-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IJJGbAWlbFUJBf7crCrb17X7wqerHTY7P5uxxinOeV6UkjCp3giK2KE4HDITJP7c ACaeC6dQ2MQ/jS9tMDgZ1w== 0000950109-00-002162.txt : 20000515 0000950109-00-002162.hdr.sgml : 20000515 ACCESSION NUMBER: 0000950109-00-002162 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FULTON FINANCIAL CORP CENTRAL INDEX KEY: 0000700564 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 232195389 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-10587 FILM NUMBER: 629179 BUSINESS ADDRESS: STREET 1: ONE PENN SQ STREET 2: PO BOX 4887 CITY: LANCASTER STATE: PA ZIP: 17604 BUSINESS PHONE: 7172912411 MAIL ADDRESS: STREET 1: ONE PENN SQ STREET 2: PO BOX 4887 CITY: LANCASTER STATE: PA ZIP: 17604 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20459 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 , or ------------------------------------ [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------ -------------- Commission File No. 0-10587 ------- FULTON FINANCIAL CORPORATION - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) PENNSYLVANIA 23-2195389 - ------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Penn Square, P.O. Box 4887 Lancaster, Pennsylvania 17604 ----------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (717) 291-2411 ----------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common Stock, $2.50 Par Value - 67,419,917 shares outstanding as of - ------------------------------------------------------------------- April 30, 2000. - --------------- FULTON FINANCIAL CORPORATION AND SUBSIDIARIES FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2000 INDEX ----- Description Page ----------- ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited): (a) Consolidated Balance Sheets - March 31, 2000 and December 31, 1999.................................3 (b) Consolidated Statements of Income - Three months ended March 31, 2000 and 1999...........................4 (c) Consolidated Statements of Shareholders' Equity - Three months ended March 31, 2000 and 1999...........................5 (d) Consolidated Statements of Cash Flows - Three months ended March 31, 2000 and 1999...........................6 (e) Notes to Consolidated Financial Statements - March 31, 2000..........7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...................9 Item 3. Quantitative and Qualitative Disclosures about Market Risk.....15 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K...............................19 SIGNATURES..............................................................20 2
FULTON FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) - ---------------------------------------------------------------------------------------------------------------------------- (Dollars in thousands, except per-share data) March 31 December 31 2000 1999 -------------------------------------- ASSETS - ---------------------------------------------------------------------------------------------------------------------------- Cash and due from banks ............................................................. $ 258,415 $ 245,572 Interest-bearing deposits with other banks .......................................... 2,309 1,798 Mortgage loans held for sale ........................................................ 1,419 1,016 Investment securities: Held to maturity (Fair value: $75,776 in 2000 and $84,777 in 1999) ............. 76,543 85,474 Available for sale ............................................................. 1,113,466 1,137,846 Loans ............................................................................... 4,513,407 4,432,030 Less: Allowance for loan losses ............................................... (58,034) (57,631) Unearned income ...................................................... (9,838) (9,623) --------------- --------------- Net Loans .................................................. 4,445,535 4,364,776 --------------- --------------- Premises and equipment .............................................................. 81,452 79,217 Accrued interest receivable ......................................................... 31,611 31,496 Other assets ........................................................................ 119,164 122,824 --------------- --------------- Total Assets ............................................... $ 6,129,914 $ 6,070,019 =============== =============== LIABILITIES - ------------------------------------------------------------------------------------- -------------------------------------- Deposits: Noninterest-bearing ............................................................ $ 793,563 $ 724,778 Interest-bearing ............................................................... 3,853,965 3,822,035 --------------- --------------- Total Deposits ............................................. 4,647,528 4,546,813 --------------- --------------- Short-term borrowings: Securities sold under agreements to repurchase.................................. 303,899 309,790 Federal funds purchased......................................................... 143,890 172,250 Demand notes of U.S. Treasury .................................................. 3,607 5,506 --------------- --------------- Total Short-Term Borrowings ................................ 451,396 487,546 --------------- --------------- Accrued interest payable ............................................................ 33,526 32,313 Other liabilities ................................................................... 64,532 60,803 Long-term debt ...................................................................... 323,194 328,250 --------------- --------------- Total Liabilities .......................................... 5,520,176 5,455,725 --------------- --------------- SHAREHOLDERS' EQUITY - ---------------------------------------------------------------------------------------------------------------------------- Common stock ($2.50 par) Shares: Authorized 400,000,000 Issued 72,824,439; Outstanding 71,335,092 (71,924,447 in 1999)........ 181,884 173,392 Capital surplus ..................................................................... 451,729 394,234 Retained earnings ................................................................... 24,154 75,482 Accumulated other comprehensive income............................................... (21,910) (11,846) Treasury stock, at cost (1,489,347 shares in 2000 and 899,992 shares in 1999)........ (26,119) (16,968) --------------- --------------- Total Shareholders' Equity ................................. 609,738 614,294 --------------- --------------- Total Liabilities and Shareholders' Equity.................. $ 6,129,914 $ 6,070,019 =============== =============== - ----------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements 3
FULTON FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - ------------------------------------------------------------------------------------------------ (Dollars in thousands, except per-share data) Three Months Ended March 31 ---------------------------------- 2000 1999 ---------------------------------- INTEREST INCOME - ------------------------------------------------------------------------------------------------ Loans, including fees ...................................... $ 91,368 $ 82,238 Investment securities: Taxable ............................................... 14,189 16,219 Tax-exempt ............................................ 2,205 1,792 Dividends ............................................. 1,105 993 Federal funds sold ......................................... 100 37 Interest-bearing deposits with other banks ................. 44 29 -------------- ------------- Total Interest Income ............ 109,011 101,308 INTEREST EXPENSE - ------------------------------------------------------------------------------------------------ Deposits ................................................... 37,226 36,030 Short-term borrowings ...................................... 6,256 2,870 Long-term debt ............................................. 4,409 3,782 -------------- ------------- Total Interest Expense ............ 47,891 42,682 -------------- ------------- Net Interest Income ............... 61,120 58,626 PROVISION FOR LOAN LOSSES .................................. 2,025 1,967 -------------- ------------- Net Interest Income After Provision for Loan Losses ...... 59,095 56,659 -------------- ------------- OTHER INCOME - ------------------------------------------------------------------------------------------------ Investment management and trust services.................... 