<PAGE>
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, 1996
-----------------------------------------------
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 number 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)
Not Applicable
- -----------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
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 ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS.
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes_____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 -- 29,961,185 shares outstanding as of April 26, 1996.
- -------------------------------------------------------------
<PAGE>
FULTON FINANCIAL CORPORATION AND SUBSIDIARIES
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996
INDEX
-----
Description Page
----------- ----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
(a) Consolidated Balance Sheets - 3
March 31, 1996 and December 31, 1995
(b) Consolidated Statements of Income - 4
Three months ended March 31, 1996
and 1995
(c) Consolidated Statements of Cash Flows - 5
Three months ended March 31, 1996
and 1995
(d) Notes to Consolidated Financial 6
Statements - March 31, 1996
Item 2. Management's Discussion and Analysis of 9
Financial Condition and Results of
Operations
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security
Holders 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 16
<PAGE>
<TABLE>
<CAPTION>
Fulton Financial Corporation
Consolidated Balance Sheets (Unaudited)
- ------------------------------------------------------------------------------------------------------------
(Dollars in thousands) March 31 December 31
1996 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
- ------------------------------------------------------------------------------------------------------------
Cash amd due from banks....................................................... $ 153,592 $ 152,143
Interest-bearing deposits with other banks.................................... 2,765 4,425
Mortgage loans held for sale.................................................. 500 613
Investment securities:
Securities held to maturity (Fair value-
$486,803 in 1996 and $506,359 in 1995)............................... 487,120 503,926
Securities available for sale.............................................. 293,164 256,380
Loans......................................................................... 2,541,154 2,502,033
Less: Allowance for loan losses............................................ (38,799) (38,272)
Unearned income...................................................... (8,171) (8,711)
---------- ----------
Net Loans.......................................................... 2,494,184 2,455,050
---------- ----------
Premises and equipment........................................................ 49,197 47,606
Accrued interest receivable................................................... 24,839 25,275
Other assets.................................................................. 74,709 79,150
---------- ----------
Total Assets....................................................... $3,580,070 $3,524,568
========== ==========
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
LIABILITIES
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deposits:
Noninterest-bearing........................................................ $ 426,547 $ 427,384
Interest-bearing........................................................... 2,540,498 2,487,885
---------- ----------
Total Deposits..................................................... 2,967,045 2,915,269
---------- ----------
Short-term borrowings:
Federal funds purchased and securities sold under agreements to repurchase.. 154,218 126,372
Demand notes of U.S. Treasury............................................... 4,619 5,058
---------- ----------
Total Short-Term Borrowings........................................ 158,837 131,430
---------- ----------
Accrued interest payable...................................................... 21,389 19,357
Other liabilities............................................................. 44,278 69,809
Long-term debt................................................................ 28,751 34,689
---------- ----------
Total Liabilities.................................................. 3,220,300 3,170,554
---------- ----------
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
SHAREHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common stock ($2.50 par)
Shares: Authorized 100,000,000
Issued 33,067,962 (32,959,127 in 1995)
Outstanding 32,944,071 (32,847,768 in 1995)........................ 82,669 74,907
Capital surplus............................................................... 222,769 174,023
Retained earnings............................................................. 50,009 98,746
Net unrealized holding gain on securities..................................... 6,746 8,526
Less: Treasury stock (123,891 shares in 1996 and 111,359 shares in 1995)...... (2,423) (2,188)
---------- ----------
Total Shareholders' Equity......................................... 359,770 354,014
---------- ----------
Total Liabilities and Shareholders' Equity......................... $3,580,070 $3,524,568
========== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
Fulton Financial Corporation
Consolidated Balance Sheets (Unaudited)
- ------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per-share data) Three Months Ended
March 31
1996 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INTEREST INCOME
Loans, including fees......................................................... $ 54,258 $ 50,937
Investment securities:
Taxable.................................................................. 8,988 7,468
Tax-exempt............................................................... 895 1,318
Dividends................................................................ 499 474
Federal funds sold............................................................ 139 239
Interest-bearing deposits with other banks.................................... 55 63
----------- -----------
Total Interest Income.............................................. 64,834 60,499
INTEREST EXPENSE
Deposits...................................................................... 25,673 22,847
Short-term borrowings......................................................... 1,597 1,944
Long-term debt................................................................ 543 459
