Fulton Financial
Annual Report 2008

Plain-text annual report

SOUND PRINCIPLES. SOLID FOUNDATION. Fulton Financial Corporation 2008 Annual Report “ i want to assure you of my confidence in the ability of this company and its people to meet every challenge that comes our way– and in our ability to emerge successfully from this difficult economic environment.” r. scott smith, jr. Chairman and Chief Executive Officer 8 0 0 2 t r o p e R l a u n n A n o i t a r o p r o C l a i i c n a n F n o t l u F Left: R. Scott Smith, Jr. Chairman and Chief Executive Officer Right: E. Philip Wenger President and Chief Operating Officer F u l t o n F n a n c i i a l C o r p o r a t i o n A n n u a l R e p o r t 2 0 0 8 Dear Shareholder, Last year at this time, my message to shareholders focused on our company’s commitment to maintaining both a sharp focus on the issues at hand and, at the same time, a broad perspective on the environment in which we operate. Over the past year, we have had many opportunities to appreciate the value of this dual viewpoint, as our company, our industry and our nation faced constant challenges, setbacks, and changes. The yearlong market retreat prompted write-downs in our investment portfolio, while mounting challenges in the credit market necessitated an increase in our Fulton Financial Corporation’s 2008 performance was loan loss allowance. We recorded an earnings charge a disappointment to me, to our senior management team related to auction rate certificates (ARCs) held and to our shareholders. We ended the year with a loss in certain customer accounts of the Corporation’s of three cents per diluted share, after battling an ongoing investment management and trust services subsidiary, tide of worldwide market declines, U.S. economic softness, Fulton Financial Advisors. Maryland real estate upheaval in the banking industry and several events sector difficulties contributed to goodwill impairment that impacted our performance. This is not the type at our most recent acquisition, The Columbia Bank; of performance that we have historically delivered indeed, it was a difficult year for all of our affiliates for our shareholders. to meet our performance expectations. As so often happens in life, with change comes opportunity. Charles J. Nugent Senior Executive Vice President/Chief Financial Officer We have confronted every challenge we faced decisively, taking what we believe to be the appropriate steps to respond to each one. However, much of our success in regaining our earnings momentum will be contingent on the timing and the strength of a rebound in the economy. That is why we will continue to focus sharply on the issues at hand while maintaining a broader perspective that will enable us to manage this company through the current economic environment with the goal of emerging stronger once the economy improves. Recent stories have appeared in the news media regarding We have worked to do our part to support the federal government’s efforts to stabilize and stimulate the economy, and a number of new initiatives are already benefiting our customers and our communities. We welcomed federal initiatives, which were undertaken to strengthen confidence and encourage liquidity in the banking system by increasing FDIC deposit insurance levels through December 2009. banks’ accountability for lending these Capital Purchase Program funds. As a family of community banks, we know how important both the retail and business sectors will be to providing the necessary impetus for economic growth in our markets. And while our best intentions will not create loan demand where it does not exist, our objective, through targeted marketing and promotional programs, is to create greater opportunity for quality loan growth. We also chose to participate in the U.S. Treasury’s As so often happens in life, with change comes Capital Purchase Program, which was designed opportunity. This company is built on sound principles specifically for healthy institutions. Our current and a solid foundation, and these underpinnings total risk-based capital ratio exceeds the regulatory have served our company well since our lead bank definition of a well-capitalized institution. was founded back in 1882. We have used these sound Participation in the Treasury program further principles and solid foundation not only to steady strengthens our already strong capital position, us through these difficult times, but also to help giving us additional capacity to make loans us pursue opportunities that position us well to credit-worthy borrowers in the markets we serve. for future success when the economy strengthens. 