4,921 3,417 Service charges on deposit accounts ........................ 5,584 4,770 Other service charges and fees ............................. 3,081 2,786 Mortgage banking income..................................... 590 1,283 Investment securities gains ................................ 2,476 3,057 -------------- ------------- Total Other Income ................ 16,652 15,313 OTHER EXPENSES - ------------------------------------------------------------------------------------------------ Salaries and employee benefits ............................. 22,745 21,362 Net occupancy expense ...................................... 3,591 3,275 Equipment expense .......................................... 2,483 2,293 Special services ........................................... 2,773 2,880 Other ...................................................... 8,194 8,888 -------------- ------------- Total Other Expenses .............. 39,786 38,698 -------------- ------------- Income Before Income Taxes ........ 35,961 33,274 INCOME TAXES................................................ 10,647 9,747 -------------- ------------- Net Income ........................ $ 25,314 $ 23,527 ============== ============= - ------------------------------------------------------------------------------------------------ PER-SHARE DATA: Net income (basic).......................................... $ 0.35 $ 0.32 Net income (diluted)........................................ 0.35 0.32 Cash dividends ............................................. 0.143 0.130 - ------------------------------------------------------------------------------------------------
See notes to consolidated financial statements 4 FULTON FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) THREE MONTHS ENDED MARCH 31, 2000 AND 1999
Accumulated Other Comprehen- Common Capital Retained sive (Dollars in thousands, except per-share data) Stock Surplus Earnings Income - --------------------------------------------------------------------------------------------------------- Balance at December 31, 1999 ......................... $ 173,392 $ 394,234 $ 75,482 $ (11,846) Comprehensive income: Net income ...................................... 25,314 Other - net unrealized loss on securities (net of $5.4 million tax benefit) (10,064) Total comprehensive income ................. Stock dividends declared - 5% (3,396,909 shares) ..... 8,492 57,929 (66,421) Stock issued (59,125 shares of treasury stock) ....... (434) Acquisition of treasury stock (648,480 shares) ....... Cash dividends - $0.143 per share .................... (10,221) ------------------------------------------------ Balance at March 31, 2000 ............................ $ 181,884 $ 451,729 $ 24,154 $ (21,910) ================================================ Balance at December 31, 1998 ......................... $ 157,638 $ 293,897 $ 136,668 $ 23,619 Comprehensive income: Net income ...................................... 23,527 Other - net unrealized gain on securities (net of $1.9 million tax benefit) ..................... (3,463) Total comprehensive income ................. Stock dividends issued - 10% (6,605,367 shares) ...... 15,727 115,122 (130,849) Stock issued (55,929 shares of treasury stock) ....... (558) Acquisition of treasury stock (41,685 shares) ........ Cash dividends - $0.130 per share .................... (9,421) ------------------------------------------------ Balance at March 31, 1999 ............................ $ 173,365 $ 408,461 $ 19,925 $ 20,156 ================================================ - --------------------------------------------------------------------------------------------------------- Treasury (Dollars in thousands, except per-share data) Stock Total - ------------------------------------------------------------------------------- Balance at December 31, 1999 ......................... (16,968) $ 614,294 Comprehensive income: Net income ...................................... 25,314 Other - net unrealized loss on securities (net of 5.4 million tax benefit) (10,064) ---------- Total comprehensive income ................. 15,250 ---------- Stock dividends declared - 5% (3,396,909 shares) ..... -- Stock issued (59,125 shares of treasury stock) ....... 1,002 568 Acquisition of treasury stock (648,480 shares) ....... (10,153) (10,153) Cash dividends - $0.143 per share .................... (10,221) ---------------------- Balance at March 31, 2000 ............................ $ (26,119) $ 609,738 ====================== Balance at December 31, 1998 ......................... $ (3,488) $ 608,334 Comprehensive income: Net income ...................................... 23,527 Other - net unrealized gain on securities (net of $1.9 million taxbenefit ....................... (3,463) ---------------------- Total comprehensive income ................. 20,064 ---------------------- Stock dividends issued - 10% (6,605,367 shares) ...... -- Stock issued (55,929 shares of treasury stock) ....... 910 352 Acquisition of treasury stock (41,685 shares) ........ (780) (780) Cash dividends - $0.130 per share .................... (9,421) ---------------------- Balance at March 31, 1999 ............................ $ (3,358) $ 618,549 ====================== - --------------------------------------------------------------------------------------------------------- See notes to consolidated financial statements
5
FULTON FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - --------------------------------------------------------------------------------------------------------------------------- (In thousands) Three Months Ended March 31 ---------------------------------- 2000 1999 ---------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income........................................................................ $ 25,314 $ 23,527 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses ................................................... 2,025 1,967 Depreciation and amortization of premises and equipment ..................... 2,536 2,383 Net amortization of investment security premiums ............................ 131 405 Investment security gains ................................................... (2,476) (3,057) Net increase in mortgage loans held for sale................................. (403) (1,341) Amortization of intangible assets ........................................... 328 325 (Increase) decrease in accrued interest receivable .......................... (115) 1,045 Decrease in other assets .................................................... 8,718 12,784 Increase (decrease) in accrued interest payable ............................. 1,213 (26) Increase in other liabilities................................................ 3,796 7,273 ------------- ------------- Total adjustments...................................................... 15,753 21,758 ------------- ------------- Net cash provided by operating activities .............................. 41,067 45,285 ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sales of securities available for sale ............................. 4,809 7,070 Proceeds from maturities of securities held to maturity .......................... 9,285 38,524 Proceeds from maturities of securities available for sale ........................ 40,422 73,018 Purchase of securities held to maturity .......................................... (346) (121) Purchase of securities available for sale ........................................ (33,964) (85,307) Increase in short-term investments ............................................... (511) (2,115) Net increase in loans ............................................................ (82,784) (20,560) Purchase of premises and equipment................................................ (4,771) (2,609) ------------- ------------- Net cash (used in) provided by investing activities .................... (67,860) 7,900 ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net increase (decrease) in demand and savings deposits ........................... 88,673 (70,551) Net increase (decrease) in time deposits ......................................... 12,042 (13,995) Decrease in long-term debt........................................................ (5,056) (192) (Decrease) increase in short-term borrowings ..................................... (36,150) 19,422 Dividends paid ................................................................... (10,288) (9,413) Net proceeds from issuance of common stock ....................................... 