----------- -----------
Total Interest Expense............................................. 27,813 25,250
----------- -----------
Net Interest Income................................................ 37,021 35,249
PROVISION FOR LOAN LOSSES..................................................... 676 680
----------- -----------
Net Interest Income After Provision for Loan Losses................ 36,345 34,569
----------- -----------
- ------------------------------------------------------------------------------------------------------------
OTHER INCOME
Trust department.............................................................. 1,903 1,872
Service charges on deposit accounts........................................... 2,963 2,537
Other service charges and fees................................................ 1,711 1,705
Gain on sale of mortgage loans................................................ 263 331
Investment securities gains................................................... 1,031 280
----------- -----------
7,871 6,725
- ------------------------------------------------------------------------------------------------------------
OTHER EXPENSES
Salaries and employee benefits................................................ 13,779 13,135
Net occupancy expense......................................................... 2,957 2,681
Equipment expense............................................................. 1,470 1,526
FDIC assessment expense....................................................... 249 1,504
Special services.............................................................. 1,544 1,363
Other......................................................................... 6,692 5,633
----------- -----------
26,691 25,842
----------- -----------
Income Before Income Taxes......................................... 17,525 15,452
INCOME TAXES 4,805 3,797
----------- -----------
Net Income......................................................... $ 12,720 $ 11,655
=========== ===========
- ------------------------------------------------------------------------------------------------------------
PER-SHARE DATA
Net Income.................................................................... $0.39 $0.35
=========== ===========
Cash dividends................................................................ $0.155 $0.132
=========== ===========
Weighted average shares outstanding........................................... 32,908,988 32,948,606
=========== ===========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
Fulton Financial Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
- ------------------------------------------------------------------------------------------------------------
(Dollars in thousands) Three Months Ended
March 31
1996 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 12,720 $ 11,655
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Provision for loan losses 676 680
Depreciation and amortization of premises and
equipment 1,384 1,329
Net amortization of investment security premiums 67 926
Gain on sale of investment securities (1,031) (280)
Decrease (increase) in mortgage loans held for sale 113 (598)
Amortization of intangible assets 367 379
Decrease (increase) in accrued interest receivable 436 (395)
Decrease (increase) in other assets 4,597 (2,808)
Increase in accrued interest payable 2,032 5,389
(Decrease) increase in other liabilities (2,173) 2,320
-------- --------
Total adjustments 6,468 6,942
-------- --------
Net cash provided by operating activities 19,188 18,597
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities available for sale 38,109 3,120
Proceeds from maturities of securities held to
maturity 79,835 44,494
Proceeds from maturities of securities available for
sale 4,544 7,545
Purchase of securities held to maturity (86,872) (7,148)
Purchase of securities available for sale (80,555) (18,704)
Decrease (increase) in short-term investments 1,660 (25,566)
Net (increase) decrease in loans (39,810) 8,673
Purchase of premises and equipment (2,975) (1,598)
-------- --------
Net cash (used in) provided by investing activities (86,064) 10,816
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in noninterest-bearing
deposits (837) 11,057
Net increase in interest-bearing deposits 52,613 46,854
Addition to long-term debt - 1,058
Repayment of long-term debt (5,938) -
Increase (decrease) in short-term borrowings 27,407 (83,699)
Dividends paid (4,827) (4,365)
Net proceeds from issuance of common stock 1,124 451
Acquisition of treasury stock (1,217) (460)
-------- --------
Net cash provided by financing activities 68,325 (29,104)
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,449 309
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 152,143 156,705
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $153,592 $157,014
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 25,781 $ 19,860
Income taxes - -
</TABLE>
See notes to consolidated financial statements.
<PAGE>
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-O1 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, 1996
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1996.
NOTE B - Net Income Per Share
Net income per share is computed on the basis of the weighted average
number of common shares outstanding.
NOTE C - Stock Dividend
The Board of Directors declared a 10% stock dividend on March 19, 1996 payable
May 31, 1996 to shareholders of record as of May 2, 1996. All share and per-
share information has been restated to reflect the effect of this stock
dividend. This stock dividend has been recorded in the consolidated balance
sheet as of March 31, 1996.
NOTE D - Acquisitions
On February 29, 1996, the Corporation completed the previously announced
acquisition of Gloucester County Bankshares, Inc. (Gloucester County). As
provided under the terms of the merger agreement, Gloucester County was merged
with and into the Corporation and each of the outstanding shares of Gloucester
County common stock was converted into 1.58 shares of the common stock of the
Corporation.
The Corporation issued approximately 1.6 million shares of its common stock in
connection with the merger. The transaction was accounted for as a pooling of
interests and all financial statements and financial information contained
herein have been restated to include the amounts and results of operations of
Gloucester County for all periods presented.
