Fulton Financial Annual Report 2008

FY2008 Annual Report · Fulton Financial

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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

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Left: R. Scott Smith, Jr.
Chairman and Chief Executive Officer

Right: E. Philip Wenger
President and Chief Operating Officer

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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.

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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.

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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.

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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)

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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

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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