8 0 0 2 t r o p e R l a u n n A n o i t a r o p r o C l a i i c n a n F n o t l u F F u l t o n F n a n c i i a l C o r p o r a t i o n A n n u a l R e p o r t 2 0 0 8 Left: James E. Shreiner Senior Executive Vice President/Administrative Services Right: Craig H. Hill Senior Executive Vice President/Human Resources Although the past year’s atypical market conditions have been disruptive, they have also presented an opportunity for us to shift the focus of our investment We have taken the opportunity to examine our management and trust services business from a shorter- company as never before, making honest evaluations term revenue horizon to a longer-term approach that and challenging decisions, seeking in every case is more relationship-driven. In the currently depressed to optimize customer experience and minimize cost. equities market, we see potential for considerable future This evaluation led to our decision to consolidate growth; accordingly, we are attracting talent and aligning our three Maryland banks. As Hagerstown Trust our brokerage capabilities to realize that upside potential and The Peoples Bank of Elkton become divisions when the time comes. of The Columbia Bank, we will leverage existing brand awareness over a broader geographic footprint. We also took the opportunity to increase the responsibilities of a member of our senior management Our company-wide “lean” initiatives are well underway, team. In December, E. Philip Wenger was promoted to the helping us to identify and eliminate processes that do position of president and chief operating officer of Fulton not create value for our customers or our shareholders. Financial Corporation. Most recently serving as senior As I related to you a year ago, we are taking a more executive vice president for community banking at Fulton creative, flexible approach to how we do things – without Financial Corporation as well as chairman of Fulton Bank, altering our conservative philosophy and established Phil represents the principles that make our company principles. Finding better, smarter ways to work has strong. Starting in our management training program generated value for our customers, and since we began in 1979, his advancement exemplifies the opportunity the “lean” initiatives, operational improvements have available to someone who possesses, in addition helped us realize more than $2 million in savings. to management skills, character, experience Our work on this initiative will continue to be a priority. and dedication within our company. Another major initiative of 2008 was the internal refocusing and launch of our customer service promise. Through an intense company-wide commitment to “care, listen, understand and deliver,” all of our employees were able to develop ways that they, as individuals, departments and employee teams, could carry out this promise for internal and external customers. As part of this initiative, we have also launched a corporate recognition program to reward employees who deliver on our customer experience promise. I believe that the adversity we have faced together will serve to make us stronger, more resilient, more efficient and more productive in the future. The current economic environment has prompted even the most seasoned experts to challenge conventional wisdom and long-held assumptions. The momentum of our internal service promise launch In my role as one of twelve members of the Federal was further fueled by a new generation of bank branding. Advisory Committee, which advises the Federal Creative advertising is now gaining attention in each Reserve Board of Governors, and as a member of the markets we serve, communicating our unique of the board of the American Bankers Association, value proposition through use of the new tagline, I have had the unique