Gloucester County is headquartered in Woodbury, New Jersey and operates six
branch offices through its wholly-owned subsidiary, The Bank of Gloucester
County, which has approximately $200 million in total assets.
<PAGE>
The following sets forth selected unaudited financial data for the Corporation
and Gloucester County for the two-months ended February 29, 1996:
<TABLE>
<CAPTION>
Fulton
Financial Gloucester
Corporation County
----------- ----------
<S> <C> <C>
Net interest income $22,575 $1,723
Other income 5,261 186
------ -----
Total income $27,836 $1,909
====== =====
Net income $ 7,696 $ 552
====== =====
</TABLE>
The effect of the merger on the Corporation's previously reported revenues, net
income, and net income per share for the quarter ended March 31, 1995 follows:
<TABLE>
<CAPTION>
Fulton
Financial Gloucester
Corporation County Restated
----------- ------ --------
<S> <C> <C> <C>
Net interest income $33,003 $ 2,246 $35,249
Other income 6,515 210 6,725
------ ------ ------
Total income $39,518 $ 2,456 $41,974
====== ====== ======
Net income $11,034 $ 621 $11,655
====== ====== ======
Net income per share $ .35 $ .58 $ .35
====== ====== ======
</TABLE>
NOTE E - Adoption of New Accounting Standards
Accounting for Mortgage Servicing Rights
- ----------------------------------------
In May, 1995, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 122, "Accounting for Mortgage Servicing
Rights" (Statement 122). This statement requires capitalization of the cost of
the rights to service mortgage loans when originated mortgages are sold and
servicing is retained, and for that cost to be amortized over the period of
estimated net servicing income. In addition, the mortgage servicing rights must
be periodically evaluated for impairment based on their fair value. Statement
122 was adopted prospectively on January 1, 1996. There has been no material
financial statement impact as a result of the adoption of this statement.
Stock-Based Compensation
- ------------------------
In October, 1995, the FASB issued Statement of Financial Accounting Standards
No. 123 "Accounting for Stock-Based Compensation" (Statement 123). This
statement requires a fair value approach to valuing compensation expense
associated with stock options and
<PAGE>
employee stock purchase plans. This statement encourages, but does not require,
the use of this method for financial statement purposes. Companies that do not
elect to adopt this statement for financial statement purposes are required to
present pro-forma footnote disclosures of net income and earnings per share as
if the fair value approach were used. Management intends to adopt the disclosure
requirements of this statement only and, accordingly, there will be no impact on
the consolidated financial statements other than additional disclosures. The
disclosures will initially be required for the consolidated financial statements
for the year ending December 31, 1996.
<PAGE>
FULTON FINANCIAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
MERGER ACTIVITY
- ---------------
On February 29, 1996, the Corporation completed the previously announced
acquisition of Gloucester County Bankshares, Inc. of Woodbury, New Jersey. As
provided under the terms of the merger agreement, Gloucester County was merged
with and into the Corporation and each of the outstanding shares of Gloucester
County common stock was exchanged for 1.58 shares of the common stock of the
Corporation. Approximately 1.6 million shares of common stock were issued in
conjunction with the merger.
The transaction was accounted for as a pooling of interests. All of the
financial information contained herein has been restated to reflect the
financial condition and results of operations of Gloucester County.
In conjunction with the merger, Gloucester County's wholly-owned subsidiary, The
Bank of Gloucester County, became the Corporation's ninth banking subsidiary.
RESULTS OF OPERATIONS
- ---------------------
Quarter ended March 31, 1996 versus Quarter ended March 31, 1995
- ----------------------------------------------------------------
Fulton Financial Corporation's net income for the first quarter of 1996
increased $1.1 million, or 9.1%, in comparison to the net income for the same
quarter in 1995. This increase is attributable to increases in both interest and
non-interest income, partially offset by increases in non-interest expenses and
income taxes.
Net Interest Income
- -------------------
Net interest income increased $1.8 million, or 5.0%, during the quarter.
Overall, this increase was a result of continued growth in the Corporation's
balance sheet while maintaining a stable net interest margin. The following
tables summarize the components of this increase as well as the changes in
average interest-earning assets and interest-bearing liabilities and the average
interest rates thereon. All dollar amounts are in thousands.
