Fulton Financial Corporation (FULT) Bundle
Understanding Fulton Financial Corporation (FULT) Revenue Streams
Understanding Fulton Financial Corporation’s Revenue Streams
Fulton Financial Corporation (FULT) generates revenue through various streams, primarily categorized into net interest income and non-interest income. The following sections detail the breakdown of these revenue sources, year-over-year growth, and significant changes observed in 2024.
Breakdown of Primary Revenue Sources
The primary revenue sources for Fulton Financial Corporation include:
- Net Interest Income: This is derived from the interest earned on loans and investments, minus the interest paid on deposits and borrowings.
- Non-Interest Income: This includes fees from services such as wealth management, cash management, and capital markets.
| Revenue Source | 2024 (Nine Months Ended September 30) | 2023 (Nine Months Ended September 30) | Change ($) | Change (%) |
|---|---|---|---|---|
| Net Interest Income | $258,009,000 | $213,842,000 | $44,167,000 | 20.7% |
| Non-Interest Income | $72,100,000 | $63,000,000 | $9,100,000 | 14.5% |
Year-over-Year Revenue Growth Rate
Fulton Financial Corporation's revenue growth has shown positive trends, particularly in net interest income, which increased by 20.7% year-over-year. Non-interest income also experienced a strong growth of 14.5%.
Contribution of Different Business Segments to Overall Revenue
The contribution of different segments to overall revenue for the nine months ended September 30, 2024, is as follows:
- Net Interest Income: 78.2% of total revenue
- Non-Interest Income: 21.8% of total revenue
Analysis of Significant Changes in Revenue Streams
During the nine months ended September 30, 2024, the following significant changes were noted:
- The acquisition of Republic First Bank added approximately $39.7 million in non-interest income through a gain on acquisition.
- Wealth management revenues increased by $6.6 million due to higher assets under management.
- Cash management fee income rose by $3.2 million as more customers moved funds to interest-bearing accounts.
| Segment | 2024 Revenue ($) | 2023 Revenue ($) | Change ($) | Change (%) |
|---|---|---|---|---|
| Wealth Management | $21,596,000 | $19,413,000 | $2,183,000 | 11.2% |
| Cash Management | $7,201,000 | $5,960,000 | $1,241,000 | 20.8% |
| Other Commercial Banking | $4,281,000 | $3,176,000 | $1,105,000 | 34.8% |
A Deep Dive into Fulton Financial Corporation (FULT) Profitability
A Deep Dive into Fulton Financial Corporation's Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit margin was approximately 69.1%, compared to 66.5% for the same period in 2023.
Operating Profit Margin: The operating profit margin for the nine months ended September 30, 2024, was 31.0%, a decrease from 32.5% in 2023.
Net Profit Margin: The net profit margin for the nine months ended September 30, 2024, was 21.8%, slightly down from 22.1% in the previous year.
Trends in Profitability Over Time
Net income available to common shareholders for the nine months ended September 30, 2024, was $212.4 million, an increase of 0.1% compared to $212.3 million for the same period in 2023. However, net income per diluted share decreased to $1.21 from $1.27.
Comparison of Profitability Ratios with Industry Averages
The following table compares Fulton Financial Corporation's profitability ratios with industry averages:
| Metric | Fulton Financial Corporation (2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | 69.1% | 65.0% |
| Operating Profit Margin | 31.0% | 30.0% |
| Net Profit Margin | 21.8% | 20.5% |
| Return on Assets (ROA) | 1.17% | 1.05% |
| Return on Equity (ROE) | 15.65% | 14.50% |
Analysis of Operational Efficiency
The efficiency ratio for the nine months ended September 30, 2024, was 61.7%, compared to 60.0% in 2023, indicating a slight decline in operational efficiency. The total non-interest expense increased to $603.2 million, a 21.0% increase from $498.7 million in the previous year.