opportunity to not only “Listening is just the beginning.” While this branding join in conversations with our nation’s leaders, creates a new level of efficiency, alignment and synergy but also to share firsthand with them the financial across our 274-branch network, we have been careful issues that are on the minds of our customers and to preserve the autonomy of our local banking our communities. I have been reassured to find affiliates. A strong sense of community has always that our policy makers in Washington, D.C., are well been and will remain an important foundation versed, intently focused and sincerely committed of our core business strategy. to strengthening the U.S. economy. 8 0 0 2 t r o p e R l a u n n A n o i t a r o p r o C l a i i c n a n F n o t l u F Return on Average Equity (tangible)* Cash Dividends Per Share Net Income (loss) per share (diluted) * Net income (loss), adjusted for intangible amortization(net of tax)and goodwill impairment charges, divided by average shareholders' equity, net of goodwill and intangible assets. F u l t o n F n a n c i i a l C o r p o r a t i o n A n n u a l R e p o r t 2 0 0 8 With the efforts of our Board, senior management, and the combined skills of our talented employees, we enter 2009 with resolve rather than retrenchment. Going forward, we will aggressively pursue quality growth. We will respond to any future challenges, just as we have to those in the past – swiftly and decisively. We will continue to invest in our brand, our technology, and our service promise. And we will support our very loyal employees, who have seen this company through good times and bad. The value of this company has always rested with them, and their hard work and commitment during these challenging times will see us through to brighter days ahead. While no one can say with certainty when the economy will recover, I want to assure you of my confidence in the ability of this company and its people to meet every challenge that comes our way – and in our ability to emerge successfully from this difficult economic environment. Every day, I see our entire team pull together to overcome adversity, helping each other to accomplish more with fewer people while guiding our customers through what has been, for many, the most financially difficult As a shareholder, we appreciate your investment in this time of their lives. company, and we look forward to once again being able I believe that the adversity we have faced together will serve to make us stronger, more resilient, more efficient to report the caliber of performance you have come to expect from Fulton Financial Corporation. and more productive in the future. Your Board R. Scott Smith, Jr. of Directors continues to perform an active, effective role in all of its governance responsibilities. We in senior management appreciate and value their guidance. Chairman and Chief Executive Officer FINANCIAL HIGHLIGHTS AS OF OR FOR THE YEAR ENDED DECEMBER 31 (Dollars in thousands, except per-share data) BALANCE SHEET DATA Total assets Loans, net of unearned income Deposits Common shareholders’ equity 2008 16,1 85,000 12,043,000 10,552,000 1,491 ,000 PER COMMON SHARE DATA Net income (loss) (diluted) Cash dividends Shareholders’ equity (tangible) $(0.03) 0.600 5.33 2007 15,923,000 11,204,000 10,1 05,000 1,575,000 2006 14,9 1 9,000 10,374,000 10,232,000 1,5 16,000 $0.88 0.598 5.30 $1.06 0.581 4.91 Percent Change 2008/2007 2007/2006 1.6% 7.5% 4.4% (5.3%) (103.4%) 0.3% 0.6% 6.7% 8.0% (1.2%) 3.9% (17.0%) 2.9% 7.9% 10 YEARS IN REVIEW (1999-2008) Net Income (loss) (in millions of dollars) Deposits (in billions of dollars) Loans (in billions of dollars) Total Assets (in billions of dollars) Dividends (in millions of dollars) Common Shareholders’ Equity (in millions of dollars) 8 0 0 2 t r o p e R l a u n n A n o i t a r o p r o C l a i i c n a n F n o t l u F F u l t o n F n a n c i i a l C o r p o r a t i o n A n n u a l R e p o r t 2 0 0 8 INVESTOR INFORMATION Investor Information Stock Listing Common shares of Fulton Financial Corporation are traded under the symbol “FULT” and are listed in the NASDAQ Global Market. Cash Dividends The Fulton Financial Corporation Board of Directors decides whether to declare a