<TABLE>
<CAPTION>
Change
-------------
1996 1995 $ %
---- ---- - -
<S> <C> <C> <C> <C>
Interest income $64,834 $60,499 $4,335 7.2
Interest expense 27,813 25,250 2,563 10.2
------ ------ -----
Net interest income $37,021 $35,249 $1,772 5.0
====== ====== =====
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1996 1995 % Change
---- ---- --------
<S> <C> <C> <C>
Average interest-earning assets $3,231,000 $3,058,000 5.7%
Yield on earning assets 8.03% 7.91% 1.5%
Average interest-bearing
liabilities $2,674,000 $2,561,000 4.4%
Cost of interest-bearing
liabilities 4.16% 3.94% 5.6%
</TABLE>
The 7.2% increase in interest income is due primarily to an increase in average
interest-earning assets during the period, coupled with a small increase in
yield. Loan growth has been generated primarily by fixed rate mortgages (92.3
million, or 40.0%, increase), consumer installment loans ($62.9 million, or
14.0%) and adjustable rate mortgages ($31.1 million, or 12.9%). In general, loan
growth is a result of relatively low interest rates during the past year.
The increase in interest expense is a result of increases in both average
interest-bearing liabilities as well as rates. Certificates of deposit have seen
the most significant growth, primarily in the products with short term
maturities ($74.8 million, or 23.3%, increase). This increase was due to the
Corporation promoting short-term certificates of deposits with competitive
yields. The overall rate increase for liabilities reflects the strong
competition for customer deposits from both banks and non-banks in the
Corporation's markets.
Provision and Allowance for Loan Losses
- ---------------------------------------
The provision for loan losses for the quarter ended March 31, 1996 was $676,000
compared to $680,000 for the same period of 1995. This provision represents
0.03% of average loans for each period and reflects the continued strong asset
quality for the Corporation. The allowance for loan losses as a percentage of
gross loans (net of unearned income) was 1.53% at March 31, 1996 and December
31, 1995.
The following table summarizes the Corporation's non-performing assets as
of the indicated periods:
<TABLE>
<CAPTION>
Mar. 31 Dec. 31
1996 1995
---- ----
(Dollars in Thousands)
<S> <C> <C>
Nonaccrual loans $11,182 $12,796
90 days past due loans and accruing 10,806 7,928
Other real estate owned 1,983 1,737
------ ------
Total non-performing assets $23,971 $22,461
====== ======
Non-performing assets/Total assets .67% .64%
Non-performing assets/Gross loans .95% .90%
</TABLE>
<PAGE>
Other Income
- ------------
Other income for the quarter ended March 31, 1996 was $7.9 million. This result
was an increase of $1.1 million, or 17.0%, over the comparable period in 1995.
Of this increase, $751,000 was due to higher gains on sales of investment
securities. Management constantly monitors the Corporation's available for sale
investments and makes periodic sale decisions based on current and expected
market conditions. In the first quarter of 1996, certain investments were sold
as a result of Management's assessment of market conditions.
Service charges on deposits increased $426,000, or 16.8%, in the first quarter
of 1996 as compared to the first quarter of 1995. This increase reflects the
growth in the Corporation's deposits over the past year as well as changes in
fee strategies at some of the Corporation's affiliate banks.
Other Expenses
- --------------
Total other expenses for the first quarter of 1996 increased $849,000, or 3.3%,
to $26.7 million from $25.8 in the comparable period from 1995. The most
significant change in other expenses was a decline of $1.3 million, or 82.2%, in
Federal Deposit Insurance Corporation (FDIC) premiums.
Adjusting for this one-time FDIC benefit, total other expenses increased $2.1
million, or 8.1%. Overall, this increase is consistent with the growth of the
Corporation. Most categories of other expense have experienced increases
consistent with the growth of the organization, rather than as a result of
individually significant factors. Salaries and employee benefits ($644,000, or
4.9%, increase); net occupancy expenses ($276,000, or 10.3%); and special
services ($181,000, or 13.3%) have increased as a result of additional
employees, facilities, and customers.
Other expenses were $6.7 million compared to $5.6 million for the same period in
1995. This $1.1 million, or 18.8%, increase is primarily a result of advertising
($178,000, or 29.1%, increase); and loan expenses ($125,000, or 43.8% increase).
Income Taxes
- ------------
Income tax expense for the quarter was $4.8 million as compared to $3.8 million
for the comparable period in 1995. This $1.0 million, or 26.5%, increase was due
to higher pre-tax income as well as an increase in the Corporation's effective
tax rate from 24.4% in 1995 to 27.4% in the current year. The effective rate has
increased primarily as a result of a reduction in the Corporation's investments
in tax-free municipal bonds and an increase in pre-tax income.