568 352 Acquisition of treasury stock .................................................... (10,153) (780) ------------- ------------- Net cash provided by (used in) financing activities..................... 39,636 (75,157) ------------- ------------- Net Increase (Decrease) in Cash and Due From Banks ............................... 12,843 (21,972) Cash and Due From Banks at Beginning of Period ................................... 245,572 247,558 ------------- ------------- Cash and Due From Banks at End of Period ......................................... $ 258,415 $ 225,586 ============= ============= Supplemental Disclosures of Cash Flow Information Cash paid during the period for: Interest .................................................................... $ 46,678 $ 42,708 Income taxes ................................................................ 500 - - ---------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements 6 FULTON FINANCIAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- NOTE A - Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. NOTE B - Stock Dividends The Corporation declared a 5% stock dividend on April 18, 2000 which will be paid on May 31, 2000 to shareholders of record on May 8, 2000. All share and per-share information has been restated to reflect the effect of this stock dividend. In addition, shareholders' equity accounts have been adjusted to reflect the impact of the dividend, assuming 67,938,000 shares are outstanding on the payment date. NOTE C - Net Income Per Share The Corporation's basic net income per share is calculated as net income divided by the weighted average number of shares outstanding. For diluted net income per share, net income is divided by the weighted average number of shares outstanding plus the incremental number of shares added as a result of converting common stock equivalents, calculated using the treasury stock method. The Corporation's common stock equivalents consist solely of outstanding stock options. A reconciliation of the weighted average shares outstanding used to calculate basic net income per share and diluted net income per share follows (in thousands):
Three months ended March 31, ---------------------------- 2000 1999 ---- ---- Weighted average shares outstanding (basic)....... 71,648 72,628 Impact of common stock equivalents................ 307 427 -------- -------- Weighted average shares outstanding (diluted)..... 71,955 73,055 ======== ========
NOTE D - Comprehensive Income The following table summarizes the reclassification adjustment for realized security gains (net of taxes) for each of the indicated periods (in thousands):
2000 1999 ---- ---- Unrealized holding losses arising during period....... $ (8,455) $ (1,476) Less: reclassification adjustment for gains included in net income................................. 1,609 1,987 ------------- ------------- Net unrealized losses on securities................... $ (10,064) $ (3,463) ============= =============
7 NOTE E - New Accounting Standards Accounting for Derivative Instruments and Hedging Activities: In June, 1998, the FASB issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (Statement 133). This statement expanded the previous definition of derivatives to include certain additional transactions. Entities are required to record derivatives at their fair values and recognize any changes in fair value in current period earnings, unless specific hedge criteria are met. Statement 133, as amended by Statement 137, is effective for years beginning after June 15, 2000. The Corporation does not expect the adoption of Statement 133 to have a material effect on its balance sheet or net income. NOTE F - Reclassifications Certain amounts in the 1999 consolidated financial statements and notes have been reclassified to conform to the 2000 presentation. 8 FULTON FINANCIAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- This discussion concerns Fulton Financial Corporation (the Corporation), a bank holding company incorporated under the laws of the Commonwealth of Pennsylvania in 1982, and its wholly-owned subsidiaries. This discussion and analysis should be read in conjunction with the consolidated financial statements and other financial information presented in this report. The Corporation has made, and may continue to make, certain forward-looking statements with respect to its management of net interest income and margin, the ability to realize gains on equity investments, allowance and provision for loan losses and expected levels of certain non-interest expenses. The Corporation cautions that these forward-looking statements are subject to various assumptions, risks and uncertainties. Because of the possibility of changes in these assumptions, risks and uncertainties, actual results could differ materially from forward-looking statements. In addition to the factors identified herein, the following could cause actual results to differ materially from such forward looking statements: pricing pressures on loan and deposit products, actions of bank and nonbank competitors, changes in local and national economic conditions, changes in regulatory requirements and regulatory oversight of the Corporation, actions of the Federal Reserve Board, the Corporation's success in merger and acquisition integration and the impact of changes in third-party contracts. The Corporation's forward-looking statements are relevant only as of the date on which such statements are made. By making any forward-looking statements, the Corporation assumes no duty to update them to reflect new, changing or unanticipated events or circumstances. MERGER AND ACQUISITION ACTIVITY - ------------------------------- On February 23, 2000, the Corporation entered into a merger agreement to acquire Skylands Financial Corporation (SFC) of Hackettstown, New Jersey. SFC is a $225 million bank holding company whose sole banking subsidiary, Skylands Community Bank (Skylands), operates eight community banking offices in Morris, Warren and Sussex counties. Under the terms of the merger agreement, each of the 2.5 million shares of SFC's common stock will be exchanged for 0.819 shares of the Corporation's common stock. In addition, the 308,000 options to acquire SFC stock will also be exchanged for options to purchase the Corporation's common stock. If the price of the Corporation's stock as of a defined pricing period prior to the merger is higher or lower than specified maximum and minimum prices, the agreement may be terminated or the exchange ratio may be modified. The acquisition is subject to approval by bank regulatory authorities and SFC shareholders. The transaction is expected to be completed in the third quarter of 2000 and will be accounted for as a purchase. As a result of the acquisition, SFC will be merged with and into Fulton Financial Corporation (parent company) and Skylands will become the Corporation's twelfth banking subsidiary. RESULTS OF OPERATIONS - --------------------- Quarter ended March 31, 2000 versus Quarter ended March 31, 1999 - ----------------------------------------------------------------- The Corporation's net income for the first quarter of 2000 increased $1.8 million, or 7.6%, in comparison to net income for the first quarter of 1999. Diluted net income per share increased $0.03, or 9.4%, compared to 1999. First quarter net income of $25.3 million, or $0.35 per share (basic and diluted), represented a 9 return on average assets (ROA) of 1.67% and a return on average equity (ROE) of 16.57%. This compares to 1999 net income of $23.5 million, or $0.32 per share (basic and diluted) (1.66% ROA and 15.62% ROE). The increase in net income in 2000 resulted from continued expansion of the Corporation's core banking business, as shown by increases in both net interest income and non-interest income. Offsetting these increases were modest increases in the provision for loan losses and other expenses as well as a decrease in investment securities gains. Net Interest Income - ------------------- Net interest income increased $2.5 million, or 4.3%, for the quarter. Overall, this increase was a result of growth in the Corporation's balance sheet, offset by a decline in net interest margin. The following tables summarize the components of the increase in net interest income as well as the changes in average balances of interest-earning assets and interest-bearing liabilities from the first quarter of 1999 to the first quarter of 2000 and the average interest rates thereon. All dollar amounts are in thousands.