quarterly cash dividend in the third month of each quarter (i.e., March, June, September and December). Investor Information and Documents Dividend Reinvestment Plan and Direct Deposit of Cash Dividends Fulton Financial Corporation offers its shareholders the convenience of a Dividend Reinvestment and Stock Purchase Plan and direct deposit of cash dividends. Holders of stock may have their quarterly dividends automatically reinvested in additional shares of the Corporation’s common stock by utilizing the Dividend Reinvestment Plan. Shareholders participating in the Plan may also make voluntary cash contributions not to exceed $5,000 per month. In addition, shareholders also have the option of having their cash dividends sent directly to their financial institution for deposit into their checking or savings account. Shareholders may receive information on either the Dividend Reinvestment Plan and Stock Purchase Plan or direct deposit of cash dividends by writing to: Stock Transfer Department Fulton Financial Advisors, N.A. P. O. Box 3215 Lancaster, PA 17604-3215 A copy of the Corporation’s Annual Report, Form 10-K, 2009 Proxy Statement and other documents filed with the Securities and Exchange Commission can be viewed on the Corporation’s website at www.fult.com. In addition, copies of the Form 10-K and 2009 Proxy Statement may be obtained without charge to shareholders by writing to: Corporate Secretary Fulton Financial Corporation P. O. Box 4887 Lancaster, PA 17604-4887 News, stock information, an events calendar, Corporate presentations and other information can be found on the Corporation’s website at www.fult.com. The Annual Meeting of Shareholders of Fulton Financial Corporation will be held on Wednesday, April 29, 2009 at 10:00 a.m. in the Great American Hall of the Hershey Lodge and Convention Center, West Chocolate Avenue and University Drive, Hershey, PA. Please note that any shareholder who would like to attend MUST HAVE A RESERVATION. To make a reservation, please return the Annual Meeting Response Card you received with your proxy statement. Your reservation will help ensure that we have adequate seating for all shareholders who or by calling: (717) 291-2546 or toll-free: 1-800-626-0255. plan to join us that day. A strong sense of community has always been and will remain an important foundation of our core business strategy. SENIOR MANAGEMENT, DIRECTORS & ADVISORY BOARD MEMBERS Fulton Financial Corporation Senior Management R. Scott Smith, Jr. Chairman and Chief Executive Officer E. Philip Wenger President and Chief Operating Officer Charles J. Nugent Senior Executive Vice President/ Chief Financial Officer James E. Shreiner Senior Executive Vice President/ Administrative Services Craig H. Hill Senior Executive Vice President/ Human Resources Fulton Financial Corporation Board of Directors Jeffrey G. Albertson, Esq. John M. Bond, Jr. Donald M. Bowman, Jr. Dana A. Chryst Craig A. Dally, Esq. Patrick J. Freer Rufus A. Fulton, Jr. George W. Hodges Carolyn R. Holleran Willem Kooyker Donald W. Lesher, Jr. Abraham S. Opatut John O. Shirk, Esq. R. Scott Smith, Jr. Gary A. Stewart E. Philip Wenger Subsidiary Bank Boards of Directors Fulton Bank Richard J. Ashby, Jr. Larry D. Bashore Dana A. Chryst Carlos E. Graupera James M. Herr Curtis J. Myers George A. Parmer Harlowe R. Prindle A. Richard Pugh Craig A. Roda John O. Shirk, Esq. Fulton Bank Divisional Boards Brandywine Division Kenneth M. Goddu, Chairman Robert F. Adams, Esq. Wilmer L. Hostetter Dallas Krapf James D. McLeod, Jr. Michael J. O’Rourke Capital Division Robert S. Jones, Chairman James C. Byerly Samuel T. Cooper, III, Esq. Steven S. Etter Dolores Liptak Barry E. Musser, C.P.A. Beth A. Peiffer Steven C. Wilds Drovers Division David W. Freeman, Chairman Vernon L. Bracey Robert S. Freed Jevon L. Holland Gregory V. Saubel William S. Shipley, III Gary A. Stewart, Jr. Delaine A. Toerper Christine R. Wardrop Constance L. Wolf Great Valley Division Jeffrey R. Rush, Chairman Marcelino Colon Michael D. Fromm Kathryn G. Goodman Daniel M. Goodyear Carolyn R. Holleran William G. Koch, Sr., C.P.A. Lebanon Valley Division Barry E. Ansel, Chairman Randall I. Ebersole Robert J. Funk Robert P. Hoffman Wendie DiMatteo Holsinger