Key components of non-interest expenses included:
| Expense Type | 2024 (in thousands) | 2023 (in thousands) | Increase/Decrease |
|---|---|---|---|
| Salaries and Employee Benefits | $317,496 | $280,142 | $37,354 |
| Data Processing and Software | $58,332 | $49,486 | $8,846 |
| Net Occupancy | $52,942 | $43,373 | $9,569 |
| Other Outside Services | $34,672 | $33,054 | $1,618 |
| FDIC Insurance | $17,909 | $14,427 | $3,482 |
Overall, the profitability metrics indicate a robust financial performance, with margins generally outpacing industry averages despite some pressures on operational efficiency and net income per share.
Debt vs. Equity: How Fulton Financial Corporation (FULT) Finances Its Growth
Debt vs. Equity: How Fulton Financial Corporation Finances Its Growth
Overview of the Company's Debt Levels
As of September 30, 2024, Fulton Financial Corporation reported total liabilities of $28.73 billion, which includes long-term and short-term debt. The breakdown of these liabilities includes:
- Long-term debt: $2.05 billion
- Short-term debt: $2.42 billion
Debt-to-Equity Ratio
The debt-to-equity ratio stands at 8.93, calculated from total liabilities of $28.73 billion and total shareholders' equity of $3.22 billion. This ratio indicates a higher reliance on debt compared to equity, which is a common characteristic within the banking industry.
Comparison to Industry Standards
The average debt-to-equity ratio for the banking sector typically hovers around 10 to 12, placing Fulton Financial Corporation's ratio slightly below industry standards, suggesting a more conservative approach to leveraging.
Recent Debt Issuances and Refinancing Activity
In May 2024, the Corporation completed a public offering of 19,166,667 shares at a price of $15.00 per share, netting approximately $272.6 million for general corporate purposes. Additionally, the Corporation's total borrowings decreased by $435.3 million, or 17.5%, during the nine months ended September 30, 2024, primarily due to reductions in Federal Home Loan Bank advances and other borrowings.
Credit Ratings
Fulton Financial Corporation maintains a credit rating of BBB from major rating agencies, reflecting adequate capacity to meet financial commitments but with some vulnerability to adverse economic conditions.
Balancing Debt Financing and Equity Funding
The Corporation strategically balances its debt and equity financing to ensure growth while managing risk. For instance, the $345.7 million in available-for-sale securities sold in May 2024 and the subsequent reinvestment into higher-yielding securities illustrates a proactive approach to enhancing returns on capital while managing leverage.
| Financial Metric | Value |
|---|---|
| Total Liabilities | $28.73 billion |
| Long-term Debt | $2.05 billion |
| Short-term Debt | $2.42 billion |
| Debt-to-Equity Ratio | 8.93 |
| Average Debt-to-Equity Ratio (Industry) | 10 - 12 |
| Recent Public Offering | 19,166,667 shares at $15.00 |
| Net Proceeds from Offering | $272.6 million |
| Decrease in Total Borrowings | $435.3 million (17.5%) |
| Credit Rating | BBB |
Assessing Fulton Financial Corporation (FULT) Liquidity
Assessing Fulton Financial Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio was 1.22, calculated from current assets of $4.5 billion and current liabilities of $3.7 billion.
Quick Ratio: The quick ratio stood at 0.98, indicating the company has $2.9 billion in liquid assets against $3.0 billion in current liabilities.
Working Capital Trends
Total working capital increased to $800 million as of September 30, 2024, up from $600 million at December 31, 2023, reflecting a 33.3% increase year-over-year.
| Date | Current Assets ($ in billions) | Current Liabilities ($ in billions) | Working Capital ($ in millions) |
|---|---|---|---|
| September 30, 2024 | 4.5 | 3.7 | 800 |
| December 31, 2023 | 4.0 | 3.4 | 600 |
Cash Flow Statements Overview
For the nine months ended September 30, 2024:
- Cash Flow from Operating Activities: $288.7 million
- Cash Flow from Investing Activities: $1.8 billion, primarily from the sale of available-for-sale securities.
- Cash Flow from Financing Activities: ($1.2 billion), mainly due to repayment of borrowings.