Three Months Ended March 31 Change -------------------------------------- ------------------------------------- 2000 1999 $ % ----------------- ----------------- ---------------- ----------------- Interest income ................. $ 109,011 $ 101,308 $ 7,703 7.6% Interest expense................. 47,891 42,682 5,209 12.2% ----------------- ----------------- ---------------- ----------------- Net interest income.............. $ 61,120 $ 58,626 $ 2,494 4.3% ================= ================= ================ =================
Three Months Ended March 31 -------------------------------------- 2000 1999 Change ----------------- ----------------- ---------------- Loans................................................. $ 4,468,516 $ 4,040,547 $ 427,969 Investment securities................................. 1,232,289 1,315,965 (83,676) Other earning assets.................................. 8,991 6,067 2,924 ----------------- ----------------- ---------------- Total interest-earning assets......................... $ 5,709,796 $ 5,362,579 $ 347,217 ================= ================= ================ Yield on earning assets (fully taxable equivalent).... 7.79% 7.74% 0.05% Deposits.............................................. $ 3,821,613 $ 3,790,317 $ 31,296 Short-term borrowings................................. 478,442 268,398 210,044 Long-term debt........................................ 340,692 295,900 44,792 ----------------- ----------------- ---------------- Total interest-bearing liabilities.................... $ 4,640,747 $ 4,354,615 $ 286,132 ================= ================= ================ Cost of interest-bearing liabilities.................. 4.15% 3.97% 0.18% Net interest margin (fully taxable equivalent)........ 4.42% 4.52% (0.10%)
The 7.6% increase in interest income was mainly volume driven as the growth in the Corporation's balance sheet, particularly average loans, accounted for an interest income increase of approximately $6.7 million. The five basis point increase in the average yield and an additional day in the 2000 quarter as a result of leap year accounted for the remaining $1.0 million increase. The average balance sheet growth was fueled mainly by loans, which increased $428 million, or 10.6%, in 2000 as compared to 1999. Commercial lending continued to be strong, as shown by a $314 million, or 15.7%, increase in the average balances of commercial loans and mortgages. Although the Corporation has had success in growing its loan portfolio, overall yields on loans have remained flat over the past year, despite an increase in the Corporation's average prime lending rate from 7.75% in 1999 to 8.68% in 2000. This has resulted from the continuing competition for new loans in the Corporation's markets. The increase 10 in the prime rate was related to the actions of the Federal Reserve Board, and reflects the changes in the interest rate environment in general. Average investment securities decreased $84 million, or 6.4%. In general, this decrease resulted from maturities and payoffs of United States obligations and mortgage-backed securities being reinvested in loans. The Corporation did continue its recent strategy of investing in tax-free municipal securities which, over the past year, have had taxable equivalent rates which were at least comparable to other investment alternatives. The average balance of these investments increased $45 million, or 28.1%, to $204 million. The 12.2% increase in interest expense was a result of both volume and rate increases. The 6.6% increase in average interest-bearing liabilities resulted in a $2.8 million increase in interest expense. The remaining $2.4 million increase resulted from the 18 basis point increase in the cost of funds as well as an additional day during the 2000 quarter. Deposit growth continued to be a challenge as shown by an average balance increase of only $31 million, or 0.8%. To support the strong loan growth, the Corporation looked to alternative funding sources. Short-term borrowings increased $210 million, or 78.3%, mainly in federal funds purchased. Long-term debt, which consists almost entirely of advances from the Federal Home Loan Bank, increased $45 million, or 15.1%. The Corporation's average cost of interest-bearing liabilities increased 18 basis points from the first quarter of 1999 to 4.15% in 2000. This increase, which is 13 basis points higher than the change experienced on interest earning assets, was the result of a shift in funding toward borrowings and strong competition for deposits. Overall, the Corporation's net interest margin on a fully taxable equivalent basis decreased ten basis points to 4.42% in 2000 from 4.52% in 1999. This reflects the pricing competition for loans and deposits and an increase in borrowings as a funding source. Despite these factors, however, management believes that its asset/liability management strategies documented in the "Market Risk" discussion have been successful in minimizing the net interest margin decline. Provision and Allowance for Loan Losses - --------------------------------------- The following table summarizes loans outstanding (including unearned income) as of the dates shown:
March 31 December 31 2000 1999 ---------------- ---------------- (in thousands) Commercial, financial and agricultural............. $ 1,095,176 $ 1,051,958 Real estate - construction......................... 181,899 164,583 Real estate - mortgage............................. 2,396,110 2,371,764 Consumer .......................................... 770,431 774,098 Leasing and other.................................. 69,791 69,627 ---------------- ---------------- Totals.......................................... $ 4,513,407 $ 4,432,030 ================ ================
The loans summary as of December 31, 1999 as shown above has been restated to conform to the presentation adopted in 2000 as a result of changes in the Corporation's financial reporting system. In addition to some immaterial classification changes, approximately $400 million of loans previously classified as commercial mortgages are now being shown as commercial loans. This reclassification has no impact on the Corporation's assessment of the risk of these loans for allowance evaluation purposes. The allowance for loan loss procedures as documented in the following section are applied to categories of loans based on source system classification or to individually large credits. These procedures are not dependent upon the ultimate classification of the loans for financial reporting purposes. 11 The following table summarizes the activity in the Corporation's allowance for loan losses:
Three Months Ended March 31 ------------------------------------ 2000 1999 --------------- --------------- (dollars in thousands) Loans outstanding at end of period (net of unearned)............... $ 4,503,569 $ 4,050,009 =============== =============== Daily average balance of loans and leases.......................... $ 4,468,516 $ 4,040,547 =============== =============== Balance of allowance for loan losses at beginning of period........................................ $ 57,631 $ 57,415 Loans charged-off: Commercial, financial and agricultural......................... 816 624 Real estate - mortgage......................................... 349 157 Consumer....................................................... 1,777 1,403 Leasing and other.............................................. 93 17 --------------- --------------- Total loans charged-off........................................ 3,035 2,201 --------------- --------------- Recoveries of loans previously charged-off: Commercial, financial and agricultural......................... 376 560 Real estate - mortgage......................................... 288 284 Consumer....................................................... 748 415 Leasing and other.............................................. 1 - --------------- --------------- Total recoveries............................................... 1,413 1,259 --------------- --------------- Net loans charged-off.............................................. 1,622 942 Provision for loan losses.......................................... 2,025 1,967 --------------- --------------- Balance at end of period........................................... $ 58,034 $ 58,440 =============== =============== Net charge-offs to average loans (annualized)...................... 0.15% 0.09% =============== =============== Allowance for loan losses to loans outstanding..................... 1.29% 1.44% =============== ===============
The following table summarizes the Corporation's non-performing assets as of the indicated dates.
