Text-Fitch affirms Fulton Financial; outlook stable

Wed Sep 7, 2011 3:34pm EDT

(The following statement was released by the rating agency.)
NEW YORK, September 07 (Fitch) Fitch Ratings has affirmed the long-term and
short-term Issuer Default Ratings (IDRs) of Fulton Financial (FULT.O)
Corporation (FULT) at 'A-' and 'F1' respectively. The Rating Outlook is Stable.
A complete list of ratings follows this release.
The ratings affirmation reflects the company's consistent performance and solid
overall financial condition including asset quality, liquidity and capital
position. Profitability has steadily improved due to declining provisions for
loan losses combined with a gradually increasing NIM and good expense control.
ROA was in line with the average of 'A-' peers and well above the average for
lower-rated U.S. bank peers.
FULT has a concentration in commercial real estate (CRE) at 32% of total
assets.
In affirming the rating, Fitch considered further potential stresses to FULT's
CRE portfolio. Fitch expects that any potential problems would remain well
contained given exposure is to the relatively more stable markets of the
Mid-Atlantic as well as portfolio granularity and disciplined underwriting.
Residential construction exposure has been reduced considerably and over 40% of
the CRE portfolio is owner occupied.
FULT's capital position is expected to remain at conservative levels. Tangible
common equity continued to improve in recent quarters owing to internal capital
generation and a restrained level of risk assets. Funding from deposits
represents close to 90% of the liability mix. Within total deposits, FULT
continues to work down the level of CDs in favor of lower cost demand or
savings
deposits.
Holding company liquidity is sound with good coverage of debt servicing costs.
Double leverage of 120% appears moderately higher than the 'A-' peer average.
However, FULT has considerable flexibility to service holding company
obligations given the following: interest is up-streamed from subsidiary banks,
subsidiaries have good dividend capacity and the holding company entities have
a
comfortable level of cash and other liquid assets.
The Stable Rating Outlook reflects an expectation for solid capital levels,
sustained profitability, manageable credit costs, and sound liquidity. Should
asset quality deterioration pressure earnings and/or capital levels, negative
rating actions could ensue. Rating upside is considered limited at least in the
near term given FULT's relatively small franchise, CRE concentration and level
of NPAs.
With $16.0 billion in assets, FULT is a financial holding company based in
Lancaster, PA operating through community bank subsidiaries located across
Pennsylvania, Maryland, Delaware, New Jersey, and Virginia.
The following ratings are affirmed with a Stable Outlook.
Fulton Financial Corporation
-- Long-term IDR at 'A-';
-- Short-term IDR at 'F1';
-- Individual rating at 'B/C';
-- Viability Rating at 'a-'
-- Subordinated debt at 'BBB+';
-- Support at '5';
-- Support Floor at 'NF'.
Fulton Bank
-- Long-term IDR at 'A-';
-- Long-term deposits at 'A';
-- Short-term IDR at 'F1';
-- Short-term deposits at 'F1';
-- Individual rating at 'B/C';
-- Viability Rating at 'a-'
-- Support at '5';
-- Support Floor at 'NF'.
Columbia Bank (The)
-- Long-term IDR at 'A-';
-- Long-term deposits at 'A';
-- Short-term IDR at 'F1';
-- Short-term deposits at 'F1';
-- Individual Rating at 'B/C';
-- Viability Rating at 'a-'
-- Support at '5';
-- Support Floor at 'NF'.
Lafayette Ambassador Bank
-- Long-term IDR at 'A-';
-- Long-term deposits at 'A';
-- Short-term IDR at 'F1';
-- Short-term deposits at 'F1';
-- Individual rating at 'B/C';
-- Viability Rating at 'a-'
-- Support at '5';
-- Support Floor at 'NF'.
The Bank
-- Long-term IDR at 'A-';
-- Long-term deposits at 'A';
-- Short-Term IDR at 'F1';
-- Short-Term deposits at 'F1';
-- Individual rating at 'B/C';
-- Viability Rating at 'a-'
-- Support affirmed at '5';
-- Support Floor at 'NF'.
Fulton Capital Trust I
-- Preferred stock at 'BBB'.
Contact:
Primary Analyst
Joseph Scott
Senior Director
+1-212-908-0821
Fitch, Inc.
One State Street Plaza
New York, NY 10004
Secondary Analyst
Brandon Bajema
Associate Director
+1-312-368-2332
Committee Chairperson
Christopher Wolfe
Managing Director
+1-212-908-0771
(New York Ratings team)
(email: Harold.Barnett@thomsonreuters.com;
Reuters messaging: harold.barnett.thomsonreuters.net; Tel: +1-646-223-4186))