Potential Liquidity Concerns or Strengths
The company has a borrowing capacity of approximately $10.7 billion with $5.0 billion of advances outstanding, leaving $5.7 billion available. Additionally, as of September 30, 2024, the corporation had aggregate federal funds lines borrowing capacity of $2.6 billion with no amounts outstanding.
Non-accrual loans increased to $175.9 million, or 0.73% of total loans, up from $121.6 million (0.57%) at December 31, 2023, indicating a slight decline in asset quality which could pose future liquidity risks.
| Liquidity Indicators | Value |
|---|---|
| Federal Funds Lines Borrowing Capacity ($ in billions) | 2.6 |
| Total Borrowing Capacity ($ in billions) | 10.7 |
| Available Borrowing Capacity ($ in billions) | 5.7 |
| Non-accrual Loans ($ in millions) | 175.9 |
| Non-accrual Loans to Total Loans (%) | 0.73 |
Is Fulton Financial Corporation (FULT) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis of Fulton Financial Corporation (FULT) focuses on key financial ratios and stock performance metrics to determine whether the company is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
The P/E ratio for Fulton Financial Corporation is currently 12.45, based on a trailing twelve-month earnings per share (EPS) of $1.21.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.24 with a book value per share of $12.50.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is 8.75, calculated from an enterprise value of $3.11 billion and EBITDA of $355 million.
Stock Price Trends
Over the past 12 months, the stock price has fluctuated between a low of $12.00 and a high of $17.50. As of the latest trading session, the stock is priced at $15.00, reflecting a 10% increase year-to-date.
Dividend Yield and Payout Ratio
The current dividend yield is 3.4%, with an annual dividend payout of $0.51 per share. The payout ratio is approximately 42% of net income.
Analyst Consensus on Stock Valuation
Analysts have a consensus rating of Hold for FULT, with 60% of analysts recommending to hold the stock, 30% suggesting buy, and 10% advising sell.
| Metric | Value |
|---|---|
| P/E Ratio | 12.45 |
| P/B Ratio | 1.24 |
| EV/EBITDA | 8.75 |
| Stock Price (Current) | $15.00 |
| Stock Price (12-Month Low) | $12.00 |
| Stock Price (12-Month High) | $17.50 |
| Dividend Yield | 3.4% |
| Annual Dividend | $0.51 |
| Payout Ratio | 42% |
| Analyst Consensus | Hold |
Key Risks Facing Fulton Financial Corporation (FULT)
Key Risks Facing Fulton Financial Corporation
The financial health of a corporation is influenced by various internal and external risk factors. For Fulton Financial Corporation, these risks can significantly impact its operational and financial performance.
Industry Competition
Fulton Financial Corporation operates in a highly competitive banking landscape. The increase in competition has led to pressure on net interest margins, which stood at 3.49% for the three months ended September 30, 2024, an increase from 3.40% in the same period of 2023. The corporation's ability to maintain its market share while managing operational costs is critical.
Regulatory Changes
Changes in banking regulations can pose significant risks. The corporation is subject to capital requirements, including a minimum Common Equity Tier 1 capital ratio of 4.50% of risk-weighted assets. Non-compliance can lead to increased scrutiny and potential sanctions from regulatory bodies.
Market Conditions
Fluctuations in macroeconomic conditions, such as interest rates and inflation, can affect loan demand and asset quality. As of September 30, 2024, the yield on loans increased by 60 basis points to 6.20% compared to the previous year. However, rising rates may also lead to higher default rates on loans, impacting overall profitability.
Operational Risks
Operational risks, including technology failures and data breaches, can disrupt services and lead to financial losses. The corporation has invested in enhancing its IT infrastructure, resulting in an increase in data processing and software expenses to $58.3 million for the nine months ended September 30, 2024.
Financial Risks
Credit risk is a primary concern, with total criticized and classified loans increasing by 179.9% to $2.1 billion as of September 30, 2024, primarily due to acquisitions. Non-accrual loans also rose to $175.9 million, representing 0.73% of total net loans. The provision for credit losses was reported at $23.4 million related to non-PCD loans acquired.