Robert J. Longo Albert B. Murry M. Randolph Tice Premier Division Joseph R. Feilmeier, Chairman Barry R. Angely Anthony D. Cino Wallace Rosenthal Ivy Silver Southern Division T.A. Grell, Jr., Chairman T. Richard Litton, Jr. Lloyd M. Poe Timothy J. Stiffler Elizabeth Addington Twohy Fulton Bank Advisory Boards Akron/Lincoln/Ephrata Larry L. Loose, Chairman Dean A. Hoover Louis G. Hurst Kent M. Martin Denver Michael L.Weinhold, C.P.A., Chairman Gerald L. Harding East Petersburg P. Larry Groff, Sr. Kenneth L. Kreider Jessica H. May Elizabethtown Nancy Z. Garber David B. Mueller David W. Sweigart III Dennis Zubler Gap Aldus R. King, Chairman 8 0 0 2 t r o p e R l a u n n A n o i t a r o p r o C l a i i c n a n F n o t l u F F u l t o n F n a n c i i a l C o r p o r a t i o n A n n u a l R e p o r t 2 0 0 8 Swineford National Bank Arthur F. Bowen Thomas C. Clark, Esq. Michael N. O’Keefe William D. Robinson Michael R. Wimer Gene D. Zartman The Bank Joseph F. Adams, C.P.A. Jeffrey G. Albertson, Esq. Dennis N. DeSimone Lafayette Ambassador Bank Lawrence M. DiVietro, Jr. Hershey/Hummelstown Charles J. DeHart III, Esq., Chairman Jack B. Billmyer Thomas S. Davis, M.D. Joan E. Spire Daniel A. Verdelli Leola Joanne B. Ladley, Chairman Robert M. Bard Richard M. Hurst Lititz Ronald L. Miller, C.P.A., Chairman Irel D. Buckwalter Wilbur G. Rohrer Paul W. Stauffer Manheim Peter J. Hondru, Chairman Peter B. McCracken Robert W. Obetz, Jr. Larry D. Sauder J. David Young, Jr., Esq. New Holland R. Douglas Good, Esq., Chairman Galen Eby Vernon R. Martin John D. Yoder Quarryville Dwight E. Wagner, Chairman Frank M. Abel, V.M.D. John E. Chase Gary A. Clewell Craig A. Dally, Esq. L. Anderson Daub Sara (Sally) Jane Gammon Thomas J. Maloney, Esq. Alan B. McFall, Esq. Jamie P. Musselman Gerald A. Nau Edith Ritter Robert A. Rupel John J. Simon FNB Bank, N.A. Robert O. Booth Richard A. Grafmyre James D. Hawkins Wendy S. Tripoli Joanne E. Wade Hagerstown Trust Donald M. Bowman, Jr. Paul N. Crampton, Jr. Louis J. Giustini Raymond A. Grahe James W. Hostetter, Sr., C.P.A. Donald R. Harsh, Jr. State College Allan Darr Elizabeth Dupuis Todd A. Erdley John A. Rodgers Agricultural Advisory Board Harry H. Bachman I. Hershey Bare Dennis L. Grumbine William Hostetter Amos M. Hursh Aldus R. King Jay H. Kopp Peter B. McCracken Doris E. Lehman Bernard P. Lesky Paul C. Mellott, Jr. Gregory Snook Delaware National Bank Dale R. Dukes Jeffrey M. Fried Amy A. Higgins Mark E. Huntley Greg N. Johnson Terry A. Megee Ronald T. Moore Ralph W. Simpers P. Randolph Taylor David T. Wilgus Sandra J. Gubbine James R. Johnson, Jr. Scott H. Kintzing Warner A. Knobe Ross Levitsky, Esq. Abraham S. Opatut Angela M. Snyder Daniel G. Timms, D.D.S. Paul J. Tully The Bank Divisional Board First Washington Division James R. Johnson, Jr. Timothy J. Losch Stephen R. Miller Abraham S. Opatut Angela M. Snyder The Peoples Bank of Elkton Harry C. Brown Judy E. Hart Donald S. Hicks Robert O. Palsgrove Nancy R. Simpers David K. Williams, Jr. Skylands Community Bank Norman S. Baron Blanquita Bonifacio Robert P. Corcoran Michael Halpin John K. Kitchen Joel A. Kobert Stephen R. Miller Raymond Nisivoccia, C.P.A. Denis H. O’Rourke Paul J. Pinizzotto Anthony J. Santye, Jr. Leslie E. Smith, Jr. Mark F. Strauss, Esq. Norman Worth The Columbia Bank Joe N. Ballard Anand S. Bhasin John M. Bond, Jr. Robert R. Bowie, Jr., Esq. Garnett Y. Clark, Jr. Hugh F. Cole, Jr. Winfield M. Kelly, Jr. Herschel L. Langenthal James R. Moxley, III John A. Scaldara, Jr. Lawrence A. Shulman, Esq. Maurice M. Simpkins Robert N. Smelkinson Theodore G. Venetoulis James J. Winn, Jr., Esq. Elizabeth M. Wright Fulton Financial Corporation One Penn Square P.O. Box 4887 Lancaster, PA 17604 1.800.FULTON4 www.fult.com Banking Subsidiaries: Fulton Bank Swineford National Bank Lafayette Ambassador Bank FNB Bank, N.A. Hagerstown Trust Delaware National Bank The Bank The Peoples Bank of Elkton Skylands Community Bank The Columbia Bank Financial Services Subsidiaries: Fulton Financial Advisors, N.A. Dearden, Maguire, Weaver and Barrett, LLC Fulton Insurance Services Group Residential mortgage lending offered through: Fulton Mortgage Company 

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