%	(0.08)	%	(0.06)	%	0.10	%
Non-performing loans to total adjusted loans	0.88	%	0.88	%	0.85	%	0.83	%	0.83	%
ACL - loans⁽²⁾to total adjusted loans	1.46	%	1.54	%	1.60	%	1.56	%	1.53	%

Profitability
Return on average assets	1.00	%	1.14	%	0.79	%	0.97	%	0.66	%
Return on average common shareholders' equity	9.38	%	10.84	%	7.61	%	10.32	%	6.89	%
Return on average common shareholders' equity (tangible)⁽¹⁾	12.93	%	15.00	%	10.32	%	13.50	%	8.99	%
Net interest margin	2.73	%	2.79	%	2.75	%	2.70	%	2.81	%
Efficiency ratio⁽¹⁾	63.8	%	63.0	%	62.5	%	62.3	%	66.4	%

Capital Ratios
Tangible common equity ratio⁽¹⁾	7.7	%	7.5	%	7.4	%	7.4	%	7.5	%
Tier 1 leverage ratio⁽⁴⁾	8.4	%	8.3	%	8.2	%	7.4	%	7.6	%
Common equity Tier 1 capital ratio⁽⁴⁾	9.9	%	9.8	%	9.5	%	9.5	%	9.5	%
Tier 1 capital ratio⁽⁴⁾	10.9	%	10.8	%	10.5	%	9.5	%	9.5	%
Total risk-based capital ratio⁽⁴⁾	14.3	%	14.2	%	14.4	%	13.9	%	13.8	%

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

(2) "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.

(3) Asset quality information excluding Paycheck Protection Program ("PPP") loans. Refer to the calculation on the page titled "Reconciliation of Non-GAAP Measures" at the end of this document.

(4) Regulatory capital ratios as of June 30, 2021 are preliminary and prior periods are actual.

FULTON FINANCIAL CORPORATION
CONDENSED CONSOLIDATED ENDING BALANCE SHEETS (UNAUDITED)
dollars in thousands
												% Change from
		Jun 30		Mar 31		Dec 31		Sep 30		Jun 30		Mar 31		Jun 30
		2021		2021		2020		2020		2020		2021		2020
ASSETS
	Cash and due from banks	$	143,002	$	102,570	$	120,462	$	139,304	$	141,702	39.4	%	0.9	%
	Other interest-earning assets	1,823,688		1,625,515		1,819,499		1,489,550		1,007,939		12.2	%	80.9	%
	Loans held for sale	41,924		34,092		83,886		93,621		77,415		23.0	%	(45.8)	%
	Investment securities	3,921,658		3,612,010		3,340,424		3,097,721		2,974,813		8.6	%	31.8	%
	Net Loans	18,586,756		18,990,986		18,900,820		19,028,621		18,704,722		(2.1)	%	(0.6)	%
	Less: ACL - loans⁽¹⁾	(255,032)		(265,986)		(277,567)		(266,825)		(256,537)		(4.1)	%	(0.6)	%
	Loans, net	18,331,724		18,725,000		18,623,253		18,761,796		18,448,185		(2.1)	%	(0.6)	%
	Net, premises and equipment	228,353		229,035		231,480		236,943		239,596		(0.3)	%	(4.7)	%
	Accrued interest receivable	63,232		65,649		72,942		70,766		73,720		(3.7)	%	(14.2)	%
	Goodwill and intangible assets	536,847		536,544		536,659		534,907		535,039		0.1	%	0.3	%
	Other assets	989,346		962,575		1,078,128		1,118,673		1,119,454		2.8	%	(11.6)	%
	Total Assets	$	26,079,774	$	25,892,990	$	25,906,733	$	25,543,281	$	24,617,863	0.7	%	5.9	%
LIABILITIES AND SHAREHOLDERS' EQUITY
	Deposits	$	21,724,312	$	21,633,838	$	20,839,207	$	20,730,051	$	19,884,208	0.4	%	9.3	%
	Short-term borrowings	533,749		520,989		630,066		611,727		572,551		2.4	%	(6.8)	%
	Other liabilities	501,542		482,101		524,369		515,230		525,407		4.0	%	(4.5)	%
	Long-term borrowings	627,213		626,407		1,296,263		1,296,012		1,295,196		0.1	%	(51.6)	%
	Total Liabilities	23,386,816		23,263,335		23,289,905		23,153,020		22,277,362		0.5	%	5.0	%
	Shareholders' equity	2,692,958		2,629,655		2,616,828		2,390,261		2,340,501		2.4	%	15.1	%
	Total Liabilities and Shareholders' Equity	$	26,079,774	$	25,892,990	$	25,906,733	$	25,543,281	$	24,617,863	0.7	%	5.9	%

LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL:

Fulton Financial Announces Second Quarter 2021 Results