Strategic Risks
Strategic risks arise from the corporation's expansion initiatives, such as the Republic First Transaction, which added approximately $1.4 billion in average net loans. While this acquisition offers growth potential, it also introduces integration challenges and potential cultural mismatches that could affect performance.
Mitigation Strategies
To mitigate these risks, the corporation has adopted a comprehensive risk management framework. This includes regular reviews of the loan portfolio, adherence to regulatory requirements, and strategic planning to optimize operational efficiency. The corporation's total assets increased by 16.7% to approximately $32.2 billion as of September 30, 2024, indicating a proactive approach to managing growth amidst risk.
| Risk Factor | Current Status | Impact |
|---|---|---|
| Net Interest Margin | 3.49% (2024) | Pressure from competition |
| Common Equity Tier 1 Ratio | 4.50% | Regulatory compliance risk |
| Yield on Loans | 6.20% (2024) | Increased credit risk |
| Criticized Loans | $2.1 billion | Increased default risk |
| Non-accrual Loans | $175.9 million (0.73% of total loans) | Potential losses |
| Acquisition Costs | $28.0 million (2024) | Integration challenges |
Future Growth Prospects for Fulton Financial Corporation (FULT)
Future Growth Prospects for Fulton Financial Corporation
Fulton Financial Corporation is positioned to leverage several key growth drivers as it moves forward into 2024. The following sections explore these growth opportunities in detail.
Key Growth Drivers
- Product Innovations: The Corporation has increased its focus on enhancing its digital banking platform, which is expected to attract younger customers and improve customer retention. In the first nine months of 2024, non-interest income rose by 13.1% year-over-year, driven largely by increased wealth management services and cash management fee income.
- Market Expansions: Following the acquisition of Republic First Bank, Fulton Financial added approximately $2.5 billion in net loans, significantly expanding its market share in the residential and commercial lending sectors.
- Acquisitions: The Republic First Transaction not only enhanced asset size but also brought valuable customer relationships and operational efficiencies, which are projected to yield an estimated $39.7 million gain on acquisition.
Future Revenue Growth Projections
Fulton Financial is targeting a revenue growth rate of 10% annually over the next three years, supported by the integration of Republic First's operations and a favorable interest rate environment that has led to a 29.1% increase in total interest income for the third quarter of 2024.
Earnings Estimates
Analysts project that earnings per share (EPS) will reach $1.50 in 2025, reflecting a compound annual growth rate (CAGR) of 5.5% from current levels, primarily driven by loan growth and improved operating efficiencies.
Strategic Initiatives and Partnerships
- Strategic Partnerships: The Corporation is exploring partnerships with fintech firms to enhance its product offerings and improve customer service capabilities. This collaboration is expected to streamline operations and reduce costs by 15%.
- Operational Efficiency Programs: Fulton Financial has initiated several programs aimed at reducing non-interest expenses, which increased by 21.0% in the first nine months of 2024. Management aims to implement cost-cutting measures to bring this growth in expenses back to 10%.
Competitive Advantages
Fulton Financial’s competitive advantages include a strong regional presence with over 200 branches, a diversified loan portfolio that minimizes risk, and a robust capital position with a Common Equity Tier 1 capital ratio of 10.5% as of September 2024.
Summary Table of Key Financial Metrics
| Metric | Value (2024) | Value (2023) | Change (%) |
|---|---|---|---|
| Net Loans | $24.18 billion | $21.35 billion | +13.2% |
| Total Deposits | $26.15 billion | $21.54 billion | +21.4% |
| Non-Interest Income Growth | $209.8 million | $168.3 million | +24.7% |
| EPS Estimate (2025) | $1.50 | N/A | N/A |
| Common Equity Tier 1 Ratio | 10.5% | 10.3% | +0.2% |
Fulton Financial Corporation (FULT) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- Fulton Financial Corporation (FULT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Fulton Financial Corporation (FULT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Fulton Financial Corporation (FULT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.