March 31 Dec. 31 March 31 (Dollars in thousands) 2000 1999 1999 --------------- --------------- --------------- Nonaccrual loans..................................... $ 18,914 $ 18,653 $ 18,149 Loans 90 days past due and accruing.................. 6,864 8,516 11,009 Other real estate owned (OREO)....................... 816 917 1,478 --------------- --------------- --------------- Total non-performing assets.......................... $ 26,594 $ 28,086 $ 30,636 =============== =============== =============== Non-performing loans/Total loans..................... 0.57% 0.61% 0.72% Non-performing assets/Total assets................... 0.43% 0.46% 0.53% Non-performing assets/Gross loans and OREO........... 0.59% 0.63% 0.76%
Additions to the allowance for loan losses are charged to income through the provision for loan losses when, in the opinion of management and based on continuing analyses of the loan portfolio, it is believed that the allowance is not adequate. Management considers various factors in assessing the adequacy of the allowance for loan losses and determining the provision for the period. Among these are charge-off history and trends, risk classification of significant credits, adequacy of collateral, the mix and risk 12 characteristics of loan types in the portfolio, and the balance of the allowance relative to total and nonperforming loans. Additional consideration is given to local and national economic conditions. The Corporation's policy is individually applied to each of its eleven affiliate banks. Resulting provisions and allowances are aggregated for consolidated financial reporting. For the first quarter of 2000, net charge-offs totaled $1.6 million, or 0.15%, of average loans on an annualized basis. This compares to $942,000, or 0.09%, for the first quarter of 1999. Non-performing loans, including loans 90 days past due and still accruing, to total loans were 0.57% at March 31, 2000 as compared to 0.61% at December 31, 1999 and 0.72% at March 31, 1999. The provision for loan losses increased $58,000, or 2.9%, to $2.0 million in 2000. This increase was due to an increase in net charge-offs. However, given that overall loan quality continued to be strong, as reflected by the non-performing assets ratios at March 31, 2000, the provision did not increase relative to the level of charge-offs. The Corporation's periodic loan portfolio review and allowance calculation resulted in an unallocated allowance for loan losses of 28% at March 31, 2000 and 32% at December 31, 1999. This fairly stable unallocated level supports the provision for loan losses for the quarter and the balance of the allowance for loan losses as of March 31, 2000. Management believes that the allowance balance of $58.0 million is sufficient to cover losses incurred in the loan portfolio and appropriate based on applicable accounting standards. Other Income - ------------ Other income for the quarter ended March 31, 2000 was $16.7 million. This was a increase of $1.3 million, or 8.7%, over the comparable period in 1999. Excluding investment security gains, which decreased from $3.1 million in 1999 to $2.5 million in 2000, other income increased $1.9 million, or 15.7%. Increases were realized in every major category, except mortgage banking income. Investment management and trust services income increased $1.5 million, or 44.0%, primarily due to the continued roll-out of investment brokerage services at all eleven of the Corporation's subsidiary banks. Service charges on deposit accounts increased $814,000, or 17.1%, as a result of an increase in cash management income ($331,000, or 41.5%, increase) and overdraft fees (234,000, or 13.9%, increase). Other service charges and fees increased $295,000, or 10.6%, mainly due to debit card income. Mortgage banking income, which consists of gains on mortgage loan sales and servicing income, decreased $693,000, or 54.0%. This decline was almost entirely due to a drop in sale volume as interest rates have risen and refinance activity has therefore decreased. Other Expenses - -------------- Total other expenses for the first quarter of 2000 of $39.8 million increased $1.1 million, or 2.8%, from 1999. The Corporation's efficiency ratio, which is the ratio of noninterest expense to fully taxable equivalent revenues (excluding security gains), decreased to 51.6% in 2000 from 53.4% in 1999. Salaries and employee benefits increased $1.4 million, or 6.5%, in comparison to the first quarter of 1999. This increase reflects normal merit increases, an increase in average full-time equivalent employees from 2,328 in 1999 to 2,356 in 2000, a lower volume of mortgage originations, resulting in lower deferred salary expense, and the addition of manager level staff to support expanding business initiatives, primarily in investment management and trust services. Other expenses, excluding salaries and benefits, remained fairly stable, decreasing $295,000, or 1.7%, from $17.3 million in 1999 to $17.0 million in 2000. 13 Income Taxes - ------------ Income tax expense for the first quarter of 2000 was $10.6 million, a $900,000, or 9.2%, increase from $9.7 million in 1999. The Corporation's effective tax rates remained stable at 29.6% in 2000 and 29.3% in 1999. The effective rate is lower than the federal statutory rate of 35% due mainly to investments in tax-free municipal securities and federal tax credits from investments in low and moderate income housing partnerships. FINANCIAL CONDITION - ------------------- At March 31, 2000, the Corporation had total assets of $6.1 billion, reflecting an increase of $59.9 million, or 1.0%, from December 31, 1999. The increase in assets was almost entirely due to loan growth, with loans (net of unearned) growing $81.2 million, or 1.8%, to $4.5 billion at March 31, 2000. As discussed in the "Net Interest Income" section, recent loan growth has been realized primarily in commercial loans and mortgages. These loan types increased $66.0 million, or 2.9%, from December 31, 1999 to March 31, 2000. Offsetting the increase in loans was a $33.3 million, or 2.7%, decrease in investment securities. This decrease resulted from a $15.6 million increase in the net unrealized loss on investment securities as a result of interest rate and market conditions. The remaining decrease in investment securities balances resulted from the net effect of normal maturities and payoffs. Deposits increased $100.7 million, or 