<PAGE>
FINANCIAL CONDITION
- -------------------
At March 31, 1996, the Corporation had total assets of $3.6 billion, reflecting
an increase of $46.0 million, or 1.3%, over December 31, 1995. In general, this
growth is a result of an increase in loans.
Loans, net of unearned income and the allowance for loan losses, increased $39.1
million, or 1.6%, million to $2.5 billion. This increase was attributable
primarily to fixed rate mortgage and commercial loans added during the quarter
as interest rates remained low. Additional funds of approximately $20.0 million
were invested in investment securities.
The funding for asset growth has been provided by increases in deposits of $51.8
million, or 1.8%. Deposit growth has been realized primarily in short-term CD
products, which increased $47.7 million during the period. This increase was
primarily a result of special promotions on such CD's.
Liquidity and Interest Rate Sensitivity Management
- --------------------------------------------------
The goals of the Corporation's asset/liability management function are to ensure
adequate liquidity while maintaining an appropriate balance between relative
sensitivity of interest-earning assets and interest-bearing liabilities.
Adequate liquidity is provided by cash, short-term investments, securities
available for sale and scheduled payments and maturities of loans receivable and
securities held to maturity. Liquidity is also provided by deposits and short-
term borrowings.
While the interest rate sensitivity gap (the difference between repricing
opportunities available for interest-earning assets and interest-bearing
liabilities) must be managed over all periods, the Corporation focuses on the
six-month period as the key interval affecting net interest income. This shorter
period is monitored as a large percentage of the Corporation's assets and
liabilities reprice within this period. In addition, short-term rate swings can
be more pronounced and provide a shorter time for reaction and strategy
adjustment.
The following table shows the interest sensitivity gaps for four different
time intervals as of March 31, 1996:
<TABLE>
<CAPTION>
Daily 0-90 91-180 181-365
Adjustable Days Days Days
---------------------------------------------------
<S> <C> <C> <C> <C>
GAP 1.14 .78 .80 .99
CUMULATIVE GAP 1.14 1.01 .96 .97
</TABLE>
The Corporation's policy provides for the six-month gap position to be
maintained between .85 and 1.15. The Corporation was positioned within this
range throughout the first quarter of 1996.
<PAGE>
Capital Resources
- -----------------
The capital resources of the Corporation, as represented by the two major
components of regulatory capital, shareholders' equity and the allowance for
loan losses, have continued to grow during 1996, increasing 1.6% and 1.4%,
respectively. Shareholders' equity growth is a result of net income, net of
dividends. The allowance growth is a result of provisions exceeding charge-offs.
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 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% for
institutions which are highly-rated in terms of safety and soundness and which
are not experiencing or anticipating any significant growth. Other institutions
are expected to maintain capital levels at least one or two percent above the
minimum.
As of March 31, 1996, the Corporation's capital ratios exceeded all of the
minimum ratios as set forth above.
As a result of the 10% stock dividend declared on March 19, 1996, approximately
$48.9 million of the Corporation's capital was transferred from retained
earnings to common stock and capital surplus.
<PAGE>
PART II OTHER INFORMATION
Item 4. Results of Votes of Security Holders
------------------------------------
The annual meeting of the shareholders of Fulton Financial Corporation was
held on May 2, 1996. There were 29,963,547 shares of stock outstanding and
entitled to vote. All seven nominees listed in the proxy statement were
elected directors of the Corporation for the term stated by a vote of at
least 24,153,247 shares.
At the same meeting, the shareholders approved an Incentive Option Plan by
a vote of 21,198,061 for, 1,060,625 against and 744,727 abstentions.
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 on April 13, 1990 and Bylaws
of Fulton Financial Corporation as amended on April 17, 1990 -
incorporated by reference from Exhibits 19(a) and 19(b) of the
Fulton Financial Corporation Quarterly Report on Form 10-Q for the
quarter ended March 31, 1990.
(2) Instruments defining the right of securities holders, including
indentures:
(a) Rights Agreement dated June 20, 1989 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 June 21, 1989.
(3) Material Contracts - Executive Compensation
Agreements and Plans:
(a) Severance Agreements entered into as of April 17, 1984 and
as of May 17,1988 between Fulton Financial Corporation and
the following executive officers: Robert D. Garner, Rufus A.
