Fulton Financial Corp. recognized $3.6 million of charter consolidation cost in 2018, and expects to incur about $7 million to $9 million in charter consolidation cost in 2019, mostly in the second and third quarter, as the Lancaster, Pa.-based company continues to simplify its franchise and unify its brand, CFO Mark McCollom said during the company's Jan. 16 earnings call.
The company, which closed two branches in the fourth quarter of 2018 and is set to close eight branches this first quarter, incurred approximately $930,000 in expenses in the 2018 fourth quarter related to the planned branch consolidations.
The company earlier disclosed that the regulatory consent orders over Bank Secrecy Act/Anti Money Laundering compliance against its Maryland-based subsidiary, Columbia Bank, have been terminated. The company is working to have the remaining BSA/AML consent order against unit Bethlehem, Pa.-based Lafayette Ambassador Bank terminated. Once that happens, the company can fully consolidate all its subsidiary banks into its flagship bank, Fulton Bank NA.
During the earnings call, Chairman and CEO E. Philip Wenger reiterated that the company would be interested in pursuing a deal once it is freed from the consent order.
Fulton Financial's full-year 2018 net income climbed year over year to $208.4 million, or $1.18 per share. Provision for credit losses for 2018 amounted to $46.9 million, up from $23.3 million in 2017. The approximately $23.6 million increase included a $36.8 million provision for credit losses in the second quarter of 2018, related to a customer fraud, McCollom said in the earnings call. "Excluding this, our provision for credit losses would have decreased $13.2 million from 2017, reflecting relatively stable credit conditions," he added.
The company also provided its initial guidance for 2019. The company expects average annual loan and deposit growth rates in the low to mid-single-digit range, and for net interest income to grow year-over-year in a mid- to high-single-digit range. Net interest margin is expected to increase 0 to 3 basis points per quarter in 2019. Noninterest income is projected to increase year-over-year in a low- to mid-single-digit range. Noninterest expense, excluding the company's remaining charter consolidation cost, is expected to increase year-over-year in a low-single-digit range. The company expects provision for credit losses in 2019 to be between $3 million and $8 million per quarter. The effective tax rate is expected to be between 13% and 16%.