2.2%, to $4.6 billion at March 31, 2000. Of this increase, $68.8 million was realized in noninterest-bearing (a 9.5% increase), while the remainder was interest-bearing deposits (a 0.8% increase). The growth in noninterest-bearing deposits was somewhat distorted by large deposits by certain commercial customers on March 31, 2000. This also contributed to the $12.8 million, or 5.2%, increase in cash and due from banks. Short-term borrowings, which include federal funds purchased and repurchase agreements with customers and other third parties, declined $36.2 million, or 7.4%, to $451.4 million at March 31, 2000. Long-term debt also decreased, ending the quarter at $323.4, down $5.1 million. The Corporation was able to fund the strong loan growth during the quarter primarily with deposits, thus temporarily reducing its reliance on borrowings. Capital Resources - ----------------- Shareholders' equity decreased $4.6 million, or 0.7%, during the first three months of 2000. This decrease was due to: 1) the Corporation continuing to buy back its stock pursuant to repurchase plans discussed later 14 in this section, resulting in a $9.2 million, or 53.4%, increase in treasury stock; and 2) the net unrealized losses on available for sale investment securities, which resulted in a $10.1 million, or 85.0%, increase in the shareholders' equity portion of the loss. Offsetting these decreases was the net increase to retained earnings as a result of net income for the period, less dividends paid to shareholders. The 40.4% dividend payout ratio on total net income of $25.3 million for the quarter resulted in a net increase to retained earnings of $15.1 million. Common stock, capital surplus and retained earnings were also adjusted during the quarter for the estimated impact of the 5% stock dividend declared on April 18, 2000. See Note B to the financial statements. On December 31, 1999, the Corporation's Board of Directors approved an open market repurchase program for the Corporation's common stock for up to 1.05 million shares. In January, 2000, the Board approved a second open market repurchase program of up to 2.1 million shares. The second plan was adopted as a means to minimize any increase in the number of outstanding shares of the Corporation as a result of its merger with SFC. To consummate the merger, the Corporation will issue treasury shares acquired under these repurchase programs and, if necessary, shares acquired under prior repurchase programs or authorized but unissued shares. Through March 31, 2000, 376,000 shares had been repurchased under the 1.05 million share program (310,000 shares during the first quarter of 2000) and 338,000 shares had been repurchased under the 2.1 million share program. Current capital guidelines measure the adequacy of a bank holding company's capital by taking into consideration the differences in risk associated with holding various types of assets as well as exposure to off-balance sheet commitments. The guidelines call for a minimum risk-based Tier I capital percentage of 4.0% and a minimum risk-based total capital percentage of 8.0%. Tier I capital includes common shareholders' equity less goodwill and non-qualified intangible assets. Total capital includes all Tier I capital components plus the allowance for loan losses. The Corporation is also subject to a "leverage capital" requirement, which compares capital (using the definition of Tier I capital) to total balance sheet assets and is intended to supplement the risk based capital ratios in measuring capital adequacy. The minimum acceptable leverage capital ratio is 3.0% for institutions such as the Corporation which are highly-rated in terms of safety and soundness. Other institutions are expected to maintain capital levels at least one or two percent above the minimum. As of March 31, 2000, the Corporation and each of its subsidiaries met the minimum capital requirements. In addition, the Corporation and each of its subsidiaries' capital ratios exceeded the amounts required to be considered "well-capitalized" as defined in the regulations. The Corporation's total and Tier I risk-based capital ratios have placed the Corporation in the top half of its self-defined peer group over the past year. The Corporation's ratio of Tier I capital to average assets has placed it in the top quartile in comparison to its peers. MARKET RISK - ----------- Market risk is the exposure to economic loss that arises from changes in the values of certain financial instruments. The types of market risk exposures generally faced by banking entities include interest rate risk, equity market price risk, foreign currency risk and commodity price risk. Due to the nature of its operations, only equity market price risk and interest rate risk are significant to the Corporation. 15 Equity Market Price Risk - ------------------------ Equity market price risk is the risk that changes in the values of equity investments could have a material impact on the financial position or results of operations of the Corporation. The Corporation's equity investments consist of common stocks of publicly traded financial institutions (cost basis of approximately $52.0 million) and U.S. Government agency stock (cost basis of approximately $33.3 million). The Corporation's financial institutions stock portfolio had net unrealized gains of approximately $5.0 million at March 31, 2000. Although the book value of equity investments accounted for only 1.5% of the Corporation's total assets, the unrealized gains on the portfolio represent a potential source of revenue. The Corporation has a history of periodically realizing gains from this portfolio and, if values were to decline significantly, this revenue source could be lost. Although the net unrealized gains at the end of the quarter were less than $5 million, gross unrealized gains were $10.0 million. The Corporation manages its equity market price risk by investing primarily in regional financial institutions. Management continuously monitors the fair value of its equity investments and evaluates current market conditions and operating results of the companies. Periodic sale and purchase decisions are made based on this monitoring process. None of the Corporation's equity securities are classified as trading. Future cash flows from these investments are not provided in the "Interest Rate Sensitivity" table on the following page since none have maturity