Fulton, Jr., James K. Sperry and R. Scott Smith, Jr. -
Incorporated by reference from Exhibit 28 (a) of the Fulton
Financial Corporation Quarterly Report on Form 10-Q for the
quarter ended March 31, 1990.
<PAGE>
PART II OTHER INFORMATION, Cont'd.
(b) Incentive Stock Option Plan adopted September 19, 1995--
Incorporated by reference from Exhibit A of Fulton Financial
Corporation's 1996 Proxy Statement.
(c) Severance Agreement entered into as of November 19, 1992
between Fulton Financial Corporation and Charles J. Nugent,
Executive Vice President and Chief Financial Officer,
incorporated by reference from Exhibit 10 (c) to the Fulton
Financial Corporation Annual Report on Form 10-K for the
year ended December 31, 1992.
(4) Financial Data Schedule - March 31, 1996
(b) Reports on Form 8-K:
(1) Form 8-K dated February 29, 1996 reporting consummation of
the Corporation's merger with Gloucester County Bankshares,
Inc.
(2) Form 8-K dated April 16, 1996 reporting results of combined
operations of Fulton Financial Corporation and Gloucester
County Bankshares, Inc.
<PAGE>
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 9, 1996 /s/ Rufus A. Fulton, Jr.
--------------------- ----------------------------
Rufus A. Fulton, Jr.
President and Chief
Executive Officer
Date May 9, 1996 /s/ Charles J. Nugent
--------------------- ----------------------------
Charles J. Nugent
Executive Vice President;
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibits Required Pursuant
to Item 601 of Regulation S-K
-----------------------------
3. Articles of Incorporation as amended on April 30, 1990, and Bylaws of Fulton
Financial Corporation as amended on April 17, 1990 -Incorporated by
reference from Exhibits 19(a) and 19(b) of the Fulton Financial Corporation
Quarterly Report on Form 10-Q for the quarter ended March 31, 1990.
4. Instruments defining the rights
of security holders, including
indentures.
(a) Rights Agreement dated June 20, 1989 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 June 21, 1989.
10. Material Contracts
(a) Severance Agreements entered into as of April 17, 1984
and as of May 17, 1988 between Fulton Financial
Corporation and the following executive officers:
Robert D. Garner, Rufus A. Fulton, Jr., James K. Sperry
and R. Scott Smith, Jr. - Incorporated by reference from
Exhibit 28(a) of the Fulton Financial Corporation Quarterly
Report on Form 10-Q for the quarter ended March 31, 1990.
(b) Incentive Stock Option Plan adopted September 19, 1995 -
Incorporated by reference from Exhibit A of Fulton Financial
Corporation's 1996 Proxy Statement.
(c) Severance Agreement entered into as of November 19, 1992
between Fulton Financial Corporation and Charles J. Nugent,
Executive Vice President and Chief Financial Officer, filed as
Exhibit 10(c) to the Fulton Financial Corporation Annual Report
on Form 10-K for the year ended December 31, 1992.
27. Financial data schedule - March 31, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FULTON
FINANCIAL CORPORATION CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1996 AND THE
RELATED CONSOLIDATED STATEMENT OF INCOME FOR THE QUARTER ENDED MARCH 31, 1996
AND OTHER FINANCIAL DATA INCLUDED WITHIN MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS AS OF AND FOR THE QUARTER ENDED
MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 153,592
<INT-BEARING-DEPOSITS> 2,765
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 293,164
<INVESTMENTS-CARRYING> 487,120
<INVESTMENTS-MARKET> 486,803
<LOANS> 2,541,154
<ALLOWANCE> 38,799
<TOTAL-ASSETS> 3,580,070
<DEPOSITS> 2,967,045
<SHORT-TERM> 158,837
<LIABILITIES-OTHER> 44,278
<LONG-TERM> 28,751
82,669
0
<COMMON> 0
<OTHER-SE> 277,101
<TOTAL-LIABILITIES-AND-EQUITY> 3,580,070
<INTEREST-LOAN> 54,258
<INTEREST-INVEST> 10,382
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<INTEREST-TOTAL> 64,834
<INTEREST-DEPOSIT> 25,673
<INTEREST-EXPENSE> 27,813
<INTEREST-INCOME-NET> 37,021
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<EXPENSE-OTHER> 26,691
<INCOME-PRETAX> 17,525
<INCOME-PRE-EXTRAORDINARY> 12,720
<EXTRAORDINARY> 0
<CHANGES> 0
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<EPS-PRIMARY> 0.39
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<LOANS-NON> 11,182
<LOANS-PAST> 10,806
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