dates. Interest Rate Risk - ------------------ Interest rate risk creates exposure in two primary areas. First, changes in rates have an impact on the Corporation's liquidity position and could affect its ability to meet obligations and continue to grow. Second, movements in interest rates can create fluctuations in the Corporation's net income and changes in the economic value of its equity. The Corporation employs various management techniques to minimize its exposure to interest rate risk. An Asset/Liability Management Committee (ALCO), consisting of key financial and senior management personnel, meets on a weekly basis. The ALCO is responsible for reviewing the interest rate sensitivity position of the Corporation, approving asset and liability management policies, and overseeing the formulation and implementation of strategies regarding balance sheet positions and earnings. The primary goal of asset/liability management is to address the liquidity and net income risks noted above. From a liquidity standpoint, the Corporation must maintain a sufficient level of liquid assets to meet the ongoing cash flow requirements of customers, who, as depositors, may want to withdraw funds or who, as borrowers, need credit availability. Liquidity sources are found on both sides of the balance sheet. Liquidity is provided on a continuous basis through scheduled and unscheduled principal reductions and interest payments on outstanding loans and investments. Liquidity is also provided through the availability of deposits and borrowings. The following table provides information about the Corporation's interest rate sensitive financial instruments. The table provides expected cash flows and weighted average rates for each significant interest rate sensitive financial instrument, by expected maturity period. None of the Corporation's financial instruments are classified as trading. 16 FULTON FINANCIAL CORPORATION INTEREST RATE SENSITIVITY (dollars in thousands)
Expected Maturity Period --------------------------------------------------------------------------------- (less than) 1 Year 1-2 Years 2-3 Years 3-4 Years 4-5 Years ------------- ------------- ------------- ------------- ----------------- Fixed rate loans (1) $ 728,750 $ 552,897 $ 454,580 $ 340,432 $ 239,803 Average rate (1) 8.03% 7.80% 7.77% 7.78% 7.78% Floating rate loans (2) 409,199 148,292 124,700 113,439 82,807 Average rate 9.43% 9.22% 9.07% 9.07% 8.37% Fixed rate investments (3) 189,027 175,444 225,625 143,132 124,405 Average rate 6.07% 6.06% 6.15% 6.10% 6.19% Floating rate investments (3) 250 50 - 1,000 - Average rate 8.00% 7.50% - 4.17% - Other interest-earning assets 3,728 - - - - Average rate 6.55% - - - - -------------------------------------------------------------------------------- Total $ 1,330,954 $ 876,683 $ 804,905 $ 598,003 $ 447,015 Average rate 8.18% 7.69% 7.52% 7.62% 7.45% -------------------------------------------------------------------------------- Fixed rate deposits (4) $ 1,343,407 $ 549,976 $ 176,116 $ 41,331 $ 39,062 Average rate 5.15% 5.68% 5.84% 5.51% 5.88% Floating rate deposits (5) 583,369 79,911 76,167 76,167 76,167 Average rate 3.59% 1.59% 1.52% 1.52% 1.52% Fixed rate borrowings (6) 83,322 70,780 85,280 67,780 280 Average rate 5.84% 4.60% 5.43% 5.05% 5.76% Floating rate borrowings (7) 451,396 - - - - Average rate 5.34% - - - - -------------------------------------------------------------------------------- Total $ 2,461,494 $ 700,667 $ 337,563 $ 185,278 $ 115,509 Average rate 4.84% 5.10% 4.76% 3.70% 3.00% -------------------------------------------------------------------------------- Expected Maturity Date Estimated (greater than) 5 Years Total Fair Value ---------------------- --------------- ------------- Fixed rate loans (1) $ 794,588 $ 3,111,050 $ 3,040,069 Average rate (1) 7.73% 7.83% Floating rate loans (2) 514,082 1,392,519 1,390,405 Average rate 8.72% 9.02% Fixed rate investments (3) 264,361 1,121,994 1,083,507 Average rate 6.14% 6.12% Floating rate investments (3) 15,145 16,445 16,232 Average rate 6.35% 6.25% Other interest-earning assets - 3,728 3,728 Average rate - 6.55% ------------------------------------------------------- Total $ 1,588,176 $ 5,645,736 $ 5,533,941 Average rate 7.77% 7.78% ------------------------------------------------------- Fixed rate deposits (4) $ 17,056 $ 2,166,948 $ 2,152,130 Average rate 5.54% 5.36% Floating rate deposits (5) 795,236 1,687,017 1,686,671 Average rate 1.39% 2.18% Fixed rate borrowings (6) 15,752 323,194 310,106 Average rate 5.04% 5.26% Floating rate borrowings (7) - 451,396 451,396 Average rate - 5.34% ------------------------------------------------------- Total $ 828,044 $ 4,628,555 $ 4,600,303 Average rate 1.54% 4.19% -------------------------------------------------------
Assumptions: 1) Amounts are based on contractual payments and maturities, adjusted for expected prepayments. 2) Average rates are shown on a fully taxable equivalent basis using an effective tax rate of 35%. 3) Amounts are based on contractual maturities, adjusted for expected prepayments on mortgage-backed securities, and expected calls on other securities. 4) Amounts are based on contractual maturities of time deposits. 5) Money market, Super NOW, NOW and savings accounts are placed based on history of deposit flows. 6) Amounts are based on contractual maturities of Federal Home Loan Bank advances. 7) Amounts are Federal Funds purchased and securities sold under agreements to repurchase, which mature in less than one year. 17 The Corporation uses three complementary methods to measure and manage interest rate risk. They are static gap analysis, simulation of net interest income, and estimates of economic value of equity. Using these measurements in tandem provides a reasonably comprehensive summary of the magnitude of interest rate risk in the Corporation, level of risk as time evolves, and exposure to changes in interest rate relationships. Static gap analysis provides a measurement of repricing risk in the Corporation's balance sheet as of a point in time. This measurement is accomplished through stratification of the Corporation's assets and liabilities into predetermined repricing periods. The assets and liabilities in each of these periods are summed and compared for mismatches within that maturity segment. Core deposits having noncontractual maturities are placed into repricing periods based upon historical balance performance. Repricing for mortgage loans held for sale and for mortgage-backed securities includes the effect of expected cash flows. Estimated prepayment effects are applied to these balances based upon industry projections for prepayment speeds. The Corporation's policy limits the cumulative 6-month gap to plus or minus 15 percent of total earning assets. The Corporation was positioned within this range throughout the first quarter of 2000. At March 31, 2000, the cumulative 6-month gap was 0.94. Simulation of net interest income and of net income is performed for the next twelve-month period. A variety of interest rate scenarios is used to measure the effects of sudden and gradual movements upward and downward in the yield curve. These results are compared to the results obtained in a flat or unchanged interest rate scenario. Simulation of earnings is used primarily to measure the Corporation's short-term earnings exposure to rate movements. The Corporation's policy limits the potential exposure of net interest income to 10% of the base case net interest income for every 100 basis point "shock" in interest rates. A "shock' is an immediate upward or downward movement of interest rates across the yield curve based upon changes in the prime rate. As of March 31, 2000, the Corporation had a larger exposure to upward rate shocks, with net interest income at risk of loss over the next twelve months of 0.2%, 4.0% and 5.1% where interest rates are shocked upward by 100, 200 and 300 basis points, respectively. Economic value of equity estimates the discounted present value of asset cash flows and liability cash flows. Discount rates are based upon market prices for like assets and liabilities. Upward and downward shocks of interest rates are used to determine the comparative effect of such interest rate movements relative to the unchanged environment. This measurement tool is used primarily to evaluate the longer term repricing risks and options in the Corporation's balance sheet. A policy limit of 10% of economic equity may be at risk for every 100 basis point shock in interest rates. As of March 31, 2000, upward shocks of 100, 200 and 300 basis points were estimated to have negative effects upon economic value of 0.4%, 0.3% and 0.3%, respectively. Downward shocks of 100 and 200 basis points were estimated to have negative effects upon economic value of 0.9% and 0.6%, respectively. 18 PART II -- OTHER INFORMATION - ---------------------------- Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits -- The following is a list of the exhibits required by Item 601 of Regulation S-K and filed as part of this report: (1) Articles of incorporation, as amended and restated, and Bylaws of Fulton Financial Corporation, as amended - Incorporated by reference from Exhibit 3 of the Fulton Financial Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 1999. (2) Instruments defining the right of securities holders, including indentures: (a) Rights Agreement dated June 20, 1989, as amended and restated on April 27, 1999 between Fulton Financial Corporation and Fulton Bank - Incorporated by reference from Exhibit 1 of the Fulton Financial Corporation Current Report on Form 8-K dated April 27, 1999. (3) Material Contracts - Executive Compensation Agreements and Plans: (a) Severance Agreements entered into between Fulton Financial and: Rufus A. Fulton, Jr., as of April 17, 1984; R. Scott Smith, Jr., as of May 17, 1988; Richard J Ashby, Jr., as of May 17, 1988; and Charles J. Nugent, as of November 19, 1992- Incorporated by reference from Exhibit 10(a) of the Fulton Financial Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 1999. (b) Incentive Stock Option Plan adopted September 19, 1995 - Incorporated by reference from Exhibit A of Fulton Financial Corporation's 1996 Proxy Statement. (4) Financial Data Schedule - March 31, 2000 (b) Reports on Form 8-K: (1) Form 8-K dated March 7, 2000 reporting the execution of an Agreement and Plan of Merger between Fulton Financial Corporation and Skylands Financial Corporation. 19 FULTON FINANCIAL CORPORATION AND SUBSIDIARIES SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FULTON FINANCIAL CORPORATION Date: May 8, 2000 /s/ Rufus A. Fulton, Jr. -------------------------- --------------------------------- Rufus A. Fulton, Jr. Chairman, President and Chief Executive Officer Date: May 8, 2000 /s/ Charles J. Nugent -------------------------- --------------------------------- Charles J. Nugent Executive Vice President and Chief Financial Officer 20 EXHIBIT INDEX Exhibits Required Pursuant to Item 601 of Regulation S-K ----------------------------- 3. Articles of incorporation, as amended and restated, and Bylaws of Fulton Financial Corporation as amended. 4. Instruments defining the rights of security holders, including indentures. (a) Rights Agreement dated June 20, 1989, as amended and restated on April 27, 1999 between Fulton Financial Corporation and Fulton Bank - Incorporated by reference to Exhibit 1 of the Fulton Financial Corporation Current Report on Form 8-K dated April 27, 1999. 10. Material Contracts (a) Severance Agreements entered into between Fulton Financial and: Rufus A. Fulton, Jr., as of April 17, 1984; R. Scott Smith, Jr., as of May 17, 1988; Charles J. Nugent, as of November 19, 1992; and Richard J Ashby, Jr., as of May 17, 1988. (b) Incentive Stock Option Plan adopted September 19, 1995 - Incorporated by reference from Exhibit A of Fulton Financial Corporation's 1996 Proxy Statement. 27. Financial data schedule - March 31, 2000. 21 EX-27 2 FINANCIAL DATA SCHEDULE
9 This schedule contains summary financial information extracted from the Fulton Financial Corporation consolidated balance sheet as of March 31, 2000 and the related consolidated statement of income for the three months ended March 31, 2000 and other financial data included within management's discussion and analysis of financial condition and results of operations as of and for the three months ended March 31, 2000 and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS DEC-31-1999 JAN-01-2000 MAR-31-2000 258,415 2,309 0 0 1,113,466 76,543 75,776 4,503,569 58,034 6,129,914 4,647,528 451,396 98,058 323,194 0 0 181,884 427,869 6,129,914 91,368 17,499 144 109,011 37,226 47,891 61,120 2,025 2,476 39,786 35,961 25,314 0 0 25,314 0.35 0.35 4.42 18,914 6,864 0 0 57,631 3,035 1,413 58,